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Why are my sales forecasts always too optimistic and how do I fix it?
Persistent over-forecasting usually comes from targets influencing the numbers, ignoring stock-outs or returns, over-weighting promotions, or models trained on a growth period. Measure bias, separate forecasts from targets, and then correct either the process or the model, for example by calibrating against past errors.
A forecast says what you expect; a target says what you want. Mixing them produces bias.
Steps:
- Track signed error by salesperson, region and product group.
- Share the bias results openly and without blame.
- Remove incentives that reward high forecasts, or penalise low ones.
- Test a bias correction factor in backtests.
- Record and review the assumptions behind large upward adjustments.
Once bias is visible, it is often among the quickest accuracy gains available.
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