Use Your Forecasts (Plural) to “Make the News”
Forecasting plays a critical role in business success. But it’s not just about having one forecast—it’s about managing three distinct types: Bookings, Financial, and Sales. It is also vital to comprehend why such forecasts are necessary for business success. In essence, forecasts are not just about “reporting the news.” They are about helping you “make the news!”
What do we mean when we say “make the news?” Simply put, Executive Leadership Teams (ELT) primarily exist to drive companies forward. Yes, the ELT must report on past performance. And yes, the ELT has an obligation to project performance for the current month and quarter. But when you get down to it, the ELT must actually guide their business to success month after month, quarter after quarter, and year after year. This takes a long-term view.
Where forecasting is concerned, “making the news” requires three things:
- Predictability: Businesses must know what bookings they will deliver long-term if they continue to operate in the status quo.
- Collaboration: Once predictions are made, the magic begins. The ELT team works together to determine how to change the status quo via capacity adjustments, demand generation investments, or efficiency improvements.
- Accountability: Once investment decisions are made, the ELT needs to measure performance and drive accountability.
Let’s dive into each of these items more deeply.
Predictability
Predictability is the foundation of success. The ELT must have an accurate, reliable, and algorithmically derived view of business bookings over a 15-plus month horizon. Absent this, it is challenging to determine how, where, and when to invest in Go-To-Market (GTM) items. “Algorithmically derived” predictability is a critical success factor for several reasons:
- Businesses must be able to account for and predict “unseen” opportunities. For example, if you have a small business segment with a 45-day sales cycle, you must be able to accurately predict what the segment will deliver twelve-plus months from now. An opportunity-derived forecast will not provide an accurate, long-term view of this segment.
- You can refine algorithmically derived forecasts using judgment-based inputs. If the forecast is derived from opportunities, your ability to run what-if, judgment-based scenarios is limited. What are you going to do? Create fictional placeholder opportunities? Layer best guesses on top of opportunities in a spreadsheet? This leads to yet another forecast that can’t be trusted.
Collaboration
This is where the magic happens–where the ELT can start making the news! When bookings are predictable, making decisions about Sales & Marketing (S&M) spending becomes much easier for the ELT team – especially when using an application or model that makes it easy to run “what if” scenarios. For example, if the ELT team sees a projected gap-to-goal six months in the future, they can evaluate investments in:
- Campaigns: Should we invest in Google Ads, LinkedIn Ads, customer marketing campaigns, or other demand-generation activities?
- Sales Capacity: Should we add sellers or SDRs?
- Efficiency: Can we improve conversion rates, increase deal size, decrease sales cycle duration, or better our win rates?
Trust in your long-term forecast makes collaborative decision-making far more effective.
Accountability
Once investment decisions are collaboratively agreed upon, the ELT can hold one another accountable. To be clear, “accountability” is not a euphemism for the “blame game.” This is where the team determines whether we are achieving the desired results and, if not, what can be done to change the trajectory.
In a straightforward example, if our collaborative what-if modeling led to an investment in a three-month LinkedIn Ad campaign designed to create qualified meetings, did we hit the desired target in month one? If not, by how much did we miss the target? More importantly, do we know why we missed the target and how we can adjust to get on track?
Predictability, Collaboration, and Accountability drive the ELT’s ability to “make the news” and are critical to your business’s long-term success.
Want to “make the news” for your business? We’d love to speak with you about this and more!
To learn more about the three types of forecasts to manage, check out this Blog Post: GTM Leaders Need to Manage Three Forecasts – Not One.