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Is Your Sales Funnel Big Enough to Reach Your Revenue Target?

Is Your Sales Funnel Big Enough to Reach Your Revenue Target?

Many managers that use salesforce are still not gaining the sales funnel insight they expected.

In particular, they want to know much more about the sales funnel and their revenue goals.

Sure, they’ve got salesforce dashboards set up. These give visibility of the sales funnel and sales performance. But its still a challenge to create a robust sales forecast.

That means they can’t use salesforce to get a definitive answer to that most fundamental of questions.

Is my sales funnel big enough to make my revenue target?

But it’s worse than that.

Knowing you’ve enough sales funnel to make your target for this month is one thing. But what if the sales funnel only contains early-stage Opportunities? Deals that may take two or three months to close. How confident can you be then of achieving this months’ target?

Fortunately there’s a sure-fire way to use salesforce.com to know whether you’ve enough sales funnel – of the right type – to meet your revenue target.

Not just the target for this month. The quarter’s sales target too. Indeed, businesses that track the sales funnel in salesforce in the way we describe here, get a clear picture of how likely they are to achieve annual, quarterly and monthly revenue targets.

Here’s how it works. And when you’re done watch the accompanying video.

Monthly Sales Target

First you need a new custom object and a new tab. Let’s call it Monthly Sales Target, although it doesn’t really matter how it’s named. If Monthly Sales Quota, Revenue Objective or Monthly Sales Forecast make more sense in your business, that’s fine.

The Monthly Sales Target stores the sales target for each sales person for each month. There’s a record in salesforce for each sales person for every month of the year. If you track performance against target quarterly, rather than monthly, that’s fine. There’s simply going to be four records per sales person per year, rather than 12.

The ‘Month’ and ‘Year’ fields on the Monthly Sales Target tell us the time period to which the target relates.

Here’s the most important field, Sales Target. This is the target or quota for the sales person for that month. Every month may have the same Sales Target figure, or they can vary to reflect seasonal trends. It’s up to you.

Compare Sales Funnel to Monthly Sales Target

Here’s how you know whether there’s enough sales funnel to meet the Sales Target figure.

You need some code that automatically links each Opportunity to the relevant Monthly Sales Target. You can either build the code yourself or you can purchase our pre-built target tracker app.

Here’s what the code does. It looks at the Opportunity Owner and the Opportunity Close Date. Then it links the Opportunity to the Monthly Sales Target that matches the Owner and the From / To dates.

Link the sales funnel Opportunity to the Monthly Sales Target

If the Close Date subsequently changes, then the code ‘unhooks’ the Opportunity from that particular Monthly Sales Target and links it to a new one.

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Sales Funnel Metrics

Next, the code ‘rolls-up’ the value of all Opportunities to the Monthly Sales Target.

These metrics indicate whether the sales funnel is big enough to meet the revenue target.

Critical metrics on the Monthly Sales Target help you understand whether you’ve enough sales funnel to meet your revenue target. These include:

  • Won Amount. The value of all Opportunities that have an Opportunity Stage of Closed Won.
  • Funnel Amount. The value of all Opportunities in the sales funnel.
  • Weighted Sales Funnel. The value of all Opportunities in the sales funnel, based on the Expected Amount (the Opportunity Amount multiplied by the Probability).
  • Expected Revenue. The value of Closed Won Opportunities plus the Weighted Sales Funnel.

In many businesses, this last one is a killer metric.

Expected Revenue

The Expected (or Weighted) Revenue figure shows whether this sales person has enough sales funnel, combined with the business they’ve already closed, to meet their sales target.

In our example above, the month target is £30,000, but the Expected Revenue is just under £25,000. We don’t have enough! This is emphasized in the percentage figures on the right. The embedded chart also shows a shortfall in the sales funnel compared to target.

But there’s more to it than that.

Sales Funnel Shape

Look at the chart to the right of the salesforce page. It provides more detail on the sales funnel Opportunities associated with this Monthly Sales Target record.

Look at the Monthly Sales Target for the current month. Let’s say your deals typically run through a 90-day sales cycle. That means you don’t want to see many deals forecast to close this month, in the Prospecting Stage. It’s likely these deals aren’t going to close in the current month.

On the other hand, if it’s the Monthly Sales Target for three months’ time, then look at the sales funnel shape. Lots of early-stage funnel Opportunities due to close in three months is probably a good thing.

Sales Funnel Dashboard

But what about the company or team-level sales target?

Here’s how we find out if the sales funnel is big enough to meet these revenue targets.

