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Mr Opportunity Probability stands in the corner at parties.

Barely getting a second look.

Everyone knows he has to be invited. But no-one really wants to speak to him.

It would be better if he just went away.

But here’s the thing.

Opportunity Probability can be your friend. He’s actually much more interesting than you think.

“Used in the right way, Opportunity Probability will increase your forecasting accuracy and root out deals that should be qualified-out of the sales funnel.”

It’s just a matter of knowing what to do with him.

So let’s understand what that Opportunity Probability fellow is and why he’s so undervalued.

Then we can explain the 5 tips that will turn him into your valuable and trusted friend.

Opportunity Probability defined

Just in case, let’s be 100% clear what we’re talking about here.

Opportunity Probability is the standard field in salesforce (or any other CRM system for that matter) that quantifies the likelihood of winning an opportunity.

If the Opportunity Stage is Closed Won then the Opportunity Probability is 100%. If the Opportunity Stage is Closed Lost the Opportunity Probability is 0%.

If the opportunity is still open, then the Opportunity Probability is somewhere in between 1% and 99%.

Opportunity probability can help identify low quality deals and improve sales forecasting.

Why Opportunity Probability is disliked

In our experience, there are three reasons why sales executives don’t make the most of Opportunity Probability.

Understanding these reasons – and why they are not valid – is key to making the most of this metric.

Here they are.

Sales deals are binary

When all is said and done, the Opportunities are either Won or Lost. Not something in between.

(OK, only 70% of the value of the opportunity might be won but that’s because the customer beat down the price or didn’t purchase all of the products that had been on the opportunity. The deal is still 100% Won, just the Amount was reduced).

The binary nature of sales means some executives don’t see any value in setting an Opportunity Probability for pipeline deals.

But here’s the thing. No-one knows which deals are going to be won and which are going to be lost. (If they did, then there would be no point in having the deals that are going to be lost in the pipeline).

That means that once there’s a critical mass of opportunities – and that number can be quite low – Opportunity Probability can be used to calculate Expected Revenue (or Weighted Revenue if you prefer that term).

Expected Revenue is one proven way to create a robust sales revenue forecast. It’s not the only way. But used in conjunction with other methods, a sales forecast based on Expected Revenue will stand up to scrutiny from colleagues and internal peers.

Providing, of course, that the Opportunity Probability is accurate.

It can be hard to assess the probability of winning a deal

Often there are many unknowns with sales deals.

We can’t be sure what the customer is truly thinking. We don’t know what price our competitors are quoting. We don’t necessarily know which stakeholders are involved.

This means Opportunity Probabilities can be perceived as difficult to predict or having a spurious degree of accuracy. Is the probability of winning this deal 65%? Or 70%? Or some other figure?

However Opportunity Probabilities should be set based on evidence from the customer. This evidence indicates that a deal is more likely or less likely. Every sales process is different, so agree what constitutes positive and negative evidence in your market place.

More about this in Tip #2.

Opportunity Probabilities are locked to Opportunity Stages

Many salesforce users believe that Opportunities Probabilities are irrevocably linked to Opportunity Stage.

Actually they’re not. It just seems that way.

By default, when an Opportunity Stage is advanced, the probability is increased to the default value associated with that Opportunity Stage. Left untouched, the Opportunity Probability may, therefore, not be realistic on specific opportunities.

It’s not always recognized that the Opportunity Probability can be overwritten and adjusted for each opportunity. Use this flexibility to set a realistic Opportunity Probability on each deal.

5 tips to make Opportunity Probability your friend

So here are the five tips that will make Opportunity Probability your trusted friend.

 

1. Adjust the Opportunity Probability on each opportunity

Too often sales people and their managers regard the Opportunity Probability as fixed for any given Opportunity Stage.

As we’ve already mentioned, it isn’t.

Simply double-click on the field or Edit the Opportunity to set the value that’s right for that particular deal.

Sales people can edit the Opportunity Probability on each deal.

Make sure sales people understand how to adjust Opportunity Probabilities and why they need to.

 

2. Set Opportunity Probabilities based on customer evidence

Think about this situation for a moment.

