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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.

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.

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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.

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.

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.

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How to Use Product Schedules to Improve Your Revenue Recognition

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How To Measure Sales Versus Target In Salesforce (2021)

How To Measure Sales Versus Target In Salesforce (2021)

If you want to track sales versus target in Salesforce, there’s a superb app that empowers you to do it.

It’s called the GSP Target Tracker.

Here’s a summary of the essential things the Target Tracker helps you do in Salesforce:

  • Compare rep, team, and company sales versus target.
  • Measure the pipeline coverage ratio. Expressly, understand whether you have enough funnel to meet your sales quota.
  • Conduct meaningful pipeline reviews and salesperson 1.1s.

Furthermore, the app delivers target performance metrics and pipeline visibility that you are unlikely to get elsewhere in Salesforce.

The Target Tracker app is straightforward to use for both salespeople and managers. You can customize the app within Salesforce to meet the specific needs of your company.

And here’s the best thing of all. The Target Tracker costs $250 per month per company, and there’s no user-based fee. We think that’s an excellent price.

Measure Sales Versus Target In Salesforce with the GSP Target Tracker

Measure Sales Versus Target In Salesforce with the GSP Target Tracker

Here’s what we cover in this article:

  • How the Target Tracker works in Salesforce.
  • The Salesforce Target Tracker dashboard.
  • Ways you can customize the Target Tracker.
  • How to trial and buy the Target Tracker app.
  • Best practice for conducting pipeline views using the Target Tracker.

Let’s start.

Section 1

How the Target Tracker works in Salesforce

Sales rep targets in Salesforce

Here’s an example of a target record for a sales rep in Salesforce.

It’s the quota record for Dave Apthorp, for March 2020.

Dave’s quota for the month is $50,000. So far, he’s won $30,000. Consequently, he’s achieved 60% of his target.

Now let’s look at this pipeline coverage. We can also see that Dave’s pipeline for the month is $48,000. However, the weighted value of his funnel is $14,200. (Weighted pipeline is the Probability of each Opportunity multiplied by the Amount).

As a result, Dave’s Total Expected Revenue for the month is $44,200. That figure is the sum of Closed Won and Weighted Pipeline.

The result?

That means Dave’s pipeline coverage ratio is not high enough. Consequently, his Expected Variance against the target for the month is negative, to the tune of $5,800.

On the right-hand side, those numbers are all shown as percentages of Dave’s sales goal for March.

For example, Dave has achieved 60% of his target; his total pipeline is 96% of the target, and his Weighted Pipeline is 28% of his sales goal.

The chart further to the right shows Dave’s target performance.

As we can see, Dave has a shortfall against his quota.

Beneath this graph, the doughnut chart analyses Dave’s funnel for March.

As Dave’s manager, I should be concerned. That’s because more than half of Dave’s funnel for the month is still in the Qualification opportunity stage. A further quarter is still in Needs Analysis.

We need to ask:

Is it realistic these deals will close this month?

If not, then Dave’s sales performance versus target for the month is potentially worse.

 

Opportunity Conversion Rate Metrics

The Target Tracker provides valuable opportunity conversion rate metrics in Salesforce.

Conversion rates calculate by comparing the ratio of deals won to opportunities lost in the period. Here’s an example:

In this case, we can see that Dave has won three opportunities in March and lost seven.

That means his opportunity conversion rate in Salesforce is 25% by record count.

However, we also calculate the opportunity conversion rate by the value of opportunities.

For example, we can see that Dave has won $30,000. He’s lost $120,000. As a result, Dave’s opportunity conversion rate by value is 25%.

The conclusion?

Dave is successfully winning a higher proportion of large-value deals. We know this because his win rate by value is higher than his win rate by record count.

 

How Opportunities Link To Quota In Salesforce

Further down the page, we can see the Salesforce opportunities linked to Dave’s March Target.

These opportunities link automatically to the target. Consequently, everything is straightforward for the sales rep, with no additional work necessary.

If the Close Date moves, the opportunity automatically re-links to the relevant sales target. Again, no additional work for the salesperson.

Also, the Target Tracker makes it easy to see the essential, large deals that Dave must focus on to achieve his sales goal for the month.

In Section Three, we explain some of the customizations you can make to the Target Tracker. For example, you can use quarterly or annual targets. You can also use fields other than the Amount to compare opportunity revenue with quotas.

However, before that, let’s look at the Salesforce target dashboard included in the app.

Section 2

Sales Target Dashboard in Salesforce

The Target Tracker comes with a pre-built Salesforce dashboard containing twelve charts and reports.

You can modify any of these charts and reports to suit the structure of your own sales team.

Let’s look at several examples from the target dashboard.

 

Sales Rep Versus Target

You’ll recognize the first. It’s similar to the chart for Dave, showing his sales versus target for this month.

The dashboard chart compares the sales of all reps versus the target for the month.

In other words, the chart combines the quota, pipeline, and variance for all reps.

It’s straightforward to modify the report and create dashboard graphs based on territory, region, or another grouping.

In this example, we see a positive variance for two reps; and a shortfall in target performance for the two others.

 

This Month, Pipeline Analysis

This chart shows the pipeline due to close this month for all salespeople. As with the example for Dave, we can start to gauge whether the funnel is robust, and if our sales forecast is reliable.

Drilling down to the detail, we can identify opportunities that might let our sales forecast down.

Now, we can start to question these deals and potentially move them to a later month.

 

Sales versus Target This Year

This dashboard chart shows the month-on-month performance for the whole year.

It’s an effective way to know whether there is enough pipeline coverage for the upcoming months. The chart also shows clearly how your team has performed against its month-on-month sales goals.

Like all the charts and reports, you can easily fine-tune it to show information based on the individual sales rep, team, or territory.

For more information on exceeding Year-End targets, here’s an article we produced specifically on Q4 Sales Strategies

 

Sales Rep Conversion Rates

The Target Tracker captures the opportunity conversion rate for each salesperson.

The conversion rate dashboard chart shows the win-rate by value and number of opportunities. These metrics are highly-valuable for identifying training and development opportunities.

Measure Sales Performance Versus Target

Interested in this app? Get in touch with us today

Section 3

Tailor the Target Tracker to your business

Here are some of the ways to can adapt the GSP Target Tracker to the specific needs of your business.

  • Monthly, quarterly, or annual sales targets.
  • Use a custom field instead of the Amount.
  • Exclude certain types of opportunities from the target roll-up.
  • Modify the reports and dashboards based on your sales structure.

We explain each one below.

Incidentally, if you have a business need that we haven’t listed here, then what you should do is very simple: get in touch to talk to us about it.

 

Monthly, Quarterly or Annual Sales Targets

By default, the Target Tracker uses monthly sales quotas. Remember, reports and dashboard charts can summarize monthly targets for each quarter and year.

However, you can instead set the Target Tracker to use quarterly, or even annual quotas, if that’s how sales performance measures work in your business.

It’s a simple process to make this change. We explain the steps very clearly in our setup guide.

 

Use A Custom Field Rather than Amount

Not all companies use the Amount field on the opportunity to measure the size of a deal.

For example, Annual Recurring Revenue (ARR), Monthly Recurring Revenue (MRR), and Margin are all examples of fields that represent the value of a deal.

In these cases, it’s the value in the custom field that must be compared with the sales target.

The Target Tracker can do this.

