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How to Use Product Schedules to Improve Your Revenue Recognition

How to Use Product Schedules to Improve Your Revenue Recognition

If your revenue recognition forecasts are little more than an educated guess (or even a stab in the dark), then this article is for you.

I’ll explain precisely how to use product schedules to forecast revenue recognition accurately.

Whatsmore, I’ll show you how to automate this process in Salesforce.

The best bit?

You’ll get reliable forecasts that will stand up to scrutiny without a pile of extra work by finance or salespeople.

Let’s dive in.

Who Needs A Revenue Recognition Forecast?

Any business where opportunity revenue accrues over periods needs to forecast revenue over time.

In other words, either you don’t invoice the customer in one go for the entire opportunity amount when winning the deal. Or you do invoice the total amount but must claim the revenue over many months or even years.

Income accrues over time, for example, with:

  • Manufacturing companies using framework agreements.
  • SaaS businesses that have monthly recurring subscriptions.
  • Professional services where the project takes many months.

Sometimes an opportunity has more than one type of revenue that spreads over time. Often, the revenue streams have different start and end dates.

I’ll explain precisely how to handle all these cases.

The Revenue Recognition Problem

Here’s what often happens.

The sales team updates their opportunities in Salesforce. The result is a bottom-up forecast of booked revenue for each month or quarter, based on deals expected to close successfully.

The VP of Finance takes this data and exports it into a spreadsheet.

Or, because he doesn’t trust the sales teams’ forecasts, he maintains his own sales projection data. Either way, the finance team manipulate the spreadsheet to create a top-down revenue recognition projection.

Unfortunately, often neither forecast turns out to be very reliable.

However, you can address both problems.

First, you can improve pipeline management and gain complete visibility of the sales pipeline to avoid poor quality sales forecasts. Here’s where to start with this:

12 Must-Have Salesforce Dashboard Charts | With Video And Examples

This blog post gives excellent advice on using Salesforce dashboards to deliver complete sales pipeline and sales performance visibility. It even includes a free dashboard that you can download from the AppExchange and install into your Salesforce environment.

Second, you can use product revenue schedules to achieve an accurate revenue recognition forecast.

Here are two examples.

  • Based in Bolingbrook, Illinois, Amsive provides data-centric marketing to many US leading financial institutions, medical care providers, retailers, and real estate companies. Projects often last many months. The company also has framework agreements in place with many clients that span multiple years. Consequently, Amsive uses product schedules to forecast revenue recognition accurately.
  • Headquartered in Toronto, Canada, you know LG as one of the world’s leading consumer electronics equipment manufacturers. Forecasting future revenue recognition and product volumes is critical to this company. That’s why the business uses product schedules in Salesforce to deliver the clarity that a wide range of stakeholders demand.

Product Schedules Explained

A Product Schedule forecasts how the revenue from a product linked to an opportunity will spread over time.

Remember, each schedule links to a product on the opportunity rather than directly to the opportunity itself.

Let’s take an example.

The total sales value of this opportunity is $55,000. The Opportunity Stage is Proposal/Price Quote, so we’re looking at a pipeline deal. The Close Date shows that we expect the sales deal to complete in mid-May.

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

The Amount field value of $55,000 is the total value of three Products on the opportunity.

We can see that we are selling a combination of capital items (the generators), professional services (the engineer) and a software license.

Your products will be different, of course. Nevertheless, the essential point is that we need to recognize the product revenue over time.

However, the revenue recognition for each product does not necessarily start as soon as we win the opportunity.

In our example, the services work by the engineer begins in May and lasts for two months.

That means we are recognizing the revenue in May in June.

In contrast, let’s assume that we can start revenue recognition for the generators in June. And that we must spread the revenue over six months.

Likewise, we can schedule the software license. Let’s assume it also starts in June, but this time we must spread the income over twelve months.

Of course, how you invoice may be different from the product schedules. That’s because the schedules describe the revenue recognition profile rather than the physical invoice dates.

Here’s how the schedules look in a report:

The report breaks down the revenue by Product Family and month.

You can see the information from a different perspective in this chart.

Next up:

How to create product schedules that track revenue recognition in Salesforce.

Two Product Schedules Options In Salesforce

There are two options for tracking revenue recognition in Salesforce.

First, use the Salesforce standard product schedule function. Second, use the GSP Product Revenue Schedule app.

This blog post explains more about both options:

How To Track Revenue Over Time In Salesforce

We built the app because the standard schedule feature is challenging and cumbersome for salespeople to use.

I made this short video to demonstrate the essential differences in the two ways to create product schedules in Salesforce. If you prefer, skip the video and jump to the screenshots.

Revenue Schedules by GSP vs Standard Product Schedule Functionality

Here are some of the main differences between the two options.

 

Creating Product Schedules

Standard schedules. The salesperson adds the opportunity products. Then revisits each product in turn to create the schedules.

GSP app. The salesperson creates the schedules at the same time as adding the products to the opportunity.

Close Date Changes

Standard schedules. The salesperson visits each product to adjust the schedule when the close date on the opportunity changes.

GSP app. Schedules adjust automatically when the close date changes.

Fine-tune Product Schedules

Standard schedules. No method to adjust schedules for each opportunity.

GSP app. Flexibility to fine-tune product schedules based on each opportunity. S-curve and other revenue profiles are also available.

Track Actuals Versus Product Schedules

Standard schedules. No method to compare the forecast revenue with actual income after winning the opportunity.

GSP app. In-built tracking of actual versus forecast revenue.

High-impact Reports and Dashboards

Standard schedules. Reports are pretty challenging to set up and use.

GSP app. Pre-built dashboard and flexible reports for complete visibility of product schedules on won and pipeline opportunities.

 

The other essential difference between the standard schedules feature and the GSP app is that we can customize the app to meet different revenue recognition business needs.

For example, we have many customers that schedule product quantity rather than revenue. They also have custom fields on the product schedule to further improve reporting and visibility.

What Next?

Here are three things you can do next.

  1. Take a free trial of the GSP app. There’s a free 14-day trial available for the app. You can do this in either your sandbox or production Salesforce environment. Log in to the AppExchange with your usual Salesforce credentials, hit the Get It Now button and follow the instructions (no credit card needed).
  2. Get in touch for a personal demo. Get in touch to walk through the app together. We can discuss your revenue recognition and product schedule needs and agree upon the best approach. Use the Contact Us page and enter your details.
  3. Read more about revenue schedules. We have several other in-depth articles about scheduling revenue over time. For example, try How To Schedule Revenue Over Time In Salesforce.

Sales Dashboard by GSP

Superb Pipeline Visibility and Sales
Performance Metrics from this free Dashboard.

Related Blog Posts

How to Use Product Schedules to Improve Your Revenue Recognition

How to Use Product Schedules to Improve Your Revenue Recognition

If your revenue recognition forecasts are little more than an educated guess (or even a stab in the dark), then this article is for you. I'll explain precisely how to use product schedules to forecast revenue recognition accurately. Whatsmore, I'll show you how to...

How To Confidently Forecast Revenue Over Time With Schedules

How To Confidently Forecast Revenue Over Time With Schedules

Many people tell me how it's difficult to forecast revenue over time in Salesforce. That's partly why they often make one of the three scheduling mistakes that I outline below. Nevertheless, it's often vital to schedule revenue over time. That's because sometimes, no...

