Assessing the Reality of Your Company Sales Forecast

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These slides were first presented to the Portland Oregon chapter of the Institute of Management Accountants in September 2011. They provide insights and techniques to use to assess the validity of a sales forecast.

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Assessing the Reality of Your Company Sales Forecast

  1. 1. Assessing the Truth and Validity in YourMarketing & Sales 2012 Forecast Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  2. 2. The Marketing & Sales Forecast Marketing Initiatives New Market Markets Momentum New Sales Forecast Share Gains Customers New Marketing Products Expenses Pricing Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  3. 3. What We’ll Cover  Corporate Trend Forecasting  Tops Down vs. Bottoms Up Forecasting  Predicting New Product Success  Assessing the Marketing Strategy  Summary Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  4. 4. Corp Trend: Validating Continued Success  Adding capacity to overheated market demand  Exploiting a competitive advantage  Offering a whole new economic value proposition What evidence exists that things may change ?? Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  5. 5. Corp Trend: Validating Continued Struggles  The market is dead  The value proposition is invalid  The competitive position is weak  The ability to communicate is weak  The delivery function is failing Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  6. 6. Top Down vs. Bottom Up Forecasting Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  7. 7. Tops Down Sales Forecasting Techniques  The boss said Validity  Industry trends Increasing  Delphi  ForecastPRO® Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  8. 8. Bottoms Up Forecasting: one popular approach Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  9. 9. Bottoms Up Sales Forecasting: The Sum of theSales Account Portfolios  Account Portfolio  Bottoms up by account  80:20 rule  Customer inquiry  Socket penetration modeling Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  10. 10. Sources of Growth  Market Momentum  Pricing (+ / - )  New Products  Share Gains  New Markets  New Accounts Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  11. 11. The Individual Account Forecast Factor 2009 2010 2011 % Change 2012 Base $2,458,740 $3,456,789 $2,878,705 $2,878,705 Momentum (10%) (287,870) Pricing (+ / -) 2.0 % 57,570 Base (8%) $2,648,405 New Product(s) 2.8 % 75,000 Share Gain 10.0 % 288,935 New Markets 0 0 New Customers 0 0 Total 4.6 % $3,012,341 Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  12. 12. Total Sales Forecast: The Sum of Accounts Factor 2009 2010 2011 % Change 2012 Base $24,587,400 $34,567,890 $28,787,059 $28,787,059 Momentum (10%) (2,878,700) Pricing (+ / -) 2.0 % 575,700 Base (8%) $26,484,059 New Product(s) 2.8 % 750,000 Share Gain 5.0 % 1,439,352 New Markets 3.5 % 1,000,000 New Customers 1.5% 450,000 Total 4.6 % $30,123,411 Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  13. 13. Assessing Market Momentum: The Sources  Economic  Macro-economic factors  Micro-economic (industry) “It’s more important to understand what’s going on  Corporate economic in your customer’s markets than in your own.”  Regulatory  Demographic Does your sales team know how to ask? Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  14. 14. Factors Affecting the Adoption of a New Product  The number of new sockets  The economic value of the offering to the customer  The extent of the intra-market network  The degree of competitive turmoil  The difficulty / ease of trying it and changing  The channel enabling capability Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  15. 15. Assessing New Product Sales Projections Installed Base Installed Base Units(log scale) Socket Growth Annual Unit Sales Re-Packaging & Fragmentation Rejuvenated growth @ HIGHER prices and HIGHER margin Time Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  16. 16. Does the Product Deliver Strong Economic Benefit? Benefit Contributor Savings calculation / yr Bottom Line $ Increased Wins # Sales people Avg 1 yr ordr $ Typical PBT # wins / sales person / yr Total $ earned 10 $180,000.00 7% 2 $ 252,000.00 Price premiums Annual Sales Price premium % orders with premium potential Total $ earned $25,000,000.00 10% 10% $ 250,000.00 Accelerated Growth Annual Sales Typical PBT Accelerate growth rate Total $ earned $25,000,000.00 10% 5% $ 125,000.00Reduced Mktg Expense Marketing Budget Reduced need: mailers, trade shows, advertising, MARCOM, brochures Total $ saved $1,500,000.00 25% $ 375,000.00 Travel Optimization # Sales people Avg cost of a trip Useless trips avoided thru focus / sales person / year Total $ saved 10 $1,000.00 2 $ 20,000.00 Estimate Annual Earnings Impact $ 1,022,000.00 Bottom Line Impact Total = Increased Earnings x 5 Years = $5,110,000 Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  17. 17. Assessing Market Share Gain Expectations Number of competitors Occupied vs non-occupied (no pun intended) Current pain vs. pain of change Economic benefit of change Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  18. 18. Assessing the Viability of a Market Strategy Strategy Target  Frontal  New Product  Fragment  New Customer  Flank  New Market  Defend  Current Market share  Depart  Current Customer  Develop  Current Product Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  19. 19. Market Strategy Alignment Check (log scale) Installed Target Offering Differentiation Units BaseStrategy Price Channel Accounts Profile Promotion Innovators Early Adopters Early Majority Strategic Late Majority Misalignments Installed Base Annual Sales Laggards Time Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  20. 20. Assessing the Home-Run “Big-Deal” Opportunity Compelling Need Match Economic Value Proposition Competitive Advantage Champion Leverage Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  21. 21. Assessing Marketing Expense Effectiveness “I know at least half of my marketing and advertising expenditures are wasted. The problem is I don’t know which half.” Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  22. 22. Typical Marketing vis-à-vis Good Marketing Typical Marketing Brochures and Print Collateral Websites The Foundation Mailings Social Media • Market Strategy Publicity • Business Development Advertising Programs • Sales: Skills & Process Disciplines Branding Programs • Performance Excellence Trade Shows / Booths Telemarketing Merchandising Materials & Programs Market Research Cost $$$$$$ $$Benefit $$ $$$$$$ Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  23. 23. Discipline Provides the Highest ROI Strategic intellect and science Focus Economic benefits selling Customer dialogue Sales account portfolio management Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  24. 24. Investment Vs. Discipline Proposed Marketing or Alternative Expense Level Required Sales Initiative Low-Cost / No-Cost Discipline Sales Qualification CRM Mid to High Opportunity strategy formulation Focus Value Pricing Price Reductions Mid to High Focus Selling based on Economic Value Propositions Focus E-strategies Mid to High Intra-market network activity Tactical marketing (ads, Intra-market network activity Hightradeshows, mailers, etc) Publicity, promotion, press relations, blogs Focus, Focus, Focus Selling Relative Perceived Quality Branding High Press, publicity, blogging Intra-market network activity Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  25. 25. Summary Preference: bottoms up forecasting by the sum of sales person account portfolios Forecast Momentum through customer inquiries into their markets Preferable Strategies: fragment (segmentation) and flank (differentiation) Forecasting new product sales: Adoption of Innovation guidelines Predicting the close of the “Home Run” deal: 6 Qualification Criteria Discipline can pay back more than tactical marketing expenditures Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011
  26. 26. The QMP Group, Inc. Here is the presentation you requested. Thank you for your attendance. QMP™’s mission is to increase a company’s The QMP Marketing & Sales Engine™ market value by improving its Market Strategy,creating cost-effective New Business Developmentinitiatives, improving Sales and Sales Management processes and instilling a lasting culture of Market Market Initiative Performance Excellence. Feedback Strategy Planning Performance Excellence Sales Business Process Development Discipline Sales Jerry Vieira, CMC Training Copyright The QMP Group, Inc. Institute of Management Accountants Questions? Call Jerry Vieira at 503-318-2696 September 2011

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