Sheriff

Sales Trainer

How the fuck do you Forecast

As some of you may know I betrayed our fine profession and moved over to sales enablement last year to try and make it suck less. One of the areas I find especially challenging to train new AEs on is forecasting. I personally sucked at it and usually just called my number and edited it as deals appeared or disappeared.

Does anyone have a method, system, training, sacrificial rite that has helped them get better with calling their number?

👑 Sales Strategy

☁️ Software Tech

😎 Sales Skills

75 comments

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sahil

Notable Contributor

Deepak Chopra of Sales

Hey @Sheriff - great question! Forecasting is HARD because new reps don't have the confidence to ask the decisive questions needed to establish a timeline / likelihood of closing. The only way to get better at forecasting is by helping your team consistently ask the following questions at the end of calls: == "Okay, let's recap and align on next steps... 1. What needs to happen between now and when you make a final decision on which vendor you're gonna move forward with? 2. Is there an internal timeline for making a final decision? If so, what is driving that? 2b. Is there a chance you just won't move forward with any vendor / shelf this project? Or is this critical for your team to solve now? 3. What are the top 2-3 reasons you'll pick one vendor over another for this project? 4. And based on that, where do we stand currently? 5. Is there anything I can do to win your business? 6. When is the right time for me to follow up next?" == After you get reps asking and noting down the responses to these (or very similar) questions, you'll start to get a feel for which prospects are ACTUALLY interested vs those who are less likely to pick your solution. Hope this helps.

paddy

WR Officer

Director of Business Development

I usually just cut a chicken's head off and have it run around on a giant checkers board with random numbers in each square. Whichever square it lands on is my forecast for the month.

youKNOW

Politicker

Sales Manager

I'm about the same...bring in the Angel of Death and we read the bones. Usually turns out better than any number I come up with on my own.

Trinity

WR Officer

BusDev

Hahaha. I just use a dartboard

someoneinsales

Tycoon

Director of Sales

Commit everything and say its a gut feeling.

CuriousFox

WR Officer

🦊

I CACKLED. 😆

someoneinsales

Tycoon

Director of Sales

That was legit a forecast field of one of my companies. Commit, Best Case, Pipeline and Gut Feeling. It was wild.

barney2021

Tycoon

Account Executive

Ahaha so did I

Sunbunny31

Politicker

Sr Sales Executive 🐰

I swear our SVP had "Gut Feeling" as a column on his .xls.

someoneinsales

Tycoon

Director of Sales

If the gut is rumbling the deal is tumbling

nozzles

Good Citizen

SDR

Omg 🤣

beerisforclosers

Politicker

Account Manager

LMAO

UrAssIsSaaS

Arsonist

SaaS Eater

Grab a 30 rack of Coors light and drink as many as I can in an hour. The number I get down is the number of deals I forecast for the quarter. Take that number and multiple it by current AQI in Lake Tahoe and that is my forecast for the quarter. Usually comes out to about $1 million

CoorsKing

WR Officer

Retired King of the Coors Knights

This is the way. You then need to use those cans to build a javelin to establish your claim as alpha in the office

UrAssIsSaaS

Arsonist

SaaS Eater

I love this. I dont work in an office anymore but I will use this to establish my claim as the alpha in my neighborhood.

BigCheese

Notorious Answer

Agency Recruiter

Coors King of the Culdesac

CoorsKing

WR Officer

Retired King of the Coors Knights

The Coors truck stops at my house on the way to BevMo - this is the privilege that comes with being the Coors King

UrAssIsSaaS

Arsonist

SaaS Eater

Brilliant

UrAssIsSaaS

Arsonist

SaaS Eater

With great power comes great responsibility, and sometimes incredible riches

hh456

Celebrated Contributor

sales

get some data, then reverse engineer.

okay i made 350 calls this month, i got 20 meetings, i got one deal. each deal is worth $100,000, i need $2,000,000 to hit my quota.

therefore I need

quota: 2,000,000
deals: 20
deals per month: 1.66
sql's per month: 33
calls per month: 875

thats how you forecast.

