Oh no! It's Forecast Friday!

Ooops, did you remember to update the AM forecast?

The dreaded forecast lies between you and your weekend. Just when you have rolled up your Commit and Best-case pipeline forecast, that Slack from your favorite sales leader flickers on your screen, asking you to update the forecast. One. Last. Time. And finally, you send it out and log-off, the butterflies for the Monday morning 9am forecast call start growing in your stomach.

Unless, of course… you are not done yet. Yes, yes, you finished the new business forecast for the Account Executives (AEs), but what about the Account Managers (AMs)? The oft-ignored AM or existing business forecast covers a large share of revenue.

And as much as you’d like, the same forecast methodology for AEs does not perfectly work for AMs.

Unlike AEs, AMs are on the hook for:

• revenue retention,

• churn prevention, and

• upsells.

Whether your AMs carry Bookings, ARR or revenue goals, your forecast needs to at least consider your customer’s usage of the product. And that’s probably sitting in Looker somewhere. Ugh.

Fear not! This week, as I plowed through thousands of rows of renewal and upsell opportunities for a client, wrangling together an AM forecast, I used a framework that put method to the madness, and I was out in time to enjoy a sunny Friday with my husband.

Here are some pointers for you to do the same.

Is your GTM motion SaaS or consumptive?

This could influence how you roll up your AM forecast. If you are traditionally SaaS, and your AMs largely upsell only around renewals (not ideal! you want them to be upselling all the time!), they likely hold a renewals ACV or Bookings goal that is inclusive of expected growth on renewals.

You likely look at all the renewal opportunities over this quarter and the next, and roll-up an ACV forecast. Ta da! But things look a little too good to be true. All the renewals are growing vs. last year’s baseline? You did see softer Enterprise monthly active usage (MAU) metrics last week … Maybe the AMs have not yet updated expected seat counts for next quarter’s opportunities. Sigh.

You may want to consider rolling up next quarter’s renewal forecast based on expected seat counts informed by recent usage. The customer is not going to renew at the same seat count signed last year if their recent MAU has been much lower.

If you are SaaS, but you expect your AMs to identify expansion opportunities all year round, they probably hold an ARR goal. Here, your forecast for the quarter is a blend of

• non-renewing ARR (sometimes called guaranteed ARR for the quarter),

• expected ARR from renewal opportunities and

• expected ARR from off-cycle upsell opportunities.

If you are consumptive and your AMs carry a revenue goal, the ARR framework still works (rolling up non-renewing, renewing and upsell revenue), but you are faced with the added complexity of translating ACV from Salesforce into revenue, leveraging historical revenue ramp curves.

How should you be weighting your renewal and upsell pipeline?

If you have great data on stage progression of renewal and upsell opportunities, by all means, use that! Otherwise, you can

• apply weightings on renewal opportunities in line with your logo retention (~80 - 90% for Enterprise SaaS), and

• apply new-business opportunity stage probabilities to your off-cycle upsell opportunities

What should your leading indicator/ input metrics be?

An ARR or revenue forecast can be a bit of a black-box, so I have often been asked for leading indicators or input metrics.

For Enterprise Account managers with just a few renewals in quarter, deep diving into each renewal opportunity is a good use of time. For both Enterprise and Mid-market Account managers, some aggregated metrics to keep a pulse on AM activity are

• % renewal opportunities in quarter that have closed won,

• Renewed ACV growth vs. baseline

  • the baseline could be the previous contract’s ACV for SaaS models, or

  • the last twelve month’s revenue for consumptive models.

It only takes one unexpected churn for your revenue leader to turn towards the AM business with an eagle eye, so the sooner you can spin up an AM forecast, the better. You can iterate on refining stage probabilities and usage forecasting, but getting out an AM forecast early in the quarter can save you a lot of pain down the line.

Have you been thinking about AM forecasting for your business? I would love to hear about your experiences.