Given today’s economic and business environment, there is much discussion about improving the accuracy of forecasts. I just read an article in CFO Magazine (http://www.cfo.com/article.cfm/12668080?f=search) about improving forecasts by challenging the inputs used. The article suggested various inputs of information and ways to make the forecasts more accurate. However, one critical source was suspiciously absent – the perspective of customers.
Sadly, this information is rarely used effectively in sales forecasting. Customer centric companies frequently put time, effort and money into gathering customer insights from a variety of listening posts that often reveal future purchasing intents and other intentions important to growth plans. Far too often the voice of the customer never makes it beyond the marketing and customer service departments.
Companies often tend to expect growth from all customers, yet each relationship is unique. Understanding these relationships—from our customers’ perspectives —can pinpoint where growth will come from and where it won’t. Or, in these tough times, we can identify where to expect high levels of customer retention and where to expect higher levels of attrition.
Finance executives are trained to focus on empirical models and analyses. Strategic account managers and sales professionals generally rely on more anecdotal models or gut feel about the relationship and creating value for customers. When it comes to forecasting, both methods have generally proven inaccurate enough to create large and sometimes unmanageable forecasting errors.
The introduction of insights from customers into those models can tighten up our forecasts significantly.