Do you have any idea what profits a 10% increase in your marketing budget would generate?
44% of marketers are clueless about how a 10% budget could enhance their corporate revenue. Certainly, it’s justified that you can’t expect your organization to place value on things you’re unable to quantify. Thus, you have to adapt personnel, procedural and cultural changes to make proper marketing measurements. The bottom line of any business is the top line: revenue and faster growth!
Sales forecasting is a process which affects many areas of a company regardless of goods or services, primarily giving a clear picture of how many of those goods or services it can sell in short or long term. A proper plan to have an adequate supply to meet customer demands. Adequate resources at the lowest possible cost and adequate logistic service must be used to avoid bottlenecks to move a product from producers to consumers. No business can be performed effectively without an accurate sales forecast. Some companies have gained success by recognizing the importance of sales forecasting as a management process. Few fail as they get confused to understand the relationship between forecasting, planning and goal setting. Numerous tactical and strategic management decisions are the primary concept of sales plan purpose. Sales people must keep in mind that long-term forecasts will affect the size of next year’s quota, wherein they will be highly motivated hoping to influence those quotas to below and attainable.
Forecast Demand and Supply Chain
Generally, company stumbles in forecasting the customer’s demand, thereby focusing on supply goods and services. The disparity between demand and supply is allowed by predicting actual demand so that it can be reduced in the future period through plans for capacity expansion.Therefore valuable information about customers needs to be provided following electronic-data-interchange information as point-of ?sale demand that could help the company move towards demand forecasting. Where capacity doesn’t meet demand forecast, the company needs to expand capacity through capital planning. This will reduce the incidence of chronic under forecasting resulting in higher level customer satisfaction.
Communicate, Cooperate, Collaborate
An effective forecast from companies considers inputs from people in different areas, each of whom provides relevant information and insights to improve overall accuracy. In a cross-functional forecast, we work at three levels: Communication, Cooperation, and Collaboration. Each of these areas, with its unique agendas, can contribute equally to a true consensus forecast. Lack of trust and understanding of assumptions leads to duplicate forecasting efforts and further distrust. The end product being consensus forecast helps develop more accurate and relevant forecast.
Eliminate the Island of Analysis
The Island of Analysis is detrimental to corporate performance that has a similar function. Identifying forecasting in logistics, planning, finance, and marketing emerges due to lack of inter-functional collaboration within units leading to a lack of credibility associated with the forecast. Redundancies generated by systems cost more money, time and energy. Once an island of analysis is eliminated, the company can expect improved forecasting performance and significant cost savings.
Use tools effectively
The key factor is that both quantitative and qualitative tools are integral to effective sales forecasting. It is impossible to analyze the cost without understanding the qualitative techniques.Companies have quantitative forecast supporting qualitative forecast. Experiencing changing trends and seasonal patterns, time series models work well in companies. A process should be implemented that uses time series to forecast trends and seasonality forecast demand, marketing and general management. Thus the key personnel involved in qualitative or quantitative incorporate qualitative adjustments in the overall forecasting process.
Make it important
Often being described by senior management, sales forecasting is considered as an important parameter. Sometimes this assessment may be shared by an individual throughout the firm, with policies and practices reinforcing that forecasting is important for business success. Often companies tell those who develop forecasts, management but then fail to reward them for efficient work or punish them for poor work. This follows a big management’s words and their actions. Focusing on senior management is not just important, but adequate training to sales people or marketers is also a major factor to be taken into consideration. Thus the jobs need to be made to be seen as important to those who do it.
Measure, Measure, Measure
The Forecaster must be rewarded for excellence and company must develop a system for measuring performance and tools for providing feedback. Without the ability to effective measurement, there is hardly any opportunity to identify whether changes in development are contributing to business success. In the case where measures have been implemented, they are helpful in identifying opportunities for improvement. They help in tracking and evaluating accuracies in different segments. Tracking and measuring will help build confidence in the forecasting process.
How to measure marketing programs?
Knowing when to measure, Multiple touches, Multiple influencers, and Extraneous variables are the key challenges to marketing programming measurements.
You generally come up with questions like Half of my money spent on advertising is wasted, the trouble is I don’t know which half.
The most digging question is Did this program deliver good results?
Here you need a sensible framework for measuring the effectiveness of these decisions.
As we work with different companies and evaluate the variety of businesses these seven keys have a profound impact on the forecasting process building a better business. Greater customer satisfaction comes with more accurate demand and fulfilling demand. Employee satisfaction comes from understanding the process, easier information access, and rewards tied to performance. Prior to this, the first step every company must take is to understand the sales forecasting and recognize the importance as management functions. With this comes a willingness to drive the necessary resources to improve this critical process.