We need to adjust some settings within the app and modify the reports and dashboards. We offer a free service to make these changes for you. Simply get in touch, and we’ll identify what you need.

 

Exclude Certain Types of Opportunity

Sometimes, not all opportunities should count against the sales target.

For example, perhaps renewal opportunities are not included in measuring sales versus target.

You can do this quickly in the Target Tracker. All you need to be able to do is set up a workflow rule in Salesforce. Again, we explain step-by-step how to do this in the setup guide.

 

Modify the Salesforce Target Dashboard

Many sales teams organize by territory, region, or another segment.

However, the pre-built reports and dashboard charts measure sales versus target for all salespeople. In other words, the charts are at the company level.

That’s because we can’t predict or foresee how each sales team is setup.

Fortunately, that’s no problem. You can easily modify the standard reports and dashboards to reflect your sales team structure. Simply create a copy of the report (using the Save As function) and adjust it based on the sales team organization in your business.

Section 4

How to buy the GSP Target Tracker for Salesforce

Here’s how to take a free 14-day trial of the Target Tracker. You can try it for yourself to see the sales management benefits your business.

All you need to do is visit the AppExchange Listing for the Target Tracker.

Click the Get It Now Button and follow the instructions. 

From the Listing you can also:

  • See what other people think about the app.
  • What a video showing how the app works. 
  • Set more screenshots showing the Target Tracker in action.
  • Read the setup guide.

Don’t delay, take a trial today!

 Any other questions about the GSP Target Tracker?

Get In Touch Below

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How Expected Revenue Delivers Reliable Sales Forecasts (2021)

How Expected Revenue Delivers Reliable Sales Forecasts (2021)

Expected Revenue delivers a reliable forecast of future sales in many companies.

It’s a sales forecast you can defend in front of the board.

Unfortunately, however, some executives dismiss Expected Revenue in Salesforce as irrelevant.

That’s a pity because not having an accurate revenue forecast is the bane of many sales managers’ lives.

After all, your gut instinct won’t cut it.

Nor will a top-down percentage applied across all open opportunities due to close this month.

However, when used correctly, Expected Revenue delivers a sales forecast report that stands up to detailed analysis and scrutiny.

Nevertheless, here’s the rub with Expected Revenue.

If the Opportunity Probabilities are wrong, then so is your Expected Revenue report.

And unfortunately, Opportunity Probabilities ARE usually wrong.

Here’s why:

They are inaccurate because, in most Salesforce implementations, the probability links directly – and only – to the Opportunity Stage.

As such, the probability reflects how far the Opportunity is through the sales process. However, that doesn’t say anything about the chances of winning the deal.

Fortunately, you can reduce the dependency upon the Opportunity Stage. It’s even possible to set opportunity probabilities automatically, based on proven historical evidence.

If you do this, then the Expected Revenue report is a realistic revenue forecast and a key sales performance indicator.

Let’s dive in.

 

What is Expected Revenue?

Expected Revenue is the Opportunity Amount multiplied by the probability. That gives a dollar value for each Opportunity.

Add up these dollars for all your deals, and you have the Expected Revenue report for each month, quarter, or year.

Whatsmore, using Expected Revenue you can measure sales targets at the rep, team, and company level. This analysis tells you whether you have enough pipeline coverage to hit your sales quota.

Consequently, decisions that drive sales team behavior are better informed.

For example, if the Expected Revenue is higher than the sales target, then focus heavily on closing the remaining pipeline deals.

Alternatively, if the Expected Revenue is too low, then the sales team must generate more pipeline to hit quota.

 

How is Expected Revenue different from Weighted Pipeline?

The Weighted Pipeline is the value of each open Opportunity multiplied by the probability of successfully winning the deal. Expected Revenue includes the Weighted Pipeline plus won deals at 100% probability.

The two concepts are, therefore, related. Expected Revenue includes won and pipeline opportunities, whereas the Weighted Pipeline refers to open deals only.

If you want to predict your sales revenue for the month, run an Expected Revenue report. Alternatively, if you’re focusing on the funnel only, run a pipeline report.

 

Why is Expected Revenue sometimes dismissed?

Here’s the view some sales executives take:

Deals are binary. The outcome of each Opportunity is a win or a loss. You win the full value of the Opportunity, or you win nothing.

Expected Revenue, these managers say, is irrelevant because it doesn’t reflect this binary result. Instead, the Expected Revenue report includes a figure for each pipeline opportunity, that will never materialize.

For example, let’s say you have a pipeline opportunity for $1,000. If you win the deal, it’s worth $1,000. Alternatively, if you lose the deal, it’s worth zero.

However, the Expected Revenue report will include a figure for this pipeline opportunity somewhere between $1 and $999, depending on the probability. Whatever the number is, it’s not an amount the customer is ever going to pay.

But wait a moment.

 

Why is Expected Revenue a powerful metric?

Let’s say you have 50 deals due to close next month or this quarter.

You know you will win some and lose some.

But here’s the problem:

Unfortunately, you don’t know which you will win and which you will lose. Crystal balls, after all, are in short supply.

However, suppose you knew this information in advance. Then you would do two things.

First, your sales forecast will take 100% of the value of those opportunities you will win. Likewise, you will apply a zero amount for the deals that will be lost.

Second, you wouldn’t bother chasing the opportunities that you will lose, would you?

However, life isn’t like that, unfortunately. No matter how good your qualification process, we all know it’s hard to predict the outcome of a sales deal.

Nevertheless, we are still under pressure to produce reliable sales forecasts, despite the uncertainty.

Fortunately, Expected Revenue is a powerful tool for creating robust revenue forecasts. However, here’s the catch: it relies on setting realistic probabilities for each pipeline opportunity.

 

What’s the problem with Opportunity Probability?

The Opportunity Probability is wrong on many deals because it relates directly and only to the Opportunity Stage.

In other words, if the Stage moves forward, the probability automatically increases. That happens irrespective of whether your chance of winning the deal has increased.

An example:

Four similar companies are pitching for a deal. They all have an Opportunity Stage called Needs Analysis. And let’s say they all have the Opportunity at 25% probability. So far, so good.

Next, all four sales teams submit their proposals. They move the Stage onto Proposal Submitted – which for each company, has an Opportunity Probability of let’s say, 30%.

The chance of any sales team winning the deal has not changed. There are four of them left. So, all things being equal, each still has a 25% chance of winning.

However, in each company, the Expected Revenue of the deal has increased. And the combined Opportunity Probability has also increased – to 120%.

That doesn’t make sense, of course.

What does this mean?

It means that to produce a reliable Expected Revenue report, we need a better way to estimate opportunity probability.

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What is the probability of winning a sales deal?

For any company, the probability of successfully closing an Opportunity depends on many factors.

These might include geographic sector, product category, tender versus pitch deal, and others.

Nevertheless, one factor common to most businesses is this: whether you are selling to a new or existing customer.

Usually, the chance of winning a deal is significantly higher with an existing customer, compared to a new prospect.

However, in most Salesforce implementations, the Opportunity Stages are common to both new and existing customers. Consequently, the opportunity probabilities are identical for any given stage.

That contradicts what we know – that the probability is normally higher for deals with existing customers.

So here’s what you do.

Manually adjust the opportunity probability.

Not many people realize you can do this. That is, override the opportunity probability associated with each Stage.

Nevertheless, if you take this simple step, then opportunity probabilities will be more accurate. As a result, your Expected Revenue report will be more reliable.