MCP

Valued Contributor

Sales Director

Yeah, that’s not forecasting, that’s playing the numbers game for KPIs

hh456

Celebrated Contributor

sales

sorry i'm stupid.

CCP

Opinionated

VP, Business Development

You had the correct answer for a different question. So not nothing? Haha

poweredbycaffeine

WR Lieutenant

☕️

That's a sales plan, not a traditional forecast.

Forecasting is based on historical close rate, current pipeline, sales velocity and other operational data modeling, with the goal of predicting what will be closed this month, next month, next quarter, etc.

@Sheriff are you trying to coach reps to reverse engineer like Girizzle has mapped out, or are you trying to model your funnel to predict future sales?

Sheriff

Politicker

Sales Trainer

Predicting future sales would be ideal, but if I can get them to call a number that they will be within +/- 5% that would make the management team happy.

hh456

Celebrated Contributor

sales

f me in the a then, my b

poweredbycaffeine

WR Lieutenant

☕️

So, yes, you want to predict future sales.

hh456

Celebrated Contributor

sales

@Closeitalready read this you lil bish

CCP

Opinionated

VP, Business Development

Maybe I misunderstood the question but this seems more like how to coach a sales rep on how to achieve quota (which is a great breakdown, btw) rather than forecasting a revenue (or whatever) number, no?

Sheriff

Politicker

Sales Trainer

Scope of this question was forecasting revenue, even if it isn't near their number. Looking to train for accuracy more than hitting a specific spot.

CCP

Opinionated

VP, Business Development

(Close Ratio x Pipeline Number)-Sandbag Buffer = Forecast

poweredbycaffeine

WR Lieutenant

☕️

Well, I'd go find someone you trust to teach you how they properly forecast. I only moved to ops well after I had built and ran sales teams, and I still struggle to keep up with some of the more advanced reps out there. Alas, here's my suggestions:

Find a rep or leader you trust and learn from them. Also, read up as much as you can on the topic. Here's a great article on the subject: https://www.clari.com/blog/how-to-create-a-sales-forecast/

Since you weren't good at it when you were a rep, you now have the opportunity to become tactically proficient at it as an ops professional.

Do.it.for.the.checks

Politicker

Account Executive

Never ever I mean ever put anything into commit. They sign a contract still keep the bad boy in best case.

After that call 1 dollar more than your highest colleague.

Sunbunny31

Politicker

Sr Sales Executive 🐰

It's never in commit until the virtual ink is cold on the contract and management has already forgotten about the deal and is looking for 2H data.

TheNegotiator

Arsonist

VP of Sales

Very easy. Here is the secret. . Pull that shit, directly out of your ass. Then write a sophisticated and well-worded disclaimer that expresses the variability and uncertainty around your forecast, then crack your first beer at 12:30 on a Friday and leave the office no later than 2PM.

SaaSData

Catalyst

VP of SaaS & Unit Economics 🏴‍☠️

The mark of a great soldier/mercenary is that he fight on his own terms or fights not at all. (stole that)

Keep that in your head if you are an IC with a quota. You don't forecast, period. There is nothing gained from it at all. Avoid it. The cost is negative, 100%.

There is absolutely no way to forecast accurately in SaaS Sales. SaaS is bought on an emotion, that's why it's so much cheaper than perpetual licenses. There are no budgets, so you can't forecast these deals like you could in perpetual software.

Do not play into it.

As a SaaS Sales Leader. I would never let my Sales Team forecast. Why would I? It's a dumb idea. The job is hard enough. I didn't do forecast calls. We just talked about how to get the deals done.

Scientifically the only people who can forecast are detached from the outcome emotionally and wouldn't lose their job if the deal didn't come in.

Leadership Teams will buy Gong, Clari and tracking the world you live in but here's how you forecast....

When I ran Data for a few CROs, we'd just look if the customer was communicating. That's the real way to forecast. We all know it can't be any different.

Never give a manual Commit Forecast. Hold back. Whenever they ask why you never Commit anything, just don't do it.

Make them change it in Salesforce. Never touch the Commit button. You can't cash that check.

