Forecasting is a complex process and an activity that is a mix of both science and art that requires inputs from every area of the business, external sources, and the executive team.  Doing it well is not a trivial task and it is not a surprise that most B2B companies would lament that, “Our forecasting is inaccurate.”

forecastingTo accurately forecast at the company or business unit level you must do so at the product/solution level.  To accurately forecast demand and revenue at the product or solution level you must have a very clear understanding of the market you serve, and of the position that your product fills in that market.  From a marketing perspective you need to also understand the competitive pressures as well as the exact reasons why prospects would need or want to buy the product you have to sell.  Once you understand these things you can predict how likely the market is to consider and buy your product over a selected period of time, and in what volume. There are many factors that impact the forecast and to consider all of them can take a significant period of time.  But there are some leading indicators that you can identify that will help dramatically improve the accuracy of the forecast you have today and enable that all too elusive accurate 18-24 month forecast.

These are the key questions related to each product/solution that must first be answered for you to be able to accurately forecast:

  1. Exactly what business problem are you able to solve?
  2. Exactly who has this business problem? [i.e. companies and roles/titles]
  3. Exactly how do these people want to solve this problem?

Drilling into each of these to get to the answer from the perspective of the prospect and customer involves acquiring a depth of customer insight that is extremely rare in B2B companies.  It also then gives you a competitive advantage that spans forecasting, marketing, sales training and other functions and enables you to better understand the real “business you are in” from the perspective of your target audience (-Peter Drucker would be proud).

If your confidence in the answers to the above three questions is high then you are ready to really enhance the accuracy of your forecast.

The process for building a forecast starts with collecting all available and readily accessible market and audience information, answering the key questions we’ve already listed, analyzing the full set of data (including win-loss % and trend by product and market), extrapolating an initial forecast, testing that forecast with the Sales team and the market, and then developing or updating the business plan (or relevant elements of the business plan) to enact the required business processes to ensure delivery to that forecast is within your team’s capacity.

B2B³ has helped numerous B2B companies create meaningful demand and revenue forecasts for their products and portfolios.  We have found ways to dramatically reduce the standard deviation and created forecasts that have been proven to be accurate within 2% over a five year period, even with large sku-based portfolios sold through multiple channels, globally.  We’ve also learned to do this in a reasonable amount of time.  Call us today if you’d like us to do this for your organization.

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