Forecasting has always been a critical skill for Customer Success leaders, but the stakes have never been higher. With retention becoming a primary growth driver, businesses are shifting their strategies to focus less on new customer acquisition and more on maximizing the value of their existing customer base.
The data says it all: expansion now accounts for up to 40% of growth in companies with $15M-$30M+ ARR, as shown in the screenshot below.
Retention is the cornerstone of sustainable, long-term growth. For companies with smaller ARR, the shift may not feel as dramatic, but the need for a clear, data-driven approach to forecasting renewals, expansions and reactivations has never been more pressing.
As a CS leader, I’ve learned that accurate forecasting is about having a system that enables you to adapt quickly, focus on the right opportunities, and anticipate risks. Whether you’re managing $300K ARR or $30M+, this system is critical to driving predictable revenue growth.
In this newsletter, we’ll break down how I’ve built a reliable Customer Success forecasting system, incorporating renewal pipelines, key metrics, and actionable processes to track risks and opportunities. Let’s dive in.
1. Opportunity Pipeline: A Unified System of Record
A well-organized pipeline is the foundation of any forecasting system. It should capture renewals, expansions, and reactivations—each classified clearly to ensure accuracy and accountability.
How I’ve Organized Our Renewal Stages:
-
- Upcoming Renewal: We automate the creation of renewal opportunities in our CRM (we use Salesforce) as soon as a new deal or recent renewal closes. By default, these opportunities are in the “Upcoming Renewal” stage, providing visibility into all contracts due for renewal.
-
- Confirmed Risk Factor and At-Risk Renewals:
-
- At-Risk Renewal: Accounts flagged here still have a chance to be saved with the right interventions.
-
- Confirmed Risk Factor: Churn is highly likely, with minimal recovery options.
-
- Confirmed Risk Factor and At-Risk Renewals:
-
- Negotiating, Finalizing, Pending, Closed Won / Closed Lost: These are the standard stages that track the progression of renewal opportunities through the commercial process.
By aligning our CRM to reflect these stages, I ensure our pipeline is transparent and actionable.
2. Key Metrics for Tracking
Your forecasting system must measure the right metrics to produce accurate predictions. Here’s what I prioritize:
-
- Up for Renewal (UFR$): Total contract value scheduled for renewal.
- Expected Renewal (ER$): Predicted renewal value based on current risk assessments.
- Renewal Rate (GRR): Revenue retention percentage (ER$ / UFR$).
- Expansion ARR: Additional revenue from upselling or cross-selling during renewals.
- Delta (UFR$ – ER$): A gap analysis showing potential risks or opportunities.
- Net Retention Rate (NRR): The percentage of revenue retained, including expansions and churn, reflecting overall growth.
These metrics provide the data backbone for my forecasts, enabling me to create reliable projections.
3. Identify At-Risk Accounts
Identifying risk early is essential for retention and forecast accuracy.
- Churn Risk Indicator / Health Scores: Use scoring systems to track customer engagement, product usage, and satisfaction. We have an automation in place that moves renewal opportunity stage to ‘At Risk Renewal’ when our Churn Risk Indicator marks them as High Churn Risk.
- CSM Input: Empower your team to flag at-risk accounts by updating opportunity stages. CSMs know their customers best, making their input invaluable.
By combining data-driven health scores with CSM insights, I ensure no risk signals are overlooked.
4. Upsell and Cross-Sell Opportunities
Your forecast need to account for growth opportunities as well.
Opportunity Reviews with MEDDPICC:
I use the MEDDPICC framework to qualify expansion opportunities:
-
- Metrics: Quantifiable impact of the solution.
- Economic Buyer: Who holds the budget authority?
- Decision Criteria: How does the customer evaluate vendors?
- Decision Process: What’s required to approve purchases?
- Paper Process: Steps for legal or procurement approvals.
- Identify Pain: The problem the solution solves.
- Champion: Who internally advocates for the solution?
- Competition: What other options are being considered?
Regular opportunity reviews using the MEDDPICC framework have been key in my forecasting process. This structured approach helps me classify opportunities into three actionable categories:
- Opportunities likely to close this quarter: These are well-qualified, progressing deals with clear next steps and stakeholder alignment.
- Opportunities that might slip to the next quarter: Deals that need more time to mature due to outstanding customer buy-in, internal challenges, or resource gaps.
- Opportunities that should be deprioritized or closed: These include deals that lack clear alignment with the customer’s needs or show no signs of progressing, allowing your team to refocus on high-impact accounts.
Using MEDDPICC as part of your forecasting system ensures you’re prioritizing the right opportunities and giving your team a clear roadmap for execution.
5. Forecast Categories: Commit, Most Likely, Best Case
Forecasting is rarely 100% accurate, but categorizing opportunities helps set expectations and create actionable plans:
-
- Commit: Opportunities with a 90%+ chance of closing.
- Most Likely: Opportunities with a moderate chance of success but require follow-up.
- Best Case: High-potential opportunities that are less certain.
These categories allow me to present forecasts that balance optimism with realism while providing a range of potential outcomes for leadership.
How I Manage Forecasting
Forecasting isn’t a one-time exercise; it’s an ongoing process:
-
- Weekly Reviews: Every Monday, I present my forecast for the current and next quarter to leadership. I review the pipeline, assess progress, and identify areas needing attention.
- CSM Collaboration: Throughout the week, I work closely with each CSM to refine their individual forecasts and ensure alignment with the team’s goals.
This process ensures that our forecasts are both data-driven and reflective of real-time account insights.
Start Building Your Forecasting System Today
Here’s how you can start creating a system for reliable forecasts:
- Audit Your Pipeline: Ensure renewals, expansions, and reactivations are clearly defined and tracked.
- Define Renewal Stages: Implement a system that captures every stage of the renewal lifecycle.
- Incorporate Metrics: Begin tracking UFR$, ER$, and Delta to understand your revenue landscape.
- Enable Your Team: Train CSMs on how to identify risks, qualify opportunities, and provide accurate updates.
- Automate and Refine: Use tools like Salesforce to streamline pipeline updates and build repeatable processes.
Effective forecasting is a skill that sets CS leaders apart. It helps us drive action, mitigate risks, and deliver predictable revenue growth. By investing in a strong forecasting system, you’re setting your team up for success.