Popular Apps

GSP Target Tracker

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GSP Sales Dashboard

Superb pipeline visibility and sales performance metrics

GSP Revenue Schedules

Improve forecasting by scheduling opportunity revenue over time 

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Download The 12 Must-Have Dashboard Charts

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How To Confidently Forecast Revenue Over Time With Schedules

How To Confidently Forecast Revenue Over Time With Schedules

Many people tell me how it’s difficult to forecast revenue over time in Salesforce.

That’s partly why they often make one of the three scheduling mistakes that I outline below.

Nevertheless, it’s often vital to schedule revenue over time.

That’s because sometimes, no money changes hands when the deal is won.

Instead, income accrues over time.

Fortunately:

If you need to know how to schedule opportunity income and forecast revenue over time confidently, then you are in the right place.

Why You Need To Schedule Revenue

Prefer to watch a video? Or scroll down to continue reading.

Revenue Schedules by GSP - Schedule Opportunity Product Revenue Over Time

Revenue schedules spread the total opportunity amount over time. The sequence of schedules defines the income you will receive over many months from a won or pipeline opportunity.

For example, let’s say you win a $12,000 opportunity in April.

However, you don’t receive the $12,000 in April. Instead, the revenue spreads over the following twelve months.

It may even be that there’s a lag between the closing month and the start of the income.

Many types of companies need to track income over time.

For example:

  • Professional services that deliver projects over time.
  • Capital equipment items that the customer draws down or pays for over a period.
  • Support or maintenance contracts that span one, two, or three years.
  • Software-as-a-Service (Saas) licenses on fixed-term or open ended-contacts.
  • Framework agreements, where you know the customer will buy every month, but with no fixed or guaranteed amount.

Sometimes, there’s more than one type of these products or services on a single opportunity.

The upshot:

Forecasting income over time is as essential as measuring booked revenue per month. Maybe it’s even more critical than booked revenue in your business.

That means you need an easy yet powerful way to create and maintain accurate product revenue schedules. Otherwise, you lack robust forecasts and clear visibility of future revenue.

How To Schedule Revenue Over Time

Here are the four ways you can schedule revenue over time in Salesforce:

  1. Standard Salesforce Product Schedules.
  2. Create multiple opportunity fields.
  3. Create different opportunities for each month.
  4. Use the GSP Revenue Schedules app.

I’ll carefully explain each of these four options.

Bottom line:

The GSP app is the quickest, easiest, and most effective way for salespeople to schedule revenue. Use this link to short-cut straight to the details: GSP Revenue Schedules App

Option 1: Standard Salesforce Product Schedules

Option 1 is to use the standard product schedules feature.

That works for some businesses. However, there are some significant limitations. The most important of these is that the user interface is cumbersome and inefficient for salespeople.

Here’s how the standard product schedule function works in Salesforce.

The salesperson adds one or more Products to an opportunity in the usual way.

After that, the salesperson creates a Schedule for each product line item. They do this by clicking on each product line item, then on the Establish button.

The Establish button provides the popup to enter details about the schedule for the opportunity product.

Consequently, we have a revenue schedule that tracks product income over time.

Unfortunately, the salesperson must repeat this process for every other product on the opportunity.

 

Advantages of standard product schedules

  • Standard functionality. There’s no need to purchase a separate app.
  • Reports and dashboards. You can track scheduled using reports and dashboards (although this is limited).

Disadvantages of standard product schedules

  • The user interface is cumbersome (putting it mildly). For example, the salesperson must create the revenue schedule for each product separately.
  • Salespeople cannot create revenue schedules while adding the product; they have to add them afterward.
  • If the opportunity close date changes, the schedules do not automatically shift. The result is that the revenue schedules quickly get out of kilter with the opportunity.
  • There’s zero ability to track committed and pipeline revenue schedules versus target.
  • Reports and dashboard formats the standard schedules are inflexible and hard to use.

The result is that many companies that need to schedule revenue over time in Salesforce don’t. Unfortunately, this means they lack visibility of future income.

Consequently, they often attempt to resolve this in one of three other ways.

Option 2: Create Multiple Opportunity Fields

The second option means you create multiple fields on the opportunity. These fields store the revenue for each quarter or month.

My opinion:

This approach is always a mistake.

The reason is that it’s almost impossible to produce meaningful reports and dashboard charts. That’s because you are adding up data from multiple fields if you want to get a total for the year.

Furthermore, it vastly reduces usability because of the time it takes to enter the data. So my advice is not to do it.

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

Option 3: Create different opportunities for each month

The third option is to create a distinct opportunity for each month.

For example, let’s say you have a framework agreement with a customer. Each month, they place a new order. With this option, you must create a fresh opportunity each month to record the revenue.

As you can see, there’s much work to create the opportunities. And, of course, it distorts reports that track the win rate and average deal size.

On the other hand, it does deliver better visibility of historical and future revenue than option 2, providing you keep the opportunities up to date.

Option 4: GSP Product Revenue Schedules app

Tracking revenue over time is essential, yet none of the alternatives cut the mustard.

It’s why we built the Revenue Schedules app. It’s listed here on the AppExchange.

Before we get into the detail, the essential things to know about the app are:

  • It’s quick and easy for reps to use.
  • Revenue schedules from won and pipeline opportunities mean accurate forecasts.
  • You can easily compare scheduled revenue over time with targets.
  • All schedules update automatically when the opportunity changes. For example, if the Close Date moves, the schedules also move without extra work for the salesperson.
  • You can analyze income over time by product, territory, salesperson, or any other parameter.

I recorded a video to show you exactly how the app works. Or scroll down for screenshots and a step-by-step guide to the app.

New video here.

How To Create Revenue Schedules

Using the app, the salesperson starts by adding products to the opportunity the usual way.

You can see the standard Quantity and Sales Price fields. However, this time there are also have two new fields: Revenue Start Date and # Revenue Months.

These fields define how the product revenue will spread over time.

Clicking Save adds the products to the opportunity and creates the revenue schedules.

You can also use the Mass Edit Schedules button to see all the schedules.

How To Adjust Revenue Schedules

Let’s say the salesperson needs to modify the number of schedules or the revenue start date.

That’s straightforward to do.

Hit the Edit Line Items button.

The page lets the salesperson quickly and easily edit all products’ revenue schedules.

Hit Save, and the revenue schedules update immediately.

 

Moving Schedules When The Close Date Changes

Changes to the Close Date are probably the most common update on opportunities.

In other words, the salesperson believes the deal is closing this month. Unfortunately, decisions get delayed. We need to move the Close Date to another month.

With standard Salesforce product schedules, this is mightily cumbersome. You have to go to each opportunity product and re-establish the schedules.

Of course, no one remembers to do that. Consequently, the schedules are quickly out of kilter with the opportunity lifecycle.

That’s different with our app.

All the revenue schedules automatically change by the same number of days as the Close Date shift. In other words, zero extra effort for salespeople.

Revenue Schedule date automatically shifts when changing the Opportunity Close Date

As a result, your revenue forecasts are always up to date.

 

Manually Adjust Product Revenue Schedules

Sometimes the salesperson needs to tweak a straight-line revenue profile.

