Sales Forecasting Software: 5 Steps to Choose the Right Tool Suited for Your Business

“We’re using Salesforce to accelerate sales and scale from a $1bn company to a $2bn company," exclaimed Sanjeev Babel, Associate VP of Corporate Strategy, Planning, M&A, and Sales Excellence at Mindtree.  

The boldness it requires to make such a demanding foresight come true not only depends on perseverance but rich, actionable analytical data. Mindtree recorded a 40 % increase in pipeline volume, a 15% increase in pipeline velocity, and a 9% increase in productivity, and all credit goes to Einstein Analytics, a reliable sales forecasting software, Pardot, and Tableau CRM.  

Mindtree, a global technology service, assists some of the world's largest organizations with digital transformation and technology needs. Mindtree collaborated with Salesforce to analyze the predictive movements and improve the sales pipeline.  

“We have a big opportunity to grow in these markets, but we need to be very disciplined and smart about what we sell and how we sell and that’s why we brought in Salesforce,” claimed Babel.  

The collaboration with the Salesforce platform allowed Mindtree to scale through automation and make life easier for reps. So, one can say that with the right sales forecasting tools, one can identify where improvement is needed, and deploy assistance in time.  

But there's more to a sales forecasting tool than just crunching data. This blog will ground a basic understanding of what sales forecasting software is, how to find the one that suits your needs, and more. 

What is a sales forecast? 

However, to put it in a layman's term sales forecasting refers to a crucial element in a company's financial planning process. It helps predict future sales based on several factors.  These factors include a company's past sales history, statistical analysis of trends, and consideration of the broader economic climate.   

For instance, a company selling winter clothing would consider historical sales data showing strong sales in the colder months.  Statistical analysis might reveal an upward trend in sales, and economic factors like rising disposable income could further support a positive sales forecast. 

So, an organization that uses sales forecasting software might benefit from: 

• Analyzing vast amounts of data and identifying trends to create more accurate forecasts. 
• Gaining insights that can inform strategic decisions about resource allocation, hiring, marketing efforts, and production schedules. 
• Enhanced collaboration within the software. 
• Increased efficiency as automation frees up time 
• Identifying potential shortfalls or overestimations to mitigate risks before they impact performance. 
• Knowing future sales projections will help companies allocate resources more effectively. 

The benefits of sales forecasting software stem from its ability to provide data-driven insights. However, its role in an organization doesn't end here. 

What is the role of sales forecast software in an organization? 

Here's a breakdown of how the role of sales forecasting software contributes to a successful sales team: 

• Predict future sales outcomes and revenue: This is the core function. By analyzing historical data, market trends, and current sales pipeline information, the software creates a reliable picture of what future sales might look like. This allows businesses to prepare for fluctuations and set realistic goals. 
• Optimize resource allocation and planning: Knowing projected sales helps organizations allocate resources like personnel, budget, and marketing efforts strategically. They can prioritize high-potential opportunities, adjust staffing levels based on demand, and ensure they have the right resources in place to achieve their sales goals. 
• Enhance decision-making and risk management: Sales forecasting software provides valuable insights that inform strategic decisions. Businesses can identify potential risks, like overestimating sales or understaffing, and take proactive measures to mitigate them. Additionally, data-driven insights allow for better decision-making on pricing strategies, product development, and market expansion. 
• Improve sales performance and drive growth: With accurate forecasts, businesses can set achievable goals, optimize sales processes, and motivate sales teams. Additionally, proactive risk management helps prevent missed opportunities and ensures resources are used effectively. Ultimately, it drives sales growth. 

Now that we have gotten to understanding the role sales forecasting software plays in an organization, let us discuss how it works.  

How does sales forecast software work? 

