What strategies and implementations need to take place when creating a more effective channel sales-forecasting process?
Accuracy into channel sales-forecasting continues to be a cornerstone problem for companies participating in the indirect sales funnel. Next to evaluating the effectiveness (i.e., return on investment) of channel incentive programs, channel demand forecasting’s ambiguous and complex predisposition affects production, go-to-market strategy, inventory control, revenue planning and partner program design.
By the time channel management professionals consolidate data, POS reports, and inventory levels, the market has already modified—leaving manufacturers and vendors with little information into ‘what to do next.’
Luckily, there are specific actions that can be applied to avoid such forecasting difficulties, or at least mitigate the issue:
1.) Don’t Rely on What Your Partners Report
One of the biggest mistakes you can make as a vendor is to accept everything your channel partners report as fact. When done manually, this philosophy will continue to plague you with inaccurate data- aggregation. In addition to misreporting of POS reports, the likelihood for partners documenting initial stocking price instead of the final (real) cost of transaction—after incentive(s) were accrued—is particularly high.
One way to better control this issue is to associate each transaction in conjunction with the promotional discounts that was attached to it. Instead of outsourcing data reporting with partners, you rely on the internal evaluation of incentives that qualified and modified each POS transaction.
2.) Internal Realization of Inventory Sold
Similar to the previous, it is simply too risky for vendors to depend on accurate reporting from their partners without a robust automated cloud-based system in place. Exact evaluation of inventory levels dictates either the acceleration or slowing down of production. Misevaluation into inventory levels can do one of two things: 1.) Create overproduction of inventory in the channel 2.) Demand exceeds the quantity of inventory in the channel. Both equally carry a financial consequence that is hard to restore.
Internal management of inventory sold and documentation into which partners acquired how much inventory, ensures that you will not have to depend on partners’ reporting to be accurate when deciphering production—and thus—forecasting.
3.) Showcase Priority into Accurate Reporting
The more you express the value in accurate reporting, the more your channel partners will as well.
It’s like checking for grammar errors on a college essay: if your professor doesn’t notice them, what incentive do you have to make sure there are none? The improvement of POS reporting allows your team to provide constructive, tangible feedback, whereas before, there was no validation of data. The more accuracy you have into reporting, the better you can decipher and segment partners based on performance—and the better you can forecast channel-sales.