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

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

Many sales managers are crestfallen when it comes to Salesforce dashboards.

Sales leaders expect dashboards to give complete visibility of the sales pipeline. They want inaccurate sales forecasts to be a thing of the past.

And they require detailed metrics to highlight when, where, and how to manage, coach, and develop the sales team performance.

Sadly, it doesn’t always work out that way.

Even with many dashboards and reports, managers often still don’t know enough about the sales pipeline’s size, quality, and trend. These constraints limit their ability to manage and coach the sales team.

Furthermore, they cannot look back at historical sales metrics to gain insight that guides better sales performance in the future.

Here’s another thing:

In many reviews and team meetings, people still spend more time arguing about the numbers than working out how to increase revenue.

However, if you’re looking for the best practical advice on Salesforce dashboards, then you’ll love this blog post.

We’ve also recorded a webinar covering the same topic. You can find that webinar recording just below.

Recorded Webinar | 12 Must-Have Sales Dashboard Charts In 2022

Webinar | 12 Must-Have Sales Dashboard Charts In 2022

The Best Salesforce Dashboard

This article is a complete guide to the best Salesforce Dashboard.

In it, you’ll learn all about:
• The 12 must-have charts on your sales dashboard.
• Best practices in using each vital chart and report.
• How to get our free sales dashboard (5,000+ downloads).
• The three pipeline quality metrics guaranteed to improve your sales forecasts.
• Where to find other authoritative free resources.

If you are looking for Salesforce dashboard examples and want complete visibility of your teams’ pipeline and sales performance, then dive into this guide.

Let’s start.

12 Recommended Salesforce Dashboard Charts

Here are the twelve charts we recommend are on any sales managers’ dashboard.

Before building them, remember you can get all twelve straight away by installing our free GSP Sales Dashboard template. After that, you can tailor each of the charts to suit your business.

Pro tip: Whether you install our free template or build the charts yourself, I recommend you also review this blog post:

10 Best Practice Tips For Awesome Salesforce Dashboards.

Here are the twelve:

1. Closed Won Opportunities by Month.
2. Pipeline Deals by Close Date and Opportunity Stage.
3. The Traditional Funnel Chart.
4. Top 10 Pipeline Customers and Prospects.
5. Long-term Pipeline Trend.
6. Open Opportunities by Created Date.
7. Pipeline Quality Metrics.
8. Opportunity Conversion Rates / Win Rates.
9. Average Size of Closed Won Deals.
10. Completed Activities per Salesperson.
11. Leaking Funnel Report.
12. Sales Performance and Pipeline Coverage versus Target.

Sales Dashboard by GSP

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

I will explain how to use each chart and report in a practical way to drive sales.

Not only that:

For every dashboard chart, I point you to a dedicated blog post I’ve written. Each of these articles gives additional in-depth information and a video demo.

And don’t forget, you can also download this blog post as an eBook to study offline.

It’s time to dive into the first chart.

 

1 – Closed Won Opportunities by Month

The goal of the sales team is to drive revenue. So we need to start with a report that tells us how successful we are.

That’s what the Closed Won Opportunities by Month dashboard chart shows. It displays the sales revenue achieved during the year.

In this example, the dashboard chart and report both sum the data by each salesperson. You may want to create report variations that group the data by team, country, or territory.

The dashboard chart and report deliver essential insight into sales performance.

In our example, Dave Apthorp is consistently the top performer. Sarah has improved her performance after a poor start to the year. Peter, in particular, needs help to boost his performance.

Combine your knowledge of each team and person with the information from this chart and insight from other reports to identify specific coaching needs.

Watch this video for a demo of the Closed Won Opportunities Dashboard Chart in action.

Recommended blog post:
The 10 Illuminating Ways To Measure Closed Won Deals. This article shows examples of other ways to analyze historical sales performance.

Of course, the Closed Won Opportunities by Month dashboard chart doesn’t tell us anything about future revenue performance. That’s where the following pipeline chart I recommend comes into play.

Here it is:

 

2 – Pipeline Deals by Close Date and Opportunity Stage

If I could only have one Salesforce dashboard chart to manage the sales pipeline, it would be this one.

That’s how powerful it is.

The chart shows the value of opportunities that are due to close each month. Within each month, we can see the deals grouped by opportunity stage.

Consequently, the Pipeline Opportunities By Close Date and Opportunity Stage dashboard chart delivers vital information to manage the sales funnel.

Sales managers and executives can use this chart to assess the pipeline’s size and begin forecasting revenue.

This dashboard chart also tells us whether the pipeline is sufficiently mature this month and next month to achieve revenue targets.

Consequently, managers and salespeople have an early warning that highlights when remedial action is necessary.

For example, let’s assume we are in January right now and that our typical sales cycle is three months.

There’s a substantial pipeline due to close this month that is still in Prospecting and Investigation.

Are we confident these deals will close in January if the sales cycle is three months? Are they at the right opportunity stage? Should these opportunities be updated to complete in a later month?

Also, what about the deals in April that are in the Negotiation Stage? Is it going to take four months to close these opportunities? Maybe.

Alternatively, are there steps we can take to bring these deals forward?

 

Pipeline By Owner

Here’s an insightful variant of this dashboard chart: Pipeline Opportunities by Close Date and Owner.

You can use this chart to zone in on the opportunity owners with most deals due to close this month.

You can also see whether salespeople have a pipeline shortfall in the medium and longer-term.

Recommended blog posts:
If You Only Create One Dashboard Chart, Make It This One. The article has excellent examples of how to use this essential chart and report.

Some readers will also need this post:
Don’t Let The Best Sales Dashboard Chart Look Like A Bedraggled Washing Line. It explains the steps to take when out-of-date pipeline opportunities make it impossible to get accurate funnel visibility.

Next, what do you think about the traditional funnel chart?

 

3 – Sales Funnel Chart

I believe the traditional sales funnel dashboard chart is relevant to look at – once a week. Therefore it should be on your dashboard.

However, here’s the thing about this chart:

The shape never changes.

That makes it hard to interpret.

It doesn’t matter how big or how small your pipeline is. The outline funnel will always be the same size and shape on your Salesforce dashboard.

So why bother with it?

The answer is because of the value of the information the segments within the funnel give you.

Perfect Funnel Shape

If the sales funnel is in perfect shape, the value of the pipeline in each segment gets progressively smaller.

After all, that’s why we refer to the pipeline as a funnel.

However, that’s not always the case.

Wrong Funnel Shape

Look at the example below. The $ value of deals in the Investigation stage is less than the $ Amount of opportunities in Proposal Made. The next opportunity stage has more funnel than the earlier stage.

Look also at the Prospecting Stage. Should it be bigger? Is the funnel lacking early-stage opportunities?

In other words, the chart is warning that our pipeline may be out of kilter.

Potentially we need to initiate marketing campaigns to boost the size of the early-stage funnel. We may also need to examine our qualification and investigation processes to move deals more effectively through the sales cycle.

Is the shape of the sales funnel chart in your business a cause for concern? If it is, there’s probably no quick-fix. You need to take steps that require thought, preparation, and planning.

That’s why it’s essential to look at the funnel dashboard chart once a week.

Recommended blog post:
Big is Beautiful: 4 Easy Charts To Measure Pipeline Size. I recommend you review these four charts that measure funnel size.

Next up: which customers and prospects should we prioritize?

 

4 – Top 10 Pipeline Accounts

Usually, salespeople can name their top few customers and prospects straightaway.

But what about the top 5? Or the top 10?

This Salesforce dashboard chart shows the customers and prospects ranked by total pipeline.

Managers and salespeople can now prioritize their time and effort. It means resources are focused on areas where they are likely to have the most impact.

This list of the top accounts also helps the leadership team identify strategic customers and their performance. For example, if the CEO has time to visit a single customer, make it one from this list.

Showing the information on a dashboard table is an excellent way of focusing attention on the top Accounts. Limit the dashboard table results to the top 5, 10, or 15. Then on the report, list all Accounts with open deals.

In our example, High Hill Estates has the highest value of sales pipeline. There’s almost twice as much funnel as the following Account.

Are we on top of the relationship with this critical customer? For example, is there a robust key account plan in place? Do we understand their buying process? Have we got relationships at all levels in the business?

And if the CEO only has time to visit one prospect, let’s make it this one.

The report shows the opportunities for each Account. Where we have multiple opportunities, can a single, large-scale deal be done?