Only talk about RISK, bring bad news every day to forecast calls. Every minor thing. Every SE issue. Every issue with their procurement. Every issue with their legal. Everything should make it painful to listen to your forecast. But know the details of these things intimately. That's what you want.

On your forecast calls, talk risk. Nothing else. Tell them exactly why it won't close, but try to close it course.

The worst thing you can possibly do is surprise a Sales Leader at the end of the quarter with a deal falling out. They hate that because it's how they get fired. Avoid putting anything in commit, even if your customer has the PO ready to send over.

Companies that use manual forecasting are still playing games. These things could not be more inaccurate.

Be a savage about it. Make it so hard for them to get. Commit nothing.

It's not good for you. It will slowly kill you overtime.

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

@GrizzleMcThornBody and @poweredbycaffeine should have some good thoughts

hh456

Celebrated Contributor

sales

you're getting slow @InQ5WeTrust

BmajoR

Arsonist

Account Executive

He's been slow, but it's okay. We still love him. Every day he's with us is a blessing.

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

I'm an old SDR. Only so much grit left in these bones.

hh456

Celebrated Contributor

sales

i will buy you whole milk

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

Thanks papa grizzle

BmajoR

Arsonist

Account Executive

This is getting weirdly sexual. I'm down with it.

hh456

Celebrated Contributor

sales

your name starts with Dildo

BmajoR

Arsonist

Account Executive

Yeah because Bilbo was already taken.

hh456

Celebrated Contributor

sales

BilbosDildo wasn't available?

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

You can be honest, bilbo wasn't taken, now was it?

BmajoR

Arsonist

Account Executive

Apparently nobody here watches South Park. Last time I come to this Wendy's, I'll tell you that much.

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

Whatever you say manbearpig

BmajoR

Arsonist

Account Executive

Are being thuper cereal right now?

InQ5WeTrust

Arsonist

No marketing, mayo isn't an MQL

You can suck my chocolate salty balls if you think otherwise

hh456

Celebrated Contributor

sales

sheyyutttt

RealPatrickBateman

Politicker

🔪Amateur Butcher🔪

Allow me to take a stab at what you're looking for here...

Say you have 5 active deals, each worth $100k
-> 5 x $100k = $500,000

Account for the probability that a deal will close (BE REALISTIC)
-> Deal 1 for $100k has a 50% chance of closing
- $100k x 50% = $50k into forecast
-> Deal 2 for $100k has a 25% chance of closing
- $100k x 25% = $25k into forecast
-> Deal 3 Rinse and repeat
-> Deal 4 Rinse and repeat
-> Deal 5 you get it

Take the total of each deal size times the probability of each deal closing and you come up with a "Forecast".

If each of the 5 deals for $100k has a 50% chance of closing, then your forecast is $250k.

Hope this helps. Oh, and fuck Gong.

Bateman, out.

MCP

Valued Contributor

Sales Director

With smoke & mirrors.

RedLightning

Politicker

Mid-Market AE

try a mixed system. Pull all pipeline stages and find the win rates and make that "your" forecast. Have reps input a percentage chance of closing for deals past a certain stage.

Mixing those may give you a good idea

UrAssIsSaaS

Arsonist

SaaS Eater

On a more serious note we use the DIICE sales methodology and assign a probability to close to each stage. From there you multiple the probability by projected deal size and it gives you a scaled forecast for each deal in the pipe. Add em up and there is your forecast for the quarter/year/whatever you need.

Disclaimer: It's not the most accurate forecast in the world, but what is. It give you a ballpark on what to expect though.

LordBusiness

Politicker

Chief Revenue Officer

What’s are your companies opportunity stages? What are the weighted % on those opportunities stages. What guidance does the team give for opportunity updating. Forecasting is only as good as the pipeline is managed.

nomdeguerre

Executive

Account executive

My practical approach is: never forecast a deal unless you already have a verbal and are in the closing process, i.e. legal and commercials review etc.

