Most founders and sales leaders are lazy with forecasting. They rely on close rates and overlook the details in the pipeline. Get your forecasting done right and never miss your number again.

I have yet to meet a founder or sales leader that is perfectly happy with how their team forecasts. It’s the way of life in SaaS sales. Your pipeline is constantly moving. Your sales efficiency ebbs and flows. Turnover, ramping hires, holidays, seasonality, big deals falling through, the list goes on.

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In the 10 years running Levelset’s revenue team, we never got it all the way right. We were always off by at least 5%-10% for the month. We thought bookings were going to come from AEs that didn’t produce. We were surprised when revenue came from opportunities we thought were dead. A lot can surprise you over the course of a month or quarter, which is why forecasting is so difficult at every stage of growth.

Here’s the deal: forecasting revenue is a team skill. It requires coordination from everyone on the team. The CRM has to be set up with the right fields and the reps need to keep it updated (the bane of every salesperson and manager). The team has to come together on a regular cadence and prune through the pipeline to make sure deals are on track.

Sure, you can get fancy forecasting and pipeline management tools like Clari or InsightSquared. Those are helpful, but they won’t do the real work. There is no shortcut, you have to go through each deal in your pipeline. That is how you make the number happen.
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“Probabilistic Forecasting”

Most founders and sales leaders mistake forecasting by assigning a close rate percentage to each stage of the sales process. For example: "I have $300k in stage 6 opportunities. These opportunities close at a 70% close rate based on past performance. So I am forecasting 70% of $300k, or $210k in bookings for the period."

I call this “probabilistic” forecasting. This is a sure fire way to miss your bookings target. Let me explain…

When you are applying a close rate to each stage of the pipeline, you are overlooking the important details that turn an opportunity into a customer. You cannot assume that each opportunity is being run according to the playbook. Even if you have the best and most responsible salespeople in the world, you have to check the pipeline to make sure all deals are in line. You have heard the saying before: “what gets measured gets managed”.

Without getting into the details of each opportunity, you will have deals slip from one month or quarter to the next. This is why most sales leaders miss their number: deals push.

Instead of relying on the close rate to forecast revenue, you have to count the amount of each deal. Your forecast can be split into two parts:

1. Commit: the sum of all deals that have a clear path to getting a “yes”.
2. Best Case: the sum of all deals that have a chance to close but need more work.

This is the only way to forecast. Going deal-by-deal and summing up the amount of each opportunity that you and the team expects will close in the period.

Getting Granular in the Pipeline

Here’s how forecasting usually looks in early stage companies: you have your sales process set up in stages, each stage corresponding with the stage of the customer’s buying process. (side note: if you haven’t spent time building your sales process, check Sales Process Blueprint here).

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The sales process stages should look something like this:
1. Expressed Interest

2. Discovery

3. Evaluation

4. Negotiation

5. Closing Plan Set

6. Closed Won

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In order for an opportunity to be real, it must meet the following criteria:
- The prospect/company meets the Ideal Customer Profile

- There is verbal or written expressed interest in evaluated the product or service as a solution for the business

- There is a clear next step with an accepted invitation or meeting on the prospect’s calendar and on your team’s calendar

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The early stage opportunities are those where the buyer is still trying to figure out whether the product or service is the right fit for their business. They are seriously considering the product, but they aren’t convinced yet that the product is going to deliver value for the business. In our example sales process above, the early stages are likely Expressed Interest, Discovery, and Evaluation.

Once a customer has evaluated and decided that they want to implement the product or service, it is time for you to Confirm the Champion. This is simple, but surprisingly difficult for AEs to implement in practice.

A champion is someone in the organization who will fight through entrenched internal resistance to implement the product or solution. This is the person who will coach you and your team how to navigate the buying process for the business. They will tell you who the executive sponsor is. They will represent your company in every internal meeting and conversation that you don’t get to join.

The champion is critical to the deal. If you don’t have a champion, you don’t have a deal.

