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The Sales & Marketing Leading Indicator to Drive Forecast

Why leading indicators beat capacity models, shown by applying the SaaS 101 formula to a real 2023 plan

Jeff Schwartz · dataroomHQ

Published September 6, 2024
About this resource
Format
SaaSOpen 2024 NYC
Length
16 min video
Inside
8 key moments
Read the full transcript

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What you’ll learn

Jeff Schwartz presents leading indicators as a more actionable alternative to capacity-based revenue forecasting. The talk explains a SaaS forecasting formula, how demand inputs reveal risk early, and how teams can course-correct through channels and events.

Read the source passages

Key moments

Find the ideas you need and go straight to the source.

Question capacity-model assumptions

“usually that's the answer is we need more people to do that my clicker doesn't seem to okay there we go so in this example their Finance team came and said we're going to have to hit 13 million to hit that goal to get to that 15 million they wanted to get to 13 million in new business AR and so and you can see that the jump from 2022 to 2023 the sales team said okay so what does that mean for me what do like how many people am I GNA have to bring on on to to be able to do that so they looked at what they call sales capacity and”
Watch at 02:56

Use opportunities, deal size, and win rate

“blue something so obvious and when I'm going to tell you is so obvious and so practical yet no one is really doing it most companies are not doing what I'm about to show you so what is it the SAS 101 formula well new business AR how many opportunities are you going to create what is your average deal size you multiply those two numbers together and then what is your win rates over time key thing here is over time most companies do not look at things over time they look at win rates it's very naive and let me explain why it's naive”
Watch at 06:21

Experiment with demand channels

“more it's actually you can actually go one by one and figure out what things are you going to do to actually drive demand in your product so that's the second piece the third piece is if one of them starts to not work and again this is fluid right things sometimes stop working you can bring in new channels so maybe you were doing LinkedIn ads are working and you're like okay maybe we should try Facebook ads because some of our other channels aren't working you could bring these other things in maybe you want to try a podcast maybe you're you're going to create a news letter to drive inbound you could try different things and experiment and it really”
Watch at 09:40

Use events to correct revenue risk

“ad budget that is an expense place so that is a conversation that had to happen um and then the third thing uh that they did was they actually had each sales rep host a local dinner um in different territories throughout the throughout the country um because they saw events were converting well so they they invested a little more in in person so they were able to course correct uh when they right when they fell behind and the result as I showed at the beginning was you had the blue blue and the green line right in line so they hit exactly what they said they were going to”
Watch at 13:06

Examine sales-capacity forecasting

“How Most Teams Forecast Today for the Year: Sales Capacity Example × × $250k Quota 10 reps 75% Attainment How many ramped sales reps will I have in the quarter? What is the quota per rep in that quarter? What % of quota do I expect the team to achieve?”
Read slide 9

Use the SaaS 101 formula

“How Teams Should Forecast: The SaaS 101 Formula”
Read slide 18

See revenue risk earlier

“Key Benefits ✓ You will know if you’re ahead or behind on your revenue numbers way before they hit the books to give you time to course correct # of Opportunities Average Deal Size Win Rates Over Time × × This number might happen 3-12 months before it impacts revenue”
Read slide 27

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About the speaker
Jeff Schwartz

Jeff Schwartz

Founder and CEO · dataroomHQ

LinkedIn

CEO of dataroomHQ, a platform providing secure virtual data rooms for M&A transactions and document sharing.

Company revenue
$5M

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Slide by slide

Each slide with a short explanation of what it shows. Open the slide text for its exact wording.

45 passages

Leading-indicator forecasting

  1. Slide 1Open deck
    Slide text

    SaaSOpen, September 2024 The Sales & Marketing Leading Indicator Framework to Drive Forecast Jeff Schwartz Founder & CEO, dataroomHQ

  2. Slide 2Open deck

    Plan the forecast discussion

    The talk will cover why forecasting matters, how to build a reliable forecast, and how to put it into practice. This agenda sets up a progression from business need to method and action.