My opinion is that basically all organizations do forecasting the wrong way since they are forecasting deals whereas the right thing to do is forecasting numbers not deals. What I mean by that is that the organization needs to collect valid statistical data on sales process time, average winning percentage etc. Then you look at what you have in pipeline in different stages apply your statistics to your pipeline to calculate the forecast.

The problem is that no organization bothers to collect that valid data, so they end up forecasting individual deals, but the problem is that that forecast depend on predicting human behavior which of course is completely impossible.

However, of course the entire forecasting process is complete political BS and has nothing to do with reality. You know that because when you actually forecast the real number which in founding in reality your manager will call you and say, we can't forecast this number it is way too low. He will say I have to commit $xx in order to align with the goal of the organization's budget, so you have to forecast a bigger number.

Then we are back to what everybody is basically saying, get drunk and pull a number out of your ass, and your manager will say oh yeah thats a great number (nevermind that it has nothing to do with reality)!

Trinity

WR Officer

BusDev

☝️💯I used to work in a B2B2C environment with 2 forecasting softwares and used them for qtr/annual guidance

Wolfof7thStreet

Valued Contributor

I basically guess and make spreadsheets with my guesses and some formulas so it looks smart hahahaha oops

artofsales

Good Citizen

Sr. Director of Enterprise Sales

@Sheriff - Forecasting can be a painful, tedious process always. But if done right, can help a lot of internal teams as well. Two approaches for the start- Top down, and bottoms up. Top Down - The leadership decides on the growth they need to achieve this year. They get a number. Sales leaders now work with sales managers to know what contributions will come from each territory/team based on avg ticket size, team size, conversion rates and # of leads generated... You iterate backwards and see if the plans align. You might have to hire more, or may be need to open up new segments by adding product features or maybe get more capacity. Sales leaders go back and work out on what's possible and add stretch goals which gives a flavor of aspirational growth. Bottoms up - Get the pipelines of individual reps, put in the future additions that might come in based on historic figures (# of calls -> meetings -> converts X ticket size) .. work you way upwards + aspirational growth of org. Every org uses variations that work best for there business.. but you get the idea.

artofsales

Good Citizen

Sr. Director of Enterprise Sales

Adding to this... I agree with @Sahil . Asking those questions will give a more quantifiable method to arrive at probability of each deal in the bottoms up approach.

JustGonnaSendIt

Politicker

Burn Towns, Get Money

Are you asking about legit forecasting? Or that "Are you committing Deal X" question we all hate.

If it's the commit question - That's more a matter of politics and expectations on your team than anything concrete.

If it's more the former, legitimate forecasting, read on -

There are two fundamental ways to approach forecasting - Top-down and bottom-up. A good forecasting process involves both with a meeting to compromise between the two and decide a go-forward plan. This is good to do on an annual basis for quota setting and budgeting. For more granular forecasts

A top-down forecast starts with strategic objectives, which gets translated into tactical objectives for each line-of-business. Based on the growth rate you need to achieve these objectives, you generally apply some growth rate calculation to the current cycle's budget to meet these new goals, plus some to manage uncertainty.

For the sake of example, let's say your team ran a $10 Million quota for FY21, and you need to grow by 5% to meet your objectives and hedge against uncertainty. Your top-down sales forecast for the team may be something like $10,500,000

A bottom-up forecast is more scientific in nature. You would do a total addressable market analysis, remove the segment of the market that you already own, apply some market growth calculation, and then derive your forecast based on your win-rate.

So let's say you operate in a $10 Million annual sales market that is expected to grow by 5%. The TAM is $10,500,000. You already own $2M of the market, so the opportunity is $8,500,000. But you only win 30% of the deals, and the deal lifecycle is 9 - 18 months. So a reasonable bottom-up forecast should fall between 15% and 25% of that $8,500,000 market opportunity, or between $1,275,000 and $2,125,000.

A good practice is to have management perform a top-down forecast (usually happening anyway for budgeting purposes) and then provide TAM data to reps. Reps can then build the bottom-up forecast based on simple math using their win-rate or your team's average win-rate and a customer list to determine how much of the market opportunity they have on their plate.

