Admins / RevOps / Sales / Sales Cloud

Complete Guide to Salesforce Forecasting

By Christine Marshall

Salesforce Forecasting is evolving for tomorrow, evolving for the future, and evolving for the next generation of sales leadership. This feature of Sales Cloud has undergone a transformation over the past few releases to reveal a slick, modern interface and a host of new functionality, propelling forecasting into the spotlight.

The team behind Salesforce Forecasting has taken the forecasting use cases across a large customer install base, plus Salesforce’s own experience of using Salesforce to forecast internally, to identify and implement the most requested functionality. In this guide, we’ll learn about the benefits and features of Salesforce Forecasting, as well as how to set it up.

What Is Sales Forecasting?

A sales forecast is a projection of future sales – which deals will be won and in what time period. Businesses forecast sales revenue or units of products. These sales forecasts have a huge impact on business-critical decisions, such as company outlay, defining budgets and targets, how much stock to order or build, and identifying gaps in the sales pipeline.

Forecasting processes across companies vary based on revenue model, sales team structure, and by industry. To ensure accurate predictions, it is crucial to have an effective forecasting tool that can adapt to your specific business needs, sales processes, and cadence of forecasting.

Here, we explore key use cases for forecasting:

  1. By sales hierarchy: The structure of sales teams varies depending on the size of the organization. Smaller companies typically adopt a reporting hierarchy, with sales managers overseeing their respective sales representatives. However, as companies grow larger, they often transition to align sales territories and base their forecasts on the territory hierarchy. This approach provides a more granular understanding of sales performance across different regions.
  2. By sales role: Many organizations have specialist sales teams, commonly known as overlay teams, that support the direct sellers during the sales process. These specialists can focus on specific product lines or assume supporting roles, such as Sales Engineers. Overlay teams often have separate quotas and may be credited for a percentage of the deal value or based on product amounts. These individual forecasts are then consolidated to generate their team forecasts.
  3. By revenue model: While forecasting based on booking amounts is common, many industries now incorporate subscription or recurring revenue models where revenue is recognized over time. In these cases, forecasts need to consider the duration of customer subscriptions and accurately project revenue inflows throughout the defined periods.
  4. By segment: Companies are increasingly segmenting their revenue forecasts based on deal type, such as New Business, Renewals, and Upsells. Alternatively, they may segment forecasts by customer types, such as Small and Medium-sized Businesses (SMBs) versus Enterprise clients. By categorizing forecasts in this manner, organizations can better analyze and predict revenue generation patterns within specific segments, enabling targeted sales strategies.
  5. By industry: In industries like Manufacturing, forecasting often occurs at the product level. This approach involves viewing and setting forecasts based on the products or services being delivered. In addition to revenue forecasts, quantity forecasts are also crucial in such cases. The forecasting period can be determined by the product delivery date or scheduled date.

It is important to select a flexible forecasting tool that can accommodate these factors, enabling organizations to tailor their forecasting models to their specific business requirements, sales processes, and industry dynamics.

Why Choose Salesforce for Forecasting?

A Customer Relationship Management (CRM) platform, such as Salesforce, is the best place to forecast since this is where you store your real-time sales data. It is time to move away from forecasting in spreadsheets and start using Salesforce Forecasting for a better, more scalable way to create effective forecasts.

With Salesforce Forecasting, you can model any forecasting process with an easy-to-use, self-service configuration that enables companies to model any of the use cases listed earlier. Furthermore, sales teams are armed with integrated insights and analytics in their flow of work, to ensure both deal accuracy and forecast accuracy.

The best thing? Forecasting is included with Sales Cloud at no additional cost!

How Does Forecasting Work in Salesforce?

Forecast Types

The first thing to understand about forecasting in Salesforce is Forecast Types. Forecast Types determine what is being forecast and how forecasts are rolled up.

When you create a Forecast Type, you’ll select:

  • Object (forecasting supports opportunity, opportunity product, opportunity splits, product splits, and line item schedule)
    • Splits allow you to allocate contributions by total opportunity amount or by product amounts when multiple sales teams are involved e.g. overlay teams, product specialists, and solution engineers. These teams can forecast off these split amounts instead of the total opportunity amount.
    • With line item schedules, you can forecast revenue spread over time e.g. with subscription revenue.
  • Specific measure (revenue, quantity, or custom)
  • Date type (close date, product, schedule date, or custom date)
  • Hierarchy (user role or territory)
  • Filters to configure segment-based forecasts e.g. new business versus add-on versus renewals, OR license versus maintenance versus services.

