In this article we will learn:
What is a sales forecast?
A sales forecast is a tool for forecasting the demand for a product or service for a future period, taking as a reference, data from our sales history and the information provided by the marketing team.
In addition to helping us organize ourselves, it allows us to foresee possible events so that we are not taken by surprise by having a damage control prepared.
Developing accurate sales forecasts requires the collection of information on the relevant facts and conditions prevailing in the market. This information is then processed using the most appropriate technique so that the resulting forecast is predictive and therefore more accurate than a random forecast.
How is a sales forecast made?
Out there there’s a good offer for specialized software to perform sales forecast, just like the one we use in Dataknow. But if this concept is new to you, perhaps you can start by doing a small exercise at home and at no cost with a basic tool like Excel. Using real or fictitious data, you can get a taste of what a forecast looks like.
Data necessary to do the forecast:
Past time periods with relevant data to analyze: days, weeks, months, semesters, years.
The sales data corresponding to each period.
For this example we want to forecast 2022 period in excel.
- We place ourselves on the period box and go to Functions.
- More functions > Statistics > Forecast.
- A dialog box opens where we must enter some values.
- For the unknown X-value, we select the Period 2022. It is also possible to forecast several Periods at the same time by creating the corresponding boxes and selecting them.
- In the Known Value Y, we must select the Sales.
- For the Known Value X, we select the Periods.
- Ready! Accepting the values entered will give us the forecast for the Period 2022.
Why to do a Sales Forecast using Artificial Intelligence?
Why not? It sounds pretty cool to do, but maybe that’s not a good enough reason. Currently sales forecasting is still done manually, but it is a very time consuming process that could be invested in some other tasks. Besides, nowadays there is so much data coming from a thousand different fronts that it is very complicated to keep up with it and we will probably miss important information. Working with A.I. software ensures predictability and accuracy.
Without accurate sales forecasts, many business decisions are based on unreliable estimates or intuition, leading to many inefficiencies and missed opportunities. Making a Sales Forecast using A.I. brings many benefits, such as increased profitability, productivity, flexibility, variety and accuracy, which allows your company or business to implement a strategy focused on the accuracy of your operations obtaining highly productive results.
Let’s talk a little bit about Machine Learning. This type of A.I. allows you to take into account the demand impacts in a very detailed way, taking into account a wide variety of data and factors such as holidays, weather and road closures, among others. Machine learning models learn patterns from the data to generate predictions. In this way, if the trend changes, the model can retrain itself and learn these changes. In addition, statistical learning algorithms can detect patterns that business analysts miss. The use of A.I. reduces the margin of error and enables more accurate business planning.
3 main Forecast objectives
- Improve the company organizational/operational processes in all areas, from communication with suppliers to the sale of the product or service.
- Get to know more deeply the niche to which your organization belongs and its behavior by comparing forecasts with real data. This allows you to fine-tune your marketing strategy.
- Improve logistics and transportation planning:
- You can adjust the stock to the actual demand and avoid product and raw material losses due to low demand.
- It helps you to offer a product/service with an adequate availability according to the market demand.
The Excel example gives you a taste of what you can achieve with Forecasting and it is amazing that there is the initiative to work with what we have at hand, however at Dataknow, we have Forecast as a Service which is our specialized software to apply with artificial intelligence techniques and machine learning.
With our comprehensive solution, we offer you the necessary advice to help your company to take advantage and monetize data in the right way, taking you to the next level.