Sales forecast software utilizes a multi-step process to predict future sales figures. Here's a breakdown of its functionalities: 

• Analyzing past performance: The software examines your company's historical sales data to identify trends and patterns. 
• Gauging current activity: It then considers the activity within your sales pipeline, which reflects potential upcoming sales. 
• Incorporating all data points: To gain a more comprehensive view, the software can integrate data from both internal sources (e.g., inventory levels) and external sources (e.g., market trends). 
• Leveraging predictive power: The software applies forecasting techniques, such as statistical algorithms, to make data-driven predictions about future sales. 
• Offering various models: It provides different forecasting models based on your specific needs and the level of detail you require. 
• Simulating different scenarios: The software allows you to create "what-if" scenarios to explore how future sales might be impacted by changes in various factors. 
• Delivering clear insights: Finally, the software generates reports and visualizations that present the sales forecast in an easy-to-understand format. 

The function of software, however, would depend on the information you are trying to gauge, and the directive the tool has to perform. For that, we need to know the types of sales forecasting software that are there.  

What are the different types of sales forecasting software? 

There are two main categories of sales forecasting software.  

1. Revenue management software  

It is designed to predict future income and oversee a company's overall financial health. It often includes features like budgeting, forecasting, and financial planning tools to help businesses maximize their revenue generation. 

• Utility: Focuses on the big picture, helping businesses predict and manage their overall financial health. 
• Enables: Budgeting, forecasting, and financial planning. 
• Benefits: Maximizes revenue generation by optimizing financial strategies and resource allocation. 

2. Sales performance management software 

It focuses on improving the effectiveness of sales teams. It provides tools for sales forecasting, analyzing sales data, and empowering salespeople. This software aims to boost sales team productivity by offering insights into sales trends, pipeline management tools, and sales performance metrics. 

• Utility: Zeros in on improving the efficiency and effectiveness of sales teams. 
• Enables: Sales forecasting, sales analytics, sales enablement. 
• Benefits: Boosts sales team productivity by providing insights into sales trends, pipeline management, and individual performance metrics. 

How to choose the right sales forecasting software? 

Choosing the right sales forecasting software involves looking at your company's needs and the software's capabilities. Here's a breakdown of the key factors to consider: 

1. Understanding your needs 

• Business size: Are you a small startup, a mid-sized company, or a large enterprise? Scalability and features will differ depending on the software. 
• Data needs: How much historical data do you have? What other data sources (e.g., CRM, marketing automation) do you use? Does the software integrate easily with your existing data infrastructure? 
• Ease of use: How comfortable are your sales reps with technology? Choose software with a user-friendly interface and consider training options. 
• Budget: Sales forecasting software can range from free (with limited features) to quite expensive. Determine your budget beforehand. 

2. Evaluating software features 

• Pipeline visibility: Can you see the sales pipeline in detail, including deal stages, close dates, and associated values? 
• Data integration: Does the software integrate with your CRM and other data sources to provide a holistic view? 
• Reporting: Does it offer customizable reports with visualizations to analyze trends and identify forecast accuracy? 

3. Forecasting approaches 

• Sales pipeline forecasting: This approach forecasts based on the current state of your sales pipeline, considering deal sizes, probabilities, and close dates. 
• Historical sales forecasting: This approach uses historical sales data to identify trends and seasonality to predict future sales. 

4. Choosing the right approach 

• Sales pipeline forecasting: Ideal for companies with a predictable sales cycle and good data on deal sizes and probabilities. 
• Historical sales forecasting: Better suited for companies with a longer sales cycle or limited data on individual deals. 

5. Making the decision 

• Consider demos and free trials: Most software offers demos or free trials. Take advantage of this to see how the software works and if it meets your needs. 
• Read user reviews: See what other users have to say about the software's ease of use, functionality, and customer support. 

Kesimpulan 

Make smarter choices with sales forecasting software and empower your sales representatives to optimize operations and achieve better sales results. Upgrade your forecasting game with Compass, a sales incentive management software that helps with sales forecasting by providing a comprehensive platform for automating and managing sales incentive programs. It offers a range of features that support sales forecasting, including: 

• Establishing, monitoring, and maintaining incentive plans for their sales teams, which helps in forecasting sales performance based on the incentives offered. 
• Providing detailed performance analytics to track sales performance and identify trends that can inform their forecasting models. 
• Supporting API integrations, which can be used to integrate with other systems and tools. 

Improve sales forecasting capabilities and make data-driven decisions to drive business growth.