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Business Forecasting: What it is and why you need it



Forecasting isn’t an uncommon term for most companies. Often times, you will hear the term being thrown around during quarterly meetings, or pitches way before the start of an operation. As a small business owner, it’s not surprising if you have no idea what forecasting is, or if you do, maybe it’s just on a surface level. However, keeping yourself in the dark in regards to how you can maximize this can potentially stagger your business’ growth.


In this article, we’re going to talk about the basic of forecasting, as well as the advantages your small business can get should you observe this practice.


What is “forecast”?


Business forecasting refers to the tools and information used by a company to determine the developments or strategies they can take in the future. For example, past feedback from various consumers can help you determine what products you should improve on, or what products are always sold out. On the other hand, for a more general overview, you can consider the current economic conditions to develop how you can overcome or use it to your advantage.


Similarly, there is also what we call Sales Forecasting, wherein you predict the amount of products or services your team will sell in the next week, month, quarter, or year – all in relation to the data you have gathered.


Now that you have some basic knowledge about forecasting, you might be getting the impression that it’s simply “assuming” or “predicting”. While that idea is somehow true, it’s still important to realize that these predictions should be calculated and studied extensively.

Therefore, we move on to the different methods in which we can derive a well-studied forecast, all of which falling under two approaches: qualitative and quantitative.


Methods of Forecasting


1. Quantitative Approach


The quantitative approach in itself is very much self-explanatory – mostly focusing on numbers and ignoring the “human element” of the analysis. This includes sales, GDP, current prices, and so on. The quantitative models include the “indicator” approach. wherein you weigh the relationship of certain indicators, econometric approach which studies the consistency of datasets, and time series approach which uses past data to predict future events.


2. Qualitative Approach


On the other hand, the qualitative approach gives importance to individual opinions of each respondent, more than measurable data. Qualitative models have shown success with short-term predictions, although they are often limited by their reliance to narratives instead of scientific models.


Qualitative models include market research, which revolves around polling a certain number of people and predicting how many will buy or use a certain product of service. The second is the Delphi approach, which is the process of asking field experts for their opinions and deriving a forecast.


Why is this relevant?


Knowing the forecasting method that would work for your business is important, because you would want to successfully derive the right data that would actually help in your decision-making.


For example, after a customer receives their products, you might want to send them a survey regarding their feedback. Since you are deriving deferring opinions from different consumers, you are then using a qualitative approach.


Now, you might think, this is a lot of work for a small team like ours, and it truly is. Luckily, there are solutions and software out there that do accurate forecasting per your every customer, so that they may enjoy their own personalized experience. To give you an example, just think of the recommendation ads you see on your social media sites that seem to know what you want – that is the work of automated forecasting and CRMs. Or, if you want to widen your reach further, software like Info Alchemy ForeSight actually helps you engage with customers via Push Notifications, SMS, emails, and many more.


Advantages of Forecasting


Not only does forecasting help you come up with a strategy in order to achieve business goals, it also helps in deciding on how you can bring better customer experience that would be memorable to your target market.


1. Personalized Offers


With software like Info Alchemy ForeSight, you can immediately provide personalized offers to each of your customer. We all know that there isn’t really a one-size-fits-all strategy on how you can reel in customers, that’s why it’s important to have a software that could make unique and accurate offerings in just a few seconds.


2. Single Customer View


When making a personalized user experience and informed business decisions, there is not better source of information that a single customer view. A SCV is the process of gathering all the data of your prospect and clients and merging it into one single record. By doing this, not only are you centralizing all of the information into one location, but you can also derive an overview or general decision based on vast data at hand.


For example, in a SCV, you will be able to see whether your customers mostly use mobile or desktop when viewing your website. Alternatively, you can also track which platform they saw your ad and ultimately ended up on your store. With these data at hand, you can prioritize product placements or even create promotions on your best-selling products to drive more customers.


With Info Alchemy ForeSight, the software actually consolidates these data into one single version of truth – meaning, you wouldn’t have to manually collate and transform all the information from scratch.


Although, it’s also important to take note that forecasting isn’t a piece of cake, much more, there could also be a lot of problems you can encounter if you don’t do it right. First of all, the data that you find useful right now will inevitably turn old, and there’s no guarantee that what’s true now would be useful in the future.


That’s why it’s important to invest in accurate forecasting software that would help you upgrade your data in real time. Instead of struggling with irrelevant or useless information, you’d find yourself at ease as your data would automatically generate personalized user experiences for you – only leaving you with the responsibility of creating a calculated strategy.


Ultimately, it’s important to realize that not being able to maximize new technology would only stagger the growth of your business. It will only take time before small businesses, with the help of cutting-edge technology, will be able to be as competitive as large enterprises. So, invest in what’s important and in something that would transform your business and the experience you’re giving to your customers. Don’t make the mistake of trying to keep it traditional, especially in a world that is “far from normal”. In giving importance to giving the best customer service, you will find yourself at the top of your game.


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