+44 203 280 3665
Opportunity Stages Explained With Best Practice Recommendations

Opportunity Stages Explained With Best Practice Recommendations

The Opportunity Stages in Salesforce should match your sales process.

But if they don’t, you’re not alone.

That’s probably especially true if you’re still using the standard opportunity stages. Those stages that come out-of-the-box with Salesforce.

Of course, you can change them. (If you’re not sure how to do this, I explain at the end of this post).

However, the question is, what should the Salesforce opportunity stages be in your business?

I’ve seen this provoke many heated discussions. Very often, the answer is a fudge. The outcome, usually, is far too many stages.

Nevertheless, getting the opportunity stages right is essential. The benefits are better funnel visibility, improved sales pipeline management and better sales performance reviews.

So cut through the frustration with our complete guide to opportunity stages best practice.

Let’s start.

Opportunity Stages Explained

Opportunity stages describe the high-level steps within your sales process. In a CRM system, salespeople update the opportunity stage as the deal moves through the sales process.

Realistic opportunity stages are critical because they deliver pipeline visibility through reports and dashboards. On the other hand, if your opportunity stages don’t reflect your sales process, then your pipeline reports and sales forecasts are not going to be reliable.

Opportunity Stages and Probabilities

In Salesforce, each stage links to a percentage probability.

When a salesperson selects an opportunity stage, the deal takes on the pre-defined probability.

However, not everyone realizes that salespeople can override the default probability.

Sometimes, this is the right thing to do. For example, let’s say you’re selling to an existing customer with a healthy relationship. That means the chances of winning the deal are higher than average. The salesperson can adjust the probability to reflect this.

Opportunity Stages and Forecast Categories

The Forecast Category in Salesforce is a way of grouping opportunity stages.

That means it’s a useful way of summarizing the pipeline. In some businesses, it helps to define the sales forecast.

The Forecasts Tab makes extensive use of Forecast Categories.

Unfortunately, the Forecasts Tab is a complicated way of creating forecasts and tracking sales versus quota. Many salespeople and managers find it challenging to use.

However, it’s only one of three ways to measure sales versus target that I explain in this blog post:

3 Ways To Track Sales Versus Target In Salesforce.

Why Opportunity Stages Are Important

Opportunity stages are critical to pipeline management and sales forecasting.

To understand why let’s take an example.

This dashboard chart shows how the stages combine with the Close Date and Amount to deliver pipeline visibility.

For example, we can see that the pipeline contains $750K of opportunities due to close in November.

Of this, $40K is currently at the Prospecting Stage. $50K is in the Investigation Stage. You can easily see the values for the other stages.

You get the picture. Reliable opportunity stages mean we have excellent visibility of the pipeline. We can use the information in the chart and report to manage the funnel effectively.

Incidentally, I’ve written other articles that explain more about using these types of charts to improve pipeline management in this blog post.
4 Vital Charts To Measure Pipeline Size.

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

Opportunity Stage Best Practices

Five best practices deliver meaningful opportunity stages in any sales team.

1. Opportunity Stages are clear and unambiguous

Many times I see unclear opportunity stages. Always, ambiguity is a significant mistake in this situation.

Why?

It’s because accurate funnel visibility is impossible to achieve if salespeople are uncertain about what each opportunity stage means.

For example, I worked recently with a client that had Opportunity Stages of Closing and Negotiation. What’s the difference?

I didn’t know. More importantly, neither did the sales team.

The result is that reports and dashboard charts do not deliver meaningful information on the sales pipeline.

Best practice:

Opportunity stages are clear and unambiguous. The meaning and definition of each are communicated clearly to salespeople.

2. Opportunity Stages reflect the sales process

Ideally, opportunity stages reflect the customer buying process. That way, the pipeline reflects where each deal is along the buying journey.

Unfortunately, there are two problems.

First, every customer’s buying process is different. So it’s hard to standardize.

Second, it’s difficult to know where we are in the customer’s buying process. With a complicated purchase and many stakeholders, even the customer may not be sure of their internal buying process.

The result?

Opportunity Stages need to reflect your sales process. That way, you do at least know where you stand from an internal point of view.

Unfortunately, the standard opportunity stages that come out-of-the-box with Salesforce aren’t going to reflect the sales process of many businesses.