This is a pretty simple overview, the subject of forecasting is literally one of the most complex mathematical subjects you can get entangled in. Many large companies invest significantly in consultants and software to help them perform this task.

pirate

Big Shot

🦜☠️ Account Executive

Well this is my logic 😅 Salesforce & Clari. It's just educated guessing.
Say I have a quota of 100k for the month. I look at all deals that have a chance and at the beginning of the quarter do an optimistic guess... Ideally forecast 100% of quota. Sometimes 50-75% of quota could pass if you have valid excuses (new joiner, summer, etc.)

Halfway through the quarter, usually forecast needs adjusting when I have better idea of what's coming in. If it's not in solution defined, it's not going to happen... Clean up all shady deals from committed by moving them out the quarter or by placing them in best case and guess again

End of the quarter: forecast should be nailed down. Your committed deals better happen. Best case deals preferably should happen. There should be 0 deals in pipeline stages (solution defined and under, unless POC can be finished before EoQ weeks and SE can back you up)

If you commit to 100k, in a perfect world, you should have another 50k in best case and 2-3x50k in pipeline at the beginning of the quarter. End of the quarter just commit deals and back up in best case. Keeping deals in best case can give impression that you're sandbagging or lack faith in yourself.

If you don't know about a deal at all, chances are it's not going to close.

That and preparing a story for every deal (next step) and gauging at my manager's reactions to my forecast commentary 🤷🏼‍♀️

SiliconBBQ

Politicker

The Metal Rooster

lick my thumb, hold it in the air, and determine which way the wind is blowing.... seems to be less fickle than human emotions

TheRealPezDog

Notable Contributor

Account Manager

I don't have any solid advice for you but forecasting sucks and is 'educated guessing' at best. Nothing is worse than taking something someone has such little control over and making them try to predict the future. The fucking job is hard enough... So I guess I DO have some advice for you: Try to move to a model of LESS FORECASTING, because you know, it sucks.

beerisforclosers

Politicker

Account Manager

We're all just telling a story but honestly, if you just trust the linearity metrics you're probably gonna get there. And if you don't, have a story hahaha

MCP

Valued Contributor

Sales Director

https://m.youtube.com/watch?v=x1Kz6DpIlag

Hoopnip

Politicker

Commercial AE

I agree with some of this …however I wouldn’t recommend working for Salesforce or any mature company who has an established sales process. It’s literally part of the job of committing both on paper and in CRM. That’s how the business is run and your lowest commit is considered “blood numbers “.

Justacoupleofbeers

Account Executive

POC count it as 50%, technical win count it as 25%, forecast as low as possible with a best case including deals you know you're gonna close. Sandbag the shit out of anything that's going to take away from your accelerators if you have a cap. Works like a charm

johngalt

VP USA

Annie Duke shared a good exercise during the webinar early this year:
1) establish baseline probabilities for closing based on historical records (for new reps, historical data for the team can be helpful)
2) adjust prob based on extra info (for example, good answers to @sahil recommended questions).
3) get expected values
4) recalibrate over time.

bigiron

Territory Manager

A good rule of thumb: At the beginning of every quarter have your commit number equal 80% of your quota. Fill that commit with random deals. As the quarter progresses you're able to do shuffle deals in and out so that real deals replace the random ones, and you can slowly increase your commit based on real business. As the quarter goes on your commit should steadily rise until you get into over-achievement numbers and when you finish the Q above plan you look amazing.

Jerry_the_cheese

Valued Contributor

Sales Manager - Pharma

I fucking love the honesty here.

Something I've noticed since my UK company was bought by a US company is a real difference in approach when discussing forecasting.

In the UK if you ask how some sales were forecasted you're likely to hear comments like "oh I consulted my crystal ball" or "my online horoscope said I would get lucky"

With US colleagues they are very adamant they spent hours and hours on this and get very irate if you try and ask for any further explanation on how this was done.

Clearly, it works for them (at least when dealing with management) but at the end of the day, its all crap of equal value, best thing you can do is try and get away with as little forecasted amount as possible without raising eyebrows and do the best you can to crush it

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Sheriff

How the fuck do you Forecast

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