How to do forecasting in HubSpot

With forecasting, you can predict future events or results. Based on present and previous data, you can use models to foresee what will be the results in a certain time period. This is a tool that is super useful for companies and sales teams. Luckily for HubSpot users, HubSpot offers a forecasting tool.

The added value of forecasting

Most forecasts use historical data such as win rates as inputs in order to estimate a future situation, e.g. revenue, products sold, ... 

There are a couple of benefits linked to forecasting:

• It allows for better cash flow planning since you have a better idea of when and how much money will come in. 
• You can also do more accurate production planning and you’ll have insights for better decision making. 
• As a sales leader, you will be able to do a better performance monitoring of your reps. If you know what they are expected to close in the future and if you can monitor their sales activities, you’ll be able to coach them where needed in order to make sure they hit their quota.

However, be aware that it is not easy to create forecasts that accurately reflect the reality of your business. In this blog post, we explain what you need in order to do good forecasting and how HubSpot can help you with that.

Defining your forecast approach

A good forecast is determined by the metrics that you choose to forecast on. There are some popular forecasting metrics that you may want to consider when you start forecasting.

• Quota attainment: The tracking between sales quota and what was actually closed. 
• Weighted sales pipeline: The expected revenue by assigning a win probability to each deal stage and multiplying that with the value in that stage.
• Pipeline coverage: The total value of all opportunities in your pipeline, compared to your quote. 
• Forecast coverage: Compares your weighted sales pipeline to your quota. 

You can turn these insights into actions to coach your reps. For example, your sales rep has a high pipeline coverage but a rather low forecast coverage. This could mean that many of their deals are not moving to later stages in the pipeline. You may want to focus on coaching your rep how to advance opportunities further down the pipeline.

Please be aware that “coaching” is not equal to just telling them to “generate more leads” or “close more deals”. As a sales manager, it’s your job to help them understand what they can do exactly in their daily activities to make this happen.

To be able to do that, you have to recognize the fact that forecasting metrics are not directly manageable. However, you can try to influence them by selecting and reporting on the right sales objectives (e.g. deal close rate, number of deals per stage, the sales cycle length, the total time spent on actual selling). On their turn sales objectives can be improved by working on the sales activities (e.g. number of calls, emails, meetings, demos, etc. possibly divided per account or lead.) which are directly manageable. It is important to look for patterns in which sales objectives they’re influenced by, and which sales activities have an impact on those objectives.

Forecasting in HubSpot

If you are a HubSpot-user and want to start or improve your forecasting, there are some tools provided by HubSpot that you can use. These include the Reporting tool, the Sales Analytics tool and the Forecast tool. 

Reporting tool

The Reporting tool allows you to visualize the data known in HubSpot on the objects such as contacts, companies, deals, activities, etc. It comes with a Custom Report Builder allowing you to combine properties into reports that are tailored to your business. But before spending time on building them yourself, take a look at the preset reports in the Report Library. There are some reports that might be interesting to start some basic forecasting, such as The ‘Deal Forecast’ report (which is a weighted sales pipeline), the ‘Deals Closed vs Goal’ report (visualizes the ‘quota attainment’ metric) or the ‘Deal stage funnel with deal totals and conversion rates’ report.

Sales Analytics tool

The Sales Analytics tool also offers a selection of pre-made sales reports and is accessible for HubSpot Sales Professional and Enterprise users. The tool is mainly meant to give an easy overview of some important sales reports without having to spend time on set-up. 

The reports in the Sales Analytics tool are divided into 3 main categories, which are “Coach Reps & Teams” : (mostly evolve around completed sales activities and deal creation), “Forecasts & Pipelines” (used to know how healthy the pipeline is looking) and “Sales Outcomes” (reports on deals such as the loss reasons, deal revenue by source or the average deal size).

The dashboards and reports that can be found in the Reports tool and the Sales Analytics tool are great for managers to get an idea of the revenue that will come in and the overall performance of the sales team. It can be really useful as a discussion guideline during Sales Team meetings.

Forecast tool

The Forecast tool is used to keep track of your team's performance compared to their goals. You can access it with a Sales Hub Professional or Enterprise seat. 

With the forecast tool, sales reps have the possibility to change the win probability of individual deals and adapt their forecast based on their own knowledge of the deals. It will show some important forecasting metrics such as your team’s and individual sales reps’ goal attainment, pipeline coverage and the weighted revenue value in each forecast category. There is also the possibility to submit a manual forecast based on what they actually expect to close and to discuss and enter the next steps that need to be taken to advance or close those deals.

The Forecast tool is helpful to use in one-to-one review meetings with your reps and identify where they need additional coaching in order to attain their goals.

Do you need any advice or support for forecasting in HubSpot? Don’t hesitate to reach out to us. We’d be happy to help!