Next time you do a pipeline review or conduct a salesperson one-to-one, check that where appropriate, the opportunity probabilities reflect your best judgment on the likelihood of winning the deal. In other words, use human judgment to update the opportunity probability.

That’s a simple step that has a high impact. You can, however, get more scientific.

 

Historic Opportunity Conversion Rates

In financial services, there’s usually a warning that past performance is not an indicator of future returns.

With sales teams, it’s different. Past performance is an excellent indicator of future ratios. We can use that to our advantage.

Specifically, we can gather information on those factors that help us set realistic opportunity probabilities.

In other words, by reviewing the opportunity probability from similar historical deals, it’s possible to forecast the future. That means we can predict the Expected Revenue with even more confidence.

 

New versus Existing Customer conversion rates

For example, look at the report and dashboard table below.

It shows the difference in opportunity conversion rates between new and existing customers.

The report and chart provide information about conversion rates for existing versus new customers. Specifically:

  • 41% of all Opportunities with existing customers were successfully won, compared to 34% for new customers. See the “1. Prospecting” row in the report.
  • 58% of Opportunities with existing customers that entered the “2. Investigation” Stage were won. This compares with 53% of Opportunities that passed through the same Stage for new customers.
  • 76% of Opportunities with existing customers that entered the “3. Proposal Made” Stage closed successfully. This compares with 65% of Opportunities that went into this Stage for new customers.
  • 92% of Opportunities with existing customers that entered the “4. Negotiation” Stage were won. This figure compares with 79% of Opportunities that entered this Stage for new customers.

In other words, the report provides the information we need to more scientifically differentiate Opportunity Probability between new and existing customers.

This information is an excellent starting point for creating accurate Expected Revenue forecasts.

 

Salesperson conversion rates

Now, let’s consider the difference in opportunity conversion rates between salespeople.

The report shows that Dave Apthorp wins 60% of all his Opportunities compared to 27% for Peter Hemsworth and 36% for Shaun Yates. You can see this in the “1 Prospecting” row.

Look at other rows in the report. They tell us the Opportunity Conversion rate for Opportunities that move into each Opportunity Stage.

For example, of all the deals that enter the “4 Negotiation” Stage, Dave successfully closes 90% compared to 78% for Peter and 86% for Shaun.

 

Accurate Expected Revenue Reports

Our customers use the information in these reports to calculate the Expected Revenue accurately.

To do this, we need a custom Opportunity Probability field.

The field populates by a formula, based on the information we garnered from the conversion reports.

Let’s take an example.

Here’s an Opportunity for $15,000 with a New Customer. It’s in the Investigation Stage.

Based on the standard method, the Opportunity Probability is 25% and the Expected Revenue $3,750.

However, we know from our reports that 47% of Opportunities with new customers that enter the Investigation Stage close successfully.

That figure automatically enters our custom Opportunity Probability field. Now the Expected Revenue becomes $7,050.

Alternatively, let’s consider what happens if this Opportunity is for an existing customer.

We know that 58% of all Opportunities with existing customers that enter the Investigation Stage close successfully.

Therefore, that figure automatically enters our custom Opportunity Probability field. This time the Expected Revenue is $8,700.

In other words, a realistic Opportunity Probability, based on historical conversion rates, automatically populates for each Opportunity. Consequently, this produces a more realistic (and in this case, higher) Expected Revenue.

 

Accurate Forecasts Using Expected Revenue

Expected Revenue calculates by multiplying the opportunity probability with the value of the deal.

The problem is that our probabilities link directly to the Opportunity Stage.

However, if we use historical facts, it’s different.

We know that 58% of Opportunities with existing customers that enter the Investigation Stage close successfully. We also know that Dave Apthorp successfully closes 60% of all his Opportunities, compared to 36% for Shaun Yates.

Now we can use these facts to set realistic Opportunity Probabilities and drive accurate Expected Revenue reports.

Accurate Expected Revenue reports mean accurate sales forecasts.

To find out more about how to create accurate sales forecasts using Expected Revenue in your business, then get in touch.

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The Best Sales Pipeline Report To Use This Year (2021)

The Best Sales Pipeline Report To Use This Year (2021)

Nothing is more useful to a sales manager than a pipeline report and dashboard chart that gives full visibility of the funnel.

That’s why this article has everything you need to know about the best sales pipeline report and dashboard chart to deliver funnel visibility in Salesforce.

I’ll explain how the report and chart look. I’ll also show you how to get both items into your Salesforce environment quickly and easily.

And most importantly of all, I’ll demonstrate EXACTLY how to use the report and chart to achieve accurate revenue forecasting and robust pipeline management.

Bottom line:

If you want to get more benefits from Salesforce dashboards, you’ll love this pipeline report and chart. It’s my favorite in our 12 Must-Have Salesforce Dashboard Charts.

Don’t have time to read the whole article right now?

No problem, download the PDF by completing the form below.

Here’s what we are talking about:

The Best Pipeline Report and Dashboard Chart

The Pipeline by Month and Opportunity Stage report is the best tool for accurate forecasting and effective sales management. It shows the value of Opportunities due to close each month. Within each month, the report splits the amount by the various Opportunity Stages.

Consequently, the report provides essential information for accurate forecasting, managing the sales pipeline, and tracking sales versus target.

Here’s what it looks like on a Salesforce Lightning dashboard chart.

We can see, for example, $60,000 of the pipeline is due to close in October. Of that, $11,000 is in the Negotiation Stage.

Drill down from the chart to see the exact numbers in the pipeline report:

If you’re using the Salesforce Classic interface, then the pipeline chart is going to look pretty similar:

However, in Classic and Lightning, Salesforce reports are often built differently. As a result, the Classic pipeline report might look like this:

In other words, in Classic, the months usually go on the horizontal axis. Lightning prefers them vertically.

Nevertheless, although the reports look slightly different, the principles of using the information to achieve robust pipeline visibility and accurate revenue forecasting are precisely the same.

How to get this pipeline report and chart

You might be thinking:

How do I get my hands on this pipeline report and dashboard chart?

You have two options.

1. Build it yourself. Use a straightforward Opportunities report, grouped by Stage, displaying the Amount field.

2. Install our free GSP Salesforce Dashboard. You can download it from the AppExchange Listing. The dashboard contains all 12 of my recommended Salesforce sales pipeline charts and reports.

So, no excuses for not having this pipeline report and chart at your fingertips. 😊

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How to use the pipeline report in the current month

Let’s assume it’s the middle of October right now. Also, let’s say our average sales cycle is three months or thereabouts.

What do the report and charts tell us?

We can see that in our current month (October), there’s $60,000 of Opportunities due to close.

Furthermore, this value splits by the various Opportunity Stages. In Salesforce, hover over each stage for additional detail.

As a sales manager looking at my October projected revenue, I want to know: just how robust is the October pipeline?

Here’s what to do. Expand the report so that it shows the names and owners of the individual opportunities. Click Edit on the report, then check the Detail Rows option.

Think about the deals in each stage.

For example, those deals that are in Prospecting:

If our average sales cycle is three months, you need to be confident those deals will close this month.

Ask yourself, should some of these opportunities be at a more advanced stage? Do the close dates need to be moved to a later month? Have the close dates on some of these opportunities already slipped from one month to another?

That’s because if the answer to any of these questions is yes, it means you do not have a robust pipeline nor an accurate forecast for the current month.

