Best Sales Forecasting Methods

Best Sales Forecasting Methods

What is Sales Forecasting? 

Sales forecasting is one of the most important business activities. 

How many leads does your business aim to generate this quarter or this year?

What’s the target revenue for this year?

Should your sales department have more sales executives in order to reach targets?

At the beginning of every quarter, the Sales Manager or the CEO of a company deals with similar questions. Did you ever wonder why? Since sales is the lifeline of any business, having an idea of what to expect will aid a company in making well-informed decisions. And the answers to such questions come with sales forecasting. 

Businesses that use effective sales forecasting methods can predict how much revenue and sales they will generate over the next year or quarter. Businesses with sales forecasting gain more insights, which can be used to make better decisions and grow their businesses. 

Here is a step-by-step guide on various sales forecasting techniques you can use to forecast your sales growth. 

Sales Forecasting Methods

Length Of Sales Cycle Forecasting 

This is a common method of sales forecasting that uses the length of time it takes for a lead to convert into a sale. Forecasting using the length of the sales cycle is a quantitative way and a perfect measure as it is highly objective and businesses do not have to rely on subjective opinions on when a sale is likely to convert or the sales executive’s thoughts on the deal’s chances of closing. 

Moreover, this method can be utilized in a wide range of sales situations. For example, a reference lead might take about two weeks but a cold email outreach client might take three months. Such leads can be organized differently depending on their sources to give a more accurate forecast. 

This method is one of the most valuable ways of sales forecasting that indicates how and when prospects enter the sales pipeline. 

Lead-driven Forecasting 

In this type of sales forecasting, you analyze every lead source, assign a value based on the response similar leads have given you in the past, and then make a forecast. Businesses that assign value to each lead source will be able to see how each lead can convert into sales. Consider the following metrics when using this method: 

  • Leads per month for previous quarter 
  • Customer conversion rate per lead 
  • Average sales price 

Opportunity Stage Forecasting 

This method allows the sales manager to see clearly where the prospect is in the sales pipeline and to calculate the likelihood of closing the deal. Companies can segment their pipeline into different parts, such as prospecting, qualified, demo, and so on. Prospects that are down in the pipeline have a higher chance of converting into sales. 

For this technique to work, it is necessary to analyze and understand past performance so that you will be able to identify each stage’s success rate. In addition to keeping track of every stage of the pipeline, selecting the right sales management tool will assist you in further accelerating conversion rates. 

Intuitive Forecasting 

The Intuitive sales forecasting method is all about trusting your sales team. Which person should be asked if a sale will take place? The salesperson. It is important for sales managers to ask their salespeople: How confident are they that the lead will be converted? 

Since salespeople are the closest to prospects from the company, they are the best people who know how things are going. As a subjective method of sales forecasting, it is best for newly founded companies with no historical sales data available. 


It is essential that a company’s sales manager or the vice president of sales makes informed decisions when creating sales strategies based on sales forecasts. However, to get an accurate sales forecast, businesses must be data-driven. Being data-driven gives you better control over your business operations and helps your team to focus more on the set targets. 

Data-driven decisions first require that your customer data is in one place. With NeoBiz, it’s possible. 

NeoBiz is a free sales management app that streamlines the sales process, provides performance insights, helps to manage tasks, and a lot more. To download the app now, click here.

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