Let’s say four companies are competing for a deal. They all have an Opportunity Stage of Investigation, with an Opportunity Probability of 25%.

All four companies submit their quote and move the Opportunity Stage to Customer Evaluating. Let’s say that Stage has a default probability of 30%.

So now the combined Opportunity Probability is 120%. Which, clearly, is nonsense.

In fact, the only thing that has happened is that the sales process – as perceived by each seller – has moved forward.

This happens all too often. The Opportunity Probability reflects the state-of-play in the selling process. It doesn’t say anything about the buying process.

So instead, base Opportunity Probabilities on evidence from the potential customer. Here are three examples of evidence from the customer that might warrant an increase in probability.

  • You are given preferential access to key stakeholders in order to conduct discovery.
  • After receiving four proposals, the customer selects you and one other for presentation.
  • The customer Sponsor communicates to colleagues that he or she prefers your proposal over the competitors.

Define and agree the customer and buyer behaviors in your specific market place that might indicate a positive intent from the prospect. Standardize and agree these across the sales team.

Admittedly, setting Opportunity Probabilities based on customer evidence is more difficult than simply relying on the default Stage values. But it encourages sales people to think through the sales process and to seek out customer commitment. That in itself, increases the likelihood of a successful sales outcome.

 

3. Use non-standard Opportunity Probability values

No-one mandates that increments of 5 or 10 have to be used in Opportunity Probabilities.

Here’s what a highly successful VP of Sales at one of our customers says to his team.

“I know the chance of winning this deal is 50:50. But use your instinct. Set the Opportunity Probability to 49% or 51%. I want to know which side of the fence you’re on.”

Not every 51% deal is won and not every 49% deal is lost. But the act of coming down on one side or the other encourages thought and analysis.

This blog post is about getting benefit from the Opportunity Probability field that is used in salesforce and most other CRM systems.

In this business, managers work through each deal with the sales executives to coach them on driving the buying process forward. This dialogue – assisted by the Opportunity Probability – contributes to conversion rates well above industry norms for our customer.

 

4. Set realistic default values for each Opportunity Stage

We’ve talked about setting an individual Opportunity Probability for each Opportunity. But the default Opportunity Probabilities associated with each Stage still have a role to play.

These default values should reflect the norm for your business.

Set realistic default opportunity probability values for each Opportunity Stage.

They provide a benchmark for sales people to adjust the Opportunity Probabilities on individual deals.

If the Opportunity Probability is above the benchmark, can it be justified? If it’s below, can the sales approach be improved?

But here’s our experience.

In many cases, the default Opportunity Probabilities set by companies on the early Opportunity Stages are too low. And the default values set on the latter Stages are too high.

Take a hard look at the default Opportunity Probability values in your salesforce environment. Discuss them in a team meeting. Reach agreement on the right values for your business based on experience and input from the sales team.

 

5. Automatically set Opportunity Probabilities based on historical outcomes

Thus far we’ve talked about the standard Opportunity Probability field in salesforce.

But what if you could automatically set the Opportunity Probability field based on past experience?

That would mean the probability is automatically set depending on factors such as:

  • New versus existing customer.
  • Historical sales person performance.
  • Size of the deal.
  • Region or geographical territory.
  • Products associated with the opportunity.

We’ve implemented exactly that functionality for a number of GSP customers.

In summary, historical opportunity probabilities in a custom object. A piece of code then automatically updates a custom Opportunity Probability field on the Opportunity. The probability in the custom field is based on the outcome of historical opportunities that match the current opportunity.

The custom probability field is automatically updated based on the historical data that shows how likely a deal is to close.

Our customers who use this solution still use the standard Opportunity Probability field. This means the sales person can set a different value to the probability that has been automatically set. It has proven to be an invaluable facilitator of discussion between the sales person and his sales coach or manager.

Don’t hesitate to get in touch if you’d like to see this solution in action.

“If you’ve left Mr Opportunity Probability alone in the corner up to now then this is the time to bring him out into the open.”

Used in the right way, Opportunity Probability encourages sales people to think through their opportunities. It facilitates discussion between managers and sales people. It enables accurate forecasting based on Expected Revenue.

It does, in short, lead to superior sales results. It’s just a matter of knowing what to do with him.

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