Guide to integrating promotional scenarios into sales forecasting

The company integrates sales forecast figures into its development plan. These must correspond to the company's reality, be reliable and above all, achievable. It is indeed impossible to base the development of the company on predictions that do not take into account, for example, the conversion rate of a website, the number of visitors per month or the sales made. The company can also elaborate its forecasts by taking into account the sales models applied by competitors in the same sector. The company's promotional periods can also be integrated into predictive software tools, since some of them represent a more than significant part of the annual turnover.

Optimize your sales forecast in 4 points

The sales forecasts consist of four parts. They include the activity and turnover of the previous year, plus the development of the coming year and promotional scenarios.

Analysis of year n-1 data

The sales department of the company is usually responsible for the development of the sales forecast for the coming year. This task is based on the figures and data of the year n-1. This is then extrapolated and a probability of an increase in sales is inserted. This sales analysis process must be as accurate as possible. It includes, among other things:

the amount of the company's overall turnover and by sector;
analysis of the margins on each product;
the resumption of the accounting elements;
KPIs provided by the company's CRMs;
the means in office staff and technical team;
the conversion rate of online sales;
the amount of investment in advertising;

seasonality and promotional operations.

The company's performance, thus detailed, reveals its strengths and weaknesses which the sales manager will try to remedy. It is from these elements that the objectives and development scenarios will be defined for the coming year.

Sales pipeline: defining the action plan from the analysis of sales data

Each salesperson in the company provides their supervisor with the data for their area:

number of contacts: telephone, e-mails, physical meetings;
conversion rate: rate of transformation of a lead into a customer over a year;
factors that have contributed to the increase or decrease of the conversion rate: reasons and solutions;
analysis of promotional periods: duration, means used, conversion rate, average margin for the period;
Increase or decrease in the customer retention rate.

The analysis of all these elements will allow the company and each sales representative to determine the sales forecast for year n+1. A sales pipeline will also be qualified and then defined and given to the sales team.

The sales pipeline is a process of transforming leads into customers, in the context of B2B sales. It consists of actions supervised by the sales and marketing departments. Each sales person must follow this sales pipeline, which will enable him to convert a prospect into a final customer. This is a well-established sales process that must be reviewed and adapted each year according to the previous year's results.

Implementation of sales scenarios and promotional offers

The sales scenarios take into account the uncertainties that may arise during the year:

product recall;
lower than expected margins;
delayed delivery process;
sector becoming saturated;
increased manufacturing costs;
personnel failure.

While one should obviously not wish to suffer disaster scenarios, it is always advisable to estimate the occurrence of an element that disrupts the activity. There is no guarantee that a promotional period in year n-1 will be as successful in the coming year. The promotional scenarios are therefore based on the previous year's results and are assigned an annual growth rate that may be reduced by the inclusion of a scenario that is not favorable to the company.

Thus, promotional scenarios are integrated into sales forecasts. They take into account:

public holidays;
school or summer vacation periods;
the seasonality of customer promotions;
The amount of margin lost per product during the price promotion;
Increased business generated by increased orders;
Additional raw material or product to bring into the warehouse;
Additional purchasing costs for stock replenishment;
End-of-life products to be promoted.

Each element will be quantified and integrated into the sales forecast table. It should never be forgotten that promotional periods often account for a large part of the company's results. The most convincing example is the Christmas period in a toy store, followed by a promotion on all products that starts just after the holidays. The company will then remove end-of-life products and overstocks from its warehouse. Some products have often been stored for too long. They represent an unfavorable balance sheet asset.

Even if the margins on business are not as important as in normal periods, the promotion period is a very important item to take into account when setting up the forecasted sales plan.

Daring a new approach to sales forecasting

Some companies systematically renew their sales forecasting methods without making any improvements. This trend may work for one or two years, but is quickly overtaken by the arrival of new sales forecasting methods on the market:

evolution of the CRM;
implementation of a Supply Chain in the logistics management;
integration of artificial intelligence within the company.

It is therefore important to regularly change the angle of approach to sales forecasting. The team can focus on a particular product line or on new customer habits to adapt its sales forecast, advertising and marketing strategy at the same time.

The realization of works in the company can change the level of sales development by a better circulation of the customers inside a store or the introduction of new references. These changes can also occur at the level of the company selling online:

new website;
integration of artificial intelligence in product management;
integration of new payment methods;
increased presence on social networks;
new logistics organization;
free shipping.

The method of calculating sales forecasts will obviously take into account these new elements, which will have already been studied and analyzed in depth before being implemented.

Identify the best promotional strategy

The choice of the best promotional strategy depends on the company's sector. It is the direct responsibility of the marketing and sales departments who will analyze the communication technique to be used to achieve the objective. They will give their recommendations in order to:

increase sales in a less favourable period;
generate additional revenue;
Reduce inventory.

Integrating a promotional period within the commercial year is an excellent way to conquer new customers, to widen the visibility of the company (by advertising, for example) and to make old customers come back in store or on the website.

The promotional period will therefore be adapted to the type of campaign desired by the company. It can be spread over several periods during the year or be unique. Thus, the scenarios will be elaborated according to the goal of the promotion:

launch and promotion of a new product;
re-launching a product and stimulating sales;
selling products at the end of their life cycle;
promotion of the company in order to gain market share.

The integration of artificial intelligence has its place here. It allows to optimize all promotional scenarios in real time and to optimize sales through different channels: website, social networks. It also provides valuable assistance in calculating margins and reduces the time spent by the team in charge of setting up the promotion, by processing the data to be taken into account in the promotional campaign more quickly and above all more efficiently.

The different promotional scenarios

Promotional scenarios are based on sales axes defined by the company. Thus, promotions can be proposed in the form of:

discount coupon to be presented at the checkout when making your next purchase;
free samples;
two products sold for one purchased;
percentage discount on the regular selling price.

These different options are chosen according to the purpose of the promotion seen previously. The match between the objective of the promotion and the means used to carry it out is necessarily the subject of an in-depth study where artificial intelligence brings its help and efficiency. It allows you to compare different promotion models and to select the one that will have the maximum impact on the company's future sales.

Artificial intelligence will also facilitate the study of the results of the promotional period by analyzing the behavior of customers and the way they make their choice among the company's products.