The same with the Investigation and Proposal Made stages. Are we going to close these opportunities this month? If not, then it means our October pipeline is significantly over-inflated.

Here’s something that happens time and again with deals due to close in the current month. They slip from one month to the next.

This post isn’t an article on how to manage that problem, but this is.

You might want to bookmark it to read later.

Or watch this video on pipeline quality metrics.

7 | Pipeline Quality Metrics Salesforce Dashboard Table

Key point:

Go through the deals due to close this month and make sure the opportunities are at the right stage and have a realistic close date.

December pipeline strength

Let’s look at another month in the sales pipeline chart: December.

What about those deals in the Negotiation stage?

Are they at the correct stage? If so, is it going to take us three months to close these deals? Is there anything we can do to bring them forward?

Looking at the December pipeline report here’s what I notice:

There’s a lot of funnel due to close at the end of the year.

Are these deals in December because the financial year of many customers ends that month? If so, we can legitimately expect many deals to complete in the run-up to Christmas?

Likewise, see if any of the opportunities closing in December been sitting in the pipeline for a long time.

For example, were salespeople under pressure earlier in the year to boost the size of the pipeline? If so, salespeople may have entered December as the close date on the basis that (hopefully) the opportunity is “bound to close sometime during the year.”

If that is the case, it means the December pipeline is nowhere near as reliable as we hope. So take a hard look at it.

Tip: this blog post explains how to get pipeline metrics that reveal how long the deal has been open and the number of days since the last opportunity stage change. Use these metrics to identify opportunities that have an increased chance of slipping to another month.

January pipeline strength

The sales pipeline chart shows there’s a dip in the size of the funnel in January.

Perhaps this dip is due to a legitimate seasonal variation. Alternatively, maybe it’s right to expect a slow start to the new year.

On the other hand, is it something about which we should be concerned? The pipeline report may be telling us we may need to start organizing marketing campaigns now, to boost the pipeline three or four months from now.

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Deals due to close in earlier months

Let’s stick with our assumption that right now, we’re in the middle of October. Consequently, what are these deals doing here on the sales pipeline chart? These, closing in September.

Unless you have a time turner, those deals aren’t going to close in September.

But we see this very often. In other words, open opportunities with close dates in the past. Either those deals are closed, and the opportunity stage is not up to date. Or, the close date needs to move because the opportunities are still open.

Unfortunately, both circumstances mean the pipeline forecast is not accurate.

A case in point:

Colin Parish, VP of Sales at Moderna, downloaded the GSP Sales Dashboard from the AppExchange. However, Colin’s pipeline report didn’t look like our beautiful example.

That’s because Colin’s funnel was full of opportunities with close dates in the past. It’s such a common problem we gave it a name: The Bedraggled Washing Line Pipeline Report.

See what I mean?

Fortunately, there are five things you can legitimately do if your best pipeline report looks like a bedraggled washing line:

  1. Go through the opportunities one by one yourself and update them.
  2. Get salespeople to update their opportunities.
  3. Update all the opportunities to Closed Won or Closed Lost en masse.
  4. Mass update all opportunities with close dates in the past to a future date.
  5. Sweep the problem under the carpet.

Yes, you read that last one right.

I explain exactly why and when you should use each course of action in this post:

Don’t Let Your Best Pipeline Chart Look Like a Bedraggled Washing Line

Don’t hog it, get your team using the best pipeline report

The sales pipeline chart and underlying report give sales managers robust visibility of the funnel. It does this in a meaningful and useful way.

However, like any other pipeline report, it doesn’t just need to be visible to managers.

Salespeople can manage their pipeline using this same pipeline chart. Filter the report to show ‘My Team’s Opportunities.’ In other words, the pipeline report contains the opportunities belonging to each team member.

Tip: check that your Role Hierarchy is accurate to make sure My Team reports show accurate pipeline information. That’s because Salesforce uses this configuration feature to define what My Team means for each person.

Now, each team member can take responsibility for managing their pipeline.

Best sales pipeline report video

In the video below, I demonstrate exactly how to use the sales pipeline report and the dashboard chart.

2 | Pipeline by Month and Stage Salesforce Dashboard Chart

Create the Opportunities by Close Date and Stage report

Remember, you can install the GSP Sales Dashboard from the AppExchange. That’s the quickest way to get the Pipeline by Close Date and Stage report and dashboard chart. You will, of course, get all the other pipeline reports we recommend as well.

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4 Ways To Measure Revenue Against Sales Targets In Salesforce

4 Ways To Measure Revenue Against Sales Targets In Salesforce

Many executives get very frustrated, trying to measure sales versus target in Salesforce.

Perhaps you’re one of them.

Like others, you may even have searched in vain for the Targets tab. (If you’re still looking, stop now; it doesn’t exist).

Fortunately, if you want to know how to measure sales versus target in Salesforce, then you’re in precisely the right place.

That’s because I’ll show you how to answer two essential questions when it comes to quota management in Salesforce:

  • First, how do historical sales performance stack up against target? You likely need to know this for individual reps, by teams and for the overall company.
  • Second, is the funnel big enough to meet the target this month, next month, or next quarter? In other words, is there enough pipeline coverage?

Quite simply, without this information, you’re flying blind. In that case, it’s challenging to know which controls need adjusting to be sure of hitting your quota.

By the way, do you prefer to watch a video rather than read? If so, take a look at this recent webinar. I cover all the essential points and demo the GSP Target Tracker.

If not, skip the webinar recording, and jump to the next section.

Webinar | Tracking Targets In Salesforce

What do we mean by Sales Target?

I mainly use the word ‘target’ in this article.

In your business, perhaps you prefer ‘quota.’ Or, maybe everyone refers to the ‘budget.’

Possibly, you talk about ‘hitting the number.’

Here, I assume they are all the same thing. A sales target is a dollar revenue goal over a period.

It doesn’t need to be dollars, of course.

The target may be in Sterling, Euros or any other currency. You may even have sales goals in multiple different currencies in your business.

You get the idea.

Three Types of Sales Target

We usually want to measure sales versus target at salesperson, team, territory or company.

However, in most businesses, we want to measure sales against three types of targets.

1. Historic sales targets

Historical sales targets are in the past. For example, last month, last quarter, last year.

We only need to know one thing about historic sales targets. Was the sales revenue higher or lower than the target?

Historic sales targets are in the past

Next, we need to know about current-period targets.

2. Current sales targets

These are the targets we are working to achieve right now. For example, this month, this quarter, this year.

However, we need to compare the target with two metrics.

These are the targets we are working to achieve right now

Firstly, the sales revenue already won.

Second, the size of the pipeline due to complete in the period.

In other words, pipeline coverage is an essential factor in calculating whether we will achieve quota for targets in the current period.

3. Future sales targets

These targets are in the future. For example, next month, next quarter, next year.

With these targets, there’s no won revenue because a deal can’t close successfully in the future.

These targets are in the future

In other words, pipeline coverage is king. We need to know whether the pipeline is big enough for us to meet future targets.

With that in mind, let’s look at the four ways to measure sales versus target in Salesforce.

How To Measure Sales Targets In Salesforce

There are four options for tracking performance against sales targets in Salesforce.

  1. Dashboard gauge.
  2. Forecasts tab.
  3. Lightning Home Page Performance Chart.
  4. GSP Target Tracker.

Collectively, the options provide salespeople and managers with different levels of information and target tracking experience.

We explain how each one works, its pros and cons, and when each is the best quota management option.