For example, there’s a ramp-up of revenue in the first couple of months.

Here’s how you do that. Hit the Mass Edit Schedules button.

Make your changes to the product revenue schedules.

You can see the adjusted total shown in red. This number indicates that the amount you have scheduled is different from the original value of the opportunity product line item.

You now have two choices.

The first option is to hit Save straightaway. The app adjusts the line item Total Price to match the new revenue schedule value ($11,250 in this example). That means the value of the opportunity corresponds with the total scheduled revenue. Everything is in sync.

The second option is to hit the Auto Adjust button. This time, we allocate the amount by which you reduced the initial months to the remaining schedules.

The auto-calculate button automatically generates the remaining Revenue Amount on non-edited Revenue Schedules

This adjustment keeps the original opportunity Amount the same and means the value aligns precisely with the total scheduled revenue.

Again, quick, easy, and straightforward for the salesperson.

 

Ramped Revenue Schedule Profiles

As you’ve just seen, it’s straightforward to make a change to the straight-line revenue profile.

But what if you need an entirely different profile?

The app comes with a pre-built S-Curve schedule profile. This profile is great for companies where the income at the start and end of the cycle is low and higher in the middle.

For example, many construction companies have this type of revenue profile on building projects.

We can also build custom templates for other types of schedule profiles. These include ramped revenue schedules and serpentine curves, for example, when income is seasonal.

Get in touch to find out more.

 

Compare Expected Revenue With Actual Income

Here’s what happens when you win the opportunity.

The Revenue Amount passes into the Updated Projection column.

Now you have the option to update this second column with the actual revenue for each month. You can also enter the income you expect to receive in the coming months.

Consequently, we can compare two things: the revenue we expected to generate when the opportunity was won, with the latest forecast based on actual figures and future estimates.

This comparison is critical in many businesses.

For example, let’s say you win an opportunity to sell 200 gas pumps. The customer plans on taking over 12 months, in line with their gas station re-fit program.

Your product revenue schedule defines how you expect to realize the revenue over time. Perhaps you’ve even made some manual adjustments to get it spot-on.

However, suppose the site re-fit program doesn’t proceed as fast as planned. Each month, the account manager updates the Projected Revenue based on the latest information.

It means you have a solid grip on the revenue you expected when the salesperson won the deal and the latest projection based on real-life data.

 

Revenue Schedule Summary Information

We’ll talk about reports and dashboard charts in a moment. However, first, let’s look at the information that rolls up to the opportunity.

The total value of the revenue schedules is the first field to notice. We can see that it’s the same as the opportunity Amount. In other words, we are scheduling revenue on all the products.

There are a total of 24 revenue schedules.

And the total Forecast Revenue is $11,550.

This figure means we have entered the Updated Projected amounts and expect to receive more revenue than anticipated when winning the deal.

Next, let’s look at the reports and dashboards.

 

Product Revenue Schedule Reports and Dashboards

Salespeople and many other people in the company need visibility of opportunity revenue over time. This visibility includes tracking revenue recognition using revenue schedules.

The apps’ dashboard gives you that visibility. Here are some examples of the reports and charts included in the dashboard.

 

Won Scheduled Revenue This FY

The metric on the left shows that $1.4M of scheduled revenue will land this year. Of course, the income may be from opportunities won this year, the previous year (or earlier). In other words, the revenue is landing in this financial year irrespective of when the salesperson won the opportunity.

Sales Dashboard by GSP

Superb Pipeline Visibility and Sales
Performance Metrics from this free Dashboard.

The chart to the right of the metrics shows the month-on-month revenue for the year.

We can also see $3.5M of revenue due to land this year from open opportunities. These deals are still in the pipeline, but there is revenue due to land this year.

Here’s another perspective. This time we are looking at the Expected Revenue. This figure is the sum of won scheduled revenue plus the weighted value of the pipeline schedules. (The weighted pipeline over time is the scheduled amount multiplied by the opportunity probability).

Remember the $1.4M of won scheduled revenue? The following chart shows that $695K of this is “earned.” In other words, the date the income is due to land is today or earlier.

We can also see the breakdown of won and pipeline scheduled revenue by product family.

And drill down to the underlying report on any chart to see more details.

Of course, you can customize any of these reports and dashboard charts to suit your specific needs.

Want To Know More About Revenue Schedules?

Here are several more steps you can take.

  1. Take a free trial of the GSP app. Visit the AppExchange to watch the video, see more screenshots, and take a 14-day free trial. Hit the Get It Now button on the Listing to set up your trial (no credit card needed).
  2. Get in touch for a demo. Let us walk you through the app. We can see whether it does what you need and answer your questions. We can also talk about whether you need to customize the app to meet your specific needs. Use the Contact Us page and enter your details.
  3. Read more about revenue schedules. We have several other in-depth articles about scheduling revenue over time. For example, try How to Use Product Schedules to Improve Your Revenue Recognition.

You can also, of course, find out about our other apps, including the GSP Target Tracker that measures pipeline coverage and sales performance versus quota.

Related Blog Posts

How to Use Product Schedules to Improve Your Revenue Recognition

How to Use Product Schedules to Improve Your Revenue Recognition

If your revenue recognition forecasts are little more than an educated guess (or even a stab in the dark), then this article is for you. I'll explain precisely how to use product schedules to forecast revenue recognition accurately. Whatsmore, I'll show you how to...

How To Confidently Forecast Revenue Over Time With Schedules

How To Confidently Forecast Revenue Over Time With Schedules

Many people tell me how it's difficult to forecast revenue over time in Salesforce. That's partly why they often make one of the three scheduling mistakes that I outline below. Nevertheless, it's often vital to schedule revenue over time. That's because sometimes, no...

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

GSP Sales Dashboard

Superb pipeline visibility and sales performance metrics

GSP Revenue Schedules

Improve forecasting by scheduling opportunity revenue over time 

Popular eBook

Download The 12 Must-Have Dashboard Charts

This fully-illustrated 27 page ebook shows you the 12 Killer Sales Charts for your Dashboard and explains How to Read Them and When to Use Them.

4 Types Of Framework Agreement You Can Manage In Salesforce (2021)

4 Types Of Framework Agreement You Can Manage In Salesforce (2021)

Framework agreements exist in virtually every industry.

They are the backbone of many commercial relationships. If you want a long-term relationship with a customer, it’s a good idea to agree on a framework agreement.

So naturally, you want to manage framework agreements in Salesforce.

Yet companies often struggle to do this.

“We made a dog’s breakfast of it,” one prospect told me recently.

He wasn’t wrong.

They created recurring opportunities for each month. They used these to anticipate ongoing revenue. Unfortunately, this meant they had opportunities coming out of their ears; but no visibility of the real pipeline or forecast revenue.

As we’ll see, there are better ways.

So here’s what you need. This is the definitive guide to managing framework agreements in Salesforce.

Types of Framework Agreement

First, you have to decide what type of framework agreement you are dealing with if you want to manage it successfully in Salesforce.

Here are four types of framework agreement you can manage in Salesforce:

  1. Drawdown.
  2. Regular Order.
  3. Occasional Order.
  4. License to Hunt.

In each case, I recommend you conduct account development planning and build Key Account Plans to drive revenue growth in these customers.

