Marketing Forecasting 101: Getting Started

Creating an effective marketing forecast enables you to look ahead and project the future for your business. Things such as how many leads are generated in a given time and how the leads will move through lead nurturing are just a few ingredients to consider when forecasting. With this information, you can also predict sales, revenue and growth.

Now where do you begin? Let’s get started.

Getting Started with Marketing Forecasting:

Forecast Methodology 

1. Model Revenue Stages– Traditional sales methodologies don’t provide a clear view of what’s coming from the earlier stages of the revenue process – they usually leave out marketing forecasting. To help with this, the first part of the forecast is clarifying the revenue stages. The basic categories of stages are:
   
    - Inventory  - This is typically where leads go through nurturing until they are sales-ready.
   
    - Gate – Basically put, if a lead qualifies to go past the gate, it will, otherwise it becomes disqualified.
   
    - SLA – This is your Service Level Agreement stage. It’s defined as having a maximum amount of time to evaluate and contact a lead. If the time goes past the maximum amount of time, the lead becomes stale and is possibly reassigned.
   
   Finally, remember to define your revenue stage model based on what you define in your business rules.
   
   
2. Specify Leads – This is the point where you define the types of leads you would like to track. Since there are different types of leads, some may convert faster or some may require more time. Classifying leads may include segmenting by: company size, channel source or lead source.
   
   
3. Revenue Stage Conversions – Understanding how each of your leads move through the revenue stages with things like conversion percentage is essential to your forecast.
   
   The conversion calculations for the revenue stages are straightforward, except for the inventory stage. With this stage, you will need to consider time before you look at conversion.
   
   
4. Grab Accurate Inputs – To avoid bringing in bad information, you will need to make sure your inputs are accurate and you aren’t bringing in garbage into your forecast.
   
   
5. Revenue Stage Model Flow – Now that you have everything put together, if your data is accurate, you will create a solid projection of what will come in from your revenue funnel.
   
   
6. Look at Results and Apply Judgment – So far, everything you have put together is estimated while assuming your conversion rates will remain steady. Now it’s up to the executive team to make judgment before finalizing the forecast.

Measurements, Incentives and Trust

The next piece of the marketing forecast is the correct amount of measurements and incentives to build trust and accountability. After all, if there is no trust from the executives, there is no credibility benefit.

To build trust in the forecast, it will take some time and correct projections based off of the metrics you have put together. This is also where the correct incentives and measurements will help build trust as well.

Remember, when you reward honest marketing forecasting, you create trust in that forecast and encourages others to do better in predicting the information needed for the forecast. Once trust becomes established, the company will put more resources into it such as funding more personnel.

Along with accuracy of the forecast, don’t forget other metrics including: forecast completeness, forecast bias and forecast consistency.

Tools

Most forecasts are created and maintained with manual tools, such as spreadsheets. This is a practice that may lead to errors and isn’t robust enough to scale with larger and multiple lead types.

In order to create the right forecast, you need the right B2B marketing tools to do the job. The tool that’s right for the job must have the following capabilities: 

• Easy to use, but robust enough for the CMO and key personnel to use without requiring a dedicated person.
• Provide not only current data, but also previous data over time.
• Easily integrate with existing automation systems and the ability to minimize duplicate data.
• Ability to provide actionable insights.