In summary, the Top 10 Pipeline Accounts dashboard table and report provide information that means we can prioritize sales, account management, and business development activities.

Top Accounts At Each Level

Don’t forget:

You can replicate the table for each territory, team, and individual salesperson.

That means this report is a practical tool for focussing attention on critical customers and prospects at all levels in the company.

Ultimate Parent

Sometimes you are dealing with large companies that have many business units. Often, you record these as separate Accounts in Salesforce.

There’s no easy, standard way to get a complete picture of all the opportunities at these connected Accounts. That’s why the GSP Account Planning app includes the ultimate parent concept. It means you can report on deals across the complete set of opportunities within the overall company group.

Account Planning by GSP

Create Key Account Plans that drive business
development and sales.

To find out more about how the account plan app works, I recommend this blog post:

How To Build Key Account Plans In Salesforce. Step-by-step advice for creating key account plans in Salesforce.

Other recommended blog posts:

Stop Guessing, Start Measuring Key Accounts. Reports, and Salesforce dashboard charts that track account performance.

Now, let’s look at something different:

 

5 – Long-Term Pipeline Trend

The Salesforce Dashboard pipeline charts we’ve looked at so far describe the funnel as it stands right now.

But what about the trend in the size of the sales funnel over time? Is the pipeline getting bigger or smaller?

The Sales Pipeline As-At dashboard chart gives us the answer.

It measures the size of the pipeline on the 1st of each month. As such, it shows the long-term trend in the size of the sales pipeline.

Grouping the information by the Historical Stage gives insight into the make-up of the sales pipeline each month. It allows us to understand the overall trend by opportunity stage.

In our example, the pipeline has been growing over recent months. This trend is mainly due to a significant increase in deals in the Prospecting stage.

That’s good news.

However, do we understand why it has happened?

We should also investigate why the size of the pipeline in the Customer Evaluating and Negotiation stages has declined. Is the sales team having trouble moving deals through the sales process? Was the funnel created over the last few months of the right quality?

The As-At Long-Term pipeline chart and report give the big picture. They tell us whether our efforts to grow the pipeline, in the long run, are thriving.

Recommended blog post:
Measure The Trend In Your Sales Pipeline. This article gives further detail on how to use the As-At report to track the critical pipeline trends.

Of course, size isn’t everything. Quality matters too. That’s why the following dashboard chart is also essential.

 

6 – Open Opportunities by Created Date

Although this is a simple report, it gives valuable insight into pipeline quality. It all tells us, crucially, how successful we are at refreshing the funnel.

The chart shows the existing funnel, summarized by Created Month and current Stage. You may also want to build a similar report and dashboard chart that displays the Created Month and Opportunity Owner.

The chart tells us how much pipeline the sales team created each month. That’s important because all other things being equal, more pipeline means increased future revenue.

However, the dashboard chart is also a pipeline-quality reality check.

For example, let’s say it typically takes three months to close a deal in your business. If there are a significant number of opportunities open much longer than this, then are these genuine, viable deals?

In other words, the chart and report give helpful information to validate the pipeline and sales forecast.

In our example, let’s assume it is January 2022, and our sales cycle is typically three months.

Look at those deals that opened in February, March, and April 2021. They have been open for the best part of a year. Are we confident they are still legitimate opportunities?

Have the Close Dates frequently shifted on these opportunities? If not, what action can we take to bring these deals to fruition?

(You might be wondering: how do I track how many times a deal slips? We’re coming to that shortly).

Measuring New Funnel

Reviewing the pipeline by Created Date is an easy but effective way of identifying potentially dormant deals in your funnel.

At the same time, it also measures how successful we are at building the pipeline.

For example, look again at our chart.

It shows that the team created less pipeline over the last three months of the year. Should we be worried about this trend? Is it due to the sales team focussing on closing existing deals before the end of the year?

On the other hand, it may be an early warning that we do not have enough pipeline to meet our sales targets in Q1 2022.

Either way, we might need to initiate new marketing and business development activities straightaway to correct the trend.

Recommended blog post:
How To Tell If Your Sales Funnel Is Emitting Warning Signals. This article explains the Salesforce dashboard charts that alert you to too many aging or poor quality deals in your pipeline.

Now, I hinted at those vital pipeline quality metrics. Let’s dig into those next.

 

7 – Pipeline Quality Metrics Table

If you want to predict tomorrow’s weather, here is the most reliable way to do it.

Whatever the weather is like today, forecast that is how it will be tomorrow.

It’s the same with sales deals.

Deals that are stuck today will probably be stuck tomorrow. Opportunities that slipped last month are the ones most likely to move this month.

With that in mind, here are three pipeline quality metrics that act as a barometer for managers and salespeople.

1. Close Date Month extensions. Counts the number of times the Close Date on each opportunity has shifted from one month to another.

(We don’t track the change if the Close Date moves within the month. It’s when the Close Date moves to another month that we’re interested).

2. Days Since The Last Stage Change. Tracks days since the opportunity stage was last updated.

3. Days Open. Counts the days the opportunity has been in the pipeline. This metric stops when the deal is Won or Lost.

You can display these metrics in a dashboard table.

In our example, we show the metrics for the top 10 deals due to close this month, ranked by the number of days they have been open.

Using The Pipeline Quality Metrics

There’s high-impact information in this table.

That’s because the dashboard table is a powerful way to rapidly identify deals due to close this month that need further scrutiny.

Are we relying on deals that have already shifted several times to hit our sales quota this month? How confident are we that each opportunity will not slip to another month again?

Likewise, what about those deals where the opportunity stage was last updated a long time ago? Will the sales cycle be completed successfully before the end of the month? You may find that’s unlikely in many cases.

Use the dashboard table to improve the accuracy of sales forecasts. Remember, these three pipeline quality metrics do not declare that a deal will not close this month. However, they give you a strong hint towards opportunities you may not want to rely upon in your sales forecast.

Pro tip: You may be wondering how to create these pipeline quality metrics. The easiest way is to install our free GSP Sales Dashboard. They are all included in the package.

Recommended blog post:
3 Killer Pipeline Metrics That Highlight When To Be Skeptical. Take your use of these pipeline quality metrics to the next level.

Now, let’s talk win rates.

 

8 – Opportunity Conversion Ratios / Win Rates

Often, a moderate increase in your win rates has a disproportionately large impact on sales revenue.

That’s why measuring opportunity conversion ratios (or win rates) is critical.

The Opportunity Conversion Rate chart tracks the win rate in two ways:
· Win Rate by Amount.
· Win Rate by Count.

Measuring the win rate both ways means we understand whether salespeople are more effective at successfully closing higher value or lower value deals.

In our example, the win rate by Amount is higher in most months. In other words, we won a higher proportion of large value deals compared to smaller opportunities.

In September and October, the situation was different. The sales team closed a higher proportion of lower-value deals.

The report tells us the questions to ask. Did the sales team lose focus on the higher value deals? Were discounts higher during these months? Did we have new joiners that had less experience with complex opportunities?

Opportunity Conversion Rate Report

The report shows the win rates for each salesperson. That’s crucial data for working out coaching, training, and support needs.

However, be careful.

Too much emphasis on win rates can have an adverse impact. You don’t want to encourage sandbagging. In other words, salespeople leave opportunities out of the pipeline until they are confident a deal is on the table.

On the other hand, you don’t want salespeople leaving opportunities in the funnel that no longer have legs. You want reliable pipeline visibility, not skewed by dormant deals that salespeople keep open to protect their win rate.

Recommended blog post:
How To Measure Opportunity Conversion Rates (Correctly) And Increase Sales. This article explains all you need to know about tracking and using win rates.

Next up, it’s time to talk deal size.

 

9 – The Average Size of Closed Won Deals

One of our customers found a 65% difference in average deal size between salespeople.

That’s a vast range.

These salespeople work in similar territories. And they’re selling the same products to similar customers.

There are many reasons why some salespeople work with more significant-sized deals. These reasons include differences in experience and confidence. Variations in process and methodology between salespeople can also be critical.

An example:

Increasing the average deal size for many salespeople was a priority for our client. We found that people with bigger deals spent more time in the Discovery stage with their customers. They dug further into their needs. And asked more questions over a more extended period.

As a result, these salespeople were better able to create a complete package for the customer. They also found more ways to sell add-ons and optional features.

Our client was able to implement a tightly focussed training and coaching program. This training increased revenue by 12%, without any increase in the number of deals in the pipeline.

Win rates remained the same, but the average deal size was higher compared to peers. Put simply that means more revenue.

