3 Awesome Sales Forecast Examples

Sales forecasting can help you make better business decisions. But what is the best way to create accurate sales projections?

Today we are going to discuss three sales forecasting methods: intuitive sales forecasting, historical sales forecasting, and opportunity stage sales forecasting.

We will also share a sales funnel that you can use to increase sales. It’s the same funnel that we used to grow our business from zero to $100M+ in annual revenue!

Sales Forecast Example #1: Intuitive Sales Forecasting

When you are just starting out, you don’t have any sales data, so all you can do is make your best guess as to how many sales you should expect to make in a given time period. This is known as intuitive sales forecasting.

We would argue that intuitive sales forecasting shouldn’t be considered forecasting at all because you are literally just guessing. Calling it “forecasting” gives it undue legitimacy that can make you overly confident about your sales projections.

Nevertheless, whatever you may call this approach, it’s the only option you have when you launch a new business or a new product. So how can you make your best educated guess?

Here are some factors that you should take into consideration:

• Is there a proven market demand? Innovative entrepreneurs are glorified in our culture but the reality is that doing something that no one has ever tried before is extremely risky. While lack of competition might mean that there’s an incredible business opportunity that you can capitalize on, it’s much more likely to be indicative of no market demand. Just to be clear, we aren’t saying that you shouldn’t follow your dreams if you have a big idea that you really believe in. We simply want you to understand the risk involved because cultural messaging around the subject of innovation can be misleading. Remember that Facebook wasn’t the first social network, Google wasn’t the first search engine, etc.
• How are your main competitors doing? If there’s a proven market demand aka competition, you want to take a closer look at the main players in that niche. Are they struggling to stay afloat or are they raking in the cash? You’d be surprised by how much you can find out with some Open Source Intelligence (OSINT) Internet sleuthing!
• What are your advantages and disadvantages compared to your main competitors? You want to be realistic about your prospects. If you are launching a new business or a new product, you will likely have to compete with established players. This doesn’t necessarily mean that you stand no chance against them but you do need to have a strategy for carving out a market share for yourself.

Beware of the optimism bias: a cognitive bias that causes people to believe that they are less likely to experience negative events and more likely to experience positive events. You should aim to be as realistic as possible instead of naively hoping for the best.

We also recommend using the lean startup approach: create a minimum viable version of your product or service, present it to your target audience, and then start iterating it based on market feedback. Ideally, you should validate your business idea within a month!

Sales Forecast Example #2: Historical Sales Forecasting

Once sales start coming in, you should begin using that data to create sales projections. This is known as historical sales forecasting.

However, it’s not as simple as looking at the sales data for a specific time period and projecting those numbers onto the upcoming equivalent time period. Just because you made an X number of sales last year, doesn’t mean that you’re going to make X number of sales this year!

This remains true even when you account for the growth rate. You can’t simply project the current growth rate into the future!

If you want to accurately forecast sales based on historical data, you need to first analyze that data and understand why you made the sales you did during that time period.

The most important thing here is to separate sales trends that can be reasonably expected to continue in the future from temporary spikes in sales that you probably won’t be able to replicate. You want to exclude the latter from your data.

Say, if a celebrity mentions your product on a popular podcast completely independently without you paying them for a shoutout, it might lead to a spike in sales but you will need to exclude it from your data when you are creating sales projections for the next year.

Note that once you exclude these irreplicable spikes, you will have to adjust the growth rate as well so that it would be based on what can be replicated.

This cleaned up data is what you should use for historical sales forecasting. You will probably underestimate future sales if you do that but from the risk management perspective, it’s better to be overly pessimistic rather than overly optimistic.

Taking a conservative approach to historical sales forecasting can help you become more resilient to unexpected market changes. It’s easier for a company to absorb shocks when its business strategy isn’t reliant on everything working out perfectly.

That being said, you need to remember that your sales projections, even those based on a mountain of cleaned up historical data, are just that: projections. They aren’t reality.

We are all vulnerable to black swans: hard-to-predict, highly improbable events that have a disproportionate impact.

The Covid-19 pandemic, which was arguably a black swan event, is a great example of historical sales forecasting limitations: all sales projections for 2020 went right out of the window in March of that year.

While it’s impossible to predict the future, you best believe that it’s going to include black swan events. So how can you prepare for them?

