Here we will show you the method for sales forecasting using total pipeline and probability of opportunities slipping, and give you this online tool to see how it works.
No doubt you are here for the tool itself, so let's begin with that.
Sales Forecasting Tool
Firstly, decide what period you are forecasting over - for example this month or this quarter. Then for that period, get the historic (but recent) win rate, percentage of opportunities that have a close date move back ("slip"), and currently open pipeline that is closing in the period.
Input below to generate a forecast.
A common mistake is to apply win rate (closed won / (closed won + closed lost)) from previous periods, to the open pipeline closing in this period.
This generally over-estimates a forecast because it excludes slipped opportunities in the win rate, but not in the pipeline it is applying the win rate to.
As such, we have included the "Slippage %" number to account for this.
Calculate Win Rate
Firstly, you will need to calculate your win rate from each stage of the sales funnel. Make sure to go far back enough that you have enough data, but also stay recent enough that the data reflects your current business and environment.
This should be [sum of closed won] / [sum of closed won and closed lost].
Calculate Opportunity Slippage %
Get the number of opportunities where the close date was pushed back to a subsequent period, as a percentage of the total open opportunities in that period.
Get Open Pipeline
Get the open pipeline that is closing in this period, from your CRM or revenue analytics system.
This is a simple method, and as such there are some limitations.
- If the mix of early-stage and late-stage pipeline has changed, the win rate being applied may not be relevant
- It is time agnostic, so does not take into account time remaining to close the opporutnities. This could have a large impact on the accuracy.
- It does not take into account features of the opportunities, such as stage, new, renewal, etc.