And that’s why you need to track average deal size.

Recommended blog post:
Why You Need To Compare Average Closed Won Opportunity Size. Get more insight on measuring average deal size with this article. It includes some great examples of how our customers use this metric to boost sales.

Of course, deals of any size don’t close themselves. For that, you need salesperson activities.

 

10 – Activities per Salesperson

Tracking activities is more important in some businesses than others.

It’s essential in businesses with a straightforward sales process and a short cycle. Here, the volume of activities is often the critical driver of revenue.

However, even with complex sales processes and medium to long sales cycles, you still want to measure the number and type of activities.

For example, I’ve seen how vital this is in professional services businesses. In these cases, the team selling is also often the team that delivers the projects. However, when the order book is complete, sales calls reduce because everyone focuses on delivery. Unfortunately, that stores up a revenue shortfall for the future.

In our example, there is an upward trend in the number of Activities by the sales team. That’s a positive sign. Indeed, Sarah’s increase in Activity volume may be a strong reason for the increase in sales that we saw on other charts.

However, we can also see variations in the number of Activities by each salesperson. Shaun and Peter have much lower levels of activity compared to Sarah and Dave.

You may also want to track activity by salespeople in several other ways. For example, you can compare activity with new customers versus existing customers. This approach helps you identify whether the teams’ actions are consistent with the overall sales strategy.

You can improve the value charts by making two small changes in Salesforce.

Due Date and Activity Type

First, I suggest you modify the Activity Type picklist. (You may also need to adjust the visibility of this field to include it on the page layout).

Using this field delivers extra insight into salesperson’s activities.

Second, I suggest you make the Due Date mandatory.

This change means future activities will always have a due date. If you don’t, you risk a task having no specific date and not appearing on reports.

Recommended blog post:
How To Spot Neglected Accounts You Should Focus On. This article explains how to spot customers and prospects that need your attention.

Now, all funnels leak deals. That’s the nature of the game. But you might be wondering, what’s the best way to measure pipeline leakage?

 

11 – Leaking Funnel Report

The Leaking Funnel report helps sales managers answer two critical questions:

First, is the funnel leaking too much? And second, is it losing deals in the right place?

The report tells you both of these things. Here’s how it works.

This Salesforce dashboard chart describes the ‘From’ and ‘To’ opportunity stage movement.

In our example, it does this for deals set to Closed Lost in the last 120 days.

In other words, it shows how often opportunities have moved to Closed Lost from each prior opportunity stage.

For example, the dashboard chart shows that eight opportunities have moved from Prospecting directly to Closed Lost.

All other things being equal, it is good that the first stage has the highest number of opportunities that moved to Closed Lost.

It implies we are qualifying-out deals we are unlikely to win. As a result, salespeople are not wasting time, effort, and resources chasing deals where they are unlikely to succeed.

In other words, if you’re going to lose the deal, it’s best to lose it quickly.

However, look at the Negotiation Stage. Five opportunities went directly from Negotiation to Closed Lost.

Again – all other things being equal – that movement in the Opportunity Stage isn’t good news.

It means we invested time and effort in moving the deal through the sales cycle, only to lose the opportunity at the last moment.

Of course, we need to know more. What happened, exactly?

For example, is the shift from Negotiation to Closed Lost linked to new versus existing customers? How does the trend compare across salespeople? Does it apply only to opportunities with certain product groups?

Like all dashboard components, the Leaking Funnel charts and reports don’t tell you the answer. Instead, what they do is tell you what questions to ask.

And that’s the art of good sales management.

Recommended blog post:
3 Steps To Plug A Leaking Sales Funnel In The Right Place. This article provides examples of the leaking funnel report and explains best practices on the steps to take.

This report leads us nicely to the last of our 12 must-have Salesforce dashboard charts. It’s a topic that makes everyone attentive.

 

12 – Sales Performance versus Target

You might be wondering:

Where’s the Target tab in Salesforce?

There isn’t one. Of course, that’s surprising because sales versus quota is an activity every sales team needs to do.

So how do you measure sales against targets in Salesforce? Here are the four ways:
1. A dashboard gauge chart.
2. The Forecasts tab.
3. The Performance Chart.
4. Our GSP Target Tracker app.

Here’s an example of the first of those options.

The dashboard gauge runs from a report that measures Closed Won opportunities. You need to manually set the red, amber, and green sectors within the chart.

The dashboard gauge is quick and easy to set up. One downside is that it provides no insight into pipeline coverage. In other words, whether there is enough funnel to meet the sales target next month or this quarter.

Also, you’ll need separate gauges for each salesperson and sales team per month.

In summary, it’s an easy but simplistic and high-maintenance option.

Secondly, the Forecasts Tab is a standard feature within Salesforce.

It includes the ability for managers to override their team members’ targets. Unfortunately, here’s the thing about the Forecasts tab:

It’s complicated, hard to use, and difficult to understand.

Training is needed for salespeople and managers to use it effectively. Even then, it’s a challenging piece of kit.

Thirdly, the Lightning Home page Performance Chart is another simple option.

Unfortunately, you can’t fine-tune the chart. And the insight it provides is minimal.

Dissatisfaction with the other options led us to build the GSP Target Tracker. We wanted to make measuring quotas intuitive, straightforward, and powerful for salespeople, managers, and executives.

It’s the fourth way to measure targets in Salesforce.

The Target Tracker contains easy-to-understand charts and metrics that measure two things. First, sales performance versus current and historical quotas. And second, pipeline coverage versus future targets.

Most importantly, it avoids the need for salespeople to create or update anything manually.

Target Tracker by GSP

Measure won and pipeline deals against
target and quota.

Recommended blog post:
The 4 Ways To Measure Sales Versus Target In Salesforce. This article explains the four options in detail.

GSP Target Tracker on the AppExchange. The listing includes a video, screenshots, and a free trial. And as you’re wondering, the app costs $350 per month, unlimited users.

What To Do Now

Here are four things I recommend you do next:

1. Install the GSP Sales Dashboard. It’s the best Salesforce dashboard, and it’s free. The package contains all the charts described in this blog post. Use it as a dashboard template and fine-tune each chart and report to suit your business.

2. Download the eBook. We have an eBook that explains each chart in the dashboard. Again, you can download it for free.

3. Look at the GSP Target Tracker. Measuring revenue and pipeline versus quota is critical. We make it super-easy and practical with the Target Tracker.

4. Get in touch. We’ll give you a free, thirty-minute web meeting to talk about opportunity stages in your business. In the session, we’ll talk through your scenario and discuss our recommendations. There’s no catch, just straightforward advice, and tips.

Here’s how you can Contact Us.

Finally, you’ve read the blog, now watch the movie:

Recorded Webinar | 12 Must-Have Salesforce Dashboard Charts

Join me, Gary Smith, and Dan Bailey as we demonstrate each of the 12 charts in action. We explain the visibility each chart provides and how it will help you manage the sales team more effectively.

Webinar | 12 Must-Have Salesforce Dashboard Charts

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Improve forecasting by scheduling opportunity revenue over time 

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How to Use Product Schedules to Improve Your Revenue Recognition

How to Use Product Schedules to Improve Your Revenue Recognition

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

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

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

The best bit?

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

Let’s dive in.

Who Needs A Revenue Recognition Forecast?

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

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

Income accrues over time, for example, with:

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

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

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

The Revenue Recognition Problem

Here’s what often happens.

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

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

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

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

However, you can address both problems.

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

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

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

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

Here are two examples.

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

Product Schedules Explained

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

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

Let’s take an example.

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

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

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

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

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

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

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

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

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

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

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

Here’s how the schedules look in a report:

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

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

Next up:

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

Two Product Schedules Options In Salesforce

There are two options for tracking revenue recognition in Salesforce.

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

This blog post explains more about both options:

How To Track Revenue Over Time In Salesforce

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

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

Revenue Schedules by GSP vs Standard Product Schedule Functionality

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

 

Creating Product Schedules

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

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

Close Date Changes

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

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

Fine-tune Product Schedules

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

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

Track Actuals Versus Product Schedules

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

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

High-impact Reports and Dashboards

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

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

 

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

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

What Next?

Here are three things you can do next.

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

Sales Dashboard by GSP

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

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How to Use Product Schedules to Improve Your Revenue Recognition

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How To Confidently Forecast Revenue Over Time With Schedules

How To Confidently Forecast Revenue Over Time With Schedules

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

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

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

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

Instead, income accrues over time.

