3 Steps to Enhance Demand Forecasting with CRM Software

An enterprise CRM solution captures data about the ‘soft’ parts of the sales, marketing, and customer service processes – opportunity and lead management, customer interactions, surveys, product reviews, promotions, business partner data etc. It’s the touchy-feely stuff where personality goes a lot further than know-how, and anyone with both skill sets is an exceptional performer. It’s hard enough to get these parts of your company to use an ERP system, but assuming you finally achieve that level of discipline, what’s left is a seemingly hodgepodge of data. It’s a challenge to find a practical use for it all. 

However, an enterprise-grade CRM system does have the potential to become an invaluable analytical tool - providing a clear, concise, and most importantly, real-time view of the demand curve. Once in place, a CRM system can be used to accurately measure actual sales demand and to accurately forecast sales demand across any time period. With an accurate forecast, all production/procurement activities in the enterprise can be fine tuned, leading to on-time deliveries, zero backorders, lower inventory costs, and higher profits.

Achieving a reliable demand forecast with your CRM solution can be accomplished in a few simple steps:

1. Build a clever master data strategy.
The quality of your master data and your master data governance will drive the quality of CRM data you can capture. Make sure you create master data that can help you achieve the demand forecast you are looking for. You need to capture useful and applicable information about your sales and sales process in order for you to forecast it correctly. Be creative and think outside the box.

2. Identify critical events that drive a sale.
You need to be able to look at all the pre-sales activity through your CRM solution and have a good idea about how much of it will lead to an actual order. Talk to your staff and understand how they gauge the quality of their respective pipelines. For example, if a second in-person meeting with a customer usually leads to a sale, be sure to record and flag that type of interaction in the CRM system as ‘applicable to demand forecast, or something to that effect. 

Be sure to identify service calls that lead to subsequent orders. Be able to link a marketing campaign to actual sales either through promo codes or email threading. In the best case, you should be able to trace every sale back to an originating event in the CRM system.

(PS…If you don’t think this is can be automated, then have someone ‘flag’ the event manually as soon as a sales seems imminent. Even better, give incentives to your staff for this. You’ll be amazed to see how correct this metric becomes.)

3. Continuously improve until it works.
No matter how much thought and planning goes into your demand forecasting project, there will always be further revisions and fine-tuning. But this is also part of the process, so don’t be discouraged. It’s unrealistic to think that you will get everything perfect on the first try – but if you do, congratulations! 

A simple approach here is to identify points where actual sales differ from the forecast – and/or points where the forecast was incorrect. Once identified, figure out why and pareto out a list of causes. Then go back and fix the problems on that list. Repeat. Over and over again.

Effective CRM solutions will provide smart features that for demand forecasting, but the key to making that forecast reliable does not lie in the software itself, it is in the minds of the people that truly understand your business. Over time, the savings realized with a reliable demand forecast can easily return all implementation expenses and costs of sustaining an enterprise CRM solution. Before long, you can start to turn your CRM platform into a profit-generating machine. So get started soon.