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How To Compare Your Sales Funnel With Quota In Salesforce

How To Compare Your Sales Funnel With Quota In Salesforce

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

In particular, they want to know much more about how the sales funnel compares with their quota.

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 quota?

But it’s worse than that:

Knowing you’ve enough sales funnel to make your quota for this month is one thing.

However, 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’ quota?

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 sales quota.

Not just the quota for this month.

The quarter’s sales quota 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 Quota

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 quota 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 quota on a quarterly, rather than monthly basis, 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 quota 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 Quota

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 to compare with quota.

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.

12 Must-Have Charts For Your Salesforce Dashboard

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12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

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 quota in salesforce.

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

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 quota.

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

However, 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 quota 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. However, 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 me demonstrate the salesforce funnel management solution described in this blog in this video.

Track Sales Performance And Pipeline Versus Target

Interested in installing this app for yourself?

Track Sales Performance And Pipeline Versus Target

Interested in installing this app for yourself?

Related Blog Posts

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

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

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

Many result in multiple orders and payments over time.

But here are two common mistakes companies make in salesforce:

  • They do use repeat opportunities when they shouldn’t, and sometimes
  • They don’t use repeat opportunities when they should.

The result?

  • Your sales process is far more convoluted than necessary.
  • It’s difficult to get accurate pipeline visibility.
  • Key sales metrics that give visibility of the size, quality and trend in the pipeline are distorted.

So here are five situations in which you may think repeat opportunities have a role to play in salesforce.

In each of these commonly occurring scenarios, companies receive multiple payments over time. So are repeat opportunities the best way to handle each situation?

Here’s a simple way to answer this question:

Decide whether future revenue is in jeopardy.

If the answer is yes, then repeat opportunities are probably required.

However, if the answer is no, then you probably don’t need repeat opportunities.

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

Repeat opportunities with software as a service

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

Sidetrade delivers its platform on a SaaS basis. Customers sign-up for a fixed term contract for a number of years. Payment is on an annual basis.

Sidetrade doesn’t need recurring or repeat opportunities each year.

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

Therefore, instead of repeat opportunities, Sidetrade forecasts future revenue using Schedules.

For sure, Sidetrade will aim to sell additional services or upgrades to the customer.

However, Sidetrade handles this using additional opportunities. These are new opportunities for incremental revenue rather than repeat opportunities.

Repeat opportunities with insurance premiums

Based near Toronto, Aboriginal Insurance Services (AIS) sells 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 area.

The insurance and premium is always for one year of cover.

AIS will aim to renew the policy with the community. However, there’s no guarantee of this renewal.

In fact, future revenue is in considerable jeopardy. Each year, competitors will seek to undercut AIS or offer more product benefits.

Therefore, it’s right for AIS to create a repeat opportunity to manage the renewal. It is a separate sales process. AIS will apply proactive key account planning to optimize the chances of success.

There is, however, no certainty of a positive outcome.

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

Repeat opportunities with service contracts

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

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

The customer pays an annual fee for the support.

However, MAM don’t use repeat opportunities.

That’s because the customer is contractually committed for the duration of the support arrangement. The revenue is secured. It’s not in jeopardy.

Instead, MAM has a single opportunity. Products with Schedules are used to forecast future revenue. This means MAM has an accurate, forward-looking view of secured revenue.

Repeat 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.

Modernis offers the analytics products in a software-as-a-service platform.

However, the sales process often involves two distinct stages.

First, Modernis provides chargeable proof-of-concept access to their platform. Later, once customers have experienced the value that the platform brings, Modernis sells 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 opportunity represents the sales process for the chargeable proof-of-concept.

A second opportunity is automatically created. This represents the sales process for the full contract.

So the company uses repeat opportunities – at least of a type. This is because commitment to the full contract is not a given.

Rather, 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 once the contract is signed, the revenue is not in jeopardy. Therefore, no repeat 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 often relates to a large 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 significant purchase from GVR.

One the one hand, a long-term contract benefits both parties.

On the other hand, the customer doesn’t want delivery of all the petrol pumps manufactured and delivered in one go!

Rather, they need 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. However, the month-on-month revenue is variable.

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. The GVR Account Manager updates the schedules each month with the actual orders.

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.

Implementation points to consider with repeat opportunities:

  • Consider triggering the repeat opportunity automatically. This avoids the subsequent opportunity being forgotten about. That trigger happens when the original opportunity is won or at some other predetermined point in the process.
  • Measure the win-loss ratio for the repeat opportunity separately to the initial opportunity.
  • Consider using 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. However, only use repeat opportunities when it is right to do so. And if it isn’t right, then try revenue schedules instead.

Make It Fast & Easy To Add Product To Opportunities Or Quotes

Interested in installing this app for yourself?

Make It Fast & Easy To Add Product To Opportunities Or Quotes

Interested in installing this app for yourself?

Related Blog Posts

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5 killer examples of recurring revenue forecasts in salesforce

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

Track Sales Performance And Pipeline Versus Target

Interested in installing this app for yourself?

Track Sales Performance And Pipeline Versus Target

Interested in installing this app for yourself?

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 from our website today

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

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