Fortunately:

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

Why You Need To Schedule Revenue

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

Revenue Schedules by GSP - Schedule Opportunity Product Revenue Over Time

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

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

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

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

Many types of companies need to track income over time.

For example:

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

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

The upshot:

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

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

How To Schedule Revenue Over Time

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

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

I’ll carefully explain each of these four options.

Bottom line:

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

Option 1: Standard Salesforce Product Schedules

Option 1 is to use the standard product schedules feature.

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

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

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

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

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

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

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

 

Advantages of standard product schedules

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

Disadvantages of standard product schedules

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

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

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

Option 2: Create Multiple Opportunity Fields

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

My opinion:

This approach is always a mistake.

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

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

Revenue Schedules by GSP

Improve forecasting by scheduling opportunity
revenue over time.

Option 3: Create different opportunities for each month

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

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

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

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

Option 4: GSP Product Revenue Schedules app

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

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

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

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

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

New video here.

How To Create Revenue Schedules

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

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

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

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

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

How To Adjust Revenue Schedules

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

That’s straightforward to do.

Hit the Edit Line Items button.

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

Hit Save, and the revenue schedules update immediately.

 

Moving Schedules When The Close Date Changes

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

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

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

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

That’s different with our app.

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

Revenue Schedule date automatically shifts when changing the Opportunity Close Date

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

 

Manually Adjust Product Revenue Schedules

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

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

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

Make your changes to the product revenue schedules.

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

You now have two choices.

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

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

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

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

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

 

Ramped Revenue Schedule Profiles

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

But what if you need an entirely different profile?

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

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

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

Get in touch to find out more.

 

Compare Expected Revenue With Actual Income

Here’s what happens when you win the opportunity.

The Revenue Amount passes into the Updated Projection column.

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

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

This comparison is critical in many businesses.

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

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

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

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

 

Revenue Schedule Summary Information

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

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

There are a total of 24 revenue schedules.

And the total Forecast Revenue is $11,550.

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

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

 

Product Revenue Schedule Reports and Dashboards

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

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

 

Won Scheduled Revenue This FY

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

Sales Dashboard by GSP

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

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

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

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

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

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

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

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

Want To Know More About Revenue Schedules?

Here are several more steps you can take.

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

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

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How And Why To Calculate Expected Revenue For Sales

How And Why To Calculate Expected Revenue For Sales

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.

Sales Dashboard by GSP

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

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.

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

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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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.

Sales Dashboard by GSP

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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.

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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.

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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.

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$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.

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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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Your Sales Forecast Is Probably Wrong (So I’ve Written This Guide To Getting It Right)

Your Sales Forecast Is Probably Wrong (So I’ve Written This Guide To Getting It Right)

Many sales managers struggle to create reliable sales forecasts.

In fact, many forecasts are wildly inaccurate.

Even (or especially) when the sales team is using a CRM system such as salesforce.

The trouble is gut feel just won’t cut it.

Nor will simply applying a top-down win rate to all opportunities.

Instead, what’s needed is a sales forecast that is robust and can stand up to scrutiny.

That’s because often the sales forecast is shared with the company leadership, finance, peers and back-office colleagues. Other people depend upon a reliable revenue projection to do their own jobs properly.

Being wrong, month after month, doesn’t help anyone.

That said, sales forecasts don’t need to be perfect. But in many businesses, they need – and can – be a heck of a lot more reliable than they are at the moment.

 

 

Don’t have time to read the entire Blog Post right now?

No problem.

 

You can download the entire “Your Sales Forecast Is Probably Wrong” eBook for free by completing the form below!

About This Guide To Sales Forecasts

This guide is the most comprehensive online resource to creating reliable sales forecasts.

In this expert-written guide you’ll learn:

• Section 1: Why sales forecasts are often unreliable.
• Section 2: How to create a sales forecast report in salesforce.
• Section 3: How to improve forecasting accuracy using three key reports.
• Section 4: Which three opportunity metrics help identify the deals most likely to slip from your sales forecast.
• Section 5: Where to get the sales forecast template, reports, dashboard charts and metrics highlighted in this guide, all for free.

So, if you’re looking to improve the sales forecasting process in your company, you’ll love this guide.

By the way:

You don’t have to be using salesforce to get tremendous value from this guide. We are experts in salesforce so naturally, that’s what I’ve used to create the examples. However, you can apply the exact same sales forecasting methods to the CRM system in your business.

We recently hosted a webinar on the same topic. There’s a recording of that webinar just below.

Your Sales Forecast Is Probably Wrong (So I Held This Webinar On Getting It Right)

1.     Why Sales Forecasts Are Inaccurate

A sales forecast is an informed prediction of the revenue a sales team will achieve in a given period (e.g. the current month or quarter). It reflects the deals already won in the period plus an estimate of the sales pipeline that will close successfully in the time remaining.

But why do we go to all the trouble of creating sales forecasts in the first place?

It’s because reliable sales forecasts:

• Provide the executive team with advance information on the health of the business.
• Tell sales managers whether they have enough pipeline to meet quota.
• Help fulfilment, order processing, manufacturing and other teams to plan and operate efficiently.
• Enable finance executives to project capital requirements and cash flow with confidence.

Doubtless there are many other reasons, specific to your company.

However, in many businesses the revenue forecast is taken with a pinch of salt by the leadership team.

Often even the VP of Sales doesn’t believe them (although she wishes she could). And embarrassingly, she struggles to explain why they are so inaccurate.

 

Why many sales forecasts are unreliable

Here are the three most common reasons I’ve found that explain why many sales forecasts are unreliable.

• Deals slip from the forecast. Often this happens at the last minute. Sometimes the same deal has slipped at the last minute more than once.

Sometimes this occurs because salespeople are optimists. Deals they thought would happen, don’t.

Furthermore, in many businesses, salespeople are under pressure to maintain the size of the pipeline. Setting deals to Lost or removing them from the funnel, contradicts this pressure. Consequently, deals that no longer have legs stay in the pipeline but slip to the next month.

Unfortunately, sales forecasts are usually submitted before the month end. This means the forecast often contains many unreliable deals that end up slipping after the forecast is created.

• Deals appear out of nowhere. Sometimes this saves our bacon. Other times it simply makes the sales leader look silly.

In other words, sandbagging. Salespeople go out of their way to avoid management pressure on deals. For example, by keeping an important deal under the radar for as long as possible.

However, these deals simply don’t figure when creating the forecast.

• There’s no crystal ball that tells us which deals we’ll win and which we won’t. Or indeed when we’ll win them. After all is said and done, customer decision making is out of our hands.

If we knew in advance which deals we will win and which deals we will lose, then we’d save ourselves a lot of trouble. Unfortunately, no matter how hard we try we’re still left with customer-driven uncertainty.

Sometimes we attempt to mask these uncertainties by asking salespeople to ‘Commit’ to deals. However, that’s like asking a soccer centre forward to commit to scoring a goal. We all know he’s trying. But there’s still a chance he’ll miss (a pretty good chance if he’s the centre forward on the team I support!).

If we want reliable sales forecasts we have to address these sources of unreliability in other ways. That’s what we’ll cover in Sections 3 and 4.

Before that, let’s examine how best to create a sales forecast in CRM systems such as salesforce.

2.     How To Create A Sales Forecast In Salesforce

What’s the best way to create a sales forecast in salesforce?

Answer:

Use an Expected Revenue Sales Forecast report.

An Expected Revenue Sales Forecast report combines the revenue from Won deals with the weighted sales value from pipeline opportunities.

Sometimes the report includes filters that exclude certain deals (for example, those at a very early stage).

 

How the Expected Revenue Sales Forecast reports works

The report combines Won and Pipeline Opportunities.

For Won deals, 100% of the revenue contributes to the sales forecast.

For pipeline deals, however, the sales value of each opportunity is multiplied by the Opportunity Probability.

For example, a deal for $10,000 at 40% will have an Expected Revenue of $4,000. A Won opportunity for $20,000 will have an Opportunity Probability of 100% and an Expected Revenue of $20,000.

In other words, the Expected Revenue of any specific deal is the weighted value of the opportunity.

Incidentally, in some businesses the sales forecast does not reflect the total, gross value of the sales deal. That’s because the revenue from the deal spreads over time. The sales forecast is therefore the amount of scheduled revenue that will be achieved in the period.

If this is the case, then you need the GSP Scheduled Revenue app. However, the principles of Expected Revenue apply equally to sales forecasts based on scheduled revenue.

