Last week, I introduced the idea of marketing forecasting and introduced six steps for marketing forecasting done right. This week, I will explore more detailed elements of the six step marketing forecasting methodology, beginning by discussing why it is so important to develop a rigorous model of the various stages of your company’s revenue cycle.
Why Have A Marketing Forecasting Methodology?
Traditional sales methodologies, such as SPIN Selling and Miller-Heiman, provide standard benchmarks and best practices for the sales function. Whether it is “Situation”, “Problem”, “Implication” and “Payoff”, or any other defined process, the stages provide the CSO with a framework for making forecasts, e.g. Stage 1 is 10% likely to close, Stage 5 is 70% likely, etc.
However, these sales methodologies do not provide a sufficient view of what is coming from the earlier stages of the revenue process; put simply, they leave marketing out and are therefore limited for modern forecasting.
Success Paths and Detours
That is why the first step in making a marketing forecast is defining the revenue stages a prospect can pass through. These can be as simple as “All Names”, “Marketing Qualified Lead”, “Sales Qualified Lead”, “Sales Accepted Lead”, etc., or you can add additional stages to model more complex movements through the buying process.
First define your “success path”, e.g. the traditional marketing to sales funnel that leads linearly from new lead to closed won business. Here is a simple set of revenue stages you might use as a starter:
|SUCCESS PATH STAGE NAME||DEFINITION|
|Review New Names||Review if new names are qualified|
|Prospect||Qualified prospects who are not yet sales ready|
|Lead||Marketing qualified leads (“sales ready”)|
|Opportunity||Sales accepted leads, actively working|
|Customer||Closed Won deals|
You may have more stages and even model additional stages after Closed Won deals to model the customer lifecycle.
Next, recognizing that not all leads follow a linear “success path”, you should also define your “detour stages” to capture leads that are not qualified, or that require a few rounds of nurturing before becoming ready. For example:
|DETOUR STAGE NAME||DEFINITION|
|Disqualified||Names marked as not-in profile|
|Inactive||Prospects that have gone non-responsive|
|Recycled||Qualified but needs more nurturing (linked to Prospect)|
|Lost||Lost opportunities (ongoing nurturing)|
By defining each revenue stage, tracking how prospects move through the stages, and monitoring what’s trending up and down, you’ll be able to find bottlenecks in your lead management process and make better investment mix and marketing ROI decisions – and you’ll have the tools you’ll to start making forecasts about how they leads will flow in the future.
Tomorrow I’ll explore some of them more detailed ways you can think about modeling your revenue stages.