How to forecast with Outreach
To deliver on their number, CROs, and sales leaders must run a predictable revenue organization that removes pipeline uncertainty for maximum forecast accuracy. Yet, traditional approaches to forecasting make predictable execution difficult. Siloed tools like CRM, spreadsheets, and BI are highly susceptible to human error. Sales leaders spend valuable time trying to piece together their number that could be better spent on managing their team to deliver it.
Pair this with inconsistent and subjective visibility into deal performance and you have a recipe for underachievement. Without reliable methods to qualify deals, leaders are left without a complete picture of pipeline risk and see deals lost or slip at the eleventh hour.
As a sales execution platform, Outreach can help you efficiently create the pipeline you need and provide sellers with the tools they need to close more deals. In this guide, we’ll show you how to use Outreach to understand your pipeline, spot risks that could impact your forecast, call your number, and model future outcomes.
Understand your pipeline and what’s on track to close
In order to forecast accurately, you first need to get a bearing on the movement of your team’s pipeline. In particular, how much pipeline you are generating and how that pipeline is pacing to close. Like navigating in a car with GPS, you can’t possibly determine when you might arrive somewhere without first knowing where you are and how fast you’re traveling.
Similarly, Outreach creates a win-and-loss model for every team and seller in your organization based on your opportunity history, so you can:
- Reinvest time previously spent on analyzing data to understand win rates and coverage into helping your team close their deals.
- Spot pipeline coverage gaps early so that you can act to fill them before they put your forecast at risk.
The Pipeline dashboard will help start your analysis by telling you where your team stands against the current period and annual quota, while also showing current bookings, gap to quota, active pipeline, and days remaining in the sales period.
Within the progression bar you are provided with a stage-by-stage breakdown of:
- Deals that have progressed to a future sales stage or forecast category
- Deals added to a specific sales stage or forecast category
- Deals from that stage that have pushed to a future sales period
- Deals from each stage that have been lost
Total projected finish
Inspect where you might end the sales period using the total projected finish. Think of this as a second opinion on your forecast that is calculated using Outreach’s win modeling.
Rather than just providing you with a single opaque projection, Outreach breaks down how it has arrived at the current projection. This includes:
- How much pipeline your team has been closed won to date for the period
- A projection of your remaining weighted pipeline, or how much of your open pipeline you might expect to win.
- The amount of intra-quarter sales remaining for the sales period. These are sales that aren’t in your pipeline yet but which are likely to come in and close before the end of the period.
- How many deals your team is likely to pull into this period from a future sales period
Your weighted pipeline provides a quick gut check on whether you have sufficient pipeline to hit your target based on your historical win rates. It can also help confirm or check opinions your organization holds, for example, the percentage of early-stage deals you expect to win before the period ends.
If you’re interested in learning more about your win rates at each sales stage, you can use the win and loss report in the Pipeline Dashboard to learn more about the length of the sales cycle and conversion rates for each sales stage or forecast category.
Pipeline coverage modeling
Outreach’s coverage modeling helps you understand how much pipeline you need relative to your target in order to hit it.
The historical coverage report shows you your average coverage requirement based on your last four sales periods, which you can quickly use in conjunction with your open pipeline and gap to quota to see what you’ll need to create.
However, it's not just enough to know what you’ll need for the current period. You’ll also want to know how much you need for the next sales period before it starts so that you can ensure your future targets are supported by enough pipeline to hit them.
The next period coverage report shows you how your coverage for the next sales period is trending on a weekly basis.
Pipeline movement report
The pipeline movement report will help you understand the historical movement of your pipeline in context. You can think of this like reviewing game tape from a sporting event or rewinding a movie. When looking back at the past week, month, or quarter you don’t want to just know what happened with your pipeline, you want to know how it happened.
Pipeline movement can help you answer that question by showing you what was in the pipeline at the time and how it converted — whether it was won, lost, or maybe pushed to a future sales period.
Spot individual opportunity risks that could derail your forecast
No one likes being surprised at the eleventh hour by slipped or lost deals that derail your forecast. In fact, only 25% of sales leaders have the tools they need to spot and save at-risk deals in their pipeline.
All of Outreach’s reporting is designed to help take you from the aggregate view of your pipeline down to the individual deals that make up that pipeline. Now that you’ve been able to spot any systematic pipeline risk, such as gaps in coverage, you can use Outreach to help build confidence in the individual deals included in your forecast.
Within Outreach’s deal grid, you can use Deal Health insights for each opportunity to easily spot deals that are at risk by examining the color and the number of the health score.
- Deal Health Score of 75-100: Opportunity is On Track
- Deal Health Score of 30-74: Opportunity Needs Review
- Deal Health Score of <30: Opportunity is At Risk
The health score showcases the detail on the top attributes, both positive and negative, that are contributing to the score. The relative score measures deals against those deals of a similar size and stage to deliver an accuracy in the likelihood of deal closure of 81%.