Bottom line:

If you want to cut to the chase, we believe the GSP Target Tracker is, by far, the best way to measure sales versus target in Salesforce.

Option 1 – Dashboard Gauge

This option uses a Salesforce dashboard gauge to display overall sales against the target.

Gauge displays overall sales against the target

The arrow indicator shows sales won. In the gauge, use the red, amber and green segments to define relevant breakpoints. For example, use amber to represent 80% sales target achievement and green for 100% sales target achievement.

The gauge relies upon an underlying sales report. The report summarizes the value of deals won over the relevant period.

Pros of the dashboard gauge

  • The report and dashboard gauge are simple and straightforward to set up.
  • The gauge is an easy way to understand quota performance visually.
  • It’s a quick and simple high-level summary of sales performance against target.

Cons of the gauge approach

  • The gauge is a simplistic target metric. For example, when measuring performance at the company level, there’s no visibility of individual rep or sales team sales versus target.
  • Breakpoint values need to be manually re-set for each target period. For example, if month-on-month targets are different, the breakpoints need to be changed each time.
  • There’s no visibility of pipeline deals. Unfortunately, this means we don’t know if there’s enough pipeline coverage to meet the sales target for next month. There’s nothing to tell us, for example, if winning 30% of pipeline deals means we’ll exceed the budget.

It’s the right choice if

  • You need to set up a target metric very quickly. If you need a target-tracking solution in the next five minutes, use this option.
  • You only need to measure top-level performance against sales targets. Alternatively, it’s an acceptable choice if you are prepared to invest the time to set up and maintain similar gauges for individual salespeople and each team.
  • Sales targets are the same for each period. In other words, it is not necessary to modify breakpoints each month.

A dashboard gauge is a viable option for a simple, straightforward measurement of sales targets.

Remember, use the gauge in conjunction with other dashboard charts and reports to get full visibility of sales performance and pipeline. Incidentally, the free GSP Sales Dashboard includes the target gauge and report. You can download the dashboard from the AppExchange here.

Option 2 – Salesforce Forecasts Tab

The Forecasts tab is the standard function in Salesforce for target measurement.

It’s an advanced method of comparing sales versus quota.

The Forecasts tab in Salesforce

You can view Closed Won opportunities that contribute to sales targets in the Forecasts tab.

Pipeline deals also show up. Consequently, managers have valuable information on the strength of the funnel and the likelihood of achieving sales goals.

Managers can override the forecasts made by their direct reports. For example, they can change the overall estimate to balance excessive optimism or pessimism of salespeople.

However, there is a downside.

Many salespeople and managers find the Forecasts tab highly involved. The functionality is challenging to use.

As such, significant training and coaching is needed to use the Forecasts tab successfully for tracking performance against sales targets.

Pros of the Forecasts Tab

  • Set sales targets at individual, team, company and product family level.
  • Tracks performance against quota based on the opportunity forecast category (won, committed, pipeline and best-case).
  • Managers can override forecasts submitted by their direct reports. Doing this modifies the expected performance against current and future team targets.
  • Reviewable history to learn from the accuracy of forecasts submitted in the past.

Cons of the Forecasts Tab

  • The Forecasts tab is hard to maintain and use compared to other areas of Salesforce functionality.
  • As such, it needs detailed training for sales reps and their managers.
  • Salespeople manually update their forecasts to make the overall sales projection more reliable. That means a high level of commitment across the team is essential to get the full benefits from the Forecasts tab.

It’s the right choice if

  • You have complex target measurement requirements.
  • In your business, managers often override the forecasts submitted by their salespeople.
  • The sales team is mature and the company has a high level of Salesforce user adoption.
  • Appropriate training for salespeople and managers is available.

The Salesforce Forecasts Tab provides robust target tracking and forecasting capabilities. However, successful roll-out and ongoing adoption need proper planning and preparation.

Option 3 – Lightning Home Page Quarterly Performance Chart

You’ve probably seen the quarterly performance chart on the Salesforce Lightning Home page.

Here’s an example.

Lightning Home Page Quarterly Performance Chart

The green line is the sales goal. The orange line shows the value of closed-won opportunities. 

The blue line shows Closed-won and opportunities over 70% probability.

However, it’s far from my favorite method of tracking sales versus target. 

Pros of the Lightning Quarterly Performance Chart

  • It’s free to use as a standard Salesforce Lightning feature. 

Cons of the Lightning Quarterly Performance Chart

  • Only the quarterly sales goal appears. There’s no monthly breakdown.
  • No drill-down to see the underlying opportunities.
  • Sales managers cannot see the Lightning Quarterly Performance Chart of their team members.
  • There’s no way to adjust the 70% setting. For example, it’s not possible to include opportunities of over 50%.

It’s the right choice if

  • You don’t like any of the other four options.

For these reasons, I don’t believe many companies use the quarterly performance goal as their main method of measuring sales quotas.

Option 4 – GSP Target Tracker

Many of our customers use the GSP Target Tracker to measure performance against sales targets.

Keep reading or click play to see how the GSP Target Tracker measures sales performance against sales targets in Salesforce.

Measure Sales Versus Target In Salesforce with the GSP Target Tracker

The Target Tracker is a managed package. As such, it is plug-and-play with any Salesforce environment.

Salespeople and managers need little training to use the Target Tracker app. The Tracker also takes away the need to adjust forecasts manually.

Closed won and pipeline deals automatically link to relevant sales targets. Consequently, it’s easy to compare sales goals with a combination of won deals and an outstanding pipeline.

In other words, everyone has full visibility of pipeline coverage.

Look at the example below. It’s the sales target for Dave Apthorp, for a single month.

We can quickly see Dave’s sales performance this month versus target:

Sales Target information example for Dave Apthorp.

The first on-page chart on the right shows Dave’s target in blue; his Closed Won deals in green and the Expected Revenue of his pipeline deals due to close this month are in orange. In other words, we can see the pipeline coverage versus target.

The purple bar shows that, based on these numbers, Dave has a shortfall against his target.

The second chart analyses the pipeline for the month. Consequently, both Dave and his manager are clear on the likelihood of hitting the target based on the pipeline deals. (Are we sure those deals in Qualification will be complete by the end of the month?).

The lower section of the screen shows the Opportunities automatically linked to this target record. The Target Tracker does this by looking at the Close Date of the Opportunity and the Opportunity Owner.

Opportunities that are linked to the Sales Target.

However, if the Close Date or the Opportunity Owner change, the Opportunity is automatically unhooked and linked to the newly relevant target record.

Target Tracker Dashboard

Dashboard charts within the GSP Target Tracker summarize company and team information.

Salesforce Dashboard included with the GSP Target Tracker

The dashboard shows over / under-performance against sales targets at the company, team and individual level.

Drill down to the underlying report to view the sales rep target. These reports compare the sales target with the value of Closed Won deals, Expected Revenue from the pipeline.

Pros of the GSP Target Tracker

  • It’s easy for sales reps to use. Opportunities automatically link to relevant targets.
  • There’s highly visual information on performance against target.
  • Powerful reports and dashboard charts provide information on sales goal performance at company, team and individual rep levels.
  • The quality of the pipeline and and pipeline coverage are very clear.
  • Very easy to set up. Install direct from the AppExchange.
  • Company-specific customizations are also available.

Cons of the GSP Target Tracker Tab

  • A license fee of $250 per company per month (unlimited users).