The best way to increase the resiliency of your business is to keep enough money in the bank to stay afloat for at least a year in case the revenue dries up. Will that help you survive the next black swan? Who knows.

But you’ll certainly have better chances than your competitors who don’t have as much cash on hand as you do!

Sales Forecast Example #3: Opportunity Stage Sales Forecasting

You can also use your sales funnel conversion data to create sales projections. This is known as opportunity stage sales forecasting.

Say, if 100 people visit your sales page and 10 of them end up buying your product, then the conversion rate of that sales page is 10%.

From that, you can extrapolate that if you sent 200 people to your sales page, then you’d likely make around 20 sales, assuming the conversion rate remains the same.

That assumption needs to be warranted, though. Are you generating traffic the same way in both situations?.

Say, if you used the same Facebook ad campaign in both cases, you can probably reasonably assume that the conversion rate should remain the same, provided that all you did was scale up the campaign without changing anything else about it.

However, if you used Facebook advertising in the first case and then switched to influencer marketing in the second case, you can’t just assume that traffic from two completely different sources will have the same conversion rate.

You also need to be aware of the vanity metrics trap, which is a common issue with opportunity stage forecasting:

It’s easy to feel like you are making progress when you see the numbers go up. But is your business generating more profit as a result? Because if it isn’t, then you are just spinning your wheels by optimizing for vanity metrics.

This is less likely to be a problem when it’s just you because solopreneurs have a direct incentive to optimize for profit. It’s going to go into your pockets after all!

But once you start hiring people, it’s important to remember that they have incentives that are different than yours:

• If you hire someone to generate traffic, they will focus on generating traffic.
• If you hire someone to bring in more leads, they will focus on bringing in more leads.
• If you hire someone to sell your product, they will focus on closing sales.

But then, due to misaligned incentives, this might have unintended downstream effects:

• That traffic may not convert into leads.
• Those leads may not convert into customers.
• Those customers may start asking for refunds because the salesperson misrepresented your product in order to close the sale.

So you might end up in a situation where your employees did what you asked them to do but it didn’t help your bottom line.

As your company grows, you must be mindful of this misaligned incentive problem and ensure that everyone on your team is working towards the same goal: increasing profit.

Otherwise, your employees will end up doing their own thing without regard for the downstream effects of their decisions. 

And that is going to interfere with opportunity stage sales forecasting because those downstream effects will end up throwing off your predictions!

Increase Sales With the Value Ladder Sales Funnel

Okay, so now that you know how to forecast sales, let’s talk about how to increase them.

We believe that the most effective way to sell anything online is the Value Ladder sales funnel.

It was created by our co-founder Russell Brunson who then used it to take ClickFunnels from zero to $10M+ in annual revenue in just one year (it’s at $100M+ now!).

This sales funnel has four stages:

• Bait. You offer the potential customer your lead magnet in exchange for their email address.
• Frontend. You offer the potential customer your least expensive and least valuable product or service.
• Middle. You offer the customer a more expensive and more valuable product or service.
• Backend. You offer the customer your most expensive and most valuable product or service.

Ideally, you also offer a continuity program of some sort, meaning, a subscription product that generates recurring revenue.

We also recommend adding downsells, upsells, and cross-sells to these core offers in order to maximize your revenue.

So the main idea here is this:

Instead of driving traffic directly to your website or sales page, you drive it to your lead magnet landing page and convert those visitors into email subscribers.

Then, once you have their email addresses, you pitch your products and services to them via email and drive traffic from your email list to your sales pages.

The reason why this sales funnel works so well is that it allows you to:

1. Start the relationship with that person by offering free value.
2. Nurture that relationship by continuing to provide free value via email.
3. Build trust by providing progressively more paid value at each stage.

Here’s how Russell explains it:

Building a Value Ladder sales funnel for your business is the single best thing you can do to increase sales!

Build Your First Sales Funnel In Just Five Days!

Let’s keep it real:

Building a sales funnel from scratch can seem like a daunting task.

That’s why we created our 5 Day Lead Challenge where Russell walks you through it step-by-step.

You will:

• Create your first lead magnet.
• Build your first sales funnel.
• Set up a six-email welcome sequence.

…and launch your funnel in just five days!

So don’t hesitate. Take action now. It can change your life!

Join Our 5 Day Lead Challenge Today!

P.S. This challenge is completely FREE!