How do I forecast sales for high value B2B startup hardware product?


[These posts are based on responses to question on Quora]

There are quite a few quantitative (Moving average, Regression analysis..) and qualitative (Executive opinion, Delphi, survey of buyers..) sales forecasting methods available. You can pick any of the net

My thoughts below are in addition to any technique you may choose to use

Similar products:

Since it’s a new product (same category) in an existing market, potentially you could forecast based on history of similar products in the market place. Identify and map the variables. Tweak the variables to meet your expectation of the new product, for instance, the sales cycle of similar product is 120 days, you could shave off 30% of the time and arrive at a number. The deal size could be larger and add a premium of 20% and crunch the numbers. Though, personally don’t like the idea of basing my sales projections on some de-merits / merits of another sales & marketing team / activities

Quick list of variables you may want to consider

External eco-system

  1. Competitors – category, replacement product,..
  2. Entry barriers – locked in long term contracts, replacement cost
  3. Partners – sales, delivery, installation, implementation, support,.

Internal eco-system

  1. Capability –  sales, marketing, sourcing / manufacture, logistics, support…
  2. Capacity
  3. Resources – Financial, human,..

Market

  1. Market size
  2. Target market size
  3. Cycles – economic, seasonal, financial,..
  4. Buying decision process stages & cycle time per stage
  5. Deal cycle time
  6. Deal size
  7. Expected closure conversion
  8. Payment terms
  9. Recurring revenues – AMC, services, refills,…

Sale is the effect not the cause. Sales numbers is the cumulative result of selling effort, marketing & customer experience with the product / company. For instance, word-of-mouth is the result of successful installation and satisfied customer. The process of “word-of-mouth” could also be hastened with smart marketing and PR activities.

Finally, avoid “buffers” and safety numbers,  be optimistic and confident of your sales team / activities while making a forecast

 

 

Post by:

Praveen M

Sales experience in Europe, US, SE Asia and India, developing external and internal sales eco-systems. Can be reached at praveen_1074@yahoo.com  

 

 

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