 

Why include Won deals in the forecast

Most sales forecasts relate to the current period; for example, this month or this quarter.

As such, the sales revenue we can expect is a combination of deals we’ve already won during the period; plus deals we expect to win.

That means we need to include won opportunities in the forecast.

 

Why use the Expected Revenue of pipeline opportunities

Some salespeople don’t like the idea of the Expected Revenue (or weighted revenue) of pipeline deals.

They argue opportunities are binary. We’ll either win it or we won’t. Take 100% of the sales value or zero dollars.

However, here’s the thing:

In any given period, you don’t categorically know which deals the sales team will win and which deals they will lose.

Let’s face it, if you knew which deals you were going to lose, you wouldn’t bother with them in the first place.

So it’s logical to take the weighted value of pipeline opportunities. That way we get a reliable total value of forecast sales.

Providing of course, the opportunity probability is reliable.

 

Entering reliable Opportunity probabilities

In salesforce, as with most other CRM systems, there’s a default Probability associated with each Opportunity Stage.

In other words, the probability is set automatically when the Stage is set.

 

Manually adjust opportunity probabilities

However, here’s something not everyone realises:

The Opportunity Probability can be manually adjusted. This is as true in salesforce as it is in all other CRM systems.

This means the salesperson can override the default probability for the Stage.

The Opportunity Probability can be manually adjusted. This is as true in salesforce as it is in all other CRM systems.  This means the salesperson can override the default probability for the Stage.

For example, the default Probability for Proposal Made might be 35%. Salesforce will automatically set this value for ALL opportunities at this Stage.

However, in reality the probability for a new customer might be lower. The probability for an existing, long-term strategic customer may be higher. So, we can manually adjust the probability when the default value isn’t appropriate.

 

Use workflow to adjust opportunity probabilities

Here’s another option.

Automatically adjust opportunity probabilities using pre-defined rules.

For example, use workflow rules to set the opportunity probability for strategic customers to 40% at the Proposal Made stage.

Naturally, you’re assuming the probabilities you pre-define in this way will be more accurate than those set by the sales team.

That may well be true for an inexperienced team. Or if you’re not confident salespeople will adjust the probability where appropriate.

 

Use the GSP Probability App

We’ve figured out how to get historic opportunity probability and velocity data out of salesforce.

In other words, we can retrospectively analyse all opportunities and calculate two things:

1. How long each opportunity spent at each stage. In other words, stage-by-stage pipeline velocity.
2. The percentage of all deals won or lost once they reached a given stage.

This is valuable information.

For example, at one manufacturing client we discovered that 23% of deals in Investigation were closed successfully for new customers. Yet for existing customers it was 33%.

Furthermore, we identified that these figures varied by +/- 6% across territories and individual salespeople.

The outcome is that in this company, opportunity probabilities are defined tightly now based on accurate, reliable historical statistical data.

This improvement led to a step-change in the reliability of sales forecasts.

If you want to measure pipeline velocity or analyse historical probability data in your company then get in touch.

 

How to get the Expected Revenue Sales Forecast report

You might be wondering:

Is there a simple way to get the Expected Revenue Sales Forecast report?

The easiest way is to install the GSP Sales Dashboard.

This free package includes all of the reports and sales metrics highlighted in our Sales Forecasting Guide.

Sales Dashboard by GSP

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

3.     Improve Sales Forecasting Accuracy

Three reports significantly improve the process of sales forecasting because they give robust visibility of the pipeline.

So use the information contained in these reports to achieve a step-change in forecasting reliability.

(We’ll talk about additional metrics in Section 4).

However, before we start there’s a critical prerequisite of robust pipeline visibility: unambiguous Opportunity Stages.

 

Opportunity Pipeline Stages

High-quality visibility of the sales pipeline leads to vastly improved sales forecasts.

However, in turn funnel visibility depends upon everyone understanding, and agreeing, on the meaning of the Opportunity Stages.
Unfortunately, very often that’s not the case.

In salesforce it doesn’t help that the default Opportunity Stages aren’t well understood. Nor particularly useful in many businesses.

So do two things:

First: change the Opportunity Stage picklist to values that have meaning in your business. This blog post will help you define the right values.

Second: make sure everyone understands and agrees on the meaning of each Opportunity Stage.

Those two items are critical to using the most important pipeline review chart.

 

Report 1: Pipeline by Stage and Close Date

This simple report and chart is the starting point in reviewing and analyzing a sales forecast.

That’s because what the chart and underlying report often reveal, is that any sales forecast based on the opportunities in salesforce is immediately going to be way off base.

However, get the underlying information right and you’re well on your way to a reliable forecast.

Let’s take an example.

Based on this example, here are the primary areas to investigate that improve our chances of getting a reliable sales forecast.

 

Deals with Close Dates in the past

This is a common problem.

So much so, in fact, I’ve published a blog post specifically on the steps you should take when you’re funnel looks full of out-of-date opportunities.

In this case, it’s not too bad.

What are those deals doing in previous months? Are they still open? If so, will they close in the current month? Or are they deals that are no longer viable and should be removed from the pipeline?

Addressing this is the first step to getting a reliable sales forecast for the current month or quarter.

Pro Tip

Drill down to the underlying report.

Here’s a great feature of Lightning reports in salesforce.

Click on the number within the report that you want to investigate. Now we can see the specific deals that make up the number.

Right click on the Opportunity Name to open it in a separate tab.

Update the Opportunity by changing the Close Date and / or Stage.

Repeat this step until you no longer have Opportunities with old Close Dates.

 

Deals with unrealistic Opportunity Stages

Let’s look at the current month (I’m assuming it’s May 2019 for the purposes of this demonstration).

Many B2B companies have a sales cycle of three to four months. Some much longer.

So how realistic is it that deals with an Opportunity Stage of Prospecting or Investigation will close this month?

In fact if we are mid-month (which is often when we are producing sales forecasts), then even many deals in Proposal Made may not close successfully this month.

So here’s what you do.

Same as before, look at the underlying detail.

Review the early stage opportunities. There’s three possible scenarios for each one:

1. The Close Date and Stage are accurate.

Perhaps it’s an existing customer with a strong purchasing track record that has told us he’ll definitely be ordering this month.

2. There’s a reliable Close Date but the Stage is wrong.

In other words, the Opportunity is more advanced in the sales cycle. Assuming you’re confident in the Close Date, update the Stage.

3. There’s a reliable Stage but the Close Date is wrong.

Perhaps this deal was originally anticipated to close this month. But now it’s not. Move the Close Date so that your forecast for this month is more robust.

Of course, there’s also the possibility that both the Stage and the Stage need updating.

So go through the funnel opportunities in your sales forecast and make sure you are happy with the Close Date and Stage in every case.

Pro Tip

Managers with large sales teams and / or lots of opportunities can’t go through every deal this way. One technique to avoid this is to manage by exception, using the metrics explained in Section 4.

Create a version of the Close Date by Stage report to run on My Team. Have sales leaders to go through the same pipeline validation process with their team members.

And then go a step further. Providing the Role Hierarchy is correct, when individual salespeople run the My Team report, they will see only their own deals. Train and educate each salesperson on using the report to check and validate their personal pipeline.

Unlikely funnel spikes

In many businesses there’s a determined sales drive at certain times of the year. In particular, to close deals in the last month of the financial year or quarter.

Here’s the Funnel by Close Date and Stage chart I saw recently.

Can you guess when their financial year ends?

You’re right. December. And of course that means there’s an additional quarter-end in March, June and September.

So why the spikes?

The reason is that in this business, salespeople are under top-down pressure to meet revenue expectations from internal and external company stakeholders.

Consequently, hopeful Close Dates are assigned to many opportunities. These are based not on the customer buying process, but on the desire to assuage other pressures. “It’s bound to close sometime this year, I’ll put in the year-end”.

In reality, how many deals do you know that close on December 31?

The same thing happens with the quarter-end.

The result?

The sales forecasts reflect funnels containing artificial peaks in the number and value of opportunities that will be won. Consequently, these sales forecasts are almost always unreliable.

So, review your longer-term pipeline. Validate that peaks in the value of deals to be closed accurately reflect sales effort and marketplace conditions rather than the need to satisfy non-customer stakeholders.

Otherwise?

You’re simply kidding yourself.

 

Pipeline by Created Date

Reviewing the pipeline by created date is another way to validate funnel quality.

