Business Forecasting

What Is Business Forecasting? (and How to Increase Your Forecast Accuracy)

Forecasting is making predictions using past or live data. To increase forecasting accuracy, you have to study your customers, know industry trends, and assess the competition.

Forecasting is valuable to any organization to make informed business choices and plans. As such, it is crucial to make an almost accurate forecast to enhance business success short-term and long-term.

Do you want to start forecasting or improve forecasting techniques?

This article is for you!

We have listed the types of business forecasting, why forecasting is essential, and the best rate for forecast accuracy. You will also learn factors that affect forecasting and the best forecasting tools.

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What types of business forecasting are there?

Types of business forecasting are dependent on what you want to predict about the future. Every business forecast focuses on a particular outcome or call center metric. They range from general (number of calls next month) to specific (number of calls after a product launch for the 2023 holiday season).

In addition, it’s incredibly helpful to present diagrams and visuals for your future business forecasts to make the situation easy to understand at a single glance.

Business forecasts are vital for all businesses. So, whether you’re starting a business or planning for an existing business, it’s important for you to understand the types of forecasts you’ll need and how to make each forecast as accurate as possible.

Here are the different types of business forecasting:

General business forecasting

Market trends and external conditions such as climate, community, politics, populations, national income, etc., affect every business. 

General business forecasting will read these future conditions and predict any potential changes affecting the business. For instance, a business can forecast the effects of presidential elections on a country’s economy.

Sales forecasting

Sales forecasting is a prediction of future sales on sales data. Whether it’s about general sales or sales of a particular service or product, your company can make plans for resources, workforce, inventory, cash flow, and investment capital. 

Sales forecasts can project revenue for the 2022 fiscal year to determine the number of salespeople to hire.

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Capital forecasting

The capital forecast predicts liquid capital, cash flow, assets, and liability of a company. 

Predicting future capital needs helps you plan for issues such as replacement, depreciation, reorganization, etc. 

A company will also use its capital fully and get optimum investment returns. For instance, an organization can predict the coming year’s working capital to open a second branch.

Demand forecasting

Sales and demand forecasts are almost similar, except demand will predict what your customers will need or want in the future. 

Demand forecasting determines customer or market demand for a service or good in the future. For example, an organization can predict demand for a new toy at Christmas.

Financial forecasting

You can get a clear picture of your company’s future with financial forecasting. It weights liabilities and assets, operating costs, accounts payable and accounts receivable, cash flow, capital structure, etc. Financial forecasting is crucial if you want your business to stay financially healthy.

Accounting forecasting

Accounting forecasting uses past and present company data to predict future costs your company will incur. 

Your organization will predict how much it will use for inventory, raw materials, utilities, person-hours, rent, etc. 

Call center forecasting

Forecasting for call centers entails estimating future workload and the staff capacity needed to handle the contact volume. 

The law of supply and demand is crucial in call center forecasting, as in any other business field. Workload forecast accuracy is paramount for service providers, so that they can estimate changes in demand (inbound calls, messages, emails) and make proactive supply decisions (allocate the right number of advising agents).

Your call center performance is greatly dependent on the balance between customer satisfaction and the costs of employing the right number of agents.

Business Forecasting

Why is business forecasting important? 

Business forecasting helps you gain valuable insights into many aspects and future business success. Look at why it is crucial to do business forecasting:

  • Increases chances of business success – Correct prediction determines the success of a business to a great extent. Knowing the future course of events can help you strategically plan for any challenges.
  • Helps company formulate plans – You can’t plan a company’s future without forecasting since it helps in managerial planning. Let’s say you want to launch a product in the market. The best thing is demand or sales forecasting to see if there’s any market or demand for that product.
  • Estimates the financial needs of a company – Companies that don’t have correct estimates of financial needs fall prey to less or excess capital. A company can plan for diversification, expansion, and improvement with financial forecasting.
  • Improves customer satisfaction – Business forecasting helps give the market what it needs and wants at the right time. Your company can offer services or products to meet a target audience’s expectations, improving customer satisfaction and business sales.

What’s a reasonable rate of forecast accuracy

Unfortunately, you can’t know how accurate a forecast will become. Setting specific forecasting performance goals makes it impossible to achieve the goal since you can’t demand a certain level of accuracy. This is why:

  1. Forecasting can only help your company achieve other goals, such as improved customer satisfaction or reduced peak hour traffic.
  2. Forecasting is one aspect of achieving different goals. Other factors come to play, such as financial management.

What factors make forecasting more or less reliable 

Let’s look at different factors that affect forecasting:

General conditions

General conditions that affect businesses include a country’s economy, wealth distribution, seasonal fluctuations, government policies, etc. A company can’t control all these factors, so they can drastically affect forecast accuracy.

Industry conditions

Factors with industry include products, competition, pricing policies, product line, competitor’s strategies, and policies. All these factors have to be considered during forecasting to avoid errors.

Internal enterprise factors

An enterprise’s internal factors like quality, price, plant capacity, resources, and advertisement policy, affect forecasting. 

Let’s say your forecast shows that there will be peak hour traffic at the call center after a product launch. The company has to increase staff capacity but didn’t invest in job advertising and recruitment, so the forecast results are drastically wrong.

Tips to improve your forecast accuracy 

Improving forecast accuracy leads to increased customer satisfaction and business success. Here’s how you can enhance your forecast accuracy:

Know industry trends

Study the industry insights and trends to serve your market. Always review the industry by analyzing old and new companies. How do they maintain success? Who are the winners and losers of your industry? Who’s worth looking out for competition? What are their plans?

Assess your competition

You can make valuable insights into your company by analyzing competitors first. Review the revenue potential by researching information on public companies online. 

If private companies are your competitors, do online research and analysis of % market share, the number of employees, advertisement strategies, funding amounts.

Study your target audience

You need to understand the behavior of your customers. Look at their reaction to a new product or service. Does your customer cross-shop? What does your client do when products are out of stock? All the answers to this will help you gather essential data and increase forecast accuracy.

Best tools for reliable forecasting 

  • Forecasting software reports and insights help you stay organized, take action, and stay in control before problems arise. You need to choose software that is in line with your goals, budget, and business size. Some examples include Hubspot Forecasting Software, Anaplan, PipeDrive, etc.
  • Resources that help you make forecasting efficient include cash flow statements, industry expert reports, internal assessment reports, organizational charts, performance indicators, etc.

Improve customer satisfaction with babelforce 

There are different types of forecasting, including sales forecasting, financial forecasting, call-center forecasting, demand forecasting, etc. They all help an organization increase its success, formulate plans, estimate financial needs, and improve customer satisfaction.

To improve forecast accuracy, you need to study your customers, know industry trends, and assess the competition.

Are you looking to improve customer experience?

babelforce is the most flexible platform for contact center service. We are a team combining contact center & telecoms veterans with developers & extreme sport experience designers.

Our cloud-based services and apps platform, on top of a multi-carrier telecoms network, guarantees you high-quality service. Use our suite of visual tools and pre-built elements to create any customer service process.

Book a demo with babelforce now! 

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