Chap 13: Turning Customer Knowledge into Sales Knowledge

 An important goal for organizations is to develop a customer knowledge edge competence

 It is the ability to gather, analyse and utilize customer knowledge effectively at the
organizational level
 Forecasting demand is only part of understanding customers.

Customer data integration: CDI is technical process for gathering data and making it useful and
available.

1.Acquire the 1.Make the data 1.Make the data 1.Use the data
data usable available

Sales data Format, clean Via data marts, Create

Market and merge analytical forecasts
research data software Build sales
Service data plans
Create pricing
Create
marketing
plans

Customer data integration process

Areas which uses sales generated knowledge:

 Manufacturing: It rely heavily on information generated from sales.

 Product development: Based on requirement of customers, information form sales people
for the same is used to develop products to cater customer demand.
 Finance and accounting: Companies credit policy affects its sales people. Loose credit means
more sales and more bad debts, and tight credit means less sales and less bad debts.
 Marketing: Marketing departments creates sales and marketing campaigns that should boost
firm’s policy.
 Sales management: Information such as how hard or easy is to sell a product gained from
salespeople can lead to decisions related to training of the product.
 Human resource: Human resource department is directly affected by the information gained
from sales reps.

Sales forecasting
It is estimating consumer demand along with capability of firm to produce and sell at a certain price,
and how its competitors and consumers will respond to it. One of the first estimate that a company
always make is to calculate its market potential (it is what can easily be sold by companies, not how
many competitors comprise the market).
Sales potential
It is the maximum market share that a company can reasonably expect to achieve. It is represented
as a market’s total sales.
Estimating market potential
Various factors such as technology, production and economic factors, external to firm influences the
demands. Derived demands for a product cause a side swing in demand for that particular product.
Demand is also affected by elasticity, or degree to which product’s price affects its sales. Other
factors which affect market potentials are-

 Laws and regulations

 Social factors
 Demographic trends

The forecasting process:

Look at the marketplace

Estimate the market potential for the

industry

Look at the firms sales potential by gathering

internal and external information

Forecast sales by product, territory, customer

type, and time period

Make a company wide sales forecast for the

period

Set quotas for individual territories and

regions for the period

Factors that affect market potential:

 Economy
 Technology
 Legal and regulatory
 Social factors
 Demographic trends

Forecasting methods
1. Time series techniques: these are a group of statistical methods used to examine sales pattern
over time. Some time series techniques are-
 Trend analysis
 Moving average
 Exponential smoothing
 Correlation analysis
2. Consumer spending correlates: Other variables used for correlational forecasts are variables
that predict how much consumers will spend overall. The consumer confidence index, a
measure of how much confident consumers are that the economy is favourable.
3. Business spending corelates
4. Response models: They consider the influence of market factors over time; these models
examine how consumers respond to sales and marketing strategies.
5. Market tests: This 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
6. Judgement techniques: Some methods involve just the judgement or expert opinions, surveys of
customers intentions or estimates, or estimates by salesperson.
7. Executive opinion: It is simply the best guess estimates of a company’s executives. Each
executive submits an estimate of market potential and the company’s sales potential, which are
then averaged to get the final sales forecast

The limitations of forecasting

 Data quality
 Rapid change
 Length of the horizon
 Time and cost

Guidelines for forecasting

 Use multiple methods
 Pick the right method for the business
 Use a much information as you can
 Plan for multiple scenarios
 Track progress and adjust the forecast