This chart shows deals due to close this month (and therefore in our current sales forecast) by created date.

Does your sales forecast contain many deals with a longer-then-average sales cycle?

It looks like it here.

Potentially, these are deals that consistently move along in order to maintain the size of the pipeline. If you’re reliant upon these deals to meet your sales quota, you may be on wafer-thin ice.

Same steps as before.

Drill down to the underlying deals.

Assess the viability of these deals. Do this to gauge reliability of your sales forecast.

 

Conversion Rate Report

You might be wondering:

How does a report that shows opportunity win rates (conversion rates) help us assess the reliability of a sales forecast?

Well, take a look to check that historic opportunity conversion rates are realistic.

First example.

Let’s assume that in your business, instinct and experience tell you the opportunity conversion rate should be around 30%.

So, how do we explain a conversion rate report in salesforce that shows the win rate is 70%?

Two possible reasons.

 

Opportunity sandbagging

Not all deals enter the pipeline immediately. In other words, only when the salesperson is confident of a successful outcome is it entered in salesforce. It’s called sandbagging.

On the one hand, this means your sales forecast might be pessimistic. This is because there are deals out there being worked on, some of which may come to fruition. It’s simply that you don’t have visibility of them.

If this genuinely is the case, your revenue forecast is still going to be pretty inaccurate. Only this time the forecast will be too low.

And as the VP of Sales it doesn’t exactly give the impression you’re on top of what’s going on.

 

Deals in the pipeline too long

Deals that no longer have legs are not moved out of the pipeline.

The result?

The funnel contains many deals that are unlikely to close successfully any time soon (if ever).

Some of these deals may be in your current sales forecast. Consequently, the forecast probably overstates revenue. In any event, it’s not built on solid foundations.

Which explanation applies in your business if the conversion rate is artificially high? Sandbagging or dormant deals? Or both?

Well, instinct and anecdotal evidence might be enough.

But to be sure, take a second look at the Pipeline by Created Date chart.

If there’s a significant number of deals open much longer than seems reasonable then it’s probably the second explanation. Dormant deals aren’t removed from the funnel.

Take a good look at these deals. Weed out those that undermine your sales forecast.

12 Must-Have Dashboard Charts

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

4.     Pipeline Quality Metrics

The reports and dashboard charts we’ve looked at so far are an excellent way of validating the sales forecast top down.

But you might be thinking:

How do I manage by exception? What are the metrics identifying specific deals that potentially should not be included in the sales forecast?

There are three deal metrics we can use to surface deals that have an increased chance of slipping from the forecast. Deals that will potentially leave egg on our face.

Here they are:

1. Number of Close Date Month Extensions. This is the number of times the Close Date on the Opportunity has moved from one month to another.

2. Number of Days since the Last Stage Change. This tracks how long it is since the Opportunity Stage was last updated.

3. Age of the Opportunity. This is the number of days the Opportunity has been open.

Use these metrics to manage by exception.

In other words, they help sales managers quickly and easily identify high-risks deals.

You can do this using a dashboard table.

The table shows deals due to close this month. So they’re all potentially in your sales forecast.
But can you rely upon them?

Well, the Oxted Manufacturing Opportunity has been open over 200 days. It’s 100 days since the Opportunity Stage was last updated. And the Close Date has moved from one month to another 4 times already.

Not exactly a banker, I’d say.

Perhaps this deal WILL finally close this month.

But you get the idea.

These sales metrics and the accompany dashboard help rapidly identify deals we must investigate further.

5.     Get Free Salesforecasting Resources

Here are free resources that will radically improve the sales forecasting method and technique in your company.
• GSP Sales Forecast Template.
• 30 minute web meeting with me.

 

GSP Sales Forecast Template

This free dashboard has been installed over 1,000 times. You can find it on the AppExchange here.

The package contains:
• All the reports described in this sales forecasting guide.
• A comprehensive dashboard with drill-down to all reports.
• The three deal quality metrics and dashboard table that help you manage by exception.

There’s even a configuration guide that explains how to adapt the sales forecast template to the specific needs of your business.

Apply for the 30 minute web meeting

Each week I hold four free one-to-one meetings lasting 30 minutes.

The discussion is private and specific to your company. You decide the specific topic to discuss so that you get maximum benefit from the discussion.

It doesn’t have to be about sales forecasting. Here some recent examples of other topics I’ve covered recently. How do I:
• Adapt salesforce to the specific needs and processes of my business?
• Embed robust forecasting and pipeline management techniques across my sales team?
Track revenue versus quota and know whether there is sufficient pipeline to meet target?
• Increase salesforce benefits and the investment ROI?
• Manage framework agreements and other non-standard opportunities?

Good luck and happy forecasting!

Apply For A 30 Minute Web Meeting With Gary Today

Just complete our Contact Us form by following the link below 

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Many sales managers struggle to create reliable sales forecasts.

In fact, many forecasts are wildly inaccurate.

Even (or especially) when the sales team is using a CRM system such as salesforce.

The trouble is gut feel just won’t cut it.

Nor will simply applying a top-down win rate to all opportunities.

Instead, what’s needed is a sales forecast that is robust and can stand up to scrutiny.

That’s because often the sales forecast is shared with the company leadership, finance, peers and back-office colleagues. Other people depend upon a reliable revenue projection to do their own jobs properly.

Being wrong, month after month, doesn’t help anyone.

That said, sales forecasts don’t need to be perfect. But in many businesses, they need – and can – be a heck of a lot more reliable than they are at the moment.

About This Guide To Sales Forecasts

This guide is the most comprehensive online resource to creating reliable sales forecasts.

In this expert-written guide you’ll learn:

• Section 1: Why sales forecasts are often unreliable.
• Section 2: How to create a sales forecast report in salesforce.
• Section 3: How to improve forecasting accuracy using three key reports.
• Section 4: Which three opportunity metrics help identify the deals most likely to slip from your sales forecast.
• Section 5: Where to get the sales forecast template, reports, dashboard charts and metrics highlighted in this guide, all for free.

So, if you’re looking to improve the sales forecasting process in your company, you’ll love this guide.

By the way:

You don’t have to be using salesforce to get tremendous value from this guide. We are experts in salesforce so naturally, that’s what I’ve used to create the examples. However, you can apply the exact same sales forecasting methods to the CRM system in your business.

1.     Why Sales Forecasts Are Inaccurate

A sales forecast is an informed prediction of the revenue a sales team will achieve in a given period (e.g. the current month or quarter). It reflects the deals already won in the period plus an estimate of the sales pipeline that will close successfully in the time remaining.

But why do we go to all the trouble of creating sales forecasts in the first place?

It’s because reliable sales forecasts:

• Provide the executive team with advance information on the health of the business.
• Tell sales managers whether they have enough pipeline to meet quota.
• Help fulfilment, order processing, manufacturing and other teams to plan and operate efficiently.
• Enable finance executives to project capital requirements and cash flow with confidence.

Doubtless there are many other reasons, specific to your company.

However, in many businesses the revenue forecast is taken with a pinch of salt by the leadership team.

Often even the VP of Sales doesn’t believe them (although she wishes she could). And embarrassingly, she struggles to explain why they are so inaccurate.

 

Why many sales forecasts are unreliable

Here are the three most common reasons I’ve found that explain why many sales forecasts are unreliable.

• Deals slip from the forecast. Often this happens at the last minute. Sometimes the same deal has slipped at the last minute more than once.

Sometimes this occurs because salespeople are optimists. Deals they thought would happen, don’t.

Furthermore, in many businesses, salespeople are under pressure to maintain the size of the pipeline. Setting deals to Lost or removing them from the funnel, contradicts this pressure. Consequently, deals that no longer have legs stay in the pipeline but slip to the next month.

Unfortunately, sales forecasts are usually submitted before the month end. This means the forecast often contains many unreliable deals that end up slipping after the forecast is created.

• Deals appear out of nowhere. Sometimes this saves our bacon. Other times it simply makes the sales leader look silly.

In other words, sandbagging. Salespeople go out of their way to avoid management pressure on deals. For example, by keeping an important deal under the radar for as long as possible.

However, these deals simply don’t figure when creating the forecast.

• There’s no crystal ball that tells us which deals we’ll win and which we won’t. Or indeed when we’ll win them. After all is said and done, customer decision making is out of our hands.

If we knew in advance which deals we will win and which deals we will lose, then we’d save ourselves a lot of trouble. Unfortunately, no matter how hard we try we’re still left with customer-driven uncertainty.