1. Drawdown Framework Agreements

In this case, customers drawdown products each month against an overall assumed volume.

Often, at the start of the agreement, there is an assumed order quantity each month. However, in practice, the actual order quantity usually varies from month to month.

These drawdown framework agreements are standard in many industries.

For example, Gilbarco Veeder Root is based in Greensboro, NC. The company creates drawdown framework agreements with petrol retailers to sell large quantities of gas pumps.

The agreement defines the products, pricing, commercial arrangements, and legal terms of the contract.

However, the petrol retailer does not want to receive all the pumps in one go. That’s usually because the retailer wants delivery in line with a gas station re-fit program.

Consequently, there may be a written minimum and maximum order quantity each month. However, the actual amount ordered each month depends on the progress of the re-fit program.

 

2. Regular Order Framework Agreements

Often, companies that sell large volumes of relatively small-ticket items or consumables use regular order framework agreements.

The customer places regular orders when they need to re-stock. Often, the customer does this directly via an online portal.

For example, take Zimmer Biomet in the UK and US. They sell a variety of consumable products to dental practices.

Zimmer Biomet enters into a regular order framework agreement with the dental practice.

This agreement specifies the price for each product based on the anticipated volume. It also describes the training support, marketing, and other services provided by Zimmer Biomet.

The dental practice places orders every few weeks using the Zimmer Biomet ERP portal. As a result, the end-to-end process for packing, shipping, and invoicing each order is highly streamlined.

Each year, a review of the framework agreements compares actual orders with the anticipated volume. Potentially this results in changes to pricing within the contract.

 

3. Occasional Order Framework Agreements

With these framework agreements, customers place occasional, rather than regular orders.

The framework agreement covers commercial terms and over-arching legal terms. However, a separate specification and agreement define the specific products and services within each order.

For example, based in Malta, Evolve provide products and services to fit and equip a wide variety of medical laboratories.

Fitting-out each new laboratory is a significant undertaking. However, often these laboratories are with large pharmaceutical or government departments with whom Evolve regularly works.

A framework agreement is set up with the organization. This agreement defines the pricing and other terms that apply to each new laboratory within the framework agreement.

Of course, no two laboratories are alike.

Each order requires consultancy and detailed collaboration with the customer to define the specific products and services needed. Consequently, a separate contract, under the umbrella of the framework agreement, outlines the agreed work.

Here’s another example.

At GSP, we use this type of framework agreement to do Salesforce benefit-enhancement work for many of our customers.

This means we have pre-agreed the commercial arrangements. We then define the specific scope of each project within the context of the agreement.

Get in touch if you’d like to discuss how we can work that way with your business.

 

4. License To Hunt Framework Agreements

A license to hunt framework agreement permits one party to seek-out deals in another organization or group of companies.

It’s common in financial services and many other industries.

For example, based in the UK, Hornbuckle Mitchell provides financial services to brokers. They secure a license to hunt framework in two ways.

The first applies to large multi-branch brokerages.

The head office of the brokerage makes framework agreements with selected providers in each market category. If Hornbuckle Mitchell is chosen as one of these providers, they have permission to visit the branches and convince individual brokers to use their products.

Second, Hornbuckle Mitchell makes framework agreements with buying groups.

For example, these buying groups often make framework agreements on behalf of many small brokers.

The agreements cover fees, training, regulatory services, and commission. The license to hunt permits Hornbuckle Mitchell to visit the buying group members to promote and sell their financial products.

How To Manage Framework Agreements In Salesforce

Very often, with framework agreements, no money changes hands when the deal is done.

Instead, the revenue accrues over time.

With that in mind, here’s how to manage each of the four types of framework agreements in Salesforce.

 

1. Drawdown Framework Agreements In Salesforce

Here’s the key to managing drawdown framework agreements in Salesforce:

Products, combined with standard or custom schedules.

I’ll explain:

Create an Opportunity to represent the potential framework agreement. You can track the progress using the standard Opportunity Stage field.

Add Products to the Opportunity to represent the physical goods and services you anticipate the customer will buy over the agreement’s lifetime.

By the way, you might want to consider using the GSP Product Selection Wizard to make it much easier for salespeople to add Products to Opportunities in Salesforce than the standard interface.

Create a revenue schedule for each Product on the Opportunity. This schedule describes how the products and services will be drawn-down over time.

Here’s an example:

Let’s assume the customer anticipates buying 60 generators over 12 months. To make the math easy, let’s assume each generator costs $1000.

The Opportunity has a total value of $60,000. That’s the figure in the Amount field.

From a gross sales perspective, the deal is worth $60,000.

However, as we know, that’s only half the story.

That’s because the sales revenue will come to us over time; not all at one go.

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

How to Forecast Revenue On Drawdown Agreements

We can use revenue schedules in Salesforce to forecast the month-on-month order value.

Revenue schedules spread the anticipated income over time.

Using the GSP Product Schedules app, you can create this revenue forecast while adding the Product to the Opportunity.

In this example, we are defining the start date for the revenue and the number of months.

This means we now have a reliable view of the revenue over time.

Opportunity probability highlighted directly on the opportunity page layout

As you can see, we’ve scheduled $5,000 of monthly revenue over 12 months.

However, you might be wondering:

What if the revenue forecast isn’t a straight line?

No problem.

The app means you can adjust the revenue schedule month by month.

In other words, you’re fine-tuning the revenue forecast.

In summary, Products and Revenue Schedules are an excellent way to manage drawdown framework agreements in Salesforce.

2. Manage Regular Order Framework Agreements in Salesforce

‘Regular order’ framework agreements in Salesforce also need an opportunity for each customer.

However, often this opportunity is created at the start of the year. It represents the total value of orders you anticipate from the customer over the year.

Nevertheless, as with the drawdown framework agreement, we need to schedule that revenue over time. So again, use the GSP Product Schedules app to do this.

But this time, let’s go a step further.

As the year progresses, we update the revenue schedules based on how the year is panning out.

This information is vital for account managers.

That’s because we can compare the value of the business we anticipated at the beginning of the year with the latest expectations on actual revenue.

We can roll this up by company, territory, and salesperson.

Opportunity probability highlighted directly on the opportunity page layout

Either way, this gives account managers high visibility of the trend in orders for each customer.

The team at Zimmer Biomet uses this information to segment customers, drive business development activity, and implement marketing campaigns.

They also measure account management performance based on the quantity and value of orders placed by the customer.

Here’s one more thing they do, relating to discount approval on the regular order framework agreement.

All information about the rationale for any discount is stored in the Chatter feed. In other words, directly on the Opportunity. The information is, therefore, readily available in the future. You don’t have to search high and low for the email trail.

The reason is this:

The promise of future orders may justify a discount. However, the customer may fall short.

At the very least, you need to know this when it comes to re-negotiating the framework agreement. Storing the rationale for the original discount in the Chatter feed keeps this critical information visible and easy to find.

Here you can find more tips on controlling price discounts using Salesforce.

 

3. Manage Occasional Order Framework Agreements in Salesforce

With these types of framework agreements, you take a different approach.

There are, however, some similarities with the regular-order approach. That’s because you create an opportunity to manage the process of securing the framework agreement.

This opportunity has a notional value only. So make sure you filter it out of the main pipeline reports and dashboard charts.

