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When Recurring Opportunities Are Right (And When They Are Not)

When Recurring Opportunities Are Right (And When They Are Not)

Not every sale results in a single, one-off invoice and payment.

Many result in multiple payments over time.

But here’s a common mistake companies make in salesforce.

They use recurring opportunities when they shouldn’t. And sometimes they don’t use recurring opportunities when they should.

Here’s what happens if you do this:

  • Your sales process is far more convoluted than it needs to be.
  • It will be difficult to get accurate pipeline visibility.
  • Key sales metrics such as the number of month close date changes, days since last stage change and open age of the opportunity will be distorted.

So here are five situations where recurring opportunities potentially have a role to play in salesforce.com.

In each of these commonly-occurring scenarios, companies receive multiple payments over time. So when are recurring opportunities required?

Here’s a simple way to answer this question. Determine whether the future revenue is in jeopardy.

If the answer is yes, then recurring opportunities are probably required. If the answer is no, then you probably don’t need recurring opportunities.

Here’s how recurring opportunities apply – or don’t apply – to each of the situations above.

Recurring opportunities with software as a service

Based in Paris, our customer Sidetrade provides predictive software to accelerate credit management and the sales-to-cash cycle.

The platform is delivered on a SaaS basis and customers generally sign-up for a fixed term contract for a number of years. Payment is on an annual basis.

Sidetrade doesn’t need recurring opportunities.

This is because the future revenue on the contract is not in jeopardy. The opportunity is closed won. The customer is committed via the contract.

So instead of recurring opportunities, Sidetrade forecasts future revenue using Schedules.

For sure, Sidetrade will aim to sell additional services or upgrades to the customer. But Sidetrade handle these via additional opportunities. But these are new opportunities for incremental revenue rather than recurring opportunities.

Recurring opportunities with insurance premiums

Based near Toronto, another customer, Aboriginal Insurance Services (AIS) sell insurance products to the Indigenous Native American communities across Canada.

For example, the community will purchase motor insurance to cover all vehicles operated by the municipal community.

The insurance and premium is for one year of cover. AIS will aim to renew the policy with the community. But this is not guaranteed.

In fact the future revenue is in considerable jeopardy. Competitors will seek to undercut AIS or challenge the incumbent company in other ways.

So it’s right for AIS to create a recurring opportunity to manage the renewal. It is a separate sales process. AIS will apply proactive key account planning and optimize their chances of success but there is no certainty of a positive outcome.

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Recurring opportunities with service contracts

Based in Yorkshire in northern England, MAM Software sell advanced software and hardware to support the automotive logistical supply chain in the UK and USA.

The company sells support contracts that cover the software and hardware. These typically run for 3 – 5 years.

The customer pays an annual fee for the support.

But MAM don’t use recurring opportunities. That’s because the customer is committed contractually for the duration of the support arrangement. The revenue is secured. It’s not in jeopardy.

To manage this MAM have a single opportunity. They use Products with Schedules to forecast the future revenue. This means MAM have an accurate, forward looking view of secured revenue.

It also means the pipeline for new opportunities provides a clear picture of future income if the deal is won.

Recurring opportunities with Proof of Concepts

Another London based customer, Modernis, provides advanced analytics and consultancy services to the insurance and re-insurance markets across the UK, USA and Europe.

The analytics products are offered in a software-as-a-service platform. The sales process often involves a two stage process.

First, Modernis sometimes provide chargeable proof-of-concept access to their platform. Then, once customers have experienced the value that the platform brings, Modernis will sell access via a contract that runs for a number of years. This contract incorporates an annual license charge.

To manage this, Modernis create two opportunities. The first represents the sales process for the chargeable proof-of-concept. A trigger then automatically creates a second opportunity, this time to manage the full contract sales process.

So the company uses recurring opportunities – at least of a type. This is because the full contract is not a given. It depends on a successful outcome to the proof of concept.

Modernis also forecast the future revenue on the full contract using Schedules. This is because this revenue is not in jeopardy. Therefore no recurring opportunity is required.

Framework agreements in salesforce

Gilbarco Veeder Root (GVR) is one of the world’s leading manufacturers of petrol pumps and retail equipment. Based in Greensboro, North Carolina, the company has a salesforce deployment covering six continents.

A GVR opportunity may often relate to a major site re-fit program for one of the major petrol retail companies.

The refit program may take the petrol retail company several years to complete. It’s likely to require a large-scale purchase from GVR.

