I did promise a second part and I will now promise a part three which I will write to wrap up the series. Let us start out with a couple of quotes that I like to liven up the prose we are reading.
“Most successful men (or women) have not achieved their distinction by having some new talent or opportunity presented to them. They have developed the opportunity that was at hand.”
— Bruce Barton taken from Motivatingquotes,com
“The secret of success in life is for a man (or woman) to be ready for his opportunity when it comes.”
Benjamin Disraeli taken from Motivatingquotes,com
Marketing is the opportunity to figure out WHO your market is, WHAT motivates your market, HOW do I get to the market, and HOW profitable is the market that you want to go after. Effective Forecasting then starts with the answers to these questions. Combine the marketing with the Sales Activity that Allan Himmelstein talked about in Part I, the company now has the drivers to success that will make a forecast effective. If you cannot forecast the revenue, the forecast is built on sand and will be meaningless. Do not waste your time on building a business tool that cannot be used to drive your business to success.
Karen Pasternack Straus has been one of the bright spots as a Marketing consultant in Phoenix Arizona. She truly understands how marketing interacts with a company’s sales and operations. She also knows what Return on Investment means and can explain how marketing has a positive ROI.
The balance of this article was written by Karen Pasternack Straus, Garnet Creative .
Top-Down vs. Bottom-Up: How Marketing Improves The Sales Forecast
Whose forecast is more realistic, Sales or Marketing? Neither. Effective forecasting requires a balanced perspective and coordinated efforts by Sales and Marketing on an ongoing basis. To simplify, you could say that Marketing provides “top-down” view, while Sales offers a “bottom-up” view.
A Marketing forecast generally takes the following approach:
- Estimating Market Demand or Total Opportunity: Marketing estimates the demand for your product/service and any competing alternatives by analyzing market data gleaned from sources outside the company, such as industry analyses, periodicals and market research. Consideration is also given to the general market conditions that affect demand, including economic conditions, trends, seasonal or cyclical factors, and adverse or advantageous events such as strikes or fads.
- Determining Potential Company Share: To determine your company’s potential share of the total opportunity, Marketing analyzes the relative strengths and weaknesses of both your product and your company relative to the competition. They watch for opportunities and threats, break the opportunity into actionable market segments, and use this information to help shape plans throughout the company.These Marketing analyses provide a balance or cross-check for the Sales view, which tends to be based on pipeline analysis – taking into account contracts, prior customer behavior, what customers are saying about their intentions to buy, and anticipated changes in personnel or territories.
- Shaping Plans: With an understanding of the opportunity in mind, Marketing may influence Sales results by implementing marketing campaigns and events, and by providing appropriate sales training and tools to support various stages of the sales process. Marketing may also have an influential role in product plans (new and updated offerings, obsolescence) and supply plans (inventory, delivery, service/support, ability to respond to unanticipated changes in demand).
- Focusing Sales & Marketing Efforts: Marketing and Sales deliver the strongest results when their conjoined efforts are focused on opportunities with the greatest short and long term profit potential – which is not necessarily the maximum sales volume. They must work together to build effective marketing programs and sales compensation plans that emphasize:
- profitable product lines
- profitable market segments (given the company’s cost to initially reach them and to provide ongoing support)
- strategically important customers (new and existing)
- key vertical markets (characterized by common requirements and opportunities to leverage prior successes to gain additional customers)
- deliberately chosen channels and/or territories
- value-added partners and resellers (which must be cultivated in order to gain longer term advantage)
In the end, the most effective forecasting takes place when the “top-down” market opportunity is considered as well as the “bottom-up” sales forecast, and when there is agreement between Sales and Marketing on where efforts will be focused.