What if the standard set of salesforce Opportunity Stages don’t match your sales process?
(They probably don’t, by the way).
Then change them. But to what?
The answer can provoke heated discussion. But it’s critical.
Get the opportunity stages right and you have the core ingredient for pipeline visibility and a robust sales process.
But there’s more to this than meets the eye. Here’s our latest guide to sales processes and salesforce opportunity stages.
Sample B2B Sales Process
Imagine a typical B2B sales process with a 3 month cycle. (We’ll come to other sales processes shortly).
There’s usually significant interaction with the customer during the sales process.
In this scenario, action-oriented opportunity stages are better than milestone-based stages. Qualifying rather than Qualified. Customer Evaluating rather than Proposal Sent.
This is because the Opportunity Stages track the status of the deal within the sales process over a period of time. That period of time might be weeks or even months. The sales person is likely to be doing a number of things to move the opportunity on during this period.
In other words the opportunity stage represents a series of customer interactions. It’s not a one-off milestone.
Here’s the sales process and set of opportunity stages used by many of our customers in this scenario.
- Investigating (alternatives might be Discovery, Qualifying).
- Closed Won.
- Closed Lost.
- Qualified Out.
- No Purchase.
Let’s have a look at each one.
Opportunities in the Prospecting Stage represent your long term pipeline.
No budget or timescale has been identified. The Close Date is uncertain and likely to be several months in advance. Indeed the customer – if asked – might not agree that a potential deal yet exists.
Many Prospecting opportunities will be qualified-out directly from this Stage. That’s fine. Either there was no solid opportunity that could be driven out. Or the sales person decided this opportunity wasn’t one to pursue.
But some of these opportunities will mature into viable and important pipeline deals.
Sometimes companies will filter opportunities at the Prospecting stage out of pipeline reports and dashboards. That’s fine, if you’re focusing on deals that might close this month or next month. But tracking the size of the Prospecting pipeline is an essential sales management activity.
Use a term such as Discovery or Qualification if you prefer. The sentiment is the same.
The potential for a deal exists. Positive actions are being taken on opportunities in this stage to determine two things.
Firstly, does the customer have a genuine need for the type of products and services we sell? Remember, activities during this stage may be more about creating demand rather than simply responding to it.
Secondly, are we a good fit (among potential other suppliers) for the customer?
This stage typically includes determining whether the customer has – or can obtain – appropriate budget. The more your product or service is innovative (at least to the customer) the less likely they are to have set budget aside at the start of the financial year.
This doesn’t mean budget cannot be found. Demonstrate compelling value and it’s often surprising how funding can materialize.
The customer is making a decision on which supplier to work with. A formal proposal or quote may have been given. But it may simply be that indicative pricing or costs estimates have been supplied.
One thing is for sure though. The value your company brings is being communicated to the customer stakeholders.
Other activities might include proof of concept demos, customer reference visits or creation of a short video to demonstrate the solution.
A close plan has been mutually agreed with the customer. This may include agreeing commercial terms and sorting out the legal paperwork.
For advice on how to track each of these stages in a report and dashboard read, “If you only create one dashboard chart make it this one”.
The customer has made a commitment to go ahead. In many cases this is based on a (hopefully electronic) signature on the contract. Time for celebration.
Read about how to create opportunity win rate reports.
This is the standard salesforce value for deals that are not going ahead. There is though, a problem with this stage value.
Sales people don’t like using it.
The word ‘Lost’ implies that a competitor gained the deal at our expense. And of course that’s not always the case.
We might have ‘Qualified Out’ a deal. Or the customer made no purchasing decision at all.
But Sales’ resistance to mark deals as Closed Lost means that many sales pipelines are over-inflated. They contain deals that are unlikely ever to be won. But no-one wants to change the status to Closed Lost.
So bring on two further opportunities stages.
Mutual agreement with the customer that there’s insufficient mutual benefit in this case. The sales person is no longer pursuing the opportunity.
Create this opportunity stage to capture management information on deals that are not being pursued.
But here’s the thing. In the majority of cases, opportunities should only transition to this stage from the early stages of Prospecting or Discovery.
Read how the From / To report describes the movement in Opportunity Stages.
The deal is dead but the customer has not made any purchasing decision. Open opportunities in this state are the biggest source of over-inflated sales pipelines and forecasts.
Create this opportunity stage to record the outcome of opportunities that no longer have legs.
Read how to create sales metrics that identify deals that are over-inflating the sales pipeline.
Other sales processes
Not every sales deal has a gestation period of several months or longer.
The sales process for new deals might be protracted. But the same company might sell consumables associated with the core products.
These sales are more transaction-based. Here we can use more milestone-based opportunity stages. ‘Quote Sent’ for example, rather than Evaluating.
The same business might also sell support contracts that are renewed every year. This repeat sales might be covered by a different set of opportunity stages. These stages may reflect the more linear process associated with renewing the contract.
What about the other extreme. Our customers Taylor Woodrow (construction) and Siemens Energy (power) have sales processes that typically span several years. Typically selling to government agencies, these businesses have to operate within procedures and processes tightly defined by the purchaser.
A sub-stage field has been created to manage this additional complexity. The field captures the status of a deal within the overall opportunity stage. This approach is preferable to proliferating the opportunity stages. Once more than four or five pipeline stages has been created it’s hard to see the wood for the trees in dashboard charts.
Tip: Use Opportunity Record Types and Sales Processes to accommodate the variation on Opportunity Stages across different types of deal in salesforce.
Read about the “3 common problems with Opportunity Stages and how to avoid them“.
Opportunity Stage Exit Criteria
It’s essential to remove ambiguity in defining a clear sales process and opportunity stages.
One important way to achieve this is to create clear exit criteria. These define the parameters of when an opportunity can exit one stage and move to the next.
Unfortunately these exit criteria often focus on the sales person’s actions. They act as internal milestones. Tick off all the boxes and you can move to the next stage.
Yet in the customers mind, the deal hasn’t moved on one iota.
Instead, create what Brent Adamson (author of The Challenger Customer and The Challenger Sale) describes as a “customer-verified sales funnel”.
“Sales people and their managers use a combination of rep activities and customer ‘verifiers’ or behaviors to track the progress of a deal. This change explicitly encourages reps to focus on achieving certain outcomes in the best way instead of simply executing activities in the prescribed way” says Adamson.
In other words, it’s all very well to create fields and even validation rules to control when an opportunity stage can be advanced. But base these controls on the customer’s buying behavior, not simply the pre-defined list of activities that the sales person is expected to fulfill.
The standard set of opportunity stages in salesforce might not match your sales process. It usually doesn’t. No matter. Follow the tips and guidance we’ve explained in this article and you’ll have a robust sales process and solid pipeline visibility.