The further along the prospect is in the funnel, the more likely the deal will close.

When creating a forecast, the salesperson will look at each opportunity and identify:

The stage the prospect is in

How likely they are to close

The value of that opportunity

To be successful, the sales rep needs to understand the average sales cycle and have a clear outline of each stage of the sales process to make a reasonable prediction.

Under this model, you can estimate the expected revenue by multiplying the deal amount (or value of the opportunity) and the probability of closing. For example, if a prospect is being nurtured toward a $100 opportunity and has a 20% probability of closing that deal, the forecasted revenue is $100 x .20 or $20. Whereas, another prospect further down the sales funnel on a $500 opportunity with a probability of 45% would forecast at $225 in expected revenue for the projected timeline.

‍