Sales forecasting with QuarterOne & HubSpot
After all, a sales forecast is a useful tool that informs decisions, measures performance and can drive your business forwards. Looking at how you create and manage your forecast can help improve the accuracy.
Here’s our guide on forecasting from your HubSpot pipeline, how to do it, understand it and embed it into your business processes.
Let’s get started…
Step 1
Capture your sales pipeline
You first need to start capturing your sales pipeline in HubSpot’s CRM. This means creating deals in HubSpot for both prospects and past contracts you’ve already won.
Including historic booked deals is just as important as adding open prospects – it will allow you to better understand your run-rate and the velocity of your sales processes.
To make sure your pipeline is easy to understand across all teams, invest some time creating meaningful pipeline stages that represent real steps in your customers’ buying journey. Try to keep it as simple as possible to ensure the stages are understood and applied consistently.
Once you’re capturing your sales pipeline, you’re well on your way to creating your first forecast.
Top Tips
√ Be clear on your definition of leads vs deals. Don’t add early stage leads to your sales pipeline, instead track them separately as contacts in HubSpot.
√ For booked deals added retrospectively, back-date then to the time prospects would have first entered your sales funnel. This will allow you to calculate accurate sales cycle lengths.
√ Be realistic about estimated deal close dates – deal slippage is the most common error in forecasts.
√ Frequently review your sales pipeline and clear out the deadwood.
Step 2
Decide if you need to see Sales Bookings or Accounting Revenue
Sales bookings
Are a list of deals or opportunities a business hopes to sell on a particular date– this is your raw sales pipeline.
Accounting revenue
How these bookings are recognised as income, on a monthly basis, through time – also known as Revenue Recognition.
Check our blog article: Revenue Forecast vs. Sales Pipeline – what’s the difference
This will help to understand why this distinction matters and to determine what you need to capture.
HubSpot is great at capturing sales bookings but you’ll need additional tools (such as QuarterOne) to create a detailed revenue forecast.
Top Tips
√ Think about your audience – if it’s the company board, they are more likely to be interested in a revenue forecasts than sales bookings. But possibly both.
√ If you care about tracking monthly profitability in a robust way, you’ll need a revenue forecast, not just a sales booking forecast.
Step 3
Calculate stage probability weightings
Accurate stage weightings will make sure you’re not over optimistic or pessimistic with your forecast.
If you’ve been capturing your sales pipeline in HubSpot for a while you can calculate these from your historic sales data. If not, you may need to track a few months of sales data first.
Calculate the conversion rate at each stage of your sales funnel. To do this, you’ll need to know how far through your sales funnel each lost deal went before dropping out of your pipeline. You can get this data from HubSpot but you’ll need to build a custom report.
Top Tips
√ Calculating the weighting is also a useful tool for measuring the effectiveness of your sales approach. For example, a good sales process qualifies out low probability prospects early in the sales funnel.
√ If you have a low conversion rate throughout your sales cycle, including late stages, you might not be qualifying opportunities out early enough, which means potentially wasting valuable sales efforts.
Step 4
Create your first forecast
Export your HubSpot deal pipeline and apply the weightings calculated in stage 3 to each individual deal. If you’re creating an accounting revenue forecast, deals amounts may also need to be spread over multiple months as well.
Top Tips
√ Share your sales pipeline and forecast frequently and consistently with senior management to encourage your sales team to keep their pipeline up to date.
√ Keep it simple, compare figures to targets and include insights in the email text to create optimal visibility.
Step 5
Take your forecast further by including a new business prediction
Usually, your sales pipeline only includes the deals your team are currently working on. Depending on the length of your sales cycle, this may mean your forecast is only reliable 2-6 months out as your pipeline is likely to drop-off after a few months.
What about future new business you’re not yet talking to customers / potential customers about?
By calculating the velocity of your sales team, you can predict the rate at which future deals are likely to enter your pipeline and contribute to your forecast further out.
You’ll need to consider:
– Number of deals
– Average time to close
– Average deal size
– Win rate
– Average deal length (accounting revenue only)
Top Tips
√ Calculating a new business prediction based on the velocity of your sales team is an effective way to measure your chances of hitting budget further out.
√ It also helps with setting meaningful and achievable budgets for the year in the first place too.
Step 6
Repeat
Creating a sales or revenue forecast isn’t a one-time exercise, it’s an essential part of sales management.
To make sure it’s as useful as possible, aim to update your forecast at least once a month but ideally at least once a week.
As this can be timing consuming for even the most efficient businesses, we built QuarterOne to do all the hard work meaning businesses can now have access to automated real-time forecasts without any of the hassle. Why not give it a try…
Happy forecasting!
More information
If you’d like more information on QuarterOne and how to enhance your sales forecast, please do get in touch or sign-up for a free trial.
