Opportunities forecasting increases return on marketing investments

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Guest Speaker: Opportunities forecasting increases return on marketing investments

> An effective marketing opportunities forecast helps focus business development efforts and increases marketing success

In December, I wrote an article describing our firm’s backlog forecasting process. In that article, I explained that MacKay & Sposito, Inc., (M&S) divides our workload projections into two forecasts depending on the likelihood of identified projects. First, our project managers forecast work-under-contract, as part of our backlog forecasting process. Second, our business development group forecasts marketing opportunities (not yet under contract) as part of our marketing opportunities forecast. The latter forecast discounts project fees to reflect any uncertainty they will be put under contract. When reviewed together these two forecasts give a complete picture of our upcoming workload.

I received a lot of positive feedback from that December article, and as a result, decided to write this follow-up detailing our opportunity forecasting process. Similar to my last article, I’m offering an example forecast to help illustrate how a firm might implement a similar tool (Please refer to the bottom of this article for directions on how to receive a free example opportunities forecast spreadsheet).

Opportunity forecasting is important for the following reasons:

1.) In contrast to backlog forecasting (which is a short-term indicator of revenue), opportunity forecasting gives firm management an indication of long-term revenue health. Armed with long-term indicators, firm managers make proactive, rather than reactive decisions.
2.) It provides a basis for longer-term marketing decisions. If your opportunity forecast trends down; turn-up the marketing engine. If your opportunity forecasts trends up; become more selective about the work you pursue or consider long-term strategic hires.
3.) An opportunity forecast provides a common framework to coordinate and strategize the projects in your firm’s marketing pipeline.

Use the following three steps to initiate an opportunity forecasting process within your firm.

Step #1 – Change your firm culture
Your rainmakers are busy people who work autonomously and are adverse to new processes. As a result, the biggest obstacle you’ll encounter when implementing an opportunity forecasting process will be gaining firm-wide buy-in. However, most now recognize that in this economy, marketing investments must be targeted and well coordinated. A well executed opportunities forecast will make your marketing efforts more transparent and ensure that business development investments are on target.

Changing your firm’s culture will take strong leadership, consistency, and time. In our firm, we are fortunate to have a strong business development manager, who has consistently reinforced the importance of reporting in the business development process. Her efforts have also been reinforced by firm owners.

As stated in my December article, I recommend you start with simple spreadsheets and focus on developing the consistency and discipline necessary to prepare meaningful projections. Good forecasts are more the product of good team (and inter-team) communication then fancy software tools. Advanced tools can then be implemented once the discipline and habit of forecasting is established.

Step #2 – Make the process easy
Recognize that the act of forecasting these opportunities is more art than science. Since identified opportunities are discounted for uncertainty, the actual value of the opportunities is only meaningful in-aggregate. In our firm, the total value of identified opportunities is quantified for upcoming months and then compared with previous forecasts to decide whether our opportunities are trending up or down. I mention this because, it is important that the effort to produce these projections be commensurate with the accuracy of the resulting reports. Decisions will be made based on changes that occur with each updated report, rather than based on any one projection.

At M&S, our process is fairly simple. We enlist the assistance of administrative staff to enter opportunities and to maintain any updates or changes. Then, in our regular marketing meetings, these forecasts are reviewed and next steps discussed to move each opportunity toward a successful win.

Step #3 – Compile opportunity forecasts with backlog forecasts
Finally, we combine our project manager led backlog forecasts with our business development led opportunity forecasts to get a short-term (backlog) and long-term (marketing) view of our revenue health. We rely on these reports when making marketing, staffing, and financial decisions. These forecasts are the basis of our annual strategic planning process, and are highly valued by our bankers and other partners as indicators of firm success.

By implementing an opportunity forecasting process firm owners create the tools needed to proactively manage for long-term health. These forecasts will also help you coordinate marketing efforts and be more strategic in marketing pursuits.

The following files are an example Opportunity Forecasting Spreadsheet and Summary Graph

[download id="1"] [download id="2"]

Derrick Smith is a senior vice president at MacKay & Sposito, Inc. (M&S) (Vancouver, WA). Contact him at dsmith@mackaysposito.com

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