Sales prediction has been around for as long as people have been selling things. After all, it’s essential for planning — you don’t know how much to invest in your business product if you don’t know how much you might sell.
In recent times, sales prediction has often taken the form of complex spreadsheets. Luckily, there’s a better way. This article will discuss how you can make easy, automated sales predictions — and how staging-mondaycomblog.kinsta.cloud can help.
What is sales prediction?
Sales prediction — also commonly called sales forecasting — is the process of estimating future sales by predicting the amount of product or services an individual salesperson, a sales team, or a company is likely to sell in a fixed time period i.e. next week, month, quarter, or year.
There are a lot of different methods for predicting sales, but the important thing is that they’re all backed by some kind of data. Sales prediction allows you to replace gut feelings with evidence-based decision-making.
What are the benefits of sales prediction?
You’re going to do your best to close deals no matter what. So why do you even need to forecast the results?
The truth is that predicting sales revenue comes with big benefits. With a good forecasting technique, you can:
1. Evaluate sales performance
If you estimate that you’ll close $2 million worth of deals in Q1 and you only bring in half of that, you have one of two problems:
- Your sales prediction formula is off
- Some issue is causing your team to underachieve
Either way, you’re alerted to the situation and can investigate further. You might identify ways that you could improve your sales processes. Or you might discover that a particular member of your team isn’t putting in the work. Starting with a clear target lets you find and fix problems early.
2. Plan effectively
This is the biggest reason to forecast sales performance. A lot of planning goes into a successful sales cycle, and sales prediction can help you get the plan right to achieve your goals. Let’s take a look at a few areas where this can have a positive impact if implemented correctly.
Inventory management
If you’re selling a physical product, your sales forecast will be important in deciding how much inventory you need and which items to stock. Proactive inventory management based on sales projections keeps your company from overstocking or understocking.
Budgeting
Accurate projections help you balance cost and revenue. Use your forecast to predict the funds you’ll have available for investments that grow the business, like new technology or training.
Setting targets
When you determine sales goals for your team or individual representatives, it’s important to choose numbers that are ambitious but attainable. You could guess where that line lies, but basing the decision on data is better.
Sales reps are often highly motivated people who are eager to exceed a quota. But if you ask them to sell more than is realistically possible, they’re likely to lose enthusiasm. Other causes of poor morale that you can avoid with sales predictions: overpromised raises or bonuses, work delays due to a lack of funding, and unexpected layoffs.
Planning team size
A sales prediction lets you see how many salespeople it will take to handle all of your deals. If you have an accurate forecast, you can onboard new team members with plenty of time to train them. Your forecast will also help you distinguish seasonal trends and other regular ups and downs, so you can hire temporary staff if needed.
3. Make decisions with confidence
A sales leader needs to be able to make strategic decisions quickly and confidently — that’s a lot easier if they’re not flying blind.
Sales predictions provide key data so that you and your team can feel good about the decisions you make. However, according to a Gartner survey, only 45% of sales leaders have high confidence in sales prediction accuracy.
The same report goes on to say that the solution to this lack of confidence is simply to track and communicate the accuracy of the predictions.
If you’re forecasting sales, you should also be evaluating the accuracy of your projections regularly so that your sales teams know they can trust the data.We’ll detail how you can use staging-mondaycomblog.kinsta.cloud Work OS to create reports and more for confident and data-driven decision-making.
How do you calculate sales predictions?
Now that we all agree that sales predictions are essential, we just need to figure out how to make the forecast. There are a couple of ways to do this — hint you can do both on staging-mondaycomblog.kinsta.cloud sales CRM.
Historical forecasting
This method is the simplest. Historical sales predictions base the forecast on previous years’ data. For example, if you made $600,000 last April, you could predict that you’ll make the same this April.
Or you could factor growth into that estimate. You made $600,000 last April, and you expect to grow by 4% year-on-year, so you’ll make $624,000 this April. This method is popular because it’s easy and can provide a relatively accurate forecast — assuming your sales don’t change much from one year to the next.
But historical forecasting doesn’t allow for very many variables. For a more nuanced estimate, try opportunity stage forecasting.
Opportunity stage forecasting
This forecasting method is a little more complicated, but you still don’t have to be a math genius to figure it out. Think about your sales pipeline. Most new leads will never close. But once the deal makes it to the negotiation stage, your odds are much better.
The close probability for each stage might look like this:
- Lead: 10%
- Proposal: 45%
- Negotiation: 70%
- Contract: 95%
Next, you apply these percentages to the value of your deals.
If you have a $100,000 deal in the negotiation stage, take 70% of $100,000 and add that number to your total sales prediction.
Deal value x close probability = sales prediction
What factors impact your sales forecast?
But wait, how do you calculate the close probability for each stage?
The possibilities are endless — you can decide for yourself which factors to consider when making sales predictions. Some possibilities include:
- Historical data: In the past, how often have deals closed after reaching each stage?
- Sales and marketing spend: You can assume that the more you spend, the more likely the deal is to close
- Competitive landscape: Deals with more competitors are less likely to close
- State of the industry: How often are people buying products like yours these days?
- Product changes: If a product is updated or a new product is introduced, your success rate might change with it
- Internal factors: Process changes, hirings and firings, new investors, etc.
- Seasonality: Do you sell more in the summer or winter?
Sales prediction with staging-mondaycomblog.kinsta.cloud
If the process of projecting sales sounds complicated or just plain tedious, don’t worry — staging-mondaycomblog.kinsta.cloud can make it much easier and even take some of the work off your hands.
Here’s how.
1. Start with the CRM template
If you’re not using it yet, start by getting staging-mondaycomblog.kinsta.cloud’s CRM template. You don’t need to change anything about the template to make sales predictions, but it is fully customizable to meet your business needs.
2. Enter deal information
Go to the Sales Pipeline board and start entering your deals. You can put a lot of information into the CRM, but for the purposes of your sales prediction, the important thing is that you include a deal value and a close probability for each. At this point, you’ll have to enter your close probability manually for each deal. You can do this manually or import directly from an Excel file.
You could generate quality predictions with this sales forecasting method, but you’re wasting time typing in percentages for each stage of each deal.
3. Bonus: use staging-mondaycomblog.kinsta.cloud automations
You can automate a change in the close probability for a deal when the deal moves to a new stage. Click on Workflows on the upper right of the board to see your active automations or to add a new one from the Workflows Center. For each stage in the sales pipeline, you can create an automation that changes the close probability.
For example:
When Stage changes to Negotiation set Close Probability to 70
Now, every time you move a deal to the negotiation stage, the deal’s close probability — and your entire sales prediction — will update to 70% automatically.
Feel free to get creative. staging-mondaycomblog.kinsta.cloud automations are flexible, and if your sales prediction secret sauce is based on factors we haven’t covered in this article, you can probably work those into the formula, too.
4. Check out your Sales Dashboard for an up-to-date sales prediction
Ready to see the results of your 5 minutes of hard work?
Switch over to the “Sales Dashboard,” and there it is, your forecasted sales revenue.
Keep an eye on the accuracy of your predictions and tweak as needed.
Data-driven sales projection
Accurate sales forecasting is complex, but it doesn’t have to create a lot of extra work for you.
A few clicks in staging-mondaycomblog.kinsta.cloud, and you’ll be well on your way to evidence-based sales planning. Get started with sales predictions using the CRM template.
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