As successful entrepreneurs and business leaders know, numbers aren't everything.
Likewise, understanding qualitative forecasting is a vital part of business. When it comes to sales forecasting, a mixture of quantitative and qualitative is critical. However, many sales leaders aren’t sure of the difference between the two.
Quantitative forecasting is hard numbers and uses historical data to predict the trajectory of sales. For example, if every year your business sales grew 4% last year, you can predict where your sales will be next year based on 4% growth. It can also help businesses predict seasonal spikes, such as the holidays or during the summer.
What is Qualitative Sales Forecasting?
On the other hand, qualitative sales forecasting methods have less to do with hard numbers and more to do with experience and expertise. For example, you can forecast how well a marketing campaign will do or a new product that you are about to roll out.
There are many guides to help businesses understand and implement quantitative data into their businesses, but qualitative forecasting is just as important. Read on to find out more about why you need it for your business, and the best qualitative sales forecasting techniques to implement.
Why You Need Qualitative Forecasting
Qualitative methods allow leadership to understand the ambiguity in the numbers that quantitative forecasting provides. It is best used alongside quantitative forecasts to give a more complete picture of customer trends and marketing changes.
There are also instances where using qualitative forecasting is more useful than quantitative. For example, say that there is a record cold front coming through sooner than most years. If you work in heater sales, you can expect that sales will be higher than in years past during that same season. Quantitative forecasting does not take into account the different factors that can impact sales, but qualitative forecasting can.
Qualitative forecasting also works well for instances where there is no historical data to provide information. New companies, for example, will most likely lean on qualitative forecasting almost exclusively until they are more established. Also, businesses that are rolling out new products will need to rely on qualitative forecasting methods to predict how well it will do.
Hard numbers provide a limited understanding of business. Qualitative forecasting can help you fill out the picture and have a better understanding of where your sales are headed.
Types of Qualitative Sales Forecasting
There are multiple methods for companies to choose from, and many use a mixture of techniques to make sure that they have a complete picture that takes all sides of the business into account.
Some qualitative methods include:
Bringing all of the leadership together can help give a great sampling of each part of the business. Since each person is an expert and has an overall understanding of their department, they can weigh in with helpful insights. This method is especially useful for small businesses that have limited resources. The owner, for example, can meet with department supervisors to hear what is happening on the ground.
Gathering leadership opinions opens up the discussion and allows everyone to come to a consensus. There are so many aspects to business decisions that each part has something relevant to add. While a new product may sound great to your sales department, for example, your accounting department might be able to point out that it is potentially a loss. Each leader can provide valuable insight and expertise.
The Delphi Method
The issue that meetings have, though, is the opinion of the group can be swayed by the influence of the leader or other members. If your experts are afraid to gainsay the owner, or the excitement is so infectious that members forget to be critical, your forecasting could be in trouble. The Delphi Method seeks to eliminate this factor.
The Delphi Method works like this: a panel of experts complete a questionnaire anonymously. The responses are aggregated and then shared with the group. The same group then completes the questionnaire again and has a chance to change their answers based on the responses provided. This is usually completed 2-3 times until there seems to be a consensus.
Group members can give their insights without fear of reprisal, and still find out what other people think as well.
Sales Field Opinions
Also called grassroots forecasting, getting a composite of the opinions of your sales team can provide valuable insights. Your sales reps are usually the ones who are closest to your customers. They are on the ground, communicating with potential customers and getting their feedback. Your sales team hears the objections firsthand and knows better than most why your product is or isn't selling.
Sales reps get an understanding that the numbers don’t provide and can see any shifts in the customer or their opinion before the numbers do most of the time. Each salesperson can give an opinion on the future of sales and how customers will likely respond to a different product or service.
Customer Surveys (Market Research)
Customers often know what they want and can give you a valuable outlook into your company and brand. Customer surveys can help you identify key trends and shift your business to align with their needs.
Customer surveys are conducted online, over the phone, or online. It should allow them to say what they think of your product, marketing campaign, and impression of your brand. The results can then be used for statistical analysis.
If you want to know what your customers think of you, the best way to find out is by asking them directly. Customer surveys can allow you to do just that.
Sales Forecasting Qualitative Methods for Better Insights
Whether you lack hard numbers or just need better insights into your quantitative forecasting, qualitative forecasting methods can serve your company well. By using these techniques, you can better direct the future of your sales and companies with a complete picture of what you need to do.
Give these methods a try today, and get the awareness you need for a stronger company!