Rob, VP Revenue Operations at Monotype gives an incredible overview of his approach. He calls this “The Artsee of Forecasting” and shares his deep knowledge in this written interview.
About Rob Levey
Rob has worked in sales, customer success and marketing operations for over 20 years. He has helped scale business from sub $1M to over $200M, from early stage start-ups to established businesses looking to IPO. Four successful exits later, he is driven by the thrill of helping accelerate growth through operational excellence, collaboration and team accountability. Currently at Monotype, he is VP Revenue Operations and Customer Success.
For decades Forecasting has been shrouded beneath a blanket of intrigue. Part art, part science, or something I call “Artsee”. Yet, despite this aura of voodoo magic, Forecasting is possibly the most visible aspect of any business, whether public or private, the Board wants to know, with accuracy, what are revenue projections for this or next quarter.
So how do you drive forecasting accuracy (to 95% and beyond) consistently, quarter over quarter? It starts with accountability. The forecast is not the sole responsibility of the Head of Sales. It is a collective, company responsibility, including the sellers, operations, marketing, customer success, the CEO and CFO. Everyone needs to contribute to it, buy into it and take ownership of it.
Why 95% accuracy and what does that mean?
Day 10 Week 10 approach
I work off something I call the Day 10 / Week 10 approach for quarterly forecasting. What is my Forecast for the current quarter on Day 10? This provides sufficient time for the sales force to review their pipeline at the beginning of the quarter, hold meetings about key opportunities and provide us a good snapshot of the “Opening Pipeline” by Day 10. Consistency is key when looking back over previous quarters, so this cadence is rock solid for me. Then, in terms of predictability, I try not to revise my Forecast until Week 10. Again this drives consistency and predictability, but at Week 10, this provides us a final point in time to deep dive and pivot, if possible. It is also when I provide a first glance into next quarter’s Forecast.
Forecasting has changed - from spreadsheets to AI
With the introduction of advanced Revenue Intelligence platforms, the RevOps function has taken center stage in orchestrating the weekly, monthly and quarterly forecasts. No doubt Forecasting has evolved significantly over the last 10-15 years. Yet most Sales Leaders still revert to old habits - how many of us still, on a weekly basis, go through deal reviews, as a proxy for arriving at the Forecast. How are those large deals progressing?
Of course this is important. But worthless until you have categorized your pipeline. What you need to do is... categorize your deals by Forecast Category. I have seen 5 broad categories, depending on your business evolution and/or size.
Different categories yield different results
- Committed: those deals your team is confident will close.
- Weighted: the remaining (in pipeline) based on stage.
- Upside: the best case potential of the above deals (weighted).
- Run-rate: deals not yet in the pipeline, that will close, in-quarter.
- Pull-ins: deals that are outside of the quarter that get pulled in.
You might have different terms or nuances, but by creating "clusters" of similar deals, based on Forecast Category, you can now start building benchmarks...
- What revenue (% or $) typically comes from each category?
- Is the composition (mix) similar / different to previous quarters?
- How does forecast accuracy vary between categories
The last point is the key to Forecast Accuracy. The Forecast is simply drawing a line in the sand, holding ourselves accountable to “a number”, and then learning from it. And iterating.
What success looks like
- Consistent look and feel
- Buy-in from Sales Managers
- Visibility and eagerness to be held accountable.
These three things do gel together. Once you have established a cadence or formula, stick to it. Consistency breeds familiarity and muscle memory. And when everyone, from seller to CEO thinks about it in the same way, good things happen. Lastly, the visibility of “what we said” helps drive accountability.
Some parting comments
Putting a Forecasting methodology can be relatively quick. At my last three companies, it has generally taken me a quarter to get the lay of the land. But then implementing changes have to be iterative - big, sweeping changes, seldom work. What has helped me is a “show me” approach. I tend to run a parallel process for a quarter, showing what my tweaks are and educating my Forecasters (and bosses) where I see improvements can be made. A classic sand-box approach, if you like. Before you know it, your stake-holders will be saying “show me how you did that”.