In two previous posts, I discussed the need for a bookings and a revenue forecast and how to create those two types of forecast. But sometimes the easiest way to learn about something is to hear how others are doing it.
So, here are a few real-life examples of companies driving their business on a bookings forecast and a revenue forecast. (more…)
I recently blogged on the need for both a bookings forecast and a revenue forecast. Now that we understand the difference and need for both types of sales forecasts, let’s talk about how to create them. While every organization is different in how they utilize bookings and revenue terms, here are a few steps you can follow to ensure you don’t miss anything critical.
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For most organizations, sales forecasting is a time-consuming painful process that results in very little value. As stated in a blog I recently read, the typical process goes something like:
“Dear Stockholder: We missed our revenue forecast, but it is okay because we made more income. Please don’t be mad.” Is this really an acceptable position for companies to take? Why do companies miss their own revenue forecasts?
In a recent article in the Wall Street Journal, Pepsi Bottling Group Inc. announced an increase in profits, despite missing its forecast.
Over my career, I have created many revenue forecasts including when I worked at Western Digital and WebEx Communications. The last thing I would ever do is say that forecasts can’t be wrong.
But, are companies using the best tools and practices available to reduce the risk of a bad forecast? Most companies have not kept up with the changes in technology and still use Microsoft Excel to build complex volume, price and mix models based on complicated assumptions and variables to estimate a range of outcomes. Unfortunately, these models usually leave out the most important contributor to the amount of revenue to be generated — the “sales force” — and are usually out of date as soon as they are created.
Now, don’t get me wrong, it isn’t that businesspeople aren’t smart enough to realize that the sales team is extremely valuable due to their proximity to the ultimate customer. The problem is that the back end of the business doesn’t have a tool that gives them real-time visibility into customer demand.
That was until Right90 came up with an on-demand application that takes the input of each salesperson, by customer, by product, by geography and tracks the changes in volume, price and mix in real-time.
Imagine the potential savings: reduced inventory and obsolescence, improved on-time delivery and in-full delivery, reduced stock-outs and premium freight just to name a few.