A strong revenue forecast is one of the most strategically significant deliverables you can hand over to your leaders.

Cliff Unger, CRO at Snappt, says that your forecast demonstrates three very important things about you to those who read it:

  1. It shows if your team is doing a good job.
  2. It shows if people trust you.
  3. It shows if you’re honest.

So… no big deal, right?

Why getting your revenue forecasts right matters (to your board)

When leaders and board members put money into a company, they want to see if it’s helping. Good forecasts help them know where to put more money to help the company grow. They also want to understand why the numbers are what they are.

Done right, a revenue forecast answers these critical questions:

What good forecasts do for you

  • Build trust: When your forecasts are accurate, your leaders and your board trust you more.
  • Work better with others: Sales teams and finance teams can work better together.
  • Spend money wisely: You know where to put money to get the best results.
  • Hit your goals: When you guess well, you can plan better to make more money than you thought.

For people who help sales teams, making good guesses helps the company leaders feel sure that they should keep putting money into your team and tools.

If you want the full primer, check out our Intro to Revenue Forecasting.

Why forecasting well is so darn hard

First, some data from the Xactly 2024 Sales Forecasting Benchmark Report, and from Aberdeen Group Research, on why revenue forecasting can feel such high stakes:

  • In 2024, only 2 out of 10 sales teams produced revenue forecasts that were remotely accurate. That means 8 out of 10 were pretty far off.
  • More than half of sales leaders made an inaccurate forecast at least two times last year. If you forecast every three months, that means missing half the time, which can make people lose trust.
  • Most sales teams (8 out of 10) are off by more than 25% in their guesses. That is a lot of money to be off by!
  • Most top leaders (8 out of 10) say that when a revenue forecast is off, it makes the board and investors lose trust.

So, the numbers show that most forecasts are inaccurate, that these inaccurate forecasts are being made frequently, that the magnitude of the inaccuracies is large, and that leaders lose trust as a result.

If you want that seat at the table with your leaders, losing their trust isn’t an option. But it takes more than one or two skills to get forecasting right…

The mix of art and science

Revenue forecasting is like mixing art and science.

  • The science part is using tools like your sales system, reports, and past sales data. These are numbers and facts, and you can follow a replicable forecasting process.
  • The art part is understanding people. Your sales reps have feelings like hope, fear, and confidence that can inform a forecast. Meanwhile, your buyers won’t always tell you exactly what they’re thinking. You need to read between the lines to understand what’s actually likely to happen.

Both present their challenges.

Science: Sales records aren’t always perfect. In fact, missing values and imperfect data sets contribute to one of the primary challenges you’ll face when revenue forecasting.

Art: Sometimes, salespeople hold back on their numbers, or they’re too hopeful about certain deals. Sometimes, different teams like sales, RevOps, and finance teams don’t align. Your job as a revenue professional, and the person in charge of the forecast, is to take all these messy parts and make them into clear, easy-to-trust information for your board.

So… how do you do that?

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4 Tips for winning over the boardroom

Here’s some strong advice for talking your board through your revenue forecasts in a way that actually brings your board on-side:

1. Share bad news early and often

Things not going well? Don’t wait until the last minute to tell the board. Cliff says waiting until the big meeting to tell them is the absolute worst thing you can do. 

Even if you’re not hitting your goal, give the board honest information early. It shows that you’re accountable, that you take ownership, and that you can be trusted to be honest.

When things aren’t going well, emphasizing these qualities by courageously leading with bad news early pays dividends.

2. Be real, but stay hopeful

It is your job to show the risks and gaps in the plan, but you need to highlight them without sounding hopeless. There’s a big difference between being real about what your team can do and being gloomy. The company expects you to be excited and believe you can overcome your challenges. You need to find a way to talk about the hard stuff while still showing that you believe in the business.

3. Learn how your board likes to hear news

Every board and every group of leaders is different. They like to get information in their own ways. If you’re new, spend time learning how they prefer to get good news or bad news. Cliff says it’s very important to understand who you’re talking to and what makes them tick.

4. Make your information better all the time

You should always be trying to get more and more reliable information. The goal is to have fewer surprises. Investigate new technology and use tools that can help you forecast more accurately, especially for smaller deals.

FAQ

How much should you reveal to the board about your forecasting process?

Cliff says this depends on the board members. Some might already know a lot about sales and forecasting, others might not.

If you can, teach them a little bit about it, even for just a minute or two in a meeting. You can also put helpful information and definitions in the extra pages of your board report so they can read it on their own time.

How should you present forecast risks to the board?

Again, this comes down to honesty. Cliff says you have to be honest, but you should also show the good things that are happening.

Find the problems or places where you need help from the board. But make sure to balance that with positive updates, like celebrating small wins. Even if it’s a tough time, there are always good things to point out.

How do you manage the "people" aspect of of forecasting successfully?

To successfully manage the “people” part of forecasting, Cliff suggests that top leaders from different parts of the business need to work together.

They should all agree on what words mean, like what is a “sure thing” versus a “best guess.” If the top leaders speak the same language, it helps clear up a lot of confusion.

How do you forecast successfully when you don't have many deals?

When you’ve only got a few, very big deals, thinking about your pull-forward pipeline can help. Cliff suggests salespeople should find many different ways to hit their target.

If a rep has 6 or 8 big deals, they should think about different mixes of those deals that could help them reach their goal. This way, if one or two big deals don’t pan out, they know where else to focus.

Next step: How AI improves revenue forecasting efficiency

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