Posted in Marketing and Strategy Terms, Total Reads: 2631
Definition: Sales Force Composite
It is a forecasting method used to forecast the sales by adding up individual sales agents forecasts for sales in their respective sales territories. It is a bottom-up approach which companies use to forecast more accurately. Sales agents have the most direct interaction with the customers and provide many valuable insights which help the companies boost their sales.
Using the sales force composite forecast the company not only forecasts for the market as a whole but it also has numbers for individual areas and territories.
Flipside of using this technique is that the company forecast will only rely on sales agents who may use too optimistic or too pessimistic approach based on their latest experience. Thus the company can end up forecasting taking only microeconomic factors and neglect the macroeconomic environment. Hence the companies usually combine the sales force composite forecast with the top-down forecast and then finalize the actual forecast.
Another drawback of this technique is that some agents may give a lower forecast than the actual potential of sales to easily achieve their target and get the money bonus from the company on the extra sales generated.
Nowadays many companies use scripting software which takes into account the response of the agents and gives a cumulated forecast based on the programming from the historical data and previous forecasts.