Sales Forecasting: Reality, Guesswork or Politics?

Monty Dent, sales manager, Clear Channel Satellite Services

“We are the satellite division for Clear Channel. If a talk show on radio – for example, Rush Limbaugh – wants to go beyond its local area, they send their show live to us, and we put it up on satellite to distribute to all the radio stations in the U.S. So we contact radio networks to try to get people who want to syndicate their shows nationwide. We are selling the satellite gear and equipment. We sell to the air talent or to station engineers or to their general managers. And sometimes, the manager, engineer and talent are all the same person.

It is hard to make sales forecasts in this business. It depends on what part of the air you want to grab it out of, I guess. But we do keep track of past history, and there is actually a trend, believe it or not. A lot of the forecast has to do with the capital-expenditure money the stations have. When they get the money, they want to spend it right away in the next six months. Radio gets a big revenue stream from Christmas advertising in November and December, but usually by April there is much less going on.

We also do a lot of syndication of baseball, hockey and football games, so there is a seasonal fluctuation in our business.

We also want to know about the newest technology coming out, because that affects our business – for example, the new satellite radios in cars. New technology keeps coming, and high-tech prices keep coming down. Then we have our competitors, ABC and CBS – you might have heard of them. We watch what they are doing, what moves they are making.

Forecasting is not like in the other industries I have been in. Very often, those guys can predict a year out when they have a new product. We can’t have a new product pop out in the next three months. We really have to stay on top of things to see which way it could possibly go on new technologies. Early on, our engineers must take the technology and advance it even more, to give us a product that is the cat’s meow.

So we use past experience to predict what will happen this year, and we are at least in the ballpark; and then we look for anything that may shift in the industry. For example, 9-11 hurt a lot of industries, but it helped our industry, because more people wanted to do radio talk shows on terrorism. And when things happen out there, like Iraq and homeland security, it seems to help us.”

Athene Daria, regional sales manager, Omega Protein

“Forecasts? That’s what they are always asking me for, and I don’t know what to tell them.

We sell fish oil to manufacturers of food products. It is a fairly new concept in the food industry. So most of what I do is educate people, call on them, and do presentations so they will include it in their product. That is how I spend 80 percent of my time. The other 20 percent of the time I might develop some customers for them.

The product literally just came out of the gate this year. So I am always asking people, ‘What are you going to need in six months, two months or one month?’ And they say, ‘If the consumer buys it, we’ll order it.’

The company I work for now had these little fish and they cooked them and squeezed them and processed them. Normally, we would sell to industry or pet food suppliers. But they processed the oil so that it did not smell like fish and figured we could sell it as a new ingredient for the food industry. For years, people took fish oil in a capsule. Now, my company wants to sell drums of the stuff, to put into a loaf of bread, like Pepperidge Farm, to fortify it.

My company knows how much it can make, and they know how big the fish-oil supplement market is. Now, we have to guess how much we can sell, if, say, Kraft puts it into their products. So we have to go on guesses. The responses are actually very favorable. There has been a dramatic increase in interest in the last two years. When we started out, they were hanging up the phone on me. And these were people I knew from previous jobs.

Now, it has been in the news. People know there are benefits. It is good for your heart and brain, so they figure that maybe they can make money doing this. I have brought one national account on board this year, and it is doing very nicely.

It can get frustrating, but you always sell better the products you believe in, and this is a great product. And that is the fun of it. I can do anything I want and go anywhere I want as long as we are getting it out there.”

Steven Lekan, director, Comexi America

“We manufacture and sell capital equipment. We sell printing machines that cost $2 million-plus to what we call converters, or flexible-packing providers, who make snack-food packaging and ice cream cartons and that sort of thing. We have about 50 people on our sales team worldwide.

Forecasts are very important to us. The applications of our customers dictate the type of equipment we need to produce. So we need to forecast dollar sales, sure. But we also need to forecast what kind of machines we will sell. If we do not start to manufacture those machines very early in the process, the deliveries might take a long time.

We need to know what functions the machines will have to perform in each market segment. For example, what is the width; what is the repeat?

We have to keep a keen eye on everything that is going on in our industry, both in the U.S. and abroad. We don’t sell to the end user, either the person buying the bag or the person filling the bag. We sell to the middle tier.

It is the Wal-Marts and Frito-Lays that are dictating what the machines will be printing in the future. For example, what is going on in RFID technology? If that takes off, we could print the antennas for RFID. That would send us in a different direction. We have to look at all these applications to get a heads up on where we are going to be next year. It is certainly not a boring business.”

Jimmie Oaks, service account manager, Yamas Controls

“We design, sell and engineer automation systems for commercial buildings, to make them more energy efficient. We apply digital direct controls to make mechanical systems electronic, so they can use a Windows front end and navigate through all their mechanical, light and security systems, rather than walk to each piece of equipment. I oversee all the accounts in our office.

Sales forecasting is a mix of art and science. When I do the forecast, I take the product history then look at the local economy to find out what is happening in our markets. I use a spreadsheet. For each customer we do business with, I start with the prior year’s volume. Then I develop a business plan based on the marketplace. I use the history of various accounts and consider what the competition is doing. I do the forecasts account by account.

For prospects, I find out how big their facilities are. Then I get together with our sales director and the prospects’ CFOs to find out what new projects are coming up and what kinds of budgets they have for tenant improvements. I can get pretty close.”