The dashboard chart and underlying report give us that information. And using Expected Revenue, the reports give us a robust sales forecast. One that will stand up to detailed scrutiny.

Sales funnel compared to revenue targets using a salesforce dashboard.

Of course, none of this replaces the need for proper sales funnel management.

The Opportunity Probability still needs to be reliable on each deal. But it does give the sales manager the tools necessary for effective sales funnel management. This is especially the case if the Monthly Sales Target reports are used in conjunction with other salesforce dashboards and reports that identify the poor quality deals. These are the deals that over-inflate your sales funnel. Weed out the lame ducks that give a false sense of future revenue.

And finally, get in touch today if you’d like to test drive our target tracker app for yourself.

Watch Gary demonstrate the salesforce funnel management solution described in this blog in this video.

Track Sales Performance And Pipeline Versus Target

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3 Ways To Measure Performance Against Sales Target In Salesforce In 2017

3 Ways To Measure Performance Against Sales Target In Salesforce In 2017

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Many frustrated people have looked for the Target tab in salesforce.

Don’t waste your time. It does not exist.

Yet measuring performance against sales target is a critical activity in running a sales team. Isn’t it?

Fortunately there ARE ways to measure performance against sales target in salesforce.

In fact, it goes deeper than that.

We need to know how the company, sales teams and individual reps performed historically against their sales targets. But we also need to know whether there’s enough pipeline to meet the target this month or next month or next quarter.

Without this information, you are flying blind.

That is an uncomfortable position. As the pilot, it means you cannot adjust the controls and take action to make sure the sales target will be hit.

For example, if you know there is enough pipeline to meet next month’s sales target then focus the team, first and foremost, on closing existing deals.

On the other hand, if there is insufficient pipeline you have a different challenge. You need to close the deals that do exist. But the sales team also need to find new pipeline simply to have enough to go at.

So measuring performance against both historic and future sales targets is essential. Here are the options for doing this in salesforce.

There are three ways to measure performance versus sales target in salesforce. We explain how each one works, its pros and cons and when its the best solution.

By the way, if you like Option 3 then get in touch. We have a package that is easy to implement for this.

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Options for measuring sales targets in salesforce

Here are the three options. They provide salespeople and managers with different levels of information. We’ve described the options and given pointers to indicate the situation in which each is appropriate.

Option 1 – Dashboard Gauge

Use a salesforce dashboard gauge to indicate overall achievement against sales target.
Salesforce dashboard gauge is a simple way to measure performance against sales target.

The arrow indicator shows the current sales performance. Use the red, amber and green segments to set relevant break-points. For example, amber to represent 80% target achievement, green for 100% sales target achievement.

Feed the gauge using an underlying matrix or summary report. The report simply needs to summarize the value of deals won over the relevant period of time.

Pros of the gauge approach

  • The report and gauge are simple and easy to set up.
  • The gauge is easy on the eye.
  • It’s a quick and powerful summary of sales performance against target.

Cons of the gauge approach

  • It is a blunt instrument. For example, if the gauge is at the company level, there’s no visibility of individual rep or sales team performance against sales target.
  • The breakpoint values must be manually re-calibrated for each target period. If the target next month is different to this month, the breakpoints need to be modified.
  • Pipeline deals are not shown. This means we don’t know if there’s enough funnel to meet the sales target for next month. There’s nothing to tell us, for example, if 30% of pipeline deals are won whether the target will be hit.

It’s the right choice if

  • You need to set something up quickly.
  • You need a Board-level chart to summarize performance.
  • You only need to measure top level performance against sales target. Alternatively if you are prepared to invest the time you can set up similar gauges for individual salespeople and teams.
  • Sales targets are the same for each time period. Breakpoints don’t need to be modified each month or quarter. (Or remembering to re-set the red, amber and green breakpoint values on a monthly basis isn’t going to be a problem).

The dashboard gauge is a viable option for relatively straightforward target measurement. It’s a simplistic solution. On the other hand, if you need to set up a sales target reporting mechanism in the next 5 minutes then this is the option to go for.

Remember, use the gauge in conjunction with other dashboard charts and reports to gain full visibility of the sales performance and pipeline.

Option 2 – Salesforce Forecasts Tab

The Forecasts tab is a sophisticated and advanced way of tracking performance versus sales target.

The Forecasts Tab is an advanced and sophisticated way to track performance against sales target.

View Closed Won opportunities that contribute to sales target achievement in the Forecasts tab.

Pipeline deals are also included. These opportunities are categorized to indicate how likely they are to close successfully. Managers have important information on the strength of the funnel and the extent to which sales targets will be hit.