More importantly, each score also provides suggested actions to get the deal back on track and turn a potential loss into a win. These targeted actions show the most impactful positives and negatives related to the health of each deal.
Deal Health Trends further clarify how an individual deal’s health is changing from week to week. This can be your first indicator that a deal in your forecast is starting to fall off track so that your team can act proactively to correct it.
For deals where you want to dig in deeper and get a more detailed view of success criteria and progress, Success Plans help provide you with all the context on steps taken in the deal. Success Plans present another opportunity to enforce adherence to sales methodologies, and ensure that deals in your forecast are uncovering obstacles early in the deal before they become surprise risks.
Call your number
Now that you’ve reviewed your pipeline and inspected individual deal risk, it's time to submit your call. By having the roll-up process automated, you’ll save valuable time each week on preparing the forecast that could be reinvested into managing the business to deliver the forecast.
Automated forecast rollup
Within the ‘forecasting’ tab, you will find the automated forecast roll-up. This rollup automatically displays the forecast calls for all the teams and reps that report to you. Across the top, you will also see the different forecasts that are available to you and which were configured using parallel forecasting.
Once you have the number you plan to forecast, you can use Outreach’s Scenario Planner to ensure that the distribution of potential outcomes supports your call. You should be asking yourself “is the call I am about to submit really supported by the data”?
Within the scenario planner, select the current sales period, the team you want to model for, and any other pipeline filters based on the fields you have synced to Outreach.
Scenario Planner will run ten thousand simulations with your current range of win rates and pipeline volumes and provide a distribution of outcomes that include:
- Bear case: Your most conservative forecast, which during the modeling occurred less than 25% of the time on the lower end
- Bull case: Your more aggressive forecast, which during the modeling occurred less than 25% of the time on the higher end
- Fair Value: Your median forecast outcome
If your planned forecast call sits closer to the bear or bull case, you should consider whether you’re being too conservative or too aggressive on the deals you have included in the call.
What if I want to make changes?
A key feature of Scenario Planner is that you can see the win rates and pipeline volumes that Outreach is using to produce its projections. If for whatever reason you disagree with the assumptions, you can apply your own judgment and manually toggle the sliders on the left side of the report to align the variables more closely with what you expect.
As a sales leader, tools like scenario planner give you more proof that when you put your call forward, you can support it with the win rates and pipeline amounts you’re currently seeing within your organization.
Now, you’re ready to submit your forecast call. Once you arrive at the end of the sales period, you can use the forecast submission history to perform an accuracy analysis. In other words, how close were your forecast call results and your actual results? By default, Outreach provides access to your forecast submission history for both the current and previous sales periods.
“Over the past year, our forecasting accuracy has increased by 45% — and that’s only going to increase the longer we use Outreach. We wouldn't be where we are today if we hadn't had that forecast accuracy.”
Plan ahead by modeling outcomes for next quarter
While sales managers know that a single deal can make or break the quota for the quarter, Sales leaders & CROs need to understand the longer-term impact macroeconomic conditions and trends may have on reaching quarterly and annual revenue goals.
Preparing for both best and worst-case scenarios empowers you to revisit your forecasting assumptions and feel more confident in the overall number. It can also help provide insight into the variety of paths that could get you to that number.
With Outreach, you can develop insight into what lies ahead so that you can act early to ensure your team is building enough pipeline to hit quota.
Within the scenario planner, running a scenario for the next sales period will give you a distribution of outcomes based on expected win rates and current pipeline volumes. If the distribution seems to fall short of the expected range, your first step should be to check the win rates and pipeline volumes Outreach used as inputs.
If you disagree with the assumptions made by Outreach you can apply your own judgment to build a new scenario and see if it aligns more closely with the forecast you anticipate. For example, maybe you know about a new product launch that is likely to boost early-stage pipeline and should be taken into consideration.
However, If the assumptions are correct and you’re still seeing a shortfall for the next period, it’s time to start asking key questions like
- Do you need to build more pipeline in certain segments?
- Do you need to focus on increasing win rates at certain deal stages?
- What else could impact your forecast in the coming months?
The pipeline dashboard also includes a number of metrics that can be very useful for planning ahead.
- The closed lost reasons can provide you with insight into why you lost deals in the current sales period, as defined by your reps on the opportunity.
- The next period coverage modeling can help you develop a sense of how much pipeline you’ll need to build across the business in order to deliver on your revenue targets.
- The weighted pipeline metric can also be filtered for the next sales period so that you can see what your overall pipeline and conversion rates look like.
Once you have done your planning, you can take the required actions inside of Outreach!