So how do you get a champion? You ask them!

It’s easier said than done. The timing is important. But once you have gotten an opportunity to the point where you are talking about pricing, you have already demonstrated value and supported the customer in their evaluation. You have earned the right to ask. So ask them: “are you ready to buy our product?”

It will be uncomfortable or awkward, but a simple question will give you an answer. The customer will either commit and help you navigate the buying process, or they will give you a reason why they don’t want to buy. Both of these are positive movements in the opportunity.

The worst thing that can happen in a deal is what I call a “slow no”. These kill your pipeline. They waste your time. They make it impossible to forecast your bookings performance.

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Stay away from the “slow no”, confirm your champion, and create a Closing Plan to complete the purchase.

This is the final important step for each late stage opportunity. Once you have a champion, you must immediately create a plan to get the deal closed. This plan should be detailed, confirmed by email, and agreed upon by both you and the champion.

Most reps skip this part. They assume that the prospect will just give them money. That’s not how it works. You must ask the prospect to purchase and you must guide them through the buying process.

Acknowledge that your prospect doesn’t buy products or services like yours very often. They are uncomfortable and lack the practice at getting the deal done. That’s what the sales team is there to do, to help the prospect navigate their company’s buying process so that they can implement the product or service. When you frame it this way, the job of selling becomes a whole more valuable to the prospect.

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So help your prospect. Set a closing plan. Set a date with clear action items that must be completed before that date. Implement a “time-based incentive” for getting the contract signed by the agreed upon date. Get the executive buyer on the phone to make sure they are bought in on implementing the solution for the business. Be as specific as you need to on the closing plan to make sure everyone in the process knows what needs to happen to complete the sale.

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Three Moments of Truth

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As you go through pipeline, you can look for evidence that the sales process has been followed:
- does the opportunity have a clear next step

- does the opportunity have a champion

- does the opportunity have a closing plan and a time-based incentive.

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These three criteria, or “moments of truth”, are necessary to get each deal over the line. I learned this from Barrett Foster, a friend and mentor who has built many companies to $100MM and beyond. We implemented it at Levelset in 2018 and never had a down quarter after that.

This playbook works for every B2B business, whether you are selling software or selling HVAC services. Running this playbook gives each opportunity the best chance to close. It is not a guarantee that the deal will close. You may even have some deals close quickly without having to run each part of the playbook. These are exceptions to the rule, however, and you cannot building a predictable and repeatable growth engine without having discipline in the pipeline.

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Getting Your Forecast Number

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Once you have reviewed each deal, you are looking for the three moments of truth, you are pushing on each rep to align each opportunity to the playbook, the math becomes easy:

- add up all the deals that have a clear path to closing. A real closing plan that has been communicated to the customer. These are your "commit" deals.

- make a list of deals that have a chance to close but need a little more work. For example, you need to re-confirm the champion or set a meeting for the next step. These are your "best case" deals.

Early stage founders and sales leaders should be reviewing this daily at their desk, especially toward the end of a bookings period. Weekly, the team comes together to review the forecast and to dig into specific deals in the pipeline.

This is the opportunity for leaders to catch people doing the right thing. Find the deals that are executed according to pipeline and celebrate them with the team. Find the deals that need some work and coach the rep how to get the deal over the line. The team wants to see you get active and get your hands dirty. No time to hide behind reports and spreadsheets. Get into the deals and help your team get wins.

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Never Miss Your Number

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Now you have your to-do list as a leader. Nothing else matters except for making sure you have enough deals in "commit" to cover your number. Not hiring, not "executive responsibilities", not that weekly marketing meeting that you need to attend. Nothing matters until you have enough pipeline to cover your number.

Get granular in your pipeline. Build your forecasting skill by regularly working the pipeline with your team. If this doesn't sound like forecasting to you, welcome to the jungle. This is how you make the number happen. It's how you actually forecast your bookings number. Part math, but mostly just working the pipeline.

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