This guide tells you everything you need to know about Forecast Categories in Salesforce. In this all-new guide, I explain: 1. The fundamentals of the Forecast Category field in Salesforce.2. How Forecast Categories and Opportunity Stage fields relate to each other.3....
This guide tells you everything you need to know about Forecast Categories in Salesforce.
In this all-new guide, I explain:
1. The fundamentals of the Forecast Category field in Salesforce.
2. How Forecast Categories and Opportunity Stage fields relate to each other.
3. How to define and interpret Forecast Categories.
4. Ways you can (and can’t) customize the Forecast Category values in Salesforce.
5. Four reasons you should use Forecast Categories to improve sales pipeline reporting.
If you want to understand what the Forecast Categories means and learn how to use them, then this guide is what you need.
With that, let’s get started.
Forecast Category in Salesforce Explained
The Forecast Category field in Salesforce classifies each sales opportunity in terms of the salesperson’s confidence in winning the deal in a given period.
This classification is different from the opportunity stage field, which describes the pipeline in terms of the current position in the sales process.
That said, the Forecast Category on each deal is often determined by the opportunity stage.
However, here’s the important thing.
Opportunity owners can adjust the Forecast Category on each opportunity, based on how likely they think the deal is to close successfully. They can do this without changing the opportunity stage.
Forecast Category Example
Let’s say you have two opportunities. Both at the Proposal stage and you’ve presented your quote.
On the first, the customer tells you that she is still reviewing offers from several competitors.
On the second, the customer has rung you several times to check on when you can deliver. She’s arranged the training for your product for the team. You know from Pardot that she’s been checking the terms and conditions on your web site, and she’s asked for a follow-up meeting.
You might classify the first opportunity as Best Case in the Forecast Category. (I’ll explain what these terms mean).
However, you classify the second opportunity as Commit. In other words, you’re saying to your boss, “trust me, I’ll bring this one in this quarter.”
You get the idea. The Forecast Categories give us additional sales funnel insight at the individual deal level.
This insight reflects the certainty the salesperson feels in winning each opportunity.
Let’s look at a Forecast Category. Then I’ll explain the definitions.
Forecast Category Report
Let’s assume we are at the start of Quarter 2 (April – June).
Here’s an example of a Salesforce dashboard chart using Forecast Categories for Quarter 2.
Here’s the corresponding report.
$111,000 of the funnel is classified Pipeline. $60,400 in Best Case. $18,100 is in Commit. And a further $16,100 is in Closed.
Forecast Categories are valuable field in creating reliable sales forecasts. However, we need to know how to interpret the categories.
Forecast Categories defined
Here’s what the meaning of the categories in Salesforce.
Only a small number the opportunities in this category will close successfully within the current period. Pipeline means the customer is in the early stages of the buying process, and deals in this Forecast Category need further development.
As a guide, you should expect only a quarter of these deals to close within the quarter.
Best Case means there is work to do to advance these opportunities. Nevertheless, the sales deals are fully qualified, and the opportunity has an embedded Close Plan.
You should expect to win between a third and half of the deals in the Best Case category.
The Close Plan is going well on these opportunities. Commit means you are confident of a successful outcome, and only in exceptional circumstances do these opportunities slip from the current period. You can confidently rely on these opportunities in your sales forecast.
You should expect to win 90% of the opportunities in this Forecast Category.
Closed opportunities are won. No further sales effort is required to clinch the deal or be sure of the sales revenue.
Include all of the opportunities in Closed in the sales forecast for the month or quarter.
Opportunities are set to Omitted when they are Lost or qualified out. However, for reporting purposes, sometimes other opportunities, renewal deals, for example, are allocated to the Omitted category.
The sales forecast excludes opportunities in the Omitted category.
Adjusting Forecast Categories
You pre-define Forecast Categories based on the opportunity stage. (We’ll look at how to do that in a moment).
However, for Forecast Category reports to be meaningful, the value on each opportunity must reflect the confidence of the salesperson.
Fortunately, therefore, the opportunity owner can change the Forecast Category on each deal.
However, here’s something to bear in mind.
Only the opportunity owner can do this. Salesforce doesn’t care if you are the system administrator or the CEO; it’s still only the opportunity owner that can change the Forecast Category on an opportunity.
Forecast Category and Opportunity Stage relationship
In Salesforce, each opportunity stage has a pre-defined Forecast Category.
The easiest way to see this is by looking at the configuration area of the opportunity stage field.
In this case, we have five pipeline stages.
The category associated with each stage is shown further to the right.
For example, we’ve grouped two opportunity stages (Value Proposition and Proposal) in the ‘Best Case’ Forecast Category.
We can easily change this. Click edit next to the stage name, and re-assign the value.
Simple as that.
However, you might be wondering:
How can I change the Forecast Category picklist values?
Modifying Standard Forecast Categories
You can change the terms in Salesforce, but you can’t add new values.
For example, we can change the Pipeline value to Qualifying. To do this, go to the Forecast Category field.
Then click edit and make the change.
However, here’s what you can’t do:
Add new Forecast Category values.
If, like me, you’d like the ability to add new values to the picklist, then you can vote for the idea here.
Reasons To Use Forecast Category Reports
Many companies that analyze the sales pipeline using the Close Date & Stage report also use Forecast Category reports.
Here are four reasons to use both in a Salesforce dashboard.
1. Salespeople must commit
If your sales team already uses the Commit concept then the Forecast Category is an excellent way to report on those deals.
In other words, salespeople must identify the pipeline opportunities they are very confident will close within the period.
Many businesses find this is a powerful way of making sure deals don’t slip; salespeople have to go all-out to win the sale once they’ve placed an opportunity in the Commit category.
2. Separating process from intent
The opportunity stage reflects your selling process. However, it says nothing about the customer buying process. Nor, indeed, does it indicate confidence in winning a deal.
Forecast Categories are a way to abstract the opportunity from the sales process.
Doing this is possible because, unlike the opportunity stage, Forecast Categories reflect confidence by the salesperson in the intention of the customer.
Consequently, in funnel reviews, managers can examine the pipeline by sales process AND salesperson confidence.
3. Communicating upwards
In some companies, Board and executive reporting use Forecast Categories.
The Board gets the opportunity stage concept. However, they want to know what the sales team believes will happen.
Likewise, if you have different opportunity stages for different types of deals (for example, new sales versus renewals), this is also an excellent way to summarize sales forecast reports for the senior management team.
4. Summarize opportunity stages
If you have more than four or five pipeline stages, then you might want to rationalize them. This article will help you do that.
Nevertheless, Forecast Categories are a way to make pipeline reports more readable and useful. That’s because each category can reflect several pipeline stages.
Likewise, if you are in the habit of changing opportunity stages regularly, then you need consistency of reporting. Forecast Categories are one way to achieve this.
Use The Forecast Category For Pipeline Reporting (Video)
Here’s my video answer to a question from one of our readers:
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