Mastering Sales Return Forecasting with Data: A Merchandising Guide
Big Data Data Analytics

Mastering Sales Return Forecasting with Data: A Merchandising Guide

By Rajarshi July 21, 2023 - 163 views

Sales return forecasting occupies a predominant position with regard to strategic decision-making, optimisation strategies, merchandising success, and overall business performance. Businesses would do almost anything to get accurate and predictable forecasts of sales and revenues by leveraging data.

This will not only help in drawing up annual budgets, but also boost overall performance through plugging loopholes and staying ahead of trends. Sales return forecasting is a specialised technique that also influences future growth and expansion plans. Here’s a closer look at the importance of the same.

The Importance of Sales Return Forecasting

Sales return forecasting is indispensable for companies in an increasingly cut-throat environment. They can enable effective forecasting through leveraging data and using advanced forecasting techniques and models.

This is how it is beneficial and important for companies in merchandising:

  • Missing sales forecasts continually will negatively impact overall long-term valuation. Exceeding forecasts is also an avoidable situation. This is where forecast accuracy is essential through leveraging data and cutting-edge technologies like data analytics, AI, ML, and more. 
  • Sales forecasts enable better optimisation strategies and merchandising success along with improving decision-making. It helps in better risk management, budgeting, and planning. 
  • Companies can use effective forecasting to suitably distribute or allocate future growth resources, while managing cash flows better. 
  • These forecasts also enable teams to accomplish their objectives through the identification of early issues and warning signs in the pipeline. Teams can take corrective measures in advance as a result. 
  • Businesses can use sales return forecasting to accurately predict revenues and estimate costs. They can thus predict long-term and short-term performance likewise.
Importance of Sales Return Forecasting

But how does data slot into the picture here? Here’s finding out.

The Power of Data-Driven Sales Return Forecasting

Accurate and powerful sales return forecasting is only possible by leveraging data. It is data which is king here and hence it possess the capabilities to empower better and more accurate forecasts. Here are a few points worth noting in this regard:

  • Sales quotas will help measure individual performance and are foundations for other metrics. 
  • Attainment is a metric tracking the deals closed as per the assigned quota. It will have to be tracked on a daily basis. Deal slippage or the count of deals that did not materialise can also be taken into account. 
  • Pipeline coverage is what intimates you about the buffer scope in the pipeline to accomplish sales targets. Historical pipelines required for achieving future targets is another helpful data point. 
  • Sales activity data includes all marketing/sales activities and engagement with prospective customers. This may include emails, calls, marketing, campaigns, day-to-day build-ups to sales, and more. This informs companies about the effectiveness of their marketing campaigns. 
  • Other historical data including sales, trends, patterns, and so on, will help take better decisions regarding future developments. 
  • Market data including economic conditions, consumer behavior data, POS data, and competitor activity also helps in accurate sales forecasting. 
  • Other data may include customer feedback, insights, region-wise performance, product/service segmentation and performance, and more. 
  • Demand and promotion analysis will also help along with data on procurement, inventory, logistics, supply chains, and so on. This will help fix potential gaps and predict revenues better based on historical trends.
The Power of Data-Driven Sales Return Forecasting

These are some of the data types that can help companies enable more accurate sales return forecasting. But how does it shape up in the future for the merchandising space? Here’s taking a closer look.

The Future of Sales Return Forecasting

The future of sales return forecasting will primarily be driven by several factors, including the following:

  • Advanced forecasting techniques and models driven by artificial intelligence (AI) and machine learning (ML). 
  • Companies will gradually automate data gathering and analysis in order to gain invaluable forecast accuracy and insights. 
  • CRMs will be more updated and accurate on a real-time basis with an accessible and connected data ecosystem for the whole company. 
  • There will be higher visibility into each division, individual, team, and company performance in order to historically analyse the same and forecast better. 
  • In-built predictive engines will do away with subjective interpretation and examine data points that may affect sales. 
  • Historical data reviews will enable a better understanding of the pipeline while revenue and activity data will also help. 
  • Sales forecasting methods will thrive on predictions on future sales team performance, automated data capture, risk assessment, signals and triggers, and so on. 
  • There could also be greater emphasis on identifying potential reasons for sales slips and losses through AI tools. This will lead to personalised coaching and best practice creation for reps.
Future of Sales Return Forecasting

However, while sales return forecasting has its clear benefits for organisations, there are a few challenges worth considering too. Here’s looking at the same.

The Challenges of Sales Return Forecasting

Here are some hurdles linked to sales return forecasting that companies may have to contend with:

  • Forecasting accuracy is an issue for many companies. 
  • Seller subjectivity is another pain point which eats into forecast accuracy, since many sellers depend on their own feelings about possibilities and opportunities instead of objective information. 
  • The lack of suitable predictive data is another issue since poor data quality will lead to improper long-term sales forecasts. 
  • Technological limitations, legacy systems, lack of proper awareness and outdated technological stacks are other problems. 
  • Many companies also face challenges since they end up complicating their forecasting processes.
Challenges of Sales Return Forecasting

However, these challenges can be surmounted with the right training, technological tools, and investments in building forecasting solutions for the future.

Companies are increasingly depending on tech and data-driven sales return forecasting for better merchandising success and overall business growth.


1.How does the accuracy of sales return forecasting impact business performance?

The accuracy levels of sales return forecasting have a direct impact on business performance, since accurate forecasts enable better decision-making on future expansion and operations. They also enable better budgeting, planning, resource allocation, procurement, future demand anticipation, and identification of potential issues. 

2.What are the key considerations in selecting the right forecasting models for sales returns?

The key considerations include the forecasting context, availability of proper historical and other data, relevance of the forecast, accuracy degree, time period, benefit/cost of the forecast to the organisation, and the time at hand for the analysis in question. 

3.What strategies and technologies can help address the challenges of sales return forecasting?

Some strategies include maintaining proper quality and relevance of historical data and using qualitative data in the process too. Other approaches include better communication throughout departments, accounting for seasonal variations and trends, and also removing stockout periods from forecasts. Some technologies that can address challenges in the space include artificial intelligence and automation, along with machine learning and data analytics. 
4. How can companies leverage historical data and trends to improve sales return forecasting precision?

Companies can tap historical trends and data for enhancing the overall forecasting precision of sales returns. This is possible since accurate data will enable better visibility into expected future sales patterns and revenues. It will give companies an idea of the sales cycle, pipeline estimates, and what to budget in the coming timeline. 

Sales Return Forecasting with Data
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Sales Return Forecasting with Data
Unlock sales return forecasting mastery with data-driven insights. Your ultimate guide to merchandising success and improved decision-making.
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Indus Net Technologies
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