Managers can also override the forecasts made by their direct reports. This means they can adjust the overall forecast to balance excessive optimism or pessimism of salespeople.

There is a downside. The Forecasts tab is a relatively complex piece of functionality. Training and coaching is needed to help both salespeople and managers use it to full advantage.

Pros of the Forecasts Tab

  • Set targets at individual, team, company and product family level.
  • Track performance against sales target based on opportunity category including won, committed, pipeline and best-case deals.
  • Allow managers to override forecasts submitted by their direct reports and modify the projected performance against target for their team.
  • Review forecast history to learn from forecasts submitted in the past.
  • Drill down from the top level forecast to examine performance against sales target at individual rep and team level.

Cons of the Forecasts Tab

  • The Forecasts tab is relatively complex to set up and use.
  • It requires detailed training for sales reps and their managers.
  • Salespeople must update their individual forecasts in order for the overall forecast to have meaning. This means a high level of commitment is required across the team to get the full benefits.

It’s the right choice if

  • You have sophisticated target measurement requirements.
  • Managers must be able to override the forecasts submitted by their salespeople.
  • The sales team is mature and already has a good level of salesforce user adoption.
  • The business is prepared to commit to appropriate training for salespeople and managers.

The salesforce Forecasts Tab provides robust target tracking and forecasting capabilities. However, bear in mind that successful roll-out means appropriate planning and configuration effort.

Option 3 – GSP Target Tracker

Many of our customers use the GSP Target Tracker to measure performance against sales target. We have created it as a managed package that can be easily implemented to any salesforce environment.

Much less training is needed for salespeople and managers to use the Tracker compared to the Forecasts Tab. The solution also takes away the need to manually create forecasts.

Closed won and pipeline deals are automatically linked to the relevant sales target. Targets can be measured against secured business and the anticipated revenue from funnel opportunities.

The GSP Target Tracker is easy to use and compares both closed won and pipeline deals to the sales target.

The sales targets are entered into a custom object for each sales person for each month. In the example above, we’re looking at the sales target for Michael Watson in April.

The lower portion of the screen shows the Opportunities that have been automatically linked to this target record. The Target Tracker does this by looking at the Close Date of the Opportunity and the Opportunity Owner. The Opportunity is then linked to the relevant target – in this case, Michael Watson’s target for April.

If the Close Date or the Opportunity Owner change the Opportunity is automatically unhooked and linked to the newly relevant target record.

The embedded chart on the left hand side of the page shows Michael’s target in blue, his Closed Won deals in green and the Expected Revenue of his April pipeline deals in orange. The purple bar shows that based on these numbers, Michael has a shortfall against his target.

The doughnut chart to right provides analysis of Michael’s April pipeline by Opportunity Stage. This means both Michael and his manager have clarity on the likelihood that his target will be achieved based on the pipeline deals.

Dashboard charts summarize company and team level information.

Drill down from dashboard charts to view performance against sales target at team and individual sales rep level.

The dashboard chart shows over / under performance against monthly sales target at the company or team level.

Drill down to the underlying report to view the sales rep target. This compares the sales target with the value of Closed Won deals, Expected Revenue from the pipeline.

Pros of the GSP Target Tracker

  • It’s easy for sales reps use. Opportunities are automatically linked to relevant targets.
  • Highly visual information on performance against target is provided.
  • Extensive drill down capability from company level performance to sales team and individual rep.
  • Assess the quality of the pipeline and its potential contribution to target achievement.
  • Easy to set up (implemented through a managed package).

Cons of the GSP Target Tracker

  • A (very reasonable!) license fee is payable.

It’s the right choice if

  • You need a powerful solution that is easier to use than the Forecasts tab.

Download a Powerpoint version of this blog post by viewing the accompanying SlideShare, How To Manage Sales Targets in Salesforce.

We have implemented each of the options described in this blog post for customers. Contact Us to find out more about applying each approach in your business.

Track Sales Performance And Pipeline Versus Target

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Recorded Webinar on sales targets in salesforce

Watch Gary Smith and Nick Ambrose demonstrate the three solutions in action.

Related Blog Posts

Why You Need To Compare Average Closed Won Opportunity Size

How to use opportunity conversion reports for superior results

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

How to Outperform Your Sales Targets Using Commission Tracking

How to Outperform Your Sales Targets Using Commission Tracking

Motivate your sales people to exceed targets by using commission tracking in salesforce.

Commission tracking drives sales people to close deals.

It motivates them to create new pipeline. It propels them to go the extra mile to win a piece of business.

But it’s not just about the money.

