Turning Customer Information Into Sales Knowledge

Group No.
TURNING CUSTOMER INFORMATION INTO SALES KNOWLEDGE
With the use of technology and customer information, the responsibility of salesforce to
provide high quality information beneficially applicable in other areas of the firm including firm's
marketing, manufacturing, finance and other functions, is highly important. One of the most
important information that sales executives are often expected to provide is the demand estimates
of the firm's products and services. Both overestimating and underestimating can cost
devastatingly high for the company. Similarly, the customer feedback about the features of the
product or service, their maximum willingness to pay, necessary modifications as indicated by the
customers etc. are all highly important.
In order to develop a customer knowledge competence, one of the important goals of any
organization, the CDI (Customer Data Integration) process is inevitable, which is defined as the
technical process of gathering data and making it useful and available. Acquiring the data, Making
the data usable and then available followed by the usage of the data are the 4 important steps of
CDI.
Sales forecasting is the process of estimating future sales. Accurate sales forecasts
enable companies to make informed business decisions and predict short-term and long-term
performance. Companies can base their forecasts on past sales data, industry-wide comparisons,
and economic trends. For that, market potential, or the total industry-wide sales expected for a
product category for a period of time be estimated, often carried out by research organizations.
The next step is determining the firm's sales potential, which is the maximum market share the
company can reasonably expect to achieve. This estimate is further filtered to create a sales forecast
which is then allocated in revenue or units to individual sales people in the form of sales quota.
There are number of factors that affect the market potential by influencing the demand of
products and services. Economic factors, technological factors, laws and regulations, social
factors, demographic trends etc. can all influence the market potential. Elasticity of demand,
scope of derived demand etc., however, decides the degree of influence of the factors to sales.
Now, a company's sales potential is a function of the market potential and the company's ability to
capture the market share.
Next, there are numerous methods adopted for the purpose of sales forecasting. Time-series
techniques, consumer spending correlates, Business spending correlates, Response models,
Market tests, Judgement techniques, Executive opinion, Expert opinion, Customer and channel
surveys, Salesforce composite are some of these methods. Trend analysis or Naïve forecast,
moving average method, exponential smoothing, correlation analysis etc. Belong to the time-
series techniques. These are used to examine sales patterns over time. Estimating future sales
based on the past sales is trend analysis. If the rate of change of past few periods is averaged, it
is called moving average. If more emphasis in the moving average technique is put onto recent
period, it is called exponential smoothing. If in a trend analysis, instead of using just past sales,
sales forecasts are based on the trends of other variables, it is called correlational analysis.
The different variables being examined in correlational analysis are leading indicator,
consumer spending correlates and so on. A variable that leads or happens before the sales of the
product is called a leading indicator. The consumer confidence index, one of the consumer
spending correlates, is a measure of how confident consumers are that the economy is favorable
for consumer spending. Consumer buying power is the measure of how much the consumer can
buy in a particular market. Response models examine how the consumers respond to sales and
marketing strategies. A market test is an experiment in which a company launches an offering in
a limited market in order to learn how the market will react to the product. While executive
opinion is a judgement technique, which is simply the best-guess estimates of a company's
executives, expert opinion is did by someone from outside the company.
There are many limitations that can affect the accuracy of any sales forecast. Data quality,
rapid change, length of the horizon, time and cost of the forecast etc. are all contributing to the
inaccuracy of the forecast. To survive these limitations there are a few guidelines to be followed.
Using multiple methods, picking the right method(s), using as much quality information as you
can, planning for multiple scenarios, tracking your progress and adjusting your forecast are some
of the methods applicable to reduce the distortions in the sales forecast.

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TURNING CUSTOMER INFORMATION INTO SALES KNOWLEDGE

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