One the one hand, both parties want to benefit from the pricing and security of trading that is reflected in a long term commitment.

On the other hand, the customer doesn’t want all the petrol pumps manufactured and delivered in one go! Rather, they want to ‘draw down’ the units as and when the refit program is ready to install them.

So the total value of the contract is agreed (usually within an agreed range). But the month-on-month revenue is more volatile.

GVR handle this with a single upfront opportunity. The company uses custom revenue schedules to predict the volume and revenue that is anticipated each month. Then, when the actual trading volumes are known, the GVR Account Manager updates the schedule with the actual number and value of orders placed.

This allows GVR to track the projected volume (upon which the commercial terms were agreed) with the actual volume ordered by the oil company.

Recommended blog post: How To Manage 4 Types of Framework Agreement In Salesforce.

Points to consider when you need recurring opportunities

  • You need a process to manage the sales process on the recurring opportunity. Remember, the revenue is in jeopardy. It’s not guaranteed. That means you need a well thought out process that maximizes the probability of securing that revenue.
  • Consider triggering the recurring opportunity automatically. This will avoid the recurring opportunity from being forgotten about. That trigger can happen when the original opportunity is won or at some other pre-determined point in the process.
  • Measure the win-loss ratio for the recurring opportunity separately to the initial opportunity. In other words, the ratio of won / lost deals on recurring. Improve your process.

Points to consider when you don’t need recurring opportunities

  • There are several different ways to track the value of the sales. These include the total upfront sales value and the revenue recognition on a quarterly or annual basis.
  • Use Products and Schedules to forecast the revenue over time. Read this blog post for more advice on how to do this.
  • Consider custom revenue schedules if you need additional flexibility. For example, if you need to record the status (not due, invoiced, paid) on individual schedules then you will need custom revenue schedules.

Not every sale results in a single payment or transaction. Use recurring opportunities when it is right to do so. And if it isn’t right, then try revenue schedules instead.

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How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

No-one likes a loser.

Or to be thought of as a loser.

So the term ‘Closed Lost’ is not going to be a favorite for your average salesperson.

Yet Closed Lost is the standard Opportunity Stage picklist value for removing a deal from the pipeline. And it’s a picklist value that salespeople hate to use.

Impact of not setting deals to Closed Lost

But here’s the problem.

Failing to set dead wood opportunities to Closed Lost has a number of adverse consequences:

  • Over-inflation of the sales funnel. Managers and salespeople do not have a robust view of the strength (or weakness) of the sales pipeline.
  • Incorrect sales performance reports. Effective management of the sales team depends upon having accurate information e.g. opportunity conversion rates. These reports, in turn, require unsuccessful deals to be closed out.
  • Salesforce clutter. It gets increasingly hard to see the wood from the trees in salesforce. This makes it more difficult to focus on the opportunities that have true value.
  • Lack of funnel leakage information. It becomes impossible to understand at what stage opportunities are leaking from the sales pipeline.
  • Reduced competitor information. It becomes more difficult to identify how many deals and of what type of deals that are lost to competitors.

How to use the Closed Lost Opportunity Stage

No self-respecting salesperson likes to set an Opportunity to Closed Lost. But that doesn’t mean it hasn’t got a place on the Opportunity Stage picklist.

Closed Lost is appropriate in the right circumstances. It’s appropriate when a deal has been lost to a competitor during a pitch, tender or other competitive situation.

So let’s not beat about the bush. If another business has won an opportunity at our expense then the salesperson should set the deal to Closed Lost.

But many of our clients that have high quality pipeline visibility and sales forecasting accuracy, also use two additional Opportunity Stage picklist values.

Additional Opportunity Stage picklist values

In addition to losing to a competitor, there are two other reasons why deals should be removed from the pipeline.

  1. The customer doesn’t make a purchase. No deal takes place – for anyone. Yet salespeople often have an anathema to using Closed Lost to describe the outcome of these opportunities.So instead of Closed Lost, many companies use an Opportunity Stage picklist value such as No Purchase to remove these deals from the sales pipeline.
  2. The opportunity is qualified-out. In fact this is a legitimate reason for ‘losing’ a deal. As Bud Suse says, coming a close second is a cardinal sin in sales. Don’t waste time, effort and resources on opportunities you are unlikely to win.So instead of Closed Lost, many companies use an Opportunity Stage picklist value such as Qualified Out to remove these deals from the sales pipeline.

Gather additional information on Closed Lost deals

Adding two more Opportunity Stage picklist values in addition to Closed Lost is not necessarily the end of the matter however.