    Slide text

    Over the next 20 minutes I’m going to show you How most companies forecast today and why it doesn’t work The SaaS 101 Formula An example bringing it all together

  3. Slide 3Open deck

    Compare actual revenue with plan

    The chart tracks quarterly run-rate ARR against plan from Q2 2021 through Q4 2023, with a hiring marker late in the period. Comparing the lines reveals when performance diverges from expectations and informs capacity decisions.

    Slide text

    We will apply the SaaS 101 Formula Here based on one of our customers planning going into 2023

  4. Slide 4Open deck

    Forecasts protect cash and strategy

    Forecasting connects near-term survival, including cash and runway, with longer-term strategic goals. The slide frames a forecast as a management tool for decisions, not just a revenue estimate.

    Slide text

    Why Does Forecasting Revenue Even Matter? ✓ Expense budgets are created to ensure the company doesn’t run out of cash before hitting next milestones. If you miss the revenue, then your cash position and runway will be shorter than anticipated leading to RIFs and Shutdowns. Numbers are set to give you the best chance to hit whatever the strategic objectives of a company are. Miss the goals and it makes those objectives much harder. ✓ Company Survival Best Outcome

  5. Slide 5Open deck

    Align sales capacity with the plan

    The cartoon contrasts a finance team’s annual plan with sales asking for many more hires. It captures how headcount requests can conflict with the plan when capacity assumptions are not explicit.

    Slide text

    Finance - Here is our Annual Plan for the year. Sales - We need 25 more sellers then

  6. Slide 6Open deck

    Translate the company goal into sales

    The top-down example starts from a $13M new-business goal and asks what sales capacity is required to deliver it. The diagram makes the company target the input to a staffing calculation.

    Slide text

    Example: Finance Top-Down Company Goal Actuals Plan Finance - We need to add $13M in New Business this year $13M

  7. Slide 7Open deck

    Calculate capacity from rep productivity

    The slide builds sales capacity from the number of reps, quota, and expected attainment. Multiplying these assumptions reveals how much revenue the current team can support.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example 10 reps How many ramped sales reps will I have in the quarter?

  8. Slide 8Open deck

    Factor attainment into quota capacity

    The capacity model discounts quota by expected attainment, showing why planned quota is not the same as forecast revenue. This adjustment makes the team’s contribution more realistic.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example × $250k Quota 10 reps How many ramped sales reps will I have in the quarter? What is the quota per rep in that quarter?

How teams forecast today

  1. Slide 9Open deck

    Set three capacity assumptions

    The example uses 10 ramped reps, a $250K quarterly quota per rep, and 75% attainment. These are the inputs for calculating sales capacity.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example × × $250k Quota 10 reps 75% Attainment How many ramped sales reps will I have in the quarter? What is the quota per rep in that quarter? What % of quota do I expect the team to achieve?

  2. Slide 10Open deck

    Calculate annual sales capacity

    Ten reps at a $250K quarterly quota and 75% attainment produce $1.875M in new business ARR per quarter, or $7.5M for the year.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example × × $250k Quota ＝ $1.875M in New Business ARR 10 reps 75% Attainment How many ramped sales reps will I have in the quarter? What is the quota per rep in that quarter? What % of quota do I expect the team to achieve? $7.5M in New Business ARR for the Year

  3. Slide 11Open deck

    Use a repeatable sales capacity formula

    A simple formula combines rep count, quota, and attainment to estimate capacity. Each assumption can be changed to test how hiring or productivity affects the target.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example $1.875M in New Business ARR $7.5M in New Business ARR for the Year Finance - We need to add $13M in New Business this year Sales

  4. Slide 12Open deck

    Capacity planning exposes assumptions

    The slide reinforces that a staffing plan depends on more than a revenue target: quota, ramp, and attainment assumptions also shape the output. Making them visible lets leaders challenge the forecast inputs.

    Slide text

    How Most Teams Forecast Today for the Year: Sales Capacity Example $1.875M in New Business ARR $7.5M in New Business ARR for the Year Finance - We need to add $13M in New Business this year Sales $5.5M Short Hire now, 6 months ramp $5.5M = Reps x $500k x 75% 15 Additional Reps

  5. Slide 13Open deck

    Model sales capacity before hiring

    The formula summarizes how headcount and productivity assumptions translate into revenue capacity. It gives finance and sales a shared basis for discussing hiring needs.

