Forecasting your revenue growth for the next 12 months is critical to convince investors that your business model is scalable. To justify your projections, you need a bottom-up approach. This means backing up your numbers with detailed assumptions and calculations, focusing on customer growth. Here's how you can nail it.

🪶 Set your marketing budget

Start with your ongoing marketing budget. This includes all your continuous efforts aimed at driving traffic and acquiring new customers. Think SEO, social media marketing (SMM), partnerships, out-of-home (OOH) ads, shows, and events. The goal is to build brand awareness and attract users organically, lowering costs over time.

🛰 Define channels

B2C Models. For B2C, you need to allocate budgets for paid advertising across platforms like Twitter, Facebook & Instagram, Google, LinkedIn, and YouTube. Make sure to grow these budgets monthly to show steady progression. Benchmark your industry and geographic area to get the right cost per click (CPC) for each ad channel. Sometimes, cost per mile (CPM) and click-through rate (CTR) are more relevant.

Once you've got the paid traffic numbers, benchmark your conversion rates. Track how much of your paid traffic converts to app installs, and do the same for organic traffic. These metrics will help you project customer acquisition costs and growth.

B2B Models. For B2B, consider both inbound and outbound sales strategies.

Outbound sales. Start by identifying new partners and setting a target number. Calculate the SQL (sales qualified lead) to active partner conversion rate. Benchmark the conversion from leads to SQLs. Figure out the size of your business development representative (BDR) team needed to attract new partners by setting the number of leads per BDR per month. Then, calculate the total commissions for the BDR team by multiplying the number of BDRs by the benchmarked commission rate.

Inbound sales. Focus on the typical cycle where customers convert through an inbound channel to a freemium model, and then to pay. Estimate the visitor-to-freemium conversion rate for both paid and organic traffic to project new freemium accounts. Determine the freemium-to-paid conversion rate to estimate new paid accounts. Calculate the number of new paid users per inbound sales development representative (SDR) per month and determine the total number of SDRs needed. Finally, benchmark and calculate SDR team commissions to complete your inbound sales cycle forecast.

🎢 Tips for accurate forecasting

Decide clearly how you will attract users. For B2C, focus on relevant paid ad channels like Meta, YouTube, LinkedIn, or Google Ads. For B2B, decide between outbound or inbound channels. If targeting large customers, outbound might be more suitable. If targeting small businesses that can arrive through ads but need support to fully onboard, consider inbound.

Benchmark your assumptions to make your bottom-up growth bulletproof. Use industry standards and adjust based on your specific context. Ensure your expenses grow along with your revenue by increasing budgets month to month. Justify increases in organic traffic with corresponding growth in ongoing marketing efforts.