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Bottom Up Forecasting

Forecasting is not just a math exercise. In a lot of companies, it is treated as one.

If Finance puts together aggressive projections without properly understanding the specifics growth levers inside the business, it is setting up the organization to fail.

Without proper input from Marketing and Sales, the organization is far less likely to meet its sales projections.

To use a bottom-up approach, we need to understand all the different inputs of our revenue model. This is where questions like the following become important:

  • How much pipeline is being generated per channel?
  • What are the close rates on pipeline by region?
  • How much can we upsell our existing customer base?

This means functions like Marketing and Sales need to have the right data points to inform forecasting decisions and actively push Finance to involve them more in budgeting cycles.

Unrealistic, uninformed expectations are a big reason why companies miss their sales projections.

And the better the forecast, the more accountability there is for everyone involved.

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