    Slide text

    Sales Capacity Formula × × Quota ＝ New Business ARR Ramped Reps Assumed Attainment

  6. Slide 14Open deck

    A top-down forecast hides constraints

    The diagram illustrates how a top-down target can miss the operating realities that determine whether sales can deliver it. Planning from capacity makes those constraints visible earlier.

    Slide text

    Major Flaws × Assumes you can hit any number by hiring more sales reps × × Quota ＝ New Business ARR Ramped Reps Assumed Attainment

  7. Slide 15Open deck

    Plan with sales inputs

    The slide highlights the need to include sales assumptions in the company forecast. A plan grounded in the team’s actual capacity is easier to act on than a target alone.

    Slide text

    Major Flaws × Assumes you can hit any number by hiring more sales reps Teams hire aggressively to then not hit a number and have to fire aggressively ×

  8. Slide 16Open deck

    Unpack the forecast gap

    The visual accumulates issues that emerge when forecasts lack operational detail. Its buildup emphasizes that small assumption errors compound into a misleading plan.

    Slide text

    Major Flaws × Assumes you can hit any number by hiring more sales reps Teams hire aggressively to then not hit a number and have to fire aggressively × By the time you know if your ‘attainment’ assumption was correct, it is too late ×

  9. Slide 17Open deck

    Test assumptions before committing

    The slide continues the forecast critique by showing how weak inputs distort the result. Checking each driver helps identify whether the gap comes from demand, productivity, or timing.

    Slide text

    Major Flaws × Assumes you can hit any number by hiring more sales reps Teams hire aggressively to then not hit a number and have to fire aggressively This tells you the amount of ‘demand’ you can serve, but it does not tell you the demand × × By the time you know if your ‘attainment’ assumption was correct, it is too late × ✓ If used properly!

The SaaS forecasting formula

  1. Slide 18Open deck

    Build a bottom-up demand forecast

    This section shifts from sales capacity to demand generation. The next slides estimate pipeline creation from opportunities, deal size, and win rates.

    Slide text

    How Teams Should Forecast: The SaaS 101 Formula

  2. Slide 19Open deck

    Start with opportunities, deal size, and wins

    The forecast method multiplies opportunity volume by average deal size and win rate. These three drivers turn pipeline activity into an expected revenue outcome.

    Slide text

    How Teams Should Forecast: The SaaS 101 Formula New Business ARR is equal to: # of Opportunities

  3. Slide 20Open deck

    Forecast revenue from pipeline drivers

    The diagram connects the number of opportunities, their average value, and the conversion rate. Changing any factor changes the revenue forecast.

    Slide text

    # of Opportunities Average Deal Size × New Business ARR is equal to: How Teams Should Forecast: The SaaS 101 Formula

  4. Slide 21Open deck

    Add timing to the pipeline model

    The model places opportunity creation and conversion across time, clarifying when pipeline is expected to turn into revenue. Timing is necessary for a useful quarterly forecast.

    Slide text

    # of Opportunities Average Deal Size Win Rates Over Time × × New Business ARR is equal to: How Teams Should Forecast: The SaaS 101 Formula

  5. Slide 22Open deck

    Use reporting to monitor pipeline

    A reporting interface illustrates how teams can inspect pipeline activity and its drivers. The screenshot supports the method with a practical view of opportunity data.

    Slide text

    The Formula in Practice

  6. Slide 23Open deck

    Build a monthly opportunity goal

    The example turns the forecast formula into a practical monthly target. It connects required revenue back to the number of opportunities the team needs to create.

    Slide text

    The Formula in Practice (End of ‘22) Number of Opportunities Per Month Goal

  7. Slide 24Open deck

    Use deal size as a forecast input

    The example uses a $25K average deal size in the demand model. A consistent deal-size assumption helps translate opportunity counts into expected pipeline value.

