Skyrocketing sales and profits is one of the primary goals of any business owner. You want to reach out to and acquire more customers. Also, you want to generate repeat business from existing customers.
Sales forecasts play a crucial role in helping you understand who you’re selling to and what your customers are interested in buying. It comes in handy for generating revenue projections, as well as estimating supply chain and inventory needs.
Key Challenges of Sales Forecasting
Despite realizing the importance of sales forecasting, many businesses struggle to come up with accurate predictions. While most organizations have a ton of sales and marketing data at hand, they find it challenging to process that data and convert it into actionable sales forecasts.
That, in turn, results in inaccurate insights and projections based on guesswork. It leads sales reps, managers, and other executives to make wrong decisions, ultimately affecting revenue and business growth.
Wouldn’t it be great if there was a way to generate more accurate and data-driven sales forecasts that don’t rely on the gut feeling or intuition of business leaders? That’s where modern business intelligence (BI) tools, such as Microsoft’s Power BI, step into the picture.
Today, it’s possible to use various readily available solutions that generate custom Power BI reports to inform multiple business functions with data-driven insights. Whether you’re looking to optimize inventory costs or analyze customer behavior, custom Power BI reports are your biggest ally.
Similarly, you can use other BI and data analytics tools to enhance sales forecasting. We’ll delve deeper into the connection between BI and sales forecasting in the following sections. Let’s get started.
The Role of Business Intelligence in Sales Forecasting
BI tools eliminate the guessing game that’s often associated with traditional sales forecasting. Instead, your sales team can use accurate predictions based on data collected from various departments, including marketing, customer service, product development, and more.
That, in turn, helps them make data-driven decisions about various aspects, such as:
- What products to launch
- What customers to target
- How long it’ll take to close a sale
- How much profit you can expect to earn from each sale
Besides enhanced accuracy, BI tools help prevent the formation of silos in your organization. New-age BI tools provide a centralized cloud-based dashboard that different teams can access. It ensures that all departments are up to speed on the latest sales forecasts and revenue projections.
That, in turn, helps other departments modify their goals and operations to help meet those targets. Ultimately, it establishes harmony among different departments and ensures that they work together for the overall success of your company.
Also, accurate sales forecasts generated using BI tools help maintain a lean inventory while meeting customer demand. You get a clear picture of the requisite inventory levels at any given time.
Similarly, it helps optimize the supply chain by precisely estimating production needs. Instead of procuring raw materials on a whim, you can purchase just as much as you need to keep up with customer demand. It results in increased cost savings and minimal wastage.
How to Use BI for Sales Forecasting
Now that you know how business intelligence can benefit sales forecasting, you must be eager to get started.
The first step is to build a robust toolbox of BI tools. Advanced BI tools, such as Power BI, eliminate the need to rely on IT professionals and analysts to make sense of business data. They convert complex data into easily understandable charts and graphs.
That, in turn, helps you derive suitable conclusions and insights from the data. You can even generate custom Power BI reports and share them with different departments to enhance transparency.
Once your toolbox is ready, the next step is to identify the operations and systems that’ll serve as data sources. Make sure you choose data sources that are relevant to your sales department.
Next, it’s time to use your BI toolbox to analyze historical and current sales data to predict future demand and revenue. Use these insights to identify high-value customers and build your ideal buyer persona.
Also, keep an eye out for seasonal trends that could affect demand and supply. Optimize supply chain operations according to these emerging trends.
Accurate and data-driven sales forecasting is essential for your company’s success in today’s competitive landscape. Use sophisticated BI tools to eliminate the guesswork, identify market trends, and empower different departments with relevant sales insights.