How To Develop Your Sales Forecast

8 Easy Steps To Create Your Revenue Forecast

Sales ForecastSay the words “sales forecast” to a marketer. Suddenly they’re too busy to talk.

“Ask finance,” they’ll respond. They think: Sales forecasts are the bean counters’ responsibility.

The reality is they fear numbers. Numbers scare most marketers.

I should know. I used to teach finance and analysis for marketers at NYU. I was lucky it was a required course. Otherwise no one would take it!

BUT sales forecasts often become your marketing sales goals. If you don’t help develop them, you’ll get stuck with overly aggressive budget targets. Often they don’t factor in your marketing history or potential outside factors.

You don’t have to be afraid of sales forecasts.

I’ll let you in on a secret. (I learned it the hard way. Teaching hundreds of students.)

Sales forecasts involve easy math.

How easy?

Chances are you learned it in third grade. It’s only addition, subtraction, multiplication and division.


Sales forecast: 8 Easy steps to develop yours

Sales Forecast

These 8 easy steps will help you build your sales forecast. Some of them require more than just filling in numbers and doing math. You must understand your business, the environment and your competition.

While you’re doing your sales forecast, try to create a few extra promotions. They should be easy-to-implement. They can help you overcome unforeseen sales hurdles.
Revenue Forecast-8 Steps by Heidi Cohen


1. Develop your sales run rate

A sales run rate is a simplified calculation to project sales through the end of the period.

The sales run rate becomes the base for your sales forecast. You improve this rough revenue forecast by making adjustments. (They’re outlined in steps 2-8.)

Sales run rate defined:

  • Divide current year-to-date sales by the number of sales periods to date. Multiply this result by the number of remaining sales periods and add it to your year-to-date sales.

Sales run rate formulas:

  • Periodic run rate (often monthly) = Total revenues to-date / # of sales periods to-date
  • Projected month’s sales = Run rate x Remaining # of sales periods
  • Projected annual sales = Total revenue to-date + (Run rate x Remaining # of sales periods)

If you’re interested, here’s how to measure marketing costs. 

Download a copy of the Mid-Year Marketing Checklist


2. Track historical trends

Your revenue forecast must be grounded in the context of your business experience over time.

Examine your business’s prior history as an indicator of future trends. Assess how your product, brand and/or firm, and the marketplace have changed.

Your goal is to adjust your sales run rate to take these trends into consideration.

Analyze these 5 factors:

• Customers

  • How many customers did you acquire? How long did it take to acquire them from first visit through actual purchase?
  • Did customers purchase more than once? Or were they only testing your products?
  • Can you convert one-time buyers into loyal customers?
  • How did segments purchase differently?
  • How should they be promoted going forward?
  • How well were customers retained? Did they keep purchasing? Should you stop marketing to any segments? Did fans support your purchase process?
  • What is your audience doing on social media?

Check what 41 Social Media Influencers Recommend You Do

• Product

  • Has your product array changed?
  • Have related products and/or services been added?
  • Will outside factors such as competition or regulation have an impact on your offering?
  • Which products have been sold, in what combination, and how many?

• Price

  • How is your product priced compared to similar products and close substitutes?
  • Were incentives needed to induce purchase?
  • How did this affect pricing?
  • Were prices affected by outside factors?

• Promotion

  • Are you reusing old promotions? If so, do they need to be tested and updated? Do you have budget allocated for this?
  • How is your brand doing? Your brand contributes to your firm’s balance sheet. (Here’s how to make your brand stand out!)
  • Do you have funds allocated to test new promotions? 
  • Do you have landing pages, email bait and welcome series tailored to your major promotions? If not, what will it cost to upgrade existing content?
  • How are your social media communities and content performing? Have you allocated related budget to support them with headcount to engage and related advertising?

• Place

  • Which distribution channels work best for your offering? Are any changes planned?
  • Are any supplier changes planned?
  • Are any changes in retail locations planned?

Download a copy of the Mid-Year Marketing Checklist


3. Establish seasonality

What recurring seasonal factors influence your sales cycles?
Seasonal factors may driven by:

  • External factors: Include holidays, buying seasons and industry conferences. For example, Back-To-School and Christmas.
  • Internal factors: Include marketing promotions, product changes and sales periods.

Determine which content and distribution channels are optimal for each season.

Download a copy of the Mid-Year Marketing Checklist


4. Include projectable market-moving events

Market-moving events tend to be major events that are outside your control. But they have an impact on your marketing and sales.