    Slide text

    The Formula in Practice (End of ‘22) Number of Opportunities Per Month Goal $25k Average Deal Size Goal

  8. Slide 25Open deck

    Use win rate over time

    The forecast models win rate at 20%, 25%, and 30% across successive periods. The progression shows how conversion assumptions can change the amount of pipeline required.

    Slide text

    The Formula in Practice (End of ‘22) Number of Opportunities Per Month Goal $25k Average Deal Size Goal Win Rates Over Time Goal

  9. Slide 26Open deck

    Combine the drivers in a pipeline table

    The table brings opportunity volume, deal size, and win rate together to estimate demand. Reading across the assumptions shows how each contributes to the forecast.

    Slide text

    The Formula in Practice (End of ‘22) Number of Opportunities Per Month Goal $25k Average Deal Size Goal Win Rates Over Time Goal Existing Pipeline

Benefits of leading indicators

  1. Slide 27Open deck

    Measure leading indicators early

    The list highlights benefits of a demand forecast, including earlier signals and the ability to take action by source. The central point is to manage pipeline before revenue misses appear.

    Slide text

    Key Benefits ✓ You will know if you’re ahead or behind on your revenue numbers way before they hit the books to give you time to course correct # of Opportunities Average Deal Size Win Rates Over Time × × This number might happen 3-12 months before it impacts revenue

  2. Slide 28Open deck

    Diversify demand across sources

    The slide emphasizes spreading demand across channels so the forecast does not depend on a single source. A broader mix makes the pipeline plan more resilient.

    Slide text

    Key Benefits ✓ You will know if you’re ahead or behind on your revenue numbers way before they hit the books to give you time to course correct Each source has actions that can be done to drive more opportunity. It might require more spend, but it’s actionable. ✓ Event calendar, sponsor, event playbook Optimize conversion, update copy, budgets, targeting

  3. Slide 29Open deck

    Connect actions to forecast inputs

    The examples show how forecast drivers can guide specific actions. When a metric moves off plan, teams can adjust the activity that produces it.

    Slide text

    Key Benefits ✓ You will know if you’re ahead or behind on your revenue numbers way before they hit the books to give you time to course correct Each source has actions that can be done to drive more opportunity. It might require more spend, but it’s actionable. It gives you enough time to create new demand channels to leverage if you fall behind ✓ ✓ Let’s try Facebook ads, local field events, podcast, tech partnership

  4. Slide 30Open deck

    Use forecast math to guide decisions

    The recap links the forecasting method to concrete operating choices. A shared model helps teams identify which assumption needs attention.

    Slide text

    Key Benefits ✓ You will know if you’re ahead or behind on your revenue numbers way before they hit the books to give you time to course correct Each source has actions that can be done to drive more opportunity. It might require more spend, but it’s actionable. It gives you enough time to create new demand channels to leverage if you fall behind It is math. To hit your target you will need to either hit the targets set OR if you miss one, make up for it in one of the other levers ✓ ✓ ✓

  5. Slide 31Open deck

    Project demand by quarter

    The quarterly demand projection rises from $1.4M to $2.6M over the year, with a dip in the second quarter. The pattern gives leaders a time-based view of expected pipeline.

    Slide text

    2023 Projections New Business ARR if you hit those 2023 Goals

  6. Slide 32Open deck

    Compare demand with rep capacity

    The chart places projected demand beside current rep capacity, revealing where the team may not have enough selling capacity. This comparison signals when to plan additional hires.

    Slide text

    2023 Projections Now Overlay Sales Capacity Need to hire more reps to have enough capacity to cover demand

  7. Slide 33Open deck

    2023 Projections Ensure Demand and Rep Capacity are closely aligned +4 Ramped Reps

  8. Slide 34Open deck

    Find the shortfall before the quarter

    The table compares expected demand with available capacity and surfaces projected deficits. Seeing the gap early gives leaders time to change hiring or demand plans.

    Slide text

    Ability to Course Correct On track, but in May hit a bump

  9. Slide 35Open deck

    Take corrective action on demand

    The proposed responses include adding events, hosting local dinners, and modestly increasing LinkedIn spend. The slide turns a forecast shortfall into channel-level actions.

