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We all want to ensure a consistent sales growth – and many companies manage to do just that – but how? This is how inbound marketing and sales can help to forecast your sales pipeline so that you can ensure consistent revenue growth.


Article inspired by HubSpot’s ultimate guide to sales forecasting.


 

Companies that enjoy consistent revenue growth normally have one thing in common: They monitor and analyse their data on a regular basis so that they always know what has to happen in order to achieve their goals.

Knowing what works – and what does not work – is the very basis of forecasting and budgeting. Also, using beneficial tools such as a CRM will have an enormous impact on the sales forecasting.

According to research carried through by the Aberdeen Group, companies with accurate sales forecasts are 10% more likely to grow their revenue year-over-year and are also 7,3% more likely to hit quota.

So how can inbound help you budget and forecast the sales pipeline?

The importance of sales forecasting The importance of sales forecasting

First of all, what is a sales forecast? A sales forecast predicts what a salesperson, a team, or a company will sell in a given period of time. This can help you get a picture of how much revenue will come in weekly, monthly, quarterly, or annually.

Sales forecasts also make it easier to spot potential issues before it is too late to mitigate them. Is the sales department trending below quota? Find out what is not working and correct it.

By discovering and facing these challenges now rather than at the end of the month – or even at the end of the quarter – you can steer the ship into the right direction to increase the sales revenue.

It also makes it a lot easier to make decisions regarding hiring and resource management and budgeting. If done right, your sales forecast will help you plan and drive growth.

 

Download ROI calculator & checklist for inbound success

How to: Sales forecasting

An accurate sales forecast requires these elements:

1) Individual and team goals – an objective definition of “success.”  

Objective definition of “success.”Inbound is a strategy grounded in specific, realistic, time-based, attainable and measurable goals. These smart goals are split into goals for entire departments or individuals so that everyone in the company gets an understanding of what is expected of them and are able to relate to the goals. These goals are all a part of the objective definition of success.


2) A structured and documented sales process that all of your sales reps are following.

Inbound is all about processes. Execute a sales process audit and find out how your sales team typically close a deal today – and whether or not all the sales reps are following this strategy.

Also, try to find out what the average time to close a deal is and how much time and money are spent on smaller value sales compared to larger opportunities. This will help you get a more efficient sales department.


3) Definitions of opportunities, leads, prospects and deals closed – Everyone needs to have the same understanding of when and how to count leads that are entering and exiting the sales funnel. Same understanding

The inbound marketing methodology is based on the idea of a sales funnel – that leads move down the funnel through a number of stages during a purchase process. The stages we work with are:

  • Visitor: A visitor to your website.
  • Lead: A visitor who has provided contact information, often when downloading content.
  • Marketing Qualified Lead (MQL): A lead who fits your customer segment and has shown additional interest in your product with their behaviour on your website and by interacting with your content in, for example, emails.
  • Sales Qualified Lead (SQL): An MQL, who, due to their interaction with your content, has come so far in their purchase process, that the sales department estimate that the lead should be contacted.
  • Opportunity: An SQL, whose sales have come into a qualified sales dialogue with and possibly has sent an offer to.
  • Customer: An SQL that has signed the deal.

4) A CRM – The sales department need a database where they can track opportunities to give you accurate close predictions. 

A customer relationship management system is crucial for sales forecasting. In HubSpot, a complete marketing and sales software used by over 40,000 companies worldwide, it is easy to set up and manage a sales pipeline with the estimated revenue – making sales forecasting easier than ever before.

Watch video: How to make the marketing department feel ownership to the company's overall goals


4 different sales forecasting methods

There are several sales forecasting methods but here are some of the most common:

Opportunity Stage Forecasting

This is based on the idea that the further along the opportunity is in the pipeline, the likelier a deal is to close. Pick a reporting period: This can be a month, quarter, or year – depending on the length of your sales cycle and the team’s goals.

Multiply each deal’s potential value by the probability it will close. If a $1,000 sale is 40% likely to close, your forecasted amount would then be $600. Doing this for each deal in the pipeline, you can add up the total and get your overall forecast.

This is a relatively easy way to create a sales forecast; however, the results are often inaccurate, and you need to trust your salespeople to clean up their pipelines regularly.

Intuitive Forecasting 

Many companies simply ask their sales reps to estimate the likelihood of closing. Although this might be a good way for startups that have no, or very little data, to lean on, this method is impossible to verify.

To see whether or not a prospect, in fact, is likely to close, someone would have to shadow the salesperson’s meetings, calls and conversations.

Historical Forecasting

A third way to do forecasting is to look at the same time period in another month or another year and assume your results will be equal to, or higher than, those results.

Although you can add historical growth to the calculation, the method still doesn’t take into consideration that some months are bad for sales or that the buyer demand decreases in periods. That is why historical demand should be used as a benchmark, not as a foundation for your sales forecasts.

Multi-variable analysis 

This method takes into consideration a number of factors such as average sales cycle length, individual sales rep performance and the probability of closing based on opportunity type. This type of forecasting tends to be the most accurate; however, you’ll need an analytics solution and salespeople that are dedicated to tracking their deal progress and activities to get more accurate forecasting.


If you wish to learn more about the inbound methodology and how you can increase the company’s ROI by implementing it, we have the starting kit for you: ROI calculator and checklist for inbound success. Download now and get started!

 

Download ROI calculator & checklist for inbound success

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