These events may be public, such as elections, or more industry-specific, such as a new Apple introduction.

  • Document these events. Calculate the impact on your sales.
  • Forecast and document the sales increase or loss you project they may generate.
  • Keep this number separate since it may not be repeated next year. You must be able to explain this next year.
  • Plan related promotions to take advantage of the event or to prevent sales losses.

Download a copy of the Mid-Year Marketing Checklist


5. Modify sales forecast for anticipated market trends and changes

Consider new trends and market changes. Answer: What impact will they have on my business and my revenue results?

• Market growth rate

  • Has overall demand for your product changed or shifted?
  • Has this had an impact or where or how the product is purchased?

• Consumer behavior

  • Has customer behavior regarding your product or market changed?
  • Have you considered changes in influencers and others using your product?

• New trends

  • Are there trends on the horizon that will affect your customers or sales? Think broadly.

Download a copy of the Mid-Year Marketing Checklist


6. Monitor competitors’ activities

Actually check what your competitors are doing. Your goal is to anticipate what they’ll do.  To help you, here’s a list of 16 places to look for competitors.

  • Shop the competition to experience its customer process. Observe each aspect, from product presentation to ease of purchase to packaging.
  • Check for differences in products and services. Are there opportunities you’re missing?
  • Determine whether players from other categories may be entering your market. Don’t get blindsided!
  • Follow the major players, regardless of category. They’ve got market share and customer knowledge.

Download a copy of the Mid-Year Marketing Checklist


7. Add your firm’s strategic business plans

Refine your revenue forecast based on internal factors. Add specifics to your marketing strategy. Translate these into tactics with realistic time frames. (Remember: Problems and delays happen.)

• Products

  • Are any aspects of your product offering changing?
  • Do you regularly liquidate excess inventory? (Be careful of training customers to wait for sales.)

• Customers

  • Are there target markets or customer segments with high growth potential? Do they require different marketing or other treatment?
  • Are there areas where you can expand your customer base with different marketing?
  • Do you have customers who are costing you more money than you make in profit? If so, plan to unmarked them.

• Prices

  • Are prices changing? Look at the market, your competitors and your costs. At a minimum, consider inflation.

• Promotions

  • Are new promotions planned? Have you considered the related marketing and analysis needed?
  • Are existing promotions fatiguing? This means they’re returning lower and lower revenues.
  • Do you have targeted promotions for new customers?
  • Do you have special promotions for existing customers?
  • Do you have a win-back strategy for former customers?
  • Do you have easy-to-use promotions if there’s a sales shortfall? If not, create some now. But don’t budget the sales until you need them.

• Marketing spends

  • What size and type of marketing is needed to achieve your revenue forecast? Do you have enough budget to accomplish this? If not, how can you adjust your marketing to succeed?
  • Are advertising formats changing? Remember marketing returns diminish over time as a particular type of campaign gets used repeatedly.

Download a copy of the Mid-Year Marketing Checklist


8. Adjust pricing and promotions in your sales forecast

Take another sanity check of the information you’ve gathered.

Specifically, you want to have comprehensive, realistic revenue forecast.

Once you’ve included everything in steps 1 -7, make another check. Ensure that your promotions and pricing are properly aligned in your forecast.

Also, have a few promotions that aren’t documented. These are to protect you when stuff happens beyond your control.

Download a copy of the Mid-Year Marketing Checklist


The sales forecast bottom line:

Don’t let the words sales forecast scare you.

You can do this. All that’s involved is adding, subtracting, multiplying and dividing. Even better you have a calculator!

Take these 8 sales forecast steps one at a time. Break each section into small bite size chunks. Your kid can do this. So can you!

Once you’re done with your sales forecast, print it out. Check all of the numbers by hand.

Worksheets can throw you curve balls you don’t expect. If you’re not practiced, you might miss something that will come back and bite you.

You have the power to create a quality sales forecast.

I have faith in you!

What challenges do you face with your sales forecasting? Please use the comments section to respond.

Happy Marketing,
Heidi Cohen

Editor’s Note: This article was originally published on September 6, 2010. It has been updated. Please stay tuned we have a Finance for Marketers product launching early 2017.

Heidi CohenHeidi Cohen is the President of Riverside Marketing Strategies.
You can find Heidi on , Facebook and .

Photo Credit: Foreign Money – Use of this photo requires link to this article.

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