As the administrator, you can create up to four custom Forecast Types that can be extended up to seven (or beyond based on business need) by contacting Salesforce Support. The setup flow, introduced in Summer ’21, will swiftly walk you through the steps.

Forecasting is so much more than predicting the Opportunity Amount due on the Opportunity Close Date! We may want to forecast custom currency values such as Profit or forecast on a custom date field instead of the Close Date. From my experience, the Close Date of an Opportunity is when we sign the contract, not when we receive the payment. Payment typically occurs 30 days, 60 days, or 90 days after the deal is closed, or even in installments.

Perhaps your company creates and sells magazines. These might be paid monthly (subscription) and delivered monthly. You’d want to know how many magazines you need to produce each month – you could use Salesforce Forecasting for this!

Forecast Types are much easier to understand when we consider the various forecasting use cases.

First up, let’s create a Forecast Type to measure a custom Opportunity amount (ACV):

Next, let’s create a Forecast Type to measure the quantity of delivery for Opportunity Line Items (products):

Don’t like the way the Forecast Categories are mapped to Stages? Not a problem. You can adjust the mapping to suit your needs.

For example, you might feel that in your business, Opportunities in “Prospecting” are too tenuous to be included in the forecast. In this instance, you can omit them:

Forecast Category Rollups

Forecasts can be either single or cumulative. Single forecasts will display the value from a single forecast category.

Cumulative forecasts can be enabled and will display the value from multiple categories:

  • Closed: Closed only
  • Commit: Closed + Commit
  • Most Likely: Closed + Commit + Most Likely
  • Best Case: Closed + Commit + Most Likely + Best Case
  • Open Pipeline: Commit + Most Likely + Best Case + Pipeline

From Summer ‘22, you can now customize cumulative forecast names, as well as single-category rollup names.

READ MORE: Forecast Categories in Salesforce: Everything You Need to Know

Forecast Hierarchy

An important part of your forecasting setup is the Forecast Hierarchy. This determines how the forecast rolls up within your company, and more specifically, who can take advantage of features such as adjustments and the ability to drill down into individual team member forecasts!

The forecast hierarchy can either roll up based on role hierarchy (shown above) or territory hierarchy.

Salesforce Forecasting Features

Next, let’s dive into the plethora of new and enhanced features within Salesforce Forecasting to appreciate the benefits of using it.

Powerful, Dynamic, Consolidated User Experience

Most importantly, when used correctly, Salesforce Forecasting is bound to be a hit with your sales teams due to its powerful, intuitive, and visually appealing interface.

Users can easily drill down into the details including selecting the forecast range, switching Forecast Type, or viewing a specific user’s forecast.

The Opportunity list at the bottom of the forecast page is dynamic, meaning the opportunities displayed update automatically depending on what is selected.

With the Winter ‘24 release, customers that have Pipeline Inspection enabled will see an upgraded view such that they can see Change Signals and Push count to quickly help identify changes and deal insights to spot risks in the path of forecasting.

Adjustments allow sales team members and managers to override forecasts without affecting the data in related opportunities. This empowers them to incorporate their own judgment, making forecasts more realistic and accurate.

Managers can use historical trends, or their own understanding of the rep behavior, to guide their forecast settings. Adjustment notes are used to capture the reasoning behind the adjustments e.g. deals they are including even though it is not in the forecast category yet or new pipeline that will be created and closed in the rest of the period.

As a manager, I can quickly drill down to a specific team member:

Or a specific time frame:

Manager Judgments allow managers to incorporate their own judgment at the deal level. For instance, they may want to include a deal in their Commit that the rep has not yet committed to. “Manager Judgment” can be enabled on the Forecast Settings page with default values IN and OUT. Both of these values can be relabeled to match the customer’s business process.

Deals can be marked as “IN” across different Forecast Categories in the opportunity list view. Managers can see the “Total IN” computation when hovering over Commit value and use this value to inform the adjustment for their own commit.

The Manager Judgement column can be added to forecast types based on opportunity, opportunity product, or line item schedule. Manager Judgements are not supported for forecast types based on opportunity splits or product splits.

When you combine Forecasts with Quotas, your users have the ability to view Quota Attainment % as a progress bar.

Sales users will appreciate the ability to quickly visualize their current progress to target from the Forecast tab.

Users can also select “Show Changes in Last 7 Days” which allows them to see which forecasts have increased or decreased in the last seven days, as well as see more information when they hover over a forecast cell.

Custom Columns

If you’re looking for even more value, why not create some custom columns on the forecast page? These columns can be used to display additional metrics that guide the users in setting forecasts accurately and understanding where they need to focus to bridge the gap to target.