So far, it’s similar to the way regular order framework agreements are managed in Salesforce.

However, there’s no expectation of a weekly or monthly flow of relatively small orders. Instead, you need to work proactively with the customer to identify new projects and opportunities.

That’s where opportunities come into it. Manage the sales process related to these projects through separate opportunities in Salesforce. That’s because each one needs its own dedicated sales process.

Here’s another thing:

The framework agreement will often define a specific set of product prices that will apply to future opportunities. To do this, you create a unique Price Book, just for that customer.

For example, Agile Solutions in the UK has a small number of strategic customers. These represent 15% of these total customer base. Yet they account for 70% of revenue.

Agile has agreed to specific rates and prices with each of these customers.

To make sure each opportunity has the correct price book, they use the GSP Auto Price Book Selector. This app makes sure your team is using the right Price Book in every case.

Price Book Auto Selector by GSP

Our 27 page eBook shows you the 12 killer
Sales Charts for your dashboard.

The GSP Auto Price Book Selector is an effective way to make sure salespeople consistently apply the right Price Book to Opportunities. You can download it for free from the AppExchange.

 

4. Manage License To Hunt Framework Agreements in Salesforce

This is similar to the way you manage occasional order agreements.

Use an opportunity to manage the sales process of getting the overall framework agreement secured. This opportunity has a notional value. It’s based on the 12 month or long-term anticipated value of related deals.

However, be sure to exclude these types of opportunities from your pipeline of ‘paying’ deals.

After the framework agreement is in place, you create a separate opportunity in Salesforce for the Accounts on which you are working.

In other words, create a new opportunity for active prospects within the overall organization. You might want to use an Ultimate Parent function to get a complete view of all the Opportunities.

Ideally, use Products and Schedules on these opportunities to define and track revenue over time in Salesforce.

So there you have it.

Four types of framework agreement you can manage in Salesforce.

Unlike our prospect, please don’t make a dog’s breakfast of it.

Need any help or more advice? Don’t hesitate to get in touch.

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9 Ways Opportunity Products Deliver Big Benefits In Salesforce

9 Ways Opportunity Products Deliver Big Benefits In Salesforce

Opportunity products are the physical items and services you sell on an opportunity in Salesforce.

However, if you don’t use opportunity products, what’s the alternative?

For many companies, the answer is to enter the total value of the opportunity in a single field – the Amount field, in other words.

That’s okay, I guess. Unfortunately, it tells you little about the deal. It also constrains the benefits your business can get from Salesforce.

That’s because using opportunity products opens the door to many benefits. These benefits include better forecasting accuracy, improved pipeline management, superior analysis of sales performance, and streamlined processes.

By the way, these benefits apply equally to companies that only provide services or intangible products. Opportunity products aren’t only for companies that sell physical items.

In this blog post, I give you concrete examples of how to gain significant benefits from opportunity products. You can apply these lessons straight away to your business.

However, before that, let’s clear up any confusion about opportunity products.

What exactly are opportunity products?

Opportunity products describe the sales revenue you will deliver on each deal. This revenue comes from the physical products and intangible services you sell to customers..

One opportunity can have one, or many, opportunity product line items.

In each case, the Quantity x Sales Price (i.e., the unit price) automatically calculates the Total Price of each opportunity product line item. The Total Price of each line item rolls up to the Amount field on the opportunity.

However, that’s quite a mouthful. Let’s take an example to understand more.

There are two opportunity products in the screenshot below.

As you can see, these represent both physical goods and services the company provides.

We can see the Quantity, Sales Price, and Total Price for each line item. Moreover, the Total Price for both line items sums up to the Opportunity Amount field.

Now, while we’re at it, let’s answer another common question.

What is the difference between Products and Opportunity Products?

Products are the ways that you generate revenue.

These might be physical items. However, they can also be services, SaaS licenses, or set up fees. In fact, any other non-tangible benefits you provide to customers.

In other words, think of products as your catalog of things that customers might want to buy.

Opportunity products are the specific products and services from that catalog you are selling on a particular deal or opportunity.

For much more on this specific topic, including how to set up products in Salesforce, read this article:
Bring Salesforce Opportunities To Life With Products.

With that, let’s talk about the benefits of using Opportunity products. Here’s the first:

Opportunity Product Benefit #1 – Improved Salesforce usability

We’ve said already, that instead of using opportunity products, some companies simply enter sales revenue into a single Amount field.

However, many others go to the opposite extreme. In searching for more visibility, they create umpteen fields on the opportunity to record revenue information.

This screenshot is a real-life example. It’s from a new customer that contacted us recently. It’s what got me thinking about this blog.

Would you believe this is only the top third of the page? Not only are there fields for each type of service, but there are more fields to track revenue over time.

We couldn’t get them all on the screenshot and still keep it readable!

It was, frankly, a pain in the tail to enter the information. As a result, poor user adoption was inevitable.

Consequently, pipeline visibility reduces significantly because no one can be bothered to create an opportunity until there’s a strong possibility of it closing successfully.

Here’s the other massive problem with this approach:

It is virtually impossible to create meaningful reports.

In contrast, Salesforce becomes much easier for salespeople when they use opportunity products.

For one thing, clicking and data entry falls dramatically.

Using opportunity products also makes prices much more accessible. For example, in manufacturing companies, or indeed any company dealing with many physical or tangible products, the prices have to be stored somewhere.

Often that’s in a ring binder or online spreadsheet.

Using Products means it is much easier for salespeople to find the right price for each type of customer and product selection. Again, that means improved usability and increased Salesforce adoption.

How to extend this Product Benefit

The GSP Product Selection Wizard makes it even easier to add products to opportunities. As a result, average deal size increases, salesperson productivity is improved, and user adoption improves.

Recommended blog post
Bring Your Opportunities To Life With Products

Product Benefit #2 – Improve Opportunity Accuracy

Opportunity amounts and values must be accurate for you to get robust pipeline visibility and reliable sales forecasts.

In other words, if the opportunity value is guesswork, then so is your revenue forecast.

Unfortunately, often that’s what happens when salespeople enter a single figure into the Opportunity Amount field.

The value of the opportunity is invariably going to be a guestimate.

It’s far better to use opportunity products to calculate the opportunity amount.

This way, salespeople enter the unit price and quantity for each product, together with any discount.

The value of each opportunity product line item calculates automatically. (Remember, it’s the quantity x unit price less any discount).

The total value of all opportunity product line items rolls up to the Amount field.

Product Selector by GSP

Make it much easier for salespeople to add
products and bundles to opportunities.

The result? Much more accurate opportunity values.

Tip: if you offer volume-based pricing, then don’t leave salespeople to work out prices outside of Salesforce. There are four ways to manage volume-based pricing directly within Salesforce.

Product Benefit #3 – Improve Pipeline Visibility

Using opportunity products improves the accuracy of individual deal values.

Therefore, the quality of management information on reports and dashboards also improves significantly.

The customer with lots of fields on the opportunity was unable to get a concise, usable pipeline report that helps manage the funnel effectively.

Here’s the same information. This time we’ve re-built the report using opportunity products.

This improved chart means that critical information can be understood much more quickly.

Using products also means you can analyze the pipeline by product category.

