Whether you operate a decades-old business or are just getting your company off the ground, knowing how to predict revenue growth is an imperative part of planning for your future. Without accurate revenue forecasting, your organization runs the risk of making critical business decisions without calculated data. In times of economic volatility or financial uncertainty, the need to know how to predict revenue growth is especially essential.
Comprehensive revenue forecasting allows organizations to implement cross function operational workflows, including budgeting efforts and thorough management of cash flow and credit usage. In addition, revenue forecasts are a key component of medium and long term strategic plans. Likewise, predicting revenue growth is necessary when dealing with investors, as it helps support your company’s valuation and provides a detailed outlook of an investor’s potential return on investment (ROI).
When it comes to making large decisions for your business, do not trust revenue forecasting to unreliable manual processes or untimely cross-departmental analysis. Instead, leverage a robust customer relationship management (CRM) system like Salesforce as a key input to accurately forecast revenue. Read on to learn how to predict revenue growth with your Salesforce pipeline.
How to Forecast Revenue Growth
When questioning how to predict revenue growth for your business, it is important to understand that you have quite a few options. The most commonly practiced form of revenue forecasting is called “straight-line forecasting.” This simple revenue forecasting model multiplies the overall sales data from the previous year by the growth rate achieved over the same period, then extrapolates that sum into the future.
Other models for how to predict revenue growth include moving average, multiple linear regression and simple linear regression, which can target more specific time frames and incorporate the use of different data variables. A CRM application represents new deals, new customers, all of which are key for growth.
How to Predict Future Sales Revenue
While the straight-line forecasting method mentioned above is useful for budgeting practices, it often does not take into account the potential opportunities that are being managed by a sales team. In other words, potential revenue is left out of the equation. A lack of a “real-time” view of revenue growth can be substantial, as it limits forecasting abilities and muddies an accurate revenue forecast calculation.
Likewise, many CRM systems on the market today model sales as a booking amount for the total deal size, but do not take into account the time component of those commitments at the point of sale or how this revenue will be recognized. This omission of key data may cause revenue growth from new opportunities to become lost. Because there is a distinct difference between sales booking forecasting and revenue forecasting, you’ll need the assistance of a CRM system that can combine data from multiple sources. This will provide a full forecast.
By adopting a powerful CRM application like Salesforce, you have the ability to create more data-driven revenue forecasts and control how to predict revenue growth in your pipeline and other customer facing activities.
Why a Robust CRM Application is Key to Track Your Pipeline for Revenue Growth
Constructing an accurate revenue forecast relies on the ability of sales teams to track a business’s pipeline. Unfortunately, pipeline data is typically “thrown over the fence” to the finance department, which is responsible for manually adding logic to the data. Because of the tedious and timely nature of this process, much of the revenue forecasting logic is applied to just part of the pipeline and tends to focus solely on large opportunities, rather than the business as a whole. Most companies aren’t even aware what percent of their potential revenue they are overlooking.
With the assistance of a robust CRM application like Salesforce, these various data sources can be compiled in one place. Rather than shift data from one department to another, Salesforce automates the majority of data collection via typical daily sales functions and categorizes revenue for the entire business, not just part of the pipeline. Enhanced data collection eliminates the gap between sales and finances teams to allow for a less time-consuming and more accurate sales forecasting process.
Salesforce Features That Create Easier Data Collection and Analysis
With Salesforce’s robust capabilities, accurately predicting revenue growth is as simple as ever. Salesforce allows businesses to segment top-performing sales sectors based on service type, product type, customer personas, and numerous other factors. This breakdown helps organizations modify current marketing or sales techniques and improve targeting to ultimately increase revenue.
An exhaustive CRM software like Salesforce also allows tools to be built on top of its platform to better visualize and automate revenue growth forecasting. Businesses can leverage a wealth of data acquired for users natively to learn how to predict revenue growth in a way that best matches their current operations. Tools like revVana then help organizations analyze this bulk data to promote effective growth.
How revVana Can Predict Revenue Growth in Salesforce
Revolutionize how your company forecasts revenue growth by using the Salesforce AppExchange products like revVana. Using time-based revenue rules established by your organization, revVana gathers data from accounts, opportunities and various other Salesforce objects to automate revenue forecasts. Users can also apply logic from finance to the opportunity process in Salesforce by modeling revenue recognition and forecasts from bookings over time.
These capabilities further allow organizations to identify gaps between potential bookings and actual revenue by recording booking details. You’re able to reflect on small changes in the pipeline versus simply analyzing a snapshot in time. Next, revVana can recast revenue when closing dates or revenue start dates change, as well as changes to the size of the deal. The best part, is that this happens automatically. Small accounts and booking opportunities are never overlooked, as revVana includes all data sources rather than a small subset of larger deals typically focused on during manual efforts.
With the use of such in-depth data sources including actuals, bookings and targets, business owners can plan for multiple scenarios at once. This feature is particularly important in uncertain economies, much like we’re facing today. Similarly, revVana with Salesforce monitors for changes in revenue forecast and provides feedback to operationally improve the realization of revenue.
Improve How You Predict Revenue Growth with Your Salesforce Pipeline
When questioning how to predict revenue growth, remember that revVana and Salesforce are here to help make it happen. While other CRM applications lack ease of access for sales and finance departments, revVana on Salesforce eliminates a significant amount of manual efforts to create a highly efficient and targeted revenue forecasting process and allows the entire process to be managed securely in the place where sales teams are doing their job on a daily basis vs. external tools like spreadsheets.
To more thoroughly understand how revVana on Salesforce can help you eliminate manual, unreliable revenue forecasting processes and replace them with fully automated capabilities, contact revVana to schedule a demo today.