You can add the following types of custom columns to your forecast page:

  • Use calculated columns to create bespoke forecasting KPIs – for example, Gap to Quota, Pipe Coverage, or Commit Coverage KPIs. Your sales team will be able to see at a glance how close they are to achieving their quota.
  • Use reference data columns to bring in additional data such as a stretch quota or pipeline targets into the forecasting view. This column can be populated via the Data Loader or using APIs.

This custom column took me only a few moments to create and I can add up to five per Forecast Type.

Visualize Forecast Changes With Embedded Charts

With the Spring ’23 release, Sales managers can use natively built charts to visualize how the forecasts are evolving. These trend charts can answer key questions that managers can leverage to improve their forecasts and take proactive action to meet their targets e.g.

  • What is the accuracy of my team’s commits?
  • Is my forecast attainment ahead or behind compared to the same time last period?

These visualizations are easily accessible by switching to the “Chart” view on the Forecast page.

Sales managers can view weekly changes to the current period forecast and assess how the current forecast trend compares to past periods.

Design Forecast Pages in the Lightning App Builder

From the Spring ‘23 release, you can build custom Forecast Pages with the Lighting App Builder. Custom pages can be created to optimize the user experience and include the information needed for accurate forecasts.

There are multiple use cases for this new feature; you can now:

  • Integrate custom reports and analytics into the forecast view.
  • Create tabs for additional revenue forecasts e.g. consumption forecasts can now be viewed side by side with your bookings forecast.

You can design multiple forecast pages and assign them to different users.

You can then add additional custom components as desired!

How Do I Set Up Salesforce Forecasting?

From a setup perspective, it doesn’t get more intuitive than this; forecasting can be enabled by admins with the click of a button, and all necessary steps are highlighted for you to be certain that this will be a success.

If you haven’t set up forecasting for a while, you may not be aware that the setup has undergone some significant changes! For a more efficient setup, Forecast Types and Forecasts Settings have been brought together on to a single page.

Go to Setup > Feature Settings > Sales > Forecast > Forecast Settings (or search “Forecasting” in the quick find box!).

  1. The first step is to enable forecasting by toggling “Enable Forecast” to “Active”. With the Winter ’24 release, existing orgs can “Enable Forecast” in settings for quick setup that automatically creates a Forecast Type for opportunity amount and enables best practices features like gap to quota and pipeline coverage. Customers can customize these settings to meet their business needs. Enterprise Edition customers will also have historical trending enabled by default to view change signals and charts. New orgs will have Forecasting enabled by default.
  2. More Forecast Types can be created using an easy setup flow. By default, you can have up to four active Forecast Types but it can be increased by filing a support ticket (based on your business needs).
  3. If desired, enable owner adjustments. Manager adjustments are enabled by default but can be deactivated if needed.
  4. Cumulative forecast rollups will be enabled by default. You may choose to change to single forecast rollups.
  5. Choose a default date range. A monthly data range will be enabled unless you choose to customize it to quarterly.
  6. If you use multiple currencies, select a default currency.
  7. Show Quotas and Quota Attainment Percentages if using quotas.
  8. Enable forecast users.
  9. Create your forecast hierarchy to configure how forecasts roll up and who can view and adjust them. Your forecast hierarchy does not need to be the same as your role hierarchy.
  10. Customize the names of your forecast categories if needed.
  11. Configure Forecast Pages in the Lightning App Builder.
  12. Add a Forecasts tab and make it visible to the relevant apps and users.

Summary

Due to the evolution of the SalesOps role and the increasing importance of RevOps, forecasting has seen a huge resurgence. In response, the team behind forecasting at Salesforce has enhanced this feature to an all-singing, all-dancing product with extensive customization possibilities. Now is the perfect time to implement (or re-evaluate) your existing forecasting!

Resources

The Author

Christine Marshall

Christine is the Courses Director at Salesforce Ben. She is an 11x certified Salesforce MVP and leads the Bristol Admin User Group.

Comments:

    James
    March 25, 2024 9:52 pm
    What SF license do you need to have this functionality?
    Lucy
    March 28, 2024 10:49 am
    The Salesforce Forecasting tool is a game-changer for businesses! Its comprehensive features empower teams to make accurate predictions, enhancing decision-making and driving success. Highly recommend exploring its capabilities!
    Dylan
    May 06, 2024 6:21 pm
    This was a really helpful article, thank you. I had a question though, how did you get the activity scorecard component on the page? I only see it as an option for the App Home Page.

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