It’s the right choice if

  • Your need is for a straightforward solution that gives powerful insight into target attainment and pipeline coverage.

So, that’s our detailed explanation of the four ways to measure sales versus target or quota in Salesforce.

Of course, get in touch to talk about how to use them in your business. Or, follow the link below and test drive the GSP Target Tracker today.

Measure Sales Performance Versus Target

Download the App from the AppExchange today

Recorded webinar on Sales Targets in Salesforce

Watch Gary Smith and Nick Ambrose demonstrate the three solutions in action.

Webinar | 3 Ways to Measure Targets in Salesforce

Got a question? Contact Us to find out more about tracking sales versus target in Salesforce in your business.

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How To Measure Sales Pipeline Coverage With Confidence

How To Measure Sales Pipeline Coverage With Confidence

Sales pipeline coverage measures the ratio between the dollar value of your funnel and upcoming revenue targets.

For example, a sales pipeline coverage ratio of three means your total pipeline is three times your quota. In this case, you need to close 33% of the pipeline’s value to meet your sales goal.

Remember, that’s not one-third of all deals. It’s a third of the value of the pipeline. Win deals that are above average size, and you need to close fewer of them successfully.

Alternatively, if your sales pipeline ratio is one or less, you don’t have enough funnel to meet your revenue goal. Not even if you win every deal.

Managers often focus on this metric at the start of the year or quarter. They, and the board, want to know whether it’s going to be a successful period. As such, pipeline coverage is top-of-mind for many executives.

As one manager told me recently, “The board demand comfort that the sun will be shinning this summer, and there won’t be a chilly wind come the Fall.”

However, confidence in the pipeline coverage ratio assumes you have a reliable way to calculate this critical metric. Unfortunately, in my experience, the approach taken by many companies is flawed or simplistic, or both.

In this article, I’ll explain how to calculate your sales pipeline coverage ratio confidently.

1 – How Pipeline Coverage Is Usually Measured

Here’s how most companies measure pipeline coverage:

The pipeline coverage ratio equals the total value of opportunities due to close in a period divided by the target for the same period.

For example, let’s say our sales target for the year is $1M, and the pipeline for deals closing this year is $3.5M. Consequently, our pipeline coverage ratio is 3.5.

To calculate the ratio, you need a Salesforce report that measures the total pipeline size. Then divide the quota into the value of the funnel.

2 – Sales Pipeline Coverage Factor

There’s a common rule-of-thumb many sales managers apply. It’s that the pipeline coverage ratio should be between 3 and 5.

How do they arrive at this number?

Assumptions about the opportunity win rate drive the thinking. If you assume you will win one-third of deals, then the pipeline coverage ratio needs to be at least 3. Likewise, if you reckon on winning 25% of opportunities, the pipeline coverage ratio must be a minimum of 4.0.

It’s an attractive concept, not least, because it’s simple enough to do the calculation in your head often. It’s math that people frequently do in the first week of January.

However, in my opinion, it’s equivalent to asking about the summer weather on January 1. You know the jet stream is roughly in the right place, but that’s a broad brush indicator. Many other factors will influence the weather by the time you take your vacation.

Likewise, the pipeline coverage ratio is fraught with problems that often render it meaningless when it comes to predicting sales targets attainment confidently.

3 – Problems with Pipeline Coverage Factors

Here are four common problems I often see in companies using pipeline coverage ratios to understand whether they have enough funnel to meet revenue targets.

  1. The metric takes no account of opportunity stages or the customer buying cycle. For example, an extensive pipeline may contain many early-stage opportunities with a low chance of closing successfully. In this case, a high pipeline coverage ratio risks creating a false sense of confidence.
  2. Hope rather than genuine customer intention or activity exaggerates funnel size. That’s because an emphasis on pipeline coverage means salespeople are under pressure to boost funnel size. Similarly, the pipeline often contains deals that have slipped from the previous period and have little change in closing successfully. In both cases, your funnel is overstated.
  3. Measuring the total pipeline size ignores many variances between types of opportunities. For example, it’s reasonable to assume a difference in win rates between new and existing customers, business lines, and territories. There may also be run-rate opportunities for which no current opportunities exist. As such, the pipeline coverage ratio is a very broad-brush number.
  4. The metric is only meaningful at the start of a period. For example, part-way through the year, when you already have many won deals, you need to carefully compare the remaining quota with those deals well-advanced through the buying process to gauge your confidence in hitting your target. For information on exceeding quota towards the end of the year, we’ve created a collection of Q4 Sales Strategies.

     

With that, you might now be wondering:

Is there a better way to calculate pipeline coverage confidently?

The answer is yes. I’ll show you two methods.

4 – Measure Weighted Pipeline Coverage

Here’s the first. With this approach, you calculate weighted pipeline coverage based on Expected Revenue.

Expected Revenue consists of two things—first, the value of won deals. Second, the value of the weighted pipeline. Add these two numbers together, and you have the Expected Revenue for a period.

To calculate the weighted value for an opportunity, you multiply the opportunity amount by the probability. For example, if the opportunity amount is $30,000, and the probability is 30%, then the weighted value is $9,000.

Add up this number for all deals in the funnel, and you have the weighted pipeline.

This method means we can compare the Expected Revenue with our sales target.

For example, in this case, we can see that the Target for the quarter is $100,000, and we have $40,000 in won revenue.

The weighted pipeline is $70,000. Therefore, we have enough pipeline to meet our sales target.

Using Expected Revenue rather than the pipeline coverage ratio means we are more confident in our assessment. That’s because the weighted pipeline reflects the various opportunity stages.

For example, the figure may include a deal in the Negotiation Stage at 80%. We’re confident it’s going to happen. However, deals at the Prospecting or Qualification Stages may be at 10 or 20 percent.

Likewise, opportunities for existing customers may have a higher probability that deals with new prospects. These variances are all reflected in the weighted pipeline.

In other words, the weighted pipeline is a reasonable estimate of the actual revenue we are likely to achieve from open opportunities.

Combining the weighted pipeline with won revenue means that Expected Revenue isn’t valuable only at the start of the period.

For example, if you are halfway through the quarter, the Expected Revenue is a reliable estimate of the likely sales outturn. You can be more confident in this figure than a simple pipeline coverage ratio.

I have written extensively about best practices for using and applying Expected Revenue. For example, here’s a powerful blog post on the topic:
How And Why Expected Revenue Delivers Reliable Sales Forecasts.

Here’s where you can also get advice on making sure opportunity probabilities are accurate.

5 – Measure Pipeline Coverage Using the GSP Target Tracker

Here’s the second method to measure pipeline coverage versus quota.

It’s to use an app we built specifically for the purpose. It’s called the GSP Target Tracker.

Here’s an example of the target for one salesperson. It’s for Dave Apthorp, for September.

We can see that Dave’s target is $50,000. He’s already won $23,400 this month. And the value of his pipeline due to close in September is $46,000.

That sounds great. It looks like Dave is smashing his number.

But wait.

The weighted value of that pipeline is only $16,600. That means Dave’s Expected Revenue for the month is $40,000. That figure is the sum of won deals and the weighted pipeline.

In other words, Dave has a shortfall this month of $10,000. In other words, his remaining pipeline isn’t big enough to meet his quota.

We immediately grasp this on the right-hand chart. The blue bar is Dave’s target, the represents won deals, and purple is the weighted pipeline. The variance, negative in this case, is in orange.