For manufacturers like Gilbarco Veeder Root, this is crucial information. These reports inform the production levels within the factory.

Alternatively, for companies like Invent, who provide consulting resources, it means accurate resource planning.

Product Benefit #4 – Identify Development Needs

Look at the dashboard chart below. It shows salesperson performance by average deal size.

The dashboard chart is a starting point for analyzing why some salespeople may have higher overall sales than others. However, to get meaningful information that can help identify individual development needs, we need to dig deeper.

For example, the dashboard chart below analyses the average deal size by product category.

Sales Dashboard by GSP

Superb Pipeline Visibility and Sales
Performance Metrics from this free Dashboard.

Each product is allocated a category – Core, Optional, Service. The dashboard chart clearly shows that Dave is better than his peers at including optional products in his deals. In other words, Dave increases the average value of his opportunities by involving add-on products and services.

Simply telling salespeople to sell more optional or non-mandatory products is unlikely to have a significant impact. Yet now we can identify the development needs of each salesperson more precisely.

Remember, the chart, in itself, does not tell us precisely how Andy can increase his average deal size. Perhaps he needs to improve his technical understanding of other products. It could be that he needs coaching on how to introduce additional services. Potentially, Andy needs to work harder during the Investigation Stage of the sales cycle to understand the potential customers’ needs better.

Analyzing performance using opportunity products does not automatically give us the answer. But it indeed tells us where to start looking.

Recommended blog post
Why You Need To Compare Average Closed Won Opportunity Size

Product Benefit #5 – Price More Selectively

When it comes to product pricing, one size does not fit all.

Different market places will support different pricing. Countries and geographical regions may justify different prices. The cost of fulfillment may differ between territories, or individual marketplaces will support a higher margin.

Here’s a different example. Not-for-profit customers get a lower price compared to commercial clients.

Some companies also have client-specific pricing—for example, exclusive pricing arrangements with strategic customers.

To handle this variability properly in Salesforce means you need to use opportunity products. That’s because using Products with opportunities means you can also use Price Books.

A Price Book is a selection of products along with their List Prices. Price books enable tailored pricing strategies based on customer, geography, market segment, or other variables.

Here’s an example.

Let’s say you have a product with a standard List Price in the United States of $1000.

Using Price Books means you might have the following List Prices for this product
– $1000 for standard customers in the USA.
– $900 for strategic customers in the USA.
– $800 for not-for-profit customers in the USA.

There may also be many additional variations based on geography or territory.

For example, the Eurozone Price Book or UK Price Book can have different prices than the straight-forward exchange rate equivalent. These differences may reflect variations in fulfillment costs or in what the market will bear in those territories.

Here’s how these prices get applied.

The salesperson defines the price book that applies to each opportunity. The Price Book contains the products and prices that are available for this opportunity.

Chose the right price book on the opportunity, and you have the right set of prices.

You can even go a step further.

Not all products need to belong within each price book. Perhaps, for regulatory, commercial, or technical reasons, a specific product cannot be sold in Europe.

To achieve this, exclude the product from the European Price Book. As a result, when the European Price Book links to an opportunity, the product will not be available for selection.

Automated price book selection in Salesforce

You may have spotted the potential human error with Price Books.

Specifically, what happens if the salesperson adds the wrong Price Book to the opportunity?

The result is incorrect product pricing on the opportunity.

There’s a way to avoid this problem, and it won’t cost you a penny (there’s excellent pricing for you!).

It’s our GSP Auto Price Book Selector. The app is available free on the AppExchange.

The Auto Price Book Selector automatically assigns the relevant Price Book to an opportunity. It ensures that the right customers receive the correct prices.

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Product benefit #6 – Schedule Revenue Over Time

Often revenue associated with a sale is not invoiced in one go.

Quite the reverse.

It may take many months for the revenue to materialize fully. For example:
– Service contracts and Saas licenses, with regular, repeat revenue over one, two, or three years.
– Framework agreements, in which goods and services are ‘drawn-down’ over time.
– Implementation projects that complete over many months.

In each case, it’s essential to schedule revenue over time in Salesforce. Tracking revenue over time improves forecasting and ensures a more predictable cash flow.

To do this, you need to use opportunity products in conjunction with product schedules.

Here’s an example of a Salesforce dashboard revenue chart and report using opportunity product schedules.

The chart and report don’t show the ‘gross’ value of deals. Instead, they measure the scheduled product revenue.

Many of our customers forecast scheduled revenue over time in this way.

How to extend this Opportunity Product Benefit
The GSP Revenue Schedules app is the most effective way to schedule opportunity revenue over time.

You can find full details about the app, including video demonstrations, on the AppExchange.

Recommended blog posts
5 Killer Examples Of Recurring Revenue Forecasts In Salesforce.

Product Benefit #7 – Increase Price Discount Control

To reduce the amount of discount given away, use opportunity products to manage discount approval processes.

Here’s an example of how to calculate price discounts and manage approval processes in Salesforce.

The salesperson enters the discount percentage for each opportunity product. In this case, a 10% discount has applied to each opportunity product.

The total discount amount rolls up to the opportunity. That’s $4,000 in this example.

The overall price discount on the opportunity is 5.7%. That’s because although 10% applies to each opportunity product, the value of each line item is different. In other words, across the board, the discount on this opportunity is 5.7%.

We can an approved discount amount on this opportunity. This process happens using the standard approvals functionality in Salesforce.

Recommended blog post
10 Expert Tips To Improve Discount Approval Processes.

Product Benefit #8 – Close Deals More Quickly

Using opportunity products opens the door to two ways to radically speed up deal closure.

First, having products on the opportunity means they can be output into quote documents. This process avoids salespeople having to re-key and re-enter information in separate documents. It also means templates containing the up-to-date set of terms and conditions are used consistently across the business.

Second, combine the quote with an electronic signature application.

These electronic signature applications integrate tightly into Salesforce. They make it super-easy for customers to commit to contracts in a robust, legally binding way.

Product Benefit #9 – Sell Bundles Of Products

One way to increase the average deal size is to sell bundles of products.

Our customers use product bundles in two key ways.

First, to group products from a technical point of view. The bundle of products comprises the solution offered to the customer.

Secondly, they offer promotional product bundles. These bundles provide discounts or additional products that are available for a limited amount of time. As such, they drive incremental sales for a period.

There is no pre-built product bundle capability in Salesforce. So instead, use the GSP Product Wizard.

The wizard contains features that enable system administrators or product managers to create product bundles easily. Salespeople have a user-friendly interface for selecting the package and adding the component products to the opportunity or quote.

Recommended blog post
GSP Product Bundle Wizard App.

That’s it. In this post are nine ways to increase your Salesforce benefits using opportunity products.

Don’t forget. If you have a question, you know what to do. Get in touch with The Gary Smith Partnership.

Recorded Webinar | 9 Ways To Win Big Using Opportunity Products

Watch the full webinar with Gary Smith and Nick Ambrose from GSP, and special guest Robby Johnson from Ellison Technologies. Gary, Nick, and Robby explain and demonstrate how to achieve significant benefits using opportunity products.

10 Ways To Win Big Using Opportunity Products In Salesforce

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Track Revenue Over Time In Salesforce Using Revenue Schedules

Track Revenue Over Time In Salesforce Using Revenue Schedules

Schedule Revenue Over Time In Salesforce

Take our new app for a test drive today

Revenue schedules are critical because when winning the deal, often, no money changes hands.