Businesses, quite rightly, often want to gather more information. They want to understand the underlying reasons why a deal was removed from the pipeline.

One way to do this is to create a Reasons Lost picklist field. A validation rule forces salespeople to make a selection from this list.

The problem with this approach is that sales people invariably select a value relating to Price. Which might indeed be the case. But it’s rarely the only reason. (Failure to communicate value might be the true reason!).

There is no killer solution to this problem. However many of our customers gather information on Closed Lost deals in a qualitative format. They have a text field called Lessons Learned in which salespeople identify what could have been done better in the sales process.

It’s not perfect. But experience shows it does provide more information in a useful format than simply selecting from a Reasons Lost picklist. Use this information to analyse sales processes, up-skill and develop salespeople, modify the pricing and discount strategy, develop new product features and create a culture of learning and sharing.

What to do next

The first step is to create additional Opportunity Stage picklist values to Closed Lost. Then educate salespeople and other users on the circumstances when each value is appropriate.

Now that you have done this, here are five ways you can benefit from the removal of dead opportunities from the sales pipeline.

  • Pipeline visibility. Get a robust view of the sales pipeline. Use this blog post to learn how to do this, If You Only Create One Dashboard Chart Then Make It This One.
  • Win Rates / Opportunity Conversion Rates. Analyze variance in win rates between teams, individuals and territories. Use this blog post, Measure And Compare Opportunity Win Rates Across Sales Teams.
  • Stage Movement Analysis. Understand at what stage in the sales process your team is removing deals from the sales pipeline. Determine whether it is early or late in the sales cycle. It’s chart #5 on our list of 12 Charts That Should Be On Your Sales Dashboard.
  • Competitor Analysis. Understand the ratio between deals lost to competitors versus Qualified-out and No Purchase. Apply this information to evolve sales strategy and tactics. Present the data in an informative way using our 5 Tip Guide To Effective Salesforce Reports.
  • Improve sales morale. No-one likes a loser – so don’t force your salespeople to feel like one. Acknowledge to the team that not every deal can be won; not every customer will make a purchase; and that some deals aren’t worth pursuing in the first place.

Closed Lost isn’t the always the only problem with the Opportunity Stage however! Read more about our sales process and opportunity stage recommendations.

And one final step. If you haven’t done so already, sign up to our email list to be the first to receive more advice and tips on maximizing your salesforce benefits.

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5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

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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7 Questions About Salesforce Opportunities That Everyone’s Asking

7 Questions About Salesforce Opportunities That Everyone’s Asking

Ever had a question about salesforce opportunities or the Sales Cloud but were afraid to ask?

Looking for best practice advice on using opportunities?

You’ve come to the right place. Here are 7 answers to the most common questions about salesforce opportunities.

And if we haven’t covered your burning question? No problem. Fill in the form at the end of this post and we’ll send you the answer.

1. Converting Leads to Opportunities

When should a Lead be converted to an Opportunity?

Salesforce doesn’t prescribe when a Lead should be converted to an Opportunity. The answer is to convert when it makes sense to do so in your business.

For example, let’s say you have a telemarketing team focused on generating opportunities for field sales. Some of our clients transfer the lead to the field sales person. It’s the latter that converts the lead to the opportunity after the initial meeting.

With others, the telemarketing person converts the lead and assigns the opportunity to the sales person.

Its horses for courses. Although in my experience one benefit of having the telesales person do it is that the opportunity is more likely to be linked to the originating campaign.

Read a full blog post on the difference between Leads and Opportunities including sample process diagrams that you can download.

2. Building your sales process into salesforce opportunities

How do I build my sales process into salesforce opportunities?

Firstly, match the opportunity stage values with your sales process. That’s probably not going to happen unless you change the default opportunity stage picklist values that come with salesforce.

Secondly, to improve reporting avoid milestone based opportunity stages. Each stage should relate to a period of time. For example, Customer Evaluating is better than Proposal Sent. Sending a proposal is one – but not the only – activity you would expect for an opportunity at this stage.

Here’s a sample set of opportunity stages that many of our B2B customers use:

Prospecting (or Qualifying)
Investigation (or Discovery)
Customer Evaluating
Closed Won
Closed Lost
No Purchase
Qualified Out

Bear in mind there may be more than one sales process in your business. The process associated with transactional products, consumables or service contract renewals may be shorter and require a different set of opportunity stages.

Read this blog post for more advice on setting opportunity stages that match your sales process.

