Forecast Models

There are two ways to model traffic or pipeline volume in revenue streams - Forecast Models and Conversion Rules.

  • Forecast Model directly creates new customers for the customer contracts of its revenue stream using different forecast drivers and targets, e.g. a volume of New Paying Customers is created when Sales Teams - having a monthly "New Customer" Target - achieve their target or a volume of New Signups is created after Marketing Budget has been spent.
  • Conversion Rule connects two customer contracts (within the same or in 2 different revenue streams) and simulates upselling/downselling logic, e.g. additional volume of Paying Customers is created when 10% of signups convert into Paying Customers on a monthly basis.

Forecast Models - Drivers and Targets

Link a Forecast Model by selecting the Tab <Forecast>. The Forecast Model allows to define how many new customers of each customer type are contracted / buy your services every period. Select the Forecast Model which best suits your go-to-market approach. 

The figure below shows an example for a revenue forecast "New Customers per Sales Teams". It shows that a new Sales Team is hired in January and that the Sales Team has a target to sign up 10 New Customer per Month.

Which Forecast Model to pick?

Each Forecast Models combines a Forecast Driver and a Forecast Target.

  • the Forecast Driver describes your Go-To-Market approach - how to scale your business over time, e.g. by the number of "New Customer" or "New Sales Teams" or by "Revenue Targets" or "Marketing Budgets"
  • the Forecast Target defines the target metric for each forecast driver, e.g. how many new customers  a or sales teams sign up or what the size of the Revenue Target or Marketing Budget  is

If you click the Tab icon next to the metrics, you can use the the Lean-Case Spreadsheet widget to adjust the data series for drivers and targets over time, e.g. to define the exact points in time when you hire a new Sales Team or to define how the target of the new Sales Team ramps up.


Direct and Indirect Forecasting

Each of the forecast models calculates the number of New Customers for its revenue streams - directly or indirectly:

  • direct forecasting - if the  forecast target is a "New Customer" number, then the volume of new customers which are generated through the forecast can be directly calculated. 
  • indirect forecasting -  if the  forecast target is not a "New Customer" number, but is based on a revenue target or marketing budget, then the volume of new customers which are generated through the forecast can only be calculated indirectly
  • for revenue targets - to calculate the number of new customers to be created via a revenue target, the revenue target is divided by the average revenue which is generated through a customer based on its contract
  • for marketing budgets targets - to calculate the number of new customers to be created via a marketing budget, the marketing is divided by the average cost of leads which are defined in the Cost of Leads Model

List of Forecast Models

The table below lists the available Forecast Models - when you can apply them and describing revenue drivers and revenue targets 

New Customers

... if you sign up leads or users via direct mechanisms (e.g. ads)

-

Define "New Customer" Target incl Ramp-up for the business

New Customers per Sales Team

... if you follow an inside or outside sales model

Define Hiring Plan for "New Sales Teams"

Define "New Customer" Target incl Ramp-up for each Sales Team

New Customers per Sales Partner

... if you follow an indirect partner sales model

Define Hiring Plan for "New Sales Partners"

Define "New Customer" Target incl Ramp-up for each Sales Partner

New MRR

... if you sign up paying subscribers directly with a revenue target for "New MRR" (New Monthly Recurring Revenues) 

-

Define "New MRR" Target incl Ramp-up for the business

New MRR per Sales Team

... if you sign up paying subscribers  following a direct sales model

Define Hiring Plan for "New Sales Teams"

Define "New MRR" Target incl Ramp-up for each Sales Team

New MRR per Sales Partner

... if you sign up paying subscribers  following an indirect sales model

Define Hiring Plan for "New Sales Partners"

Define "New MRR" Target incl Ramp-up for each Sales Partner

Marketing Budget

... if you sign up customers via marketing and know your cost of leads

-

Define available "Marketing Budget" incl Ramp-up over time

Account-based Forecast

... if you want to forecast specific customer accounts using customer contracts

.

Target automatically set so that customer contracts are simply added up

Cost-Benefit Analysis

... if you want to forecast benefits and related cost using customer contract logic

.

Target automatically set so that benefits are simply added up







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