In sales forecasting, what does the term "variance" refer to?

In sales forecasting, "variance" specifically refers to the difference between what was projected (or expected) and what was actually achieved in terms of sales. This metric is crucial for businesses as it allows them to assess their performance against forecasts, identify any discrepancies, and make informed decisions for future planning. By examining the variance, companies can understand whether their sales strategies are effective, assess the impact of various factors affecting sales, and adjust their forecasts or strategies accordingly. This understanding can lead to better resource allocation, improved sales tactics, and overall enhanced financial performance. The concept of variance is a key element in financial analysis for measuring performance and ensuring alignment between expectations and actual outcomes.