Instead, revenue accrues over time.

For example:

  • Professional services that deliver projects over time.
  • Capital equipment items that the customer draws down or pays for over a period.
  • Support or maintenance contracts that span one, two or three years.
  • Software-as-a-Service (Saas) licenses on fixed-term or open ended-contacts.
  • Transactional or regularly supplied items in which you anticipate the customer will buy a significant volume every month, but with no fixed or guaranteed amount.

In other words, it’s common to have multiple revenue schedules over many months or years on the same opportunity.

The upshot:

You need an easy yet powerful way to create and maintain accurate product revenue schedules. Otherwise, you lack robust forecasts and precise visibility of future revenue.

Unfortunately:

Many people have told me just how difficult that is to achieve in Salesforce.

So, to fix this problem, we built the GSP Product Revenue Schedules app.

It’s the quickest, easiest and most effective way for salespeople to schedule revenue over time in Salesforce.

In this blog post, I’ll explain why scheduling revenue using standard functionality is difficult in Salesforce. And demonstrate EXACTLY how to address this using the Product Revenue Schedules app.

Prefer to jump straight to a demo of the app? Watch this video to see how it works.

Before we get onto the app, let’s understand why the standard product revenue schedule functionality in Salesforce is a challenge.

Standard Salesforce Product Schedules

One option to schedule revenue over time in salesforce is to use the standard product schedules feature.

That works for some businesses. However, there are also significant limitations which I’ll explain.

Here’s how the standard product schedule function works in salesforce.

The salesperson adds one or more Products to an opportunity in the usual way.

Then, the salesperson creates a Schedule for each product line item. They do this by clicking individually on each product line item, then on the Establish button.

That provides the popup to enter details about the schedule for that opportunity product.

The result is that we have a revenue schedule that tracks product income over time.

However, the salesperson then repeats this process for every other product on the opportunity.

Advantages of standard product schedules

  • Standard functionality. No need to purchase a separate app.
  • Scheduled revenue over time can be tracked using reports and dashboards (although this is limited).

Disadvantages of standard product schedules

  • The user interface is cumbersome (that’s putting it mildly). For example, the salesperson drills down to each product separately to create the revenue schedule.
  • Salespeople cannot create revenue schedules at the same time as adding the product; they have to add them afterward.
  • If the opportunity close date changes, the schedules do not automatically shift. The result is that the revenue schedules quickly get out of kilter with the opportunity.
  • It’s impossible to customize, adapt or extend the standard schedules. For example, you can’t add a Status field to track Booked, Shipped, Invoiced, Paid values. Likewise, you also cannot schedule the product margin.
  • There’s zero ability track committed and pipeline revenue schedules versus target.

The result is that many companies that need to schedule revenue over time in Salesforce don’t. Unfortunately, this means they lack visibility of future income.

Consequently, they often attempt to resolve this in one of three other ways.

Common alternatives to standard scheduling

Rather than using the standard salesforce revenue scheduling functionality, here’s what many companies do:

 

Option #1:

They perform this critical activity outside Salesforce.

Often, this happens because companies perceive it’s too difficult to schedule revenue over time in Salesforce using standard functionality.

However, accurate visibility of won and pipeline scheduled revenue based on the latest opportunity updates is lost.  

Significant effort is also expended, manually forecasting future revenue.

 

Option #2

Create numerous fields on the opportunity. These fields capture scheduled revenue for Q1, Q2 and so on for each year.

That is almost always a mistake.

That’s because it’s virtually impossible to produce meaningful reports and dashboard charts. It also significantly reduces usability because its time consuming for salespeople to enter the data.

 

Option #3

The third option is to create multiple opportunities in salesforce. Each opportunity typically represents one year of revenue.

For example, let’s say you win a contract to deliver services over three years. That’s one opportunity.

However, companies often create two further opportunities to represent income in years two and three. That’s even though the deal is won, and no additional sales effort needs to take place.

The result?

Pipeline reports and dashboard charts are inaccurate. Opportunity conversion rates are wrong. And salespeople waste time maintaining and updating spurious opportunities.

Looking To Customize The App To Suit Your Business?

Get in touch with us today

GSP Product Revenue Schedules app

Tracking revenue over time is essential yet none of the alternatives cut the mustard.

Its why we built a salesforce app.

Here’s where you can find the GSP Revenue Schedules app on the AppExchange.

Here are the main features and benefits of the app.

  • Very quick and easy for reps to use.
  • Revenue schedules from won and pipeline opportunities mean accurate forecasts.
  • Easily compare scheduled revenue over time with targets.
  • Schedules and forecasts update automatically when the opportunity information changes.
  • Analyze revenue over time by product, territory, salesperson or any other parameter.

And guess what?

The schedules automatically shift whenever the close date of the opportunity moves.

That means everything always stays in sync.

We’ve included a webinar recording at the foot of this post to show exactly how the app works.

Or carry on reading for screenshots and more information about how the app works.

(Incidentally, although all the screenshots in this post are in Lightning, the app works equally well in Classic interface).

Create revenue schedules

The salesperson selects products to add to the opportunity the usual way.

As you’d expect, we have the standard Quantity and Sales Price fields. However, we also have two custom fields, Revenue Start Date and # Revenue Months.

These fields allow the salesperson to define the revenue schedule parameters for each product on the opportunity.

Clicking Save adds the products to the opportunity and generates the related revenue schedules.

We can click View All to see all the revenue schedules associated with each product.

Adjust revenue schedules

Let’s say the salesperson wants to adjust the revenue schedules.

Easy.

Hit the Edit Line Items button.

The page opens and lets the salesperson quickly and easily edit the revenue schedules for all products on the opportunity.

The revenue schedules update immediately.

Close Date Changes

Here’s the most frequent event on an opportunity:

A change to the close date.

In other words, the salesperson thinks it’s closing this month. However, decisions get delayed. Therefore we need to move the close date to next month.

No problem.

All the revenue schedules automatically update by the same number of days as the shift in the close date.

This feature means salespeople avoid having to continuously re-align revenue schedules. Therefore, revenue forecasting accuracy is maintained effortlessly.

Manually adjust product revenue schedules

The GSP Product Revenue Schedules app automatically calculates the schedule amounts. This calculation is based on the parameters set by the salesperson.

However, sometimes, it’s right for the salesperson to manually adjust the revenue schedule amounts, based on human knowledge.

Let’s say, for example, you know that the first monthly schedule will be higher than the others.

No problem.

Open the Mass Edit Line Item page.

Adjust the schedules.

That automatically adjusts the Sales Price of the Product Line Item.

In turn, this updates the Line Item Total Price and the Opportunity Amount.
In other words, everything is kept 100% in sync.

Update for latest scheduled revenue forecasts

Here’s what happens when the Opportunity is Won.
The Schedule Amount is locked.
Why?
It’s because this value represents the product schedule revenues we expect when the opportunity is won.

Something else also happens:

The Revenue Amount copies into the Forecast Amount.

That means as time goes by, the Forecast Amount can be adjusted based on how the opportunity revenue pans out.

Moreover, this means we can compare two things: the revenue we expected to generate alongside the latest actual forecast.