Don’t stop there. Look at the chart below.

This chart shows the full value of Dave’s pipeline due to close this month. In other words, the $46,000, but split by Stage.

Over 50% of the pipeline due to close this month is in the Qualifying Stage. So now, I’m even more concerned. It will be challenging for Dave to complete many of those deals if the average sales cycle is three or four months.

Further down the page, we see the opportunities that make up the pipeline.

Now, we can focus on the deals that Dave needs to work on urgently. And potentially, move some of these early-stage opportunities to later months.

6 – Sales Pipeline Coverage Dashboard

The GSP Target Tracker has a comprehensive dashboard the displays pipeline coverage for the company and all salespeople.

For example, this dashboard shows the performance of all salespeople this quarter.

We see immediately who is likely to hit their target and who needs more help.

The next dashboard chart shows the month-on-month pipeline coverage for upcoming months; and the historical performance for previous months.

Of course, you can drill down into any report to see more information.

7 – Customizing the GSP Target Tracker

The app is a powerful way to measure pipeline coverage based on the Opportunity Amount.

However, we can quickly adapt the app to use custom opportunity fields. We can also use quarterly or annual targets rather than monthly.

We even have customers linking opportunities to business line targets, and some people tracking quota against products.

All in all, it’s an excellent way to measure your pipeline coverage ratio.

It’s easy to get in touch to find out more. Or to take a free trial of the GSP Target Tracker, visit the AppExchange.

8 – Over To You 

Let us know which of the three ways of measuring the pipeline coverage ratio you prefer.

Of course, if you need advice or want to discuss the options, get in touch, and we’ll arrange a web meeting to talk through the topic. 

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5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

Opportunity Probability stands in the corner at pipeline review parties.

Usually, he barely gets a second look.

Everyone knows he’s always invited. But no-one feels like speaking to him.

Sometimes, it would be better if he just went away.

Nevertheless, here’s the thing:

Opportunity Probability can be your helpful friend. He’s much more engaging than you think.

“Used in the right way, Opportunity Probability increases forecast accuracy and roots out deals that should be qualified-out of the sales funnel.”

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

So let’s understand who this Opportunity Probability chap is and why he’s undervalued.

Then I’ll explain five best practice tips that will turn him into your valuable and trusted friend.

 

Opportunity Probability Defined

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

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

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

Why Opportunity Probability Is Disliked

There are three reasons why sales executives don’t make the most of Opportunity Probability.

Understanding why these reasons are not valid is vital to making the most of this metric.

Here they are.

 

Sales Deals Are Binary

Sometimes, salespeople win only part of the deal. For example, the customer negotiates a lower price. Or she doesn’t purchase everything on the proposal. Nevertheless, the sales process still concludes successfully, or it doesn’t.

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

But here’s the thing. 

No-one knows the outcome in advance. If people did, there would be no point in having losing deals in the pipeline in the first place. The reality is, you will win some deals and lose others. The problem is you don’t know which ones.

That means that once there’s a critical mass of opportunities – and that number can be quite low – Opportunity Probability can calculate the Expected Revenue

Expected Revenue is a proven way to create robust sales revenue forecasts. It’s not the only way. However, using it alongside other methods, a sales forecast based on Expected Revenue stands up to inspection from colleagues and internal peers.

However, that assumes one thing: the opportunity probability is reliable.

Accurate Opportunity Probabilities

Often, there are many unknowns with sales deals.

We can’t be sure what the customer is honestly thinking. Likewise, we don’t know the moves our competitors are making. And it’s hard to know all the stakeholders involved.

That means Opportunity Probability can difficult to quantify. Or it has a spurious degree of accuracy. Is the probability of winning this deal 65%? Or 70%? Or some other figure?

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

More about this in Tip #2.

Opportunity Probabilities are locked to Opportunity Stages

Many Salesforce users believe Opportunities Probabilities lock to the Opportunity Stage.

They’re not. It just seems that way.

The Opportunity Probability is changed when salespeople update the Opportunity Stage. It moves to the default for that stage.

However, the default value may not be realistic.

That’s why the figure can be manually adjusted. Salespeople can override it and enter a new value. 

Therefore, use this flexibility to set a realistic Opportunity Probability on each deal.

5 Opportunity Probability Best Practice Tips

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

 

1. Adjust the Opportunity Probability On Each Deal

Too often, salespeople regard Opportunity Probability as fixed for any given Opportunity Stage.

As we’ve said already, it isn’t.

Double-click on the field or Edit the Opportunity to set the value right for the deal.

Adjusting the opportunity probability directly on the opportunity

Recommendation: Make sure salespeople understand how to adjust Opportunity Probabilities and why this is important.

Awesome Pipeline and Sales Performance Visibility

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2. Set Opportunity Probabilities Based On Evidence

Think about this situation for a moment.

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

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

So now the combined Opportunity Probability is 120%. However, that’s silly.

The only thing that has happened is that the sales process has moved forward for each seller.

However, Opportunity Probability reflects the state-of-play in the selling process. It doesn’t say anything about the buying process.

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

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

Recommendation: Define and agree on the customer and buyer behaviors in your marketplace that indicates a positive intent from the prospect. Standardize and agree on these across the sales team.

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

 

3. Use Non-standard Opportunity Probability Values

No-one mandates that increments of 10 or 20 percent apply to Opportunity Probabilities.

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

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

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

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

 

4. Set realistic default values for each Opportunity Stage

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

These default values should reflect the norm for your business.

They provide a benchmark for salespeople.

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

But here’s my experience.

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

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

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5. Automatically set Opportunity Probabilities based on historical outcomes

So far, we’ve talked about the standard Opportunity Probability field in Salesforce.

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

That means the probability is automatically set based on, for example:

  • The win rate for new versus existing customers.
  • Historical performance of salesperson performance.
  • Size of the deal.
  • Region or geographical territory.
  • Products associated with the opportunity.

We are implementing this for some customers.

We have developed methods to gather statistical data from Salesforce that is not available via the user interface. 

This data means we are helping companies predict the outcome of new opportunities based on historical evidence.

Customers with this approach still apply the standard Opportunity Probability field. It means the salesperson can always use their judgment.

Get in touch if you want to find out more.

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

Used in the right way, Opportunity Probability helps salespeople to think through their opportunities. It facilitates discussion between managers and salespeople. And it enables accurate forecasting based on Expected Revenue.

Start getting to know your friend better.

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Forecast Categories in Salesforce | What They Mean and How To Use Them

Forecast Categories in Salesforce | What They Mean and How To Use Them

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.

 

Pipeline

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

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.

 

Commit

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

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.

 

Omitted

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.

That’s it.

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:

Your Questions Answered #9 - Should I use the Forecast category for pipeline reporting?

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3 Killer Pipeline Quality Metrics That Highlight When To Be Skeptical

3 Killer Pipeline Quality Metrics That Highlight When To Be Skeptical

Often skepticism is deserved when it comes to pipeline quality and the accuracy of the revenue forecast for this month.

That’s because deals that we assume will close this month, sometimes slip to the next month.

That’s painful if it’s unexpected.

Of course, in an ideal world, we can confidently rely upon every opportunity that is due to close this month.

In that world, close dates are always accurate. Customers sign agreements when we expect. Moreover, this months’ revenue forecast is invariably spot-on.

Unfortunately, life is not that simple.

It’s inevitable that sometimes deals slip. Often through no fault of the salesperson. It’s just the way life is.

