sales-forecasting-model

Sales Forecasting Model Skill

Produces a structured sales forecast framework — from pipeline conversion modelling to scenario analysis. Built for revenue and sales leaders who need a defensible forecast, not a spreadsheet guess.

Required Inputs

Ask the user for these if not provided:

• Business type (SaaS / Transactional / Services / Marketplace)
• Forecast period (monthly / quarterly / annual)
• Sales motion (inbound / outbound / channel / PLG / mixed)
• Current pipeline data (number of deals, stages, values — rough is fine)
• Historical conversion rates (if available — otherwise model will flag as assumption)
• Average deal size and sales cycle length

Output Structure

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Sales Forecast: [Team / Business] — [Period]

Forecast type: [Bottom-up pipeline / Top-down quota / Capacity-based / Hybrid]

Period: [Month / Quarter / Year]

Created: [Date]

Forecast owner: [Name]

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1. Forecast Methodology

Chosen approach: [Bottom-up / Top-down / Hybrid] — and why for this context.

Bottom-up (recommended when pipeline data exists):

> Start from real deals in the pipeline. Apply stage-by-stage conversion rates. Sum to a revenue number.

Top-down (useful for planning, not for calling a number):

> Start from market or quota. Work backwards to activity targets.

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2. Pipeline Stage Model

Define the sales stages and the expected conversion rate between each:

| Stage | Description | % of deals that advance | Avg time in stage |

|---|---|---|---|

| Prospect | Identified, not contacted | — | — |

| Qualified | Discovery done, confirmed fit | [X%] | [N days] |

| Proposal | Proposal sent | [X%] | [N days] |

| Negotiation | Commercial terms being agreed | [X%] | [N days] |

| Closed Won | Contract signed | [X%] | — |

Overall pipeline conversion rate: [X%] (Qualified → Closed Won)

Average sales cycle: [N days from Qualified to Close]

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3. Current Pipeline Snapshot

| Stage | Number of deals | Total value | Expected close (weighted) |

|---|---|---|---|

| Qualified | [N] | £[X] | £[X × conversion %] |

| Proposal | [N] | £[X] | £[X × conversion %] |

| Negotiation | [N] | £[X] | £[X × conversion %] |

| Total | | £[X] | £[weighted total] |

Coverage ratio: [Weighted pipeline ÷ target = X×]

Rule of thumb: 3× pipeline coverage is needed for confident forecast; 2× is tight; below 1.5× is at risk.

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4. Scenario Analysis

| Scenario | Assumption | Revenue | Probability |

|---|---|---|---|

| Upside | All Negotiation + top 50% of Proposal close | £[X] | [%] |

| Base | Weighted pipeline conversion at historical rates | £[X] | [%] |

| Downside | Conversion rates drop 20% from historical | £[X] | [%] |

Committed forecast: £[X] — [The number the forecast owner is willing to call. Between base and downside.]

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5. Key Assumptions Log

Every forecast is a set of assumptions. Name them explicitly so they can be updated:

| Assumption | Value | Confidence | Source | Last updated |

|---|---|---|---|---|

| Avg deal size | £[X] | High/Med/Low | [Last N deals] | [Date] |

| Sales cycle | [N days] | | | |

| Close rate from Proposal | [X%] | | | |

| Seasonal factor | [e.g. Q4 +20%] | | | |

| Churn/contraction | [X% of ARR at risk] | | | |

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6. Activity-Based Sanity Check

Work backwards from the forecast to check if the required activity is achievable:

To hit £[target]:

• Deals needed to close: [N] (target ÷ avg deal size)
• Qualified pipeline needed (at current conversion): [N deals or £value]
• Discovery calls needed per week to build that pipeline: [N]
• Outreach needed per week (at [X%] meeting rate): [N]

Does the team have capacity to generate this? [Yes / No — flag if not]

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Quality Checks

• [ ] Forecast methodology is stated (not just a number)
• [ ] Stage conversion rates are based on historical data or flagged as assumptions
• [ ] Coverage ratio is calculated
• [ ] Three scenarios are modelled (not just one number)
• [ ] Assumption log is explicit and dated
• [ ] Activity sanity check confirms the forecast is achievable with current capacity

Example Trigger Phrases

• "Build a sales forecast for [period]"
• "Create a pipeline model for [team/business]"
• "Help me build a bottom-up revenue forecast"
• "What is our forecast for Q[N] based on current pipeline?"

Anti-Patterns

• [ ] Do not present a single forecast number without scenario analysis — a forecast without upside and downside cases hides risk
• [ ] Do not use 100% confidence on conversion rates that are not backed by historical data — flag them as assumptions
• [ ] Do not skip the activity sanity check — a forecast number that requires unreachable activity levels is not credible
• [ ] Do not use top-down quota as the only forecast method when pipeline data exists — bottom-up is more accurate and defensible
• [ ] Do not omit the coverage ratio — without it, stakeholders cannot assess whether the pipeline is sufficient to hit target