3. Highlight doubtful deals in the sales pipeline

How can I use salesforce to highlight doubtful deals?

Just when you thought you were going to be above target this month, a bunch of opportunities slip to the next month. If that’s ever happened to you then you’re not alone.

Deals do slip. It happens all the time. Unfortunately that’s in direct contrast to the sales manager’s desire for a robust pipeline and confidence in this month’s sales forecast.

But here’s what you can do. Use two opportunity quality metrics to highlight deals that have an above average chance of slipping.

  • Number of Close Date changes. Specifically the number of times the opportunity has already slipped from one month to the next. Experience shows it’s these opportunities that have a higher-than-average probability of slipping again.
  • Days since last Stage Change. If the number of days since the last stage change is well above average then it often highlights a deal that is not being actively managed.

These metrics measure the quality of opportunities in the sales pipeline.

In both of these cases the sales manager should work with the opportunity owner to decide on the best course of action. Can the deal be revitalised? Shall we bite the bullet and close-out the opportunity? Can a more realistic close date be established?

Read this blog post about using opportunity metrics to manage your sales pipeline quality.

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4. Make it easier to add Products to Opportunities

Can we make it easier to add Products to Opportunities?

Adding Products to opportunities has many benefits.

It produces more accurate opportunity values. This makes your pipeline and sales forecast more accurate. It provides information on the pipeline at product level. And it opens the door to a raft of ways to streamline the end to end sales and fulfilment process.

There’s only one drawback.

If you have a lot of products then the user interface is not particularly helpful. In fact it’s quite hard to find the right products at times.

There are two ways to solve this. Option 1 is to use a CPQ (Configure, Price, Quote) application. Here’s a link to those applications on the AppExchange.

Option 2 is to use our Product Wizard and / or the Product Bundle Wizard.

Product selection wizard to make it easier to add products to salesforce opportunities.

Read this blog post to find out more about product selection wizards including a short video.

5. Track Opportunity Stakeholders in the buying center

What’s the best way to track Opportunity Stakeholders?

There’s nearly always more than one person involved in a B2B buying center. Gatekeepers, business users, influencers, technical evaluators, executive sponsors, budget holders and project managers. They can all be playing a role.

And they can all make or break your deal.

So how do you keep track of all them all?

Use Contact Roles to relate multiple people to an opportunity.

Many companies use modified contact role picklist values on salesforce opportunities.

These Contacts can even be from other companies – external consultants or advisors, for example.

Read this blog post for advice on using Contact Roles.

6. Calculate sales commission using salesforce

Is it possible to calculate sales commission using salesforce?

If you calculate and display commission in salesforce then you’ve got a built-in sales incentive tool.

The trouble is commission calculation is rarely straightforward. It often includes short term kickers and long term commission bandings. In other words, the commission percentage on a deal increases as total sales in the month or quarter increase.

There’s two ways to calculate and track commission in salesforce.

The custom solution works well if you don’t have an excessively complicated commission structure.

Commission tracking on salesforce opportunities.

Read this blog post to learn about the commission management solution many of our clients have implemented.

7. Measure the trend in the size of the sales pipeline

How do I measure the trend in the size of the sales pipeline?

Any sales manager needs to know whether the total sales pipeline is getting bigger or smaller.

Salesforce has two standard reports to help you measure the trend in pipeline size.

The first is the As-At report. It measures the pipeline on the first day of each month. It’s an excellent report to show the long term trend in pipeline size.

Measure the long term pipeline trend in salesforce opportunities.

The second is more short term focussed. It’s the Historical Trending report.

Dashboard chart showing short term trend in salesforce opportunities.

The report can be built to show the size of the pipeline over the last 4 weeks or other timescales. It’s a good report if you want to understand the impact of recent marketing and business development effort.

Read this blog post two pipeline trend reports.

Any other questions?

Do you have a question about salesforce opportunities? Fill in our contact us page and we’ll send you the answer!

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Sales Process and Opportunity Stage Hacks

Sales Process and Opportunity Stage Hacks

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.

  1. Prospecting.
  2. Investigating (alternatives might be Discovery, Qualifying).
  3. Evaluating.
  4. Negotiating.
  5. Closed Won.
  6. Closed Lost.
  7. Qualified Out.
  8. No Purchase.

Let’s have a look at each one.

Prospecting Stage

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.

Investigating Stage

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.

Evaluating Stage

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.

Negotiating Stage

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”.

Closed Won

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.

Closed Lost

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.

Qualified Out

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.

No Purchase

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.


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