    Slide text

    Ability to Course Correct On track, but in May hit a bump Increased resources in the channels that were performing the best: Added 4 additional events to their event calendar Had each sales rep host a local dinner field event Slightly increased the LinkedIn Ad budget

Results

  1. Slide 36Open deck

    Check whether actions changed results

    The chart compares performance after corrective actions, showing how actual demand tracks against the earlier plan. It closes the loop between forecast, intervention, and outcome.

    Slide text

    The Results

  2. Slide 37Open deck

    Apply the forecast method step by step

    The slide starts the practical walkthrough, moving from forecast inputs toward an operating plan. Each step makes the calculation usable in a real planning cycle.

    Slide text

    Applying This To Your Company List out all the sources used to generate new opportunities with a name assigned to each source.

  3. Slide 38Open deck

    Set the inputs for the forecast

    The example asks teams to define the assumptions that drive demand and capacity. Clear inputs make the result easier to review and update.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Applying This To Your Company

  4. Slide 39Open deck

    Review forecast assumptions together

    The workflow encourages sales and finance to assess the same forecast drivers. Shared review helps teams agree on what changed and what action follows.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Applying This To Your Company

  5. Slide 40Open deck

    Turn the forecast into operating actions

    The method connects expected outcomes with the decisions teams can make about demand and staffing. Forecasting becomes useful when it changes the operating plan.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Use the formula to see what it yields for New Business. Applying This To Your Company

  6. Slide 41Open deck

    Revisit the forecast as conditions change

    The closing recap returns to the talk’s forecast method and reinforces that inputs should be revisited as the business changes. This keeps plans connected to current pipeline evidence.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Use the formula to see what it yields for New Business. Overlay sales capacity and ensure they’re aligned. Applying This To Your Company

  7. Slide 42Open deck

    Make forecasting a team practice

    The slide encourages teams to use the model as a repeatable planning practice. Regular review helps keep demand, capacity, and targets aligned.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Use the formula to see what it yields for New Business. Overlay sales capacity and ensure they’re aligned. Compare this to the Top Down Financial plan. Ensure they are aligned. This is where Sales and Marketing should either explain additional budget needed to hit the goals, or explain why it would not be feasible. Applying This To Your Company

  8. Slide 43Open deck

    Use forecast gaps to choose next steps

    A forecast gap can point to a change in hiring, pipeline generation, or assumptions. The model helps focus discussion on the driver that needs attention.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Use the formula to see what it yields for New Business. Overlay sales capacity and ensure they’re aligned. Compare this to the Top Down Financial plan. Ensure they are aligned. This is where Sales and Marketing should either explain additional budget needed to hit the goals or explain why it would not be feasible. If you fall behind on the Opportunity Created goals, determine how many additional opportunities you would need to create in the next few months to course correct and what channel can create them. Applying This To Your Company

  9. Slide 44Open deck

    Keep the forecast tied to evidence

    The final method slide emphasizes grounding plans in observable pipeline and sales capacity. Updating the inputs keeps expectations realistic.

    Slide text

    List out all the sources used to generate new opportunities with a name assigned to each source. How many opportunities will be created by month per source? The person assigned should be the one developing this. Determine the average deal size and win rate over time assumption. Use the formula to see what it yields for New Business. Overlay sales capacity and ensure they’re aligned. Compare this to the Top Down Financial plan. Ensure they are aligned. This is where Sales and Marketing should either explain additional budget needed to hit the goals or explain why it would not be feasible. If you fall behind on the Opportunity Created goals, determine how many additional opportunities you would need to create in the next few months to course correct and what channel can create them. Hit your leading indicators, and the rest is math. Applying This To Your Company

  10. Slide 45Open deck

    Closing and follow-up

    The speaker thanks the audience and invites follow-up through the contact information shown on the slide.

    Slide text

    SaaSOpen, September 2024 Thank you! [redacted email] Jeff Schwartz Founder & CEO, dataroomHQ