An accurate sales forecast helps you plan more efficiently and saves you a lot of money. Instead of shooting in the dark, you can make informed business decisions about hiring, adjusting your sales strategy, or planning the next quarter.
On the other hand, inaccurate forecasts have serious consequences.
Underestimating future revenue can mean missed opportunities and lower profits. And overestimating potential outcomes results in demotivation, frustration, and burnout as your sales team struggles to meet unrealistic targets.
That’s why it’s critical to choose a sales forecasting tool carefully.
A good sales forecasting tool is like a crystal ball for your business — only, with correct predictions. It estimates how much money you’re going to make, points out potential blockers, and saves you headaches down the line.
In this guide, we’re featuring sales leaders’ favorite tools for sales forecasting that deliver reliable predictions. Let’s dive in.
How sales forecasting works
Sales forecasting is the process of predicting future sales revenue based on historical data and current trends. It helps businesses plan their norway telephone number data resources, marketing strategies, and budget more effectively.
How sales forecasting tools help business
You can do manually. Why invest in technology?
There are many advantages to using sales forecasting tools.
Accuracy
For one thing, creating an accurate sales forecast is a science and not all salespeople nail it. It involves a deep understanding of sales data, KPIs, market 5 revue alternatives to switch to in 2024 trends, and customer behavior.
Time saving
The manual sales forecasting process is a time-consuming. It takes hours of work every week to collect and analyze the sales data needed to make informed predictions. Before the forecast to be of any use, it needs to be constantly updated.
And manual entry can be a drain on sales teams, taking away valuable time that could be spent on actual sales and strategic decision-making.
Error-free
Perhaps most importantly, manual sales forecasting is simply not as accurate as machine-based forecasting. Sales forecasting platforms use sophisticated algorithms that update in real time and are not prone to mistakes like humans.
So why do you need a sales forecasting tool?
In short, sales forecasting software collects and analyzes historical sales data, market trends, and other relevant metrics to identify patterns and make predictions about future sales.
It not only saves you time and resources but also improves the accuracy of your sales planning and sales reports. Let go of the Excel spreadsheets that need endless updating!
Sales forecasting methods offered by software
Different sales tools employ different forecasting methods. The most popular are:
- Historical forecasting: Uses past sales data to predict future sales. It assumes future performance won’t differ much from the past so historical data can be used to identify trends and make predictions.
- Weighted pipeline or opportunity-stage forecasting: This method relies on assigning a probability of closing to each stage in the sales process. The probability increases down the sales funnel. Then estimates about future sales are calculated based on how many deals you have at each stage with the corresponding probability.
- Lead-driven forecasting: This technique conduit china involves evaluating every lead source’s potential to bring sales based on past data. These scores are then used to forecast sales for each lead source. This method helps you focus on the most promising lead sources if you can’t cover them all.
- Length of sales cycle forecasting: When using this method, you look at the time it takes to close a deal and make predictions about future sales based on that.
There’s also a difference in the technology sales forecasting tools use to make revenue predictions. Some platforms are AI-powered, which means they use real-time data and artificial intelligence to deliver forecasts with minimal input from sales teams. If you feel comfortable with relying on AI insights, you’ll find some AI-powered tools on our list.
Most platforms on our list, however, combine the power of automation and human input, creating accurate forecasts.
The best sales forecasting tools compared
Here are the most popular with sales forecasting functionality. As you see, not all are geared towards small businesses but it’s important to mention and compare them so you see the difference.