However, that means we need pipeline quality metrics to help us decide which opportunities to question. These metrics highlight which deals we can be confident will close this month and which we should examine more deeply.

In other words, these funnel metrics tell us the pipeline opportunities about which we need to be skeptical.

They highlight when you should ask questions about deals due to close this month or quarter.

Impressive Pipeline and Sales Performance Visibility

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Pipeline quality metrics

The challenge is to use pipeline quality metrics to identify deals that have a high risk of slipping.

These are the deals that you need to question.

Sales managers should ask about these deals when tracking sales versus target. However, salespeople should also use these pipeline quality metrics to scrutinize and self-manage their pipeline.

These are the three key pipeline quality metrics:

  1. Number of Close Date Month Extensions.
  2. Number of Days since the last Stage Change.
  3. Number of Days the Opportunity has been Open.

No single pipeline quality metric dominates the others. Use the metrics in conjunction with each other.

Working together, these are the three pipeline quality metrics that highlight deals that have a high probability of slipping.

Bottom line: use these pipeline quality metrics to get a more robust sales forecast.

 

Robust Sales Forecast

The pipeline quality metrics allow you to accurately assess whether you have enough reliable deals to meet your sales quota. That’s because they help you identify the dormant deals that are over-inflating your sales funnel.

Think about it for a moment:

Let’s say your average sales cycle is three months.

You have a deal due to close this month. It’s making an essential contribution to your revenue forecast.

Now, suppose the Close Date has already slipped from one month to another four times. It’s in the final Negotiation Stage, but it’s been there for over two months. The Opportunity has been open a total of 180 days.

You’re probably right to question the close date of this month. It’s potentially a deal that should not be in your sales forecast for this month.

 

Displaying the pipeline quality metrics in dashboards

Here’s an example of these pipeline quality metrics on a single salesforce dashboard table.

In our example, the table shows deals that are due to close this month. However, the period can be anything you choose.

The key message is that these pipeline quality metrics are an excellent way to gauge the reliability of your revenue forecast for the period.

Watch this video to see me demonstrate the pipeline quality metrics in a salesforce dashboard.

Pipeline quality metric #1 – Number of Close Date Month Extensions

There’s a statistically robust way to forecast tomorrow’s weather.

Whatever is happening today, predict that’s what the weather will be like tomorrow. You’ll be right more often then you are wrong.

It’s the same with opportunities. If a deal slipped last month, there’s an increased chance it will move again this month.

The Number of Close Date Month Extensions gives us this data. This pipeline quality metric counts the number of times the Close Date has slipped from one month to another.

Close Date changes within a month don’t matter. Nor do changes that make the Close Date earlier. This metric tracks how often the opportunity Close Date has moved from one month to another month.

 

Pipeline quality metric #2 – Days Since Last Stage Change

This pipeline quality metric counts the number of days since the Opportunity Stage was last updated.

Life is not linear. Opportunity Stages don’t change at regular, pre-determined intervals. However, a lengthy period without a change – in the context of your average sales cycle – is a sign of a dormant deal.

Let’s say the Opportunity Stage hasn’t changed for a significant period. The deal has slipped from one month to another month several times. Then you are probably right to question the close date of this month.

 

Pipeline quality metric #3 – Number of Days Open

This pipeline quality metric counts the number of days that the opportunity has been open. When the deal reaches Closed (Won or Lost), the clock stops ticking.

This pipeline quality metric is valuable in its own right. Nevertheless, the primary purpose is to put context into the other quality metrics.

Deals that have had a significantly longer than average sales cycle have a lower chance of closing successfully this month. Particularly if the opportunity has already slipped from one month to the next several times. Of course, that’s especially true if it’s quite a while since the deal was last updated.

12 Must-Have Charts For Your Salesforce Dashboard

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Pipeline quality metrics underlying report

Here’s the underlying report that shows the three pipeline quality metrics for all opportunities due to close this month. Click on the image of the report to enlarge it.

We added conditional highlighting to the report to help focus the eye on the deals we might want to question.

In our case, for example, three or more Close Date Month Extensions are shown in red and two in amber. One or zero values for this pipeline quality metric are not highlighted.

If you download our free GSP Sales Dashboard from the AppExchange, then you can set the conditional highlight to whatever values you choose. Set threshold values that are right for your business.

The report shows the pipeline quality metrics for all the deals due to close this month, grouped by Opportunity Stage.

It also separates the opportunities into those relating to new customers – and those for existing customers.

This separation is because – as a rule of thumb – deals with new customers will take longer and can be subject to more uncertainty than deals with existing customers.

To emphasize, it’s not about one single pipeline quality metric. It’s about understanding the context. However, the report and dashboard chart draw the eye to the deals about which you might need to question.

To demonstrate, let’s take some examples from our report. Remember, each of these opportunities is due to close this month in the sales forecast.

 

Green Brothers

This Opportunity is in the Prospecting Stage, which immediately makes me nervous about whether it will close this month. (We’re assuming here, of course, that the opportunity is in the correct Stage and that there isn’t a case of sandbagging going on).

The Number of Days Open and Number of Days since Last Stage Change are the same because the opportunity has not progressed from the date it was first opened.

The opportunity hasn’t slipped from one month to the next. However, given that this is a new customer and the opportunity Stage hasn’t advanced, I’m doubtful the deal will close this month.

One that has a good chance of slipping, I’d say.

 

Greengate Hotel

The deal has slipped once already. It’s been open for over two months. We’re still only in the Investigation Stage and it’s due to close this month.

The opportunity is for a new customer. Again, another one to question. At least as far as a successful close this month is concerned.

 

Brown Estates

The opportunity has been in Customer Evaluating for over two months. The Close Date has twice moved from one month to another. Presumably, at some point, the salesperson thought it will close long before now.

This deal is for an existing customer. On the face of it, that gives us more confidence the deal will close successfully.

What do we know about Brown Estates? Are they a high-quality customer that has purchased from us many times before? How long do they usually take to make a decision? Do we have a relationship with the customer that allows us to have a straight dialogue about whether the deal will close successfully this month?

The answers to these questions may give us assurance the deal is likely to close this month. Again, it’s a matter of context. However, overall, the pipeline quality metrics may make me doubtful about including this deal in my revenue forecast.

 

Guilderland Court

Take a look at the pipeline quality metrics on this one.

The deal has been open for four months and the opportunity has moved from one month to another four times. It’s for a new customer and has sat in the Negotiation stage for over two months.

I’m certainly questioning this one!

 

High Hill Estates

Does this deal look better? Quite possibly.

The deal is 48 days old. The Days Open pipeline quality metric alone might make me doubtful about the close date of this month if our average sales cycle is 90 days. On the other hand, it’s for an existing customer, so a shorter sales cycle is a reasonable possibility.

The opportunity hasn’t slipped from one month to another. It was updated to Negotiation 4 days ago. If I look at the opportunity itself, are there planned actions that will expedite the negotiation? As the sales manager, do I know our trading history with High Hill Estates? Based on previous experience and my knowledge of the context of the deal, am I confident in the close date?

 

Install the pipeline quality metrics

You don’t have to create these pipeline quality metrics yourself. There’s a much easier way:

Install the GSP Sales Dashboard from the AppExchange.

The dashboard also contains 15 other components that allow managers to track the size, trend and quality of your sales pipeline. Together they give tremendous visibility of the funnel and sales performance.

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