Definition: The Sale Force Composite Method is a sale forecasting method wherein the sales agents forecast the sales in their respective territories, which is then consolidated at branch/region/area level, after which the aggregate of all these factors is consolidated to develop an overall company sales forecast.
The sales force composite method is the bottom-up approach where the sales force gives their opinion on sales trend to the top management. Since, the salesmen are the people, who are very close to the market, can give a more accurate sales prediction on the basis of their experience with the direct customers.
There are several advantages of sales force composite forecast method.
- The intimate knowledge and experience of the sales force in their respective territories can be used efficiently.
- The responsibility to forecast sales rests on the shoulders of the sales agent and thus could be held accountable if anything goes wrong.
- Since the sales agents forecast the sales by themselves, put more efforts to achieve them.
- This method is more reliable because of a large population sample and moreover, it can be readily broken down into product-wise, month-wise, area-wise forecast.
The sales force composite method is not free from the limitations too.
- Since the sales agents are not the experts in forecasting, they cannot employ the sophisticated forecasting techniques properly and neither they have complete data to have a fact-based forecasting.
- Also, the salesman often gets heavily influenced by the conditions existing in his territory, due to which he either becomes more optimistic or more pessimistic about the future sales.
- The sales agent might be well informed about all the conditions prevailing in his territory, but may not be well equipped with the complete information about the economic environment and the industry as a whole.
- Sometimes, the sales agent intentionally gives fewer sales forecast, so that they can fetch more incentives or bonus from the management on exceeding the sales targets.
This method is again based on the judgments but is different from the jury and survey of expert’s opinions method. The difference is while both the methods depend on the judgments made by a few top executives, the sales force composite methods encompasses the aggregate judgments of the entire sales force. This method is considered to be the grass-root level method, where the forecast for the territorial sales is made first, and then the overall company’s sales forecast is made on this basis.
Aniruddha Tambe says
Very nicely explained in simple language.