Businesses have it hard these days, with such a big marketplace and competition, they need to recognize trends in the market and create strategies that will lead to their success.
Trends forecasting is one of these almost untouched niches that, if done right, can fuel a business’s success. As research shows, companies with accurate forecasts are 10% more likely to grow revenue year by year and two times as likely to be at the top of their field.
What is trend forecasting?
Most companies have market research data and sales records. On its own this information doesn’t change anything, but if businesses use it for trend forecasting, then it may be quite useful. By predicting the desires of a customer and understanding market fluctuations, a company can adjust its business techniques and maximize its profit.
Trend forecasting is the process when data is used to make predictions, for example, customer data can be used to predict their future buying habits and preferences, whereas market research can help determine the amounts of product that will be needed.
Forecasters that use quantitative and time-sensitive data, with numerical data, have a clearer view of time periods, from which they can detect a trend. They also research cultural and environmental changes and then detect how fast and strong these factors will impact a customer’s behavior and priorities.
How do forecasting and trends contribute to a company's success?
In this part, we will talk more about the ways you can contribute forecasting to your business and the right ways to use it. These following points are important to understand because, as research claims, even though most salespeople spend 2.5 hours on sales forecasting each week, their predictions are typically less than 75% accurate.
- Identify past trends
In order to determine the success of a certain product or service, professionals should first recognize previous market trends and how the market reacted to changes. A simple example would be the fashion industry, the fashion industry is known for its cycles, meaning clothing trends return every few years. Also, you can notice how each new trend will typically contrast with the previous one.
With access to these cycle timelines and trend changes, fashion industry professionals can predict what styles of clothing to produce next and how much time they have before a new trend takes over.
- Pay close attention to patterns in the data
For accurate trend results, it’s important that forecasters look for patterns in consumer behavior, some popular patterns to look for are:
- Linear patterns. Linear patterns indicate constant increase and decrease in product sales. The pattern is displayed in straight diagonal lines that either move upward or downward.
- Exponential patterns. These patterns are similar to linear, but rather than reporting on steady growth, they indicate rapid growth, a dramatic increase in a short period of time.
- Constant patterns. A constant pattern doesn’t really change, which can be both good and bad. If the sales are good, and the pattern isn’t decreasing, then the company must be doing something right. On the other hand, if the company is trying everything to increase sales, but they are steadily low, then that’s a bad sign for the business.
- Assess the difference between forecasts and customer behaviors
Even with a detailed past forecast, professionals can just rely on it, they need to have a row of predictions and solutions to various problems. For example, predictions on how customers will react to economic changes, societal shifts, and cultural norms. For perfect market strategies, past forecasts need to be combined with current market problems.
Key benefits of business forecast predictions
By introducing forecast predictions to your company’s standard list of success measures, you will experience a major positive impact. In fact, studies show that high-performing sales teams are 10.5 times more likely than underperformers to experience a major positive impact on forecast accuracy when using intelligent capabilities. Experience the following benefits of forecasting.
Expand into new markets
People nowadays have very short attention spans, which results in them migrating from market to market. Just as fast as they change their interests and markets, companies should change their products/services. Trend forecasting will indicate customer behavior changes, leaving you with enough time to integrate new strategies.
Investment decision making
Business development is about the continuous flow of money, whether that’s financing a product launch, enhancing company strategies, or investing in profitable areas. All of these decisions need to be made wisely so that a company benefits from them rather than losing money. Forecasting will allow you to identify the right sources where to put money in.
Plan formulation
Forecasting is an essential element of planning, the perfect plan consists of predictions and correct future steps for your business. Planning for all instances and situations requires you to project the future in view of circumstances and the environment.
Main tips for trend forecasting in business
To close off, here are some tips on how to act with forecasted data so that you can grab the maximum from it.
- React quickly. As soon as a potential trend emerges, act quickly to produce it, so it adheres to consumer interests and preferences.
- Use visual marketing strategies. Many trends nowadays are associated with social media, so be sure to capture your audience’s attention with content.
- Pay attention to shared opinions. For a greater understanding of your audience, pay attention to who they follow, what they like, and which content they engage with the most.
- Take advantage of technological resources. Many algorithms allow businesses to track online sales and record what items are trending, which get the most views, and what items are left in the cart.
Final thoughts
When done right, trend forecasting can act as the thin line between a successful and unsuccessful business. Forecasting trends help managers, analysts, investors, and companies make informed decisions for the company’s future success. Without a good forecasting strategy or unknowledgeable use, a company can miss out on many opportunities.