Director, Content Marketing
What a difference a year makes.
For many small- and medium-sized businesses (SMBs) and business leaders, 2020 was all about survival. Initiatives like increasing headcount or running a sales forecast that was anywhere near accurate were severely compromised (if not completely thrown out the window).
The uncertainty was daunting and tough to navigate successfully, like slogging through a muddy swamp without getting stuck in quicksand. But, somehow, we appear to have collectively made it through to the other side in a post-pandemic era — not without gaining some scratches and nicks along the way.
Turning the lights back on
It’s starting to feel like we’re getting back to some semblance of normal. Heavy emphasis on feel, though, because we’re not exactly back to business as usual yet.
We’ve seen our 2021 Marketing relationships survey capture some of this positive sentiment, with sales and marketing executives painting an optimistic vision of the future for their employees:
- 88% think their business revenue in 2022 will be stronger than 2019
- 73% expect to beef up their sales and marketing teams in the coming year
If history is any guide, activities like consumer spending (albeit of the cautious variety) and innovative risk-taking, including with digital transformation, have actually risen notably in the wake of traumatic global events. But as SMBs work to get back on their feet in these rollercoaster conditions, there’s no better time to tackle one of the biggest challenges business leaders and companies face: sales forecasting.
What is sales forecasting?
Simply put, it’s the practice of predicting and estimating future sales based on data, often broken down by factors like time, departments or individuals and units or cash.
A forecast that projects a company’s sales is often created in three, six or nine month increments and provides extremely valuable data-driven insights that help businesses budget, hire, and expand.
You wouldn’t plan a camping trip without checking on the weather report, would you? Of course not. So why wouldn’t you use sales forecasts to plan for the near future of your SMB?
Sales forecasting done right
Making a plan
While it does seem like the business landscape is shifting in the right direction for economic growth, now isn’t the time to rest on your laurels.
Any resurgence of COVID-19 could wipe out all the progress you’ve made in the past year, or a major supply chain snag — like the now infamous blockage of the Suez Canal by container ship Ever Given in March 2021 — could also disrupt your best laid plans.
The point is: We’re still operating in a pretty fluid environment filled with uncertainty. When it comes to strategic planning right now, the same approaches you and other employees used in the past probably won’t cut it.
Here are a few questions (the first two courtesy of Forbes) you should be asking yourself — and steps to take if you find yourself on the wrong side of the answer in a post-pandemic era:
- What is the current state of your industry or category? Did the pandemic lead to unprecedented growth or shrinkage — or even start to render your offerings obsolete? Your answer to this question will determine how dramatically your approach to sales needs to change, and whether a serious pivot is needed for your business.
- Who are your target customers in 2021? They may not be the same as in 2019, so take the time to do some customer research and generate up-to-date insights to give you clarity around the right buyer personas to target in your marketing and sales efforts.
- How have your customers’ needs and behaviors changed over the past year? Are they demanding solutions to different problems than before (like needing digital tools instead of brick-and-mortar options)? Have their buying criteria shifted notably (prioritizing budget over high-touch customer service, for example)? You may need to adjust your brand positioning and messaging — or even your product or service offerings — to meet these shifts.
Do you see a trend here? Your customers. They’re the key to getting clarity around forecasting for your business in the near term. Securing meaningful customer relationships built on a foundation of trust, makes gathering these insights and making the necessary adjustments to pave the way for future success way easier.
Using a customer relationship management (CRM) tool that can help you organize your various business contacts, connect better and more consistently with them, and grow your relationships and network will provide you with more accurate data and set you up for smoother forecasting as you continuously measure your progress in the short term. Using CRM reports to inform these forecasting efforts will help automate this process, enabling you to predict rough seas ahead and change tack quickly as the market shifts.
This kind of predictive data — not just your gut or intuition — should help guide key business decisions for economic growth across departments, like whether or not to boost ad spend in the next quarter, what your hiring plan should look like for the next 6 months, and how aggressive your production goals should be for next year.
Helpful tips for 2021
Even though this past year has been a rough one, there are still a lot of forecasting strategies SMBs can utilize right now to get a more accurate read on the future.
Check out some of these approaches (inspired by The Business Journals):
- Update your budget each month for maximum predictability and stability — especially helpful during a volatile pandemic.
- Keep in close touch with clients to assess their needs and expectations. This goes beyond nurturing a single point of contact at an organization; assess your connections with individuals holding different roles within that organization, from an economic buyer or executive to a champion in sales or marketing or advisor in a separate department. Work to expand your network of contacts within key accounts to help deepen your relationships across a company, potentially giving you longer staying power in the case of employee turnover or leadership changes.
- Ensure information and assumptions are up to date by using market data that takes the pandemic into account. This relates to the question listed above — keep tabs on how your industry or category is changing as we continue to emerge from the pandemic.
- It’s easier to staff up than down, so err on the side of caution when it comes to adding more employees. If it makes legal and financial sense, look for alternative options like temporary contract workers or freelancers.
- Take historical data with a grain of salt and look for new baselines that reflect today’s “new normal” which may look completely different from years past.
Sales forecasting methods to rely on
New companies might be forgiven for Googling, “how to forecast sales in Excel.” When you’re just starting out, familiar tools or back-of-the-napkin approaches might suffice for a little while — but it’s no way to scale.
That’s because selling has become more complex than ever. If you want to track how your new lead generation push is faring, or if a nurture campaign is gaining any traction, you need a CRM that’s able to transform all the data points into meaningful reports.
In fact, a robust CRM allows you to produce a range of different sales forecasts, providing all sorts of informed glimpses into how your business might perform in the coming month, quarter or year. It also makes reporting more intuitive with prebuilt report templates for out-of-the-box insights, and the options for customized reports for those data points that are more specific to your business.
Below are some of the different kinds of forecasting methods out there:
Companies set goals for a specific period of time based on their past performance. While it may not be the most accurate method for leaders to study digital engagement, historical forecasting is worthwhile for gauging your SMB’s sales performance in broader terms. Again, view these with a heavy dose of caution as we’re coming out of the most unprecedented year in recent history.
This method assesses the probability of your prospects closing based on their behavior and position in your funnel. While opportunity forecasting requires a significant amount of customer data to be truly effective, it makes your leads (and their value) more tangible to the sales reps trying to close them. For product-based businesses, product usage data from prospects in a free trial gleaned using tools like Sherlock can help further refine opportunity forecasting.
This is defined by the expected revenues from all the opportunities currently in your pipeline based on several variables — i.e., lead source, average deal size and close ratio — that are unique to your team’s performance. Typically, these opportunities are assessed monthly or quarterly, and they’re often your best bet at gauging whether you’ll meet sales projections for a given period.
Recalibrating business projections after a crisis
Transitioning from survival mode to healthy and thriving business with positive customer experiences after a pandemic involves creating sales forecasts you can trust.
It all works best when you use a robust CRM like Copper designed to help you build enduring relationships — and gather more, quality data along the way — to generate short- and long-term projections with better accuracy and support your business health.
Could Copper be your sales forecasting solution? Find out with a 14-day free trial.