This comparison is critical in many businesses.

For example, let’s say you win an opportunity to sell 100 petrol pumps. The customer wants to take delivery over 12 months, in line with their gas station re-fit program.

Your product revenue schedule defines how you expect to realize the revenue over time. Perhaps you’ve even made some manual adjustments to get it spot-on.

But suppose the site re-fit program doesn’t proceed as fast as planned. Now, five months into the contract, the account manager updates the Forecast Amount based on the latest information.

Perhaps she even needs to add several new monthly schedules to extend the timeframe.

Opportunity level summary

At all times, essential revenue schedule values are summarized back on the opportunity. These updates include the Revenue Amount, the latest Forecast Amount and the number of schedules.

Consequently, this means salespeople can quickly and easily view the latest critical metrics about the opportunity.

Track revenue over time versus target

Now you can compare scheduled product revenue over time with salesperson targets.

Here’s an example.

Let’s look at the target for Jim Jones for April 2019. The product revenue schedules that are due to land in April, automatically link to this target.

Jim’s scheduled revenue target for April is $12,000. Remember, that’s his scheduled revenue target, not the gross sales value target.

Jim has scheduled product revenue from won opportunities of $8,333.

So he’s achieved 69% of his target.

Jim also has potential scheduled product revenue of $1,666 from open opportunities. In other words, this revenue is not committed. It relates to the product revenue schedules on pipeline opportunities that we hope will close soon.

We can also see the weighted value of these pipeline schedules: $833. This amount is the opportunity probability factored into the scheduled amount.

Consequently, this produces the Expected Schedule Amount of $9,167. That’s the total amount Jim can expect to achieve from scheduled revenues in April.

The result is that salespeople and managers can easily see whether there is enough committed and pipeline scheduled revenue to meet quota.

It looks like Jim has some work to do to hit his target!

Product Revenue Schedule Reports and Dashboards

Salespeople and managers need full visibility of the sales pipeline and scheduled revenue. Fortunately, the GSP Product Revenue Schedules app has comprehensive dashboards for Salesforce Lightning and Classic versions.

Here’s the Lightning dashboard

And the Classic version.

Users can clone and adapt these charts and reports and customize them to meet additional reporting needs.

S-curve versus straight-line schedules

By default, the app produces straight-line product revenue schedules. In other words, each monthly schedule is for the same amount.

As we’ve seen, salespeople can easily adjust the revenue schedule for any month.

But who on earth needs s-curve schedules?

Well, let’s say you deliver infrastructure projects.

The initial stages of the project are about mobilization and planning. These activities are relatively resource-light. Then you get into the heavy lifting of delivery. However, towards the end of the project, there’s more activity around testing and commissioning, which requires less overall effort.

Consequently, the revenue profile is an s-curve. Moderate amounts of effort and cost are expended at the beginning and end. More significant work occurs in the middle.

The result is an s-curve revenue profile on individual opportunities.

Get in touch if you’d like to find out how to activate s-curve revenue profiles within the app.

Advantages of the GSP Product Schedules app

Here’s a summary of the main advantages of using the GSP app to schedule product revenue in salesforce.

  • Super-easy for salespeople to use.
  • Flexibility to define different revenue profiles over time for each opportunity product.
  • Forecast accuracy is maintained because schedules automatically shift when the close date changes.
  • Compare schedule revenue expected when the opportunity is won with the latest post-win forecast.
  • Compare scheduled product revenue versus target.
  • There’s also the option to adapt the standard app to meet specific scheduling needs within your business.

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Link Close Dates To Product Schedules To Avoid Warped Forecasts

Link Close Dates To Product Schedules To Avoid Warped Forecasts

Here is something that will inevitably your revenue forecast utterly wrong if you are using Product Schedules in salesforce.

The salesperson modifies the opportunity close date.

But then, she does not make the same date adjustment to the Product Schedule.

To be fair, it’s an easy thing to forget. And to use a technical term, it is a right pain to do.

Using standard salesforce functionality, the salesperson needs to go to each product on the opportunity. Then she needs to modify each product schedule. Individually.

It takes time. It is a distraction. And it almost never happens.

The root cause of the problem is that there’s no link between close dates and product schedules. Unfortunately, that means revenue forecasts that rely upon product schedules are nearly always wrong.

And over time, the problem gets worse. Both pipeline and won revenue reports become increasingly inaccurate.

Fortunately, it doesn’t need to be that way. The Schedule Shifter App solves the problem. It directly links the close date with product schedules.

Link Close Dates To Product Schedules

The Schedule Shifter links the close date to product schedules. This means that whenever the close date changes, the product schedules are automatically adjusted by the same number of days.

The close date can move forwards or backwards in time. The Schedule Shifter will keep the product schedules aligned with the close date. And if there’s already a delay between the close date and the start of the product schedule, then that delay will be respected when the schedules are automatically modified.

The Schedule Shifter works with both revenue and quantity product schedules. It’s particularly useful for accurate forecasts on ‘regular order’ framework agreements.

It’s simple to install. We’ll give you a link to a private listing on the AppExchange. And it’s great value at $700 per year for unlimited users. Find out more.

Schedule Shifter In Action

Link Close Date To Product Schedules In Salesforce

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

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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.

Often, they result in multiple orders and payments over time.

However, 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 more complex than necessary.
  • It’s challenging to get accurate pipeline visibility.
  • Sales metrics on the size, quality and trend in the sales pipeline become distorted.

So, here are five examples 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 several years. Payment is on an annual basis.

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

Repeat opportunities are not required because the future revenue on the existing contract is not in jeopardy. The opportunity is not in doubt. That’s because the signed customer contract is already in place.

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

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 crucial, proactive key account planning to optimize the chances of success.

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

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

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 the 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 support.

However, MAM doesn’t use repeat 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.

Instead, MAM has a single opportunity. Products with Schedules forecast future revenue. These schedules mean MAM has an accurate, forward-looking view of secured income.

Repeat opportunities with Proof of Concepts

Another London based customer, Modernis, provides advanced analytics and consultancy services to the insurance and reinsurance 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 its platform. Later, once customers have experienced the value that the platform brings, Modernis sells a contract that runs for several years. This contract incorporates an annual license charge.

To manage this, Modernis create two opportunities.

The first opportunity represents the sales process for a 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. The repeat opportunity is used because commitment to the full contract is not a given.

Instead, 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, a repeat opportunity is not 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 retail petrol 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 the delivery of all the petrol pumps manufactured and delivered in one go!

Rather, they need to ‘drawdown’ the units as-and-when the refit program is ready to install them.

So the total value of the contract is agreed upon. However, the month-on-month revenue is variable.

GVR handles 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 first 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.

Product Selector by GSP

Make it much easier for salespeople to add
products and bundles to opportunities.

Related Blog Posts

How to Use Product Schedules to Improve Your Revenue Recognition

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Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

GSP Sales Dashboard

Superb pipeline visibility and sales performance metrics

GSP Revenue Schedules

Improve forecasting by scheduling opportunity revenue over time 

Popular eBook

Download The 12 Must-Have Dashboard Charts

This fully-illustrated 27 page ebook shows you the 12 Killer Sales Charts for your Dashboard and explains How to Read Them and When to Use Them.