Sometimes we attempt to mask these uncertainties by asking salespeople to ‘Commit’ to deals. However, that’s like asking a soccer centre forward to commit to scoring a goal. We all know he’s trying. But there’s still a chance he’ll miss (a pretty good chance if he’s the centre forward on the team I support!).

If we want reliable sales forecasts we have to address these sources of unreliability in other ways. That’s what we’ll cover in Sections 3 and 4.

Before that, let’s examine how best to create a sales forecast in CRM systems such as salesforce.

2.     How To Create A Sales Forecast In Salesforce

What’s the best way to create a sales forecast in salesforce?

Answer:

Use an Expected Revenue Sales Forecast report.

An Expected Revenue Sales Forecast report combines the revenue from Won deals with the weighted sales value from pipeline opportunities.

Sometimes the report includes filters that exclude certain deals (for example, those at a very early stage).

 

How the Expected Revenue Sales Forecast reports works

The report combines Won and Pipeline Opportunities.

For Won deals, 100% of the revenue contributes to the sales forecast.

For pipeline deals, however, the sales value of each opportunity is multiplied by the Opportunity Probability.

For example, a deal for $10,000 at 40% will have an Expected Revenue of $4,000. A Won opportunity for $20,000 will have an Opportunity Probability of 100% and an Expected Revenue of $20,000.

In other words, the Expected Revenue of any specific deal is the weighted value of the opportunity.

Incidentally, in some businesses the sales forecast does not reflect the total, gross value of the sales deal. That’s because the revenue from the deal spreads over time. The sales forecast is therefore the amount of scheduled revenue that will be achieved in the period.

If this is the case, then you need the GSP Scheduled Revenue app. However, the principles of Expected Revenue apply equally to sales forecasts based on scheduled revenue.

 

Why include Won deals in the forecast

Most sales forecasts relate to the current period; for example, this month or this quarter.

As such, the sales revenue we can expect is a combination of deals we’ve already won during the period; plus deals we expect to win.

That means we need to include won opportunities in the forecast.

 

Why use the Expected Revenue of pipeline opportunities

Some salespeople don’t like the idea of the Expected Revenue (or weighted revenue) of pipeline deals.

They argue opportunities are binary. We’ll either win it or we won’t. Take 100% of the sales value or zero dollars.

However, here’s the thing:

In any given period, you don’t categorically know which deals the sales team will win and which deals they will lose.

Let’s face it, if you knew which deals you were going to lose, you wouldn’t bother with them in the first place.

So it’s logical to take the weighted value of pipeline opportunities. That way we get a reliable total value of forecast sales.

Providing of course, the opportunity probability is reliable.

 

Entering reliable Opportunity probabilities

In salesforce, as with most other CRM systems, there’s a default Probability associated with each Opportunity Stage.

In other words, the probability is set automatically when the Stage is set.

 

Manually adjust opportunity probabilities

However, here’s something not everyone realises:

The Opportunity Probability can be manually adjusted. This is as true in salesforce as it is in all other CRM systems.

This means the salesperson can override the default probability for the Stage.

The Opportunity Probability can be manually adjusted. This is as true in salesforce as it is in all other CRM systems.  This means the salesperson can override the default probability for the Stage.

For example, the default Probability for Proposal Made might be 35%. Salesforce will automatically set this value for ALL opportunities at this Stage.

However, in reality the probability for a new customer might be lower. The probability for an existing, long-term strategic customer may be higher. So, we can manually adjust the probability when the default value isn’t appropriate.

 

Use workflow to adjust opportunity probabilities

Here’s another option.

Automatically adjust opportunity probabilities using pre-defined rules.

For example, use workflow rules to set the opportunity probability for strategic customers to 40% at the Proposal Made stage.

Naturally, you’re assuming the probabilities you pre-define in this way will be more accurate than those set by the sales team.

That may well be true for an inexperienced team. Or if you’re not confident salespeople will adjust the probability where appropriate.

 

Use the GSP Probability App

We’ve figured out how to get historic opportunity probability and velocity data out of salesforce.

In other words, we can retrospectively analyse all opportunities and calculate two things:

1. How long each opportunity spent at each stage. In other words, stage-by-stage pipeline velocity.
2. The percentage of all deals won or lost once they reached a given stage.

This is valuable information.

For example, at one manufacturing client we discovered that 23% of deals in Investigation were closed successfully for new customers. Yet for existing customers it was 33%.

Furthermore, we identified that these figures varied by +/- 6% across territories and individual salespeople.

The outcome is that in this company, opportunity probabilities are defined tightly now based on accurate, reliable historical statistical data.

This improvement led to a step-change in the reliability of sales forecasts.

If you want to measure pipeline velocity or analyse historical probability data in your company then get in touch.

 

How to get the Expected Revenue Sales Forecast report

You might be wondering:

Is there a simple way to get the Expected Revenue Sales Forecast report?

The easiest way is to install the GSP Sales Dashboard.

This free package includes all of the reports and sales metrics highlighted in our Sales Forecasting Guide.

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

3.     Improve Sales Forecasting Accuracy

Three reports significantly improve the process of sales forecasting because they give robust visibility of the pipeline.

So use the information contained in these reports to achieve a step-change in forecasting reliability.

(We’ll talk about additional metrics in Section 4).

However, before we start there’s a critical prerequisite of robust pipeline visibility: unambiguous Opportunity Stages.

 

Opportunity Pipeline Stages

High-quality visibility of the sales pipeline leads to vastly improved sales forecasts.

However, in turn funnel visibility depends upon everyone understanding, and agreeing, on the meaning of the Opportunity Stages.
Unfortunately, very often that’s not the case.

In salesforce it doesn’t help that the default Opportunity Stages aren’t well understood. Nor particularly useful in many businesses.

So do two things:

First: change the Opportunity Stage picklist to values that have meaning in your business. This blog post will help you define the right values.

Second: make sure everyone understands and agrees on the meaning of each Opportunity Stage.

Those two items are critical to using the most important pipeline review chart.

 

Report 1: Pipeline by Stage and Close Date

This simple report and chart is the starting point in reviewing and analyzing a sales forecast.

That’s because what the chart and underlying report often reveal, is that any sales forecast based on the opportunities in salesforce is immediately going to be way off base.

However, get the underlying information right and you’re well on your way to a reliable forecast.

Let’s take an example.

Based on this example, here are the primary areas to investigate that improve our chances of getting a reliable sales forecast.

 

Deals with Close Dates in the past

This is a common problem.

So much so, in fact, I’ve published a blog post specifically on the steps you should take when you’re funnel looks full of out-of-date opportunities.

In this case, it’s not too bad.

What are those deals doing in previous months? Are they still open? If so, will they close in the current month? Or are they deals that are no longer viable and should be removed from the pipeline?

Addressing this is the first step to getting a reliable sales forecast for the current month or quarter.

Pro Tip

Drill down to the underlying report.

Here’s a great feature of Lightning reports in salesforce.

Click on the number within the report that you want to investigate. Now we can see the specific deals that make up the number.

Right click on the Opportunity Name to open it in a separate tab.

Update the Opportunity by changing the Close Date and / or Stage.

Repeat this step until you no longer have Opportunities with old Close Dates.

 

Deals with unrealistic Opportunity Stages

Let’s look at the current month (I’m assuming it’s May 2019 for the purposes of this demonstration).

Many B2B companies have a sales cycle of three to four months. Some much longer.

So how realistic is it that deals with an Opportunity Stage of Prospecting or Investigation will close this month?

In fact if we are mid-month (which is often when we are producing sales forecasts), then even many deals in Proposal Made may not close successfully this month.

So here’s what you do.

Same as before, look at the underlying detail.

Review the early stage opportunities. There’s three possible scenarios for each one:

1. The Close Date and Stage are accurate.

Perhaps it’s an existing customer with a strong purchasing track record that has told us he’ll definitely be ordering this month.

2. There’s a reliable Close Date but the Stage is wrong.

In other words, the Opportunity is more advanced in the sales cycle. Assuming you’re confident in the Close Date, update the Stage.

3. There’s a reliable Stage but the Close Date is wrong.

Perhaps this deal was originally anticipated to close this month. But now it’s not. Move the Close Date so that your forecast for this month is more robust.

Of course, there’s also the possibility that both the Stage and the Stage need updating.

So go through the funnel opportunities in your sales forecast and make sure you are happy with the Close Date and Stage in every case.