Sales people are highly motivated. Commission tracking is a way of keeping the score. It’s a way of comparing sales performance with the previous month or quarter. It’s how sales people measure this quarter with their personal best. It’s how they know they are winning.

So the greater the visibility of commission earnings, both actual and potential, the greater the motivation for sales people to increase revenue.

So commission tracking is important to you (sales manager) to drive business performance – but it is paramount to the sales person.

But unfortunately there’s no out-of-the-box module for commission tracking in salesforce.

So at GSP we created one.

Here’s how it works.

Commission levels

Managers set up records in salesforce that define how much commission each person should receive for each level of sales revenue.

Set percentages for each commission level in salesforce.

For example, the screen shot above shows the commission levels for Dave Apthorp for February 2016.

Dave will earn 2% commission on £1 to 50,000 and 4% on all sales between £50,0001 and £75,000.

If he has a particularly good month, Dave will earn 6% on all revenue over £75,000 with no upper limit.

Defining the parameters at this granular level (i.e. by person, month and sales level) gives major flexibility. It means that a commission structure that will best motivate the sales team can be created.

It also means there’s the opportunity to introduce kickers for individual months by increasing the percentages for that month. In this case, for example, we might raise the commission percentages for March to make sure we end the quarter with a bang and outperform the sales target.

There’s also the option to create commission levels related to product families. This means percentages can be varied based on margin or the gross profit associated with each type of product.

Commission tracking in salesforce

The screenshot below shows Dave’s commission tracking record in salesforce for February.

Commission tracking in salesforce.

The highlighted box shows his:

  • Commission Earned. This is based on the opportunities he has closed this month.
  • Pipeline Commission. The total amount Dave would earn if he closed all the deals in his February pipeline.
  • Total Potential Commission. The sum of Earned and Pipeline Commission.

Dave’s opportunities that are due to close for this month are automatically linked to this commission record. We can see these at the foot of the screenshot.

This linkage between the opportunity and the commission record is done by a trigger that runs every time an opportunity is updated. If Dave edits an opportunity, for example by moving the Close Date on a pipeline opportunity to the following month, then the relevant commission records will be updated.

The in-line chart on the left of the page shows how much Dave has earned for the month on won deals (blue bar). It also shows his potential commission (green bar) and his total potential earnings (orange bar).

The chart on the right provides more analysis of Dave’s pipeline deals. He can immediately see which of his open opportunities will yield the most commission.

For most sales people, this commission tracking in salesforce is a proven way of focussing attention. Align the commission structure with your corporate sales objectives and you’ve a built-in way of driving sales performance.

Commission reporting in salesforce

This approach means commission tracking reports can be created in salesforce for managers.

Sales managers in many of our customers use these reports to motivate and encourage individual sales reps. The automated commission tracking visibility also saves (probably you) countless hours updating and sharing spreadsheets across the team!

Commission tracking isn’t just about the money. It’s a way to keep the score. And now you can keep that score in salesforce.

If you have a question, or you’d like our help in implementing a commission tracking solution in salesforce in your business, simply get in touch.

Track Sales Performance And Pipeline Versus Target

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Related Blog Posts

Why You Need To Compare Average Closed Won Opportunity Size

How to use opportunity conversion reports for superior results

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

Your sales forecast is probably wrong (but here’s what you can do about it)

Your sales forecast is probably wrong (but here’s what you can do about it)

Track Sales Performance And Pipeline Versus Target

Download the FREE App from our website today

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It’s tough to create accurate sales forecasts.

Gut feel just won’t cut it. Nor will a top-down percentage applied across all opportunities.

And often your forecast contains deals that get continually shifted to the next month at the last minute.

It’s no wonder most sales forecasts are inaccurate.

But it doesn’t need to be this way. And that’s why Derek Davis of Gilbarco Veeder Root and I ran a webinar about it.

The live version was attended by 86 people from 12 countries. This 10 minute edited-highlights version distils the essential information.

So listen to Derek and myself as we discuss:

  • How a single dashboard chart can double forecasting accuracy.
  • How to spot poor quality deals that have no chance of closing this month.
  • How to set realistic probabilities on opportunities.
  • How to compare your sales forecast with revenue targets.

 

Other blog posts by The Gary Smith Partnership on sales forecasting, pipeline visibility and salesforce dashboards include:

12 Must Have Charts For Your Salesforce Dashboard

Download the FREE eBook today from our website

Get it now!

Related Blog Posts

Why You Need To Compare Average Closed Won Opportunity Size

How to use opportunity conversion reports for superior results

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend