In Divisible, we have developed a "causal forecast" method based on correlation, starting from the assumption that the target variable, i.e. demand, can be described by the trend of other variables.
In fact, product sales are influenced by numerous variables, both of an "endogenous" nature, therefore under the control of company management (product price, investment in advertising, etc.), and of an "exogenous" nature which may escape company control (per capita income, age of the population, interest rates, product taxation, rainfall, temperature, oil price, competitors’ moves, and so on).
In order to optimize the outputs of a sales forecast model it is essential, first of all, starting from precise and updated data and secondly, being able to predict the future values of the "exogenous" variables: this is the real competitive advantage.
Forecasts guarantee an optimal organization of business activities. For example they allow to anticipate potential low productivity periods (due to the seasonality of the sales cycle) and to identify the best selling prices.
Knowing the potential volume of future sales, allows you to anticipate extraordinary requests in terms of order volume, guaranteeing deliveries without delay, high customer satisfaction, and a reduction in the risk of stock shortage.
A precise sales forecast makes it possible to estimate the company’s turnover and potential profits, allowing to focus on reducing costs, increasing revenues and managing investments.
Knowing future sales volumes reduces uncertainty about the company's economic availability and, as a result, you can plan more accurately for recruitments, contract extensions, expansions to new markets or geographies, and much more.
On the basis of historical data and continuous sales data available, it is possible, firstly, identifying in real time any effective working models and successful strategies and secondly, having a real perception of the company's performance.
Synchronizing the sales and marketing area is essential to plan excellent business strategies: an effective sales forecasting activity allows the marketing department to define the best promotions or strategies.