Pro Tip

Managers with large sales teams and / or lots of opportunities can’t go through every deal this way. One technique to avoid this is to manage by exception, using the metrics explained in Section 4.

Create a version of the Close Date by Stage report to run on My Team. Have sales leaders to go through the same pipeline validation process with their team members.

And then go a step further. Providing the Role Hierarchy is correct, when individual salespeople run the My Team report, they will see only their own deals. Train and educate each salesperson on using the report to check and validate their personal pipeline.

Unlikely funnel spikes

In many businesses there’s a determined sales drive at certain times of the year. In particular, to close deals in the last month of the financial year or quarter.

Here’s the Funnel by Close Date and Stage chart I saw recently.

Can you guess when their financial year ends?

You’re right. December. And of course that means there’s an additional quarter-end in March, June and September.

So why the spikes?

The reason is that in this business, salespeople are under top-down pressure to meet revenue expectations from internal and external company stakeholders.

Consequently, hopeful Close Dates are assigned to many opportunities. These are based not on the customer buying process, but on the desire to assuage other pressures. “It’s bound to close sometime this year, I’ll put in the year-end”.

In reality, how many deals do you know that close on December 31?

The same thing happens with the quarter-end.

The result?

The sales forecasts reflect funnels containing artificial peaks in the number and value of opportunities that will be won. Consequently, these sales forecasts are almost always unreliable.

So, review your longer-term pipeline. Validate that peaks in the value of deals to be closed accurately reflect sales effort and marketplace conditions rather than the need to satisfy non-customer stakeholders.

Otherwise?

You’re simply kidding yourself.

 

Pipeline by Created Date

Reviewing the pipeline by created date is another way to validate funnel quality.

This chart shows deals due to close this month (and therefore in our current sales forecast) by created date.

Does your sales forecast contain many deals with a longer-then-average sales cycle?

It looks like it here.

Potentially, these are deals that consistently move along in order to maintain the size of the pipeline. If you’re reliant upon these deals to meet your sales quota, you may be on wafer-thin ice.

Same steps as before.

Drill down to the underlying deals.

Assess the viability of these deals. Do this to gauge reliability of your sales forecast.

 

Conversion Rate Report

You might be wondering:

How does a report that shows opportunity win rates (conversion rates) help us assess the reliability of a sales forecast?

Well, take a look to check that historic opportunity conversion rates are realistic.

First example.

Let’s assume that in your business, instinct and experience tell you the opportunity conversion rate should be around 30%.

So, how do we explain a conversion rate report in salesforce that shows the win rate is 70%?

Two possible reasons.

 

Opportunity sandbagging

Not all deals enter the pipeline immediately. In other words, only when the salesperson is confident of a successful outcome is it entered in salesforce. It’s called sandbagging.

On the one hand, this means your sales forecast might be pessimistic. This is because there are deals out there being worked on, some of which may come to fruition. It’s simply that you don’t have visibility of them.

If this genuinely is the case, your revenue forecast is still going to be pretty inaccurate. Only this time the forecast will be too low.

And as the VP of Sales it doesn’t exactly give the impression you’re on top of what’s going on.

 

Deals in the pipeline too long

Deals that no longer have legs are not moved out of the pipeline.

The result?

The funnel contains many deals that are unlikely to close successfully any time soon (if ever).

Some of these deals may be in your current sales forecast. Consequently, the forecast probably overstates revenue. In any event, it’s not built on solid foundations.

Which explanation applies in your business if the conversion rate is artificially high? Sandbagging or dormant deals? Or both?

Well, instinct and anecdotal evidence might be enough.

But to be sure, take a second look at the Pipeline by Created Date chart.

If there’s a significant number of deals open much longer than seems reasonable then it’s probably the second explanation. Dormant deals aren’t removed from the funnel.

Take a good look at these deals. Weed out those that undermine your sales forecast.

4.     Pipeline Quality Metrics

The reports and dashboard charts we’ve looked at so far are an excellent way of validating the sales forecast top down.

But you might be thinking:

How do I manage by exception? What are the metrics identifying specific deals that potentially should not be included in the sales forecast?

There are three deal metrics we can use to surface deals that have an increased chance of slipping from the forecast. Deals that will potentially leave egg on our face.

Here they are:

1. Number of Close Date Month Extensions. This is the number of times the Close Date on the Opportunity has moved from one month to another.

2. Number of Days since the Last Stage Change. This tracks how long it is since the Opportunity Stage was last updated.

3. Age of the Opportunity. This is the number of days the Opportunity has been open.

Use these metrics to manage by exception.

In other words, they help sales managers quickly and easily identify high-risks deals.

You can do this using a dashboard table.

The table shows deals due to close this month. So they’re all potentially in your sales forecast.
But can you rely upon them?

Well, the Oxted Manufacturing Opportunity has been open over 200 days. It’s 100 days since the Opportunity Stage was last updated. And the Close Date has moved from one month to another 4 times already.

Not exactly a banker, I’d say.

Perhaps this deal WILL finally close this month.

But you get the idea.

These sales metrics and the accompany dashboard help rapidly identify deals we must investigate further.

5.     Get Free Salesforecasting Resources

Here are free resources that will radically improve the sales forecasting method and technique in your company.
• GSP Sales Forecast Template.
• 30 minute web meeting with me.

 

GSP Sales Forecast Template

This free dashboard has been installed over 1,000 times. You can find it on the AppExchange here.

The package contains:
• All the reports described in this sales forecasting guide.
• A comprehensive dashboard with drill-down to all reports.
• The three deal quality metrics and dashboard table that help you manage by exception.

There’s even a configuration guide that explains how to adapt the sales forecast template to the specific needs of your business.

Apply for the 30 minute web meeting

Each week I hold four free one-to-one meetings lasting 30 minutes.

The discussion is private and specific to your company. You decide the specific topic to discuss so that you get maximum benefit from the discussion.

It doesn’t have to be about sales forecasting. Here some recent examples of other topics I’ve covered recently. How do I:
• Adapt salesforce to the specific needs and processes of my business?
• Embed robust forecasting and pipeline management techniques across my sales team?
• Track revenue versus quota and know whether there is sufficient pipeline to meet target?
• Increase salesforce benefits and the investment ROI?
• Manage framework agreements and other non-standard opportunities?

Good luck and happy forecasting!

Apply For A 30 Minute Web Meeting With Gary Today

Just complete our Contact Us form by following the link below 

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Track Revenue Over Time In Salesforce Using Revenue Schedules

Track Revenue Over Time In Salesforce Using Revenue Schedules

Schedule Revenue Over Time In Salesforce

Take our new app for a test drive today

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

Instead, revenue accrues over time.

For example:

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

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

The upshot:

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

Unfortunately:

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

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

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

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

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

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

Standard Salesforce Product Schedules

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

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

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

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

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

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

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

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

Advantages of standard product schedules

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

Disadvantages of standard product schedules

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

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

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

Common alternatives to standard scheduling

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

 

Option #1:

They perform this critical activity outside Salesforce.

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

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

Significant effort is also expended, manually forecasting future revenue.

 

Option #2

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

That is almost always a mistake.

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

 

Option #3

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

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

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

The result?

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

Looking To Customize The App To Suit Your Business?

Get in touch with us today

GSP Product Revenue Schedules app

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

Its why we built a salesforce app.

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

Here are the main features and benefits of the app.

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

And guess what?

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

That means everything always stays in sync.

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

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

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

Create revenue schedules

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

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

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

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

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

Adjust revenue schedules

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

Easy.

Hit the Edit Line Items button.

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

The revenue schedules update immediately.

Close Date Changes

Here’s the most frequent event on an opportunity:

A change to the close date.

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

No problem.

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

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

Manually adjust product revenue schedules

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

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

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

No problem.

Open the Mass Edit Line Item page.

Adjust the schedules.

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

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

Update for latest scheduled revenue forecasts

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

Something else also happens:

The Revenue Amount copies into the Forecast Amount.

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

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

This comparison is critical in many businesses.

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

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

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

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

Opportunity level summary

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

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

Track revenue over time versus target

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

Here’s an example.

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

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

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

So he’s achieved 69% of his target.

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

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

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

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

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

Product Revenue Schedule Reports and Dashboards

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

Here’s the Lightning dashboard

And the Classic version.

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

S-curve versus straight-line schedules

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

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

But who on earth needs s-curve schedules?

Well, let’s say you deliver infrastructure projects.

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

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

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

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

Advantages of the GSP Product Schedules app

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

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

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