Sales Forecast
A sales forecast is an estimate of how much revenue a sales team expects to close in a given period, based on its current pipeline, historical results and the judgment of its reps and managers.
Also called: revenue forecasting, forecast accuracy
Why it matters
Forecasts drive decisions far beyond sales: hiring plans, spending, cash planning and what leaders tell boards and investors. A reliable forecast lets a company act early when a quarter is at risk, for example by adding pipeline or pulling deals forward, instead of finding out at the end of the period.
Common methods include weighting each deal by the probability of its stage, asking reps to commit deals into categories such as commit and best case, and using historical conversion rates. Forecast accuracy, how close the forecast came to actual results, depends heavily on clean CRM data and consistent stage definitions.
Example
A sales manager has 1.2 million dollars of pipeline due to close this quarter. Weighting each deal by the historical win rate of its stage gives 420,000 dollars. Reps commit 380,000 dollars of deals they are confident in. The manager forecasts 400,000 dollars and flags two large deals that would move the number either way.
Questions people ask
Can you use AI to do your forecasting?
AI can help, for example by spotting deals that look at risk from their activity, or by comparing the pipeline with past patterns.
Turn the definition into a working system.
We build the RevOps systems behind terms like this one. Tell us where your pipeline breaks and we will show you what we would fix first.