That means you need to change them. The section at the end of this blog post explains how to customize the opportunity stages in Salesforce.

However, you might be wondering:

What if I have more than one sales process?

For example, in many companies, there’s a defined sales process for new customers.

However, the sales process for renewals, repeat sales, or replacement items is probably different. Often, for example, it will be much shorter.

Opportunity Record Types are the way to handle this.

Create different record types for each sales process that is different. Then modify the Opportunity Stage picklist for each record type.

In other words, only include those Opportunity Stage picklist values relevant to each record type.

Best practice:

Modify the default Opportunity Stages to tightly reflect the sales process(es) in your business.

3. Avoid too many Opportunity Stages

If you have too many opportunity stages, this is what happens:

In other words, it’s impossible to see the wood for the trees. The result is that pipeline visibility deteriorates rather than improves.

This situation often occurs when a business tries to get too granular in measuring the pipeline.

Sometimes, companies with long sales cycles fall into this trap. They want more detail within each stage. If that applies to you, it’s better to create sub-stages in a separate field.

Best practice:

Don’t over complicate things. Stick to four or five pipeline stages for better funnel visibility.

4. Opportunity Stages are action-oriented

Let’s say a typical B2B sales process has a three-month lifecycle.

Naturally, there’s significant interaction with the customer over the three months. Consequently, action-oriented opportunity stages are better than milestone-based stages.

For example, Qualifying is better than Qualified. Discovery is better than First Meeting.

The reason is that each opportunity stage reflects the status of the deal over a period.

That period might be weeks or even months. The salesperson is likely to be doing many things to move the opportunity along during this period.

Alternatively, milestone-based stages only reflect the status at a specific moment.

Best practice:

The opportunity stage represents a series of customer interactions. They’re not one-off milestones.

5. Opportunity Stages are up to date

As we’ve seen, it’s crucial opportunity stages accurately reflect the sales process.

However, it’s essential salespeople keep the opportunity stage on each deal up to date. If not, then pipeline reports and sales forecasts count for nothing.

For example, this sales dashboard chart shows the current pipeline.

Let’s assume we are in the last week of November and the sales cycle in this business is three months.

Here’s the question:

Are those deals at Prospecting and Qualification really at the right opportunity stages?

If they are, then I’m potentially skeptical about whether they really will close successfully this month.

If they’re not at the right stage, then my pipeline view is inaccurate, and I can’t depend upon it.

Best practice:

Make sure everyone understands the importance of updating and maintaining the stage on each opportunity. Emphasize this in pipeline reviews and sales performance meetings.

Recommended Opportunity Stages

These are the opportunity stages used by many of our customers.
Qualifying.
Investigating ( or Discovery).
Customer Evaluating.
Negotiating.
Closed Won.
Closed Lost.

In some cases, businesses have additional variations of Closed Lost. Qualified Out and No Purchase are examples of this.

Let’s look at each one.

The Qualifying Opportunity Stage

Opportunities in this stage are your potential long-term pipeline.

Often, the customer has not yet identified budget or committed to a timescale. The Close Date is uncertain and can be many months in the future.

Sometimes, the customer – if asked – might not even agree that a potential deal yet exists. That’s because you are busy educating the stakeholders on how the status quo needs to change.

The primary outcome of the qualifying stage is a decision on whether to spend more time, effort and resources working this opportunity.

If the answer is that it is worth it, move to the next opportunity stage. If no, remove the deal from the pipeline.

To determine this, ask these four questions:

  • Is there an opportunity?
  • Can we win it?
  • Is it worth winning?
  • Do we want to win it?

Questions three and four sound similar, yet they are different.

‘Is it worth winning?’ is an economic question. In other words, is the revenue and margin worth the cost and effort?

‘Do we want to win it?’ is a strategic question. There may be existing customer relationships or marketplace dynamics that give a compelling reason to attempt to win the deal.

At this stage, you may not be able to answer these questions definitively. However, there needs to be enough information to decide whether to move to the next phase.

Many qualifying opportunities will be removed directly from the pipeline at this stage. That’s fine. Don’t waste time with deals that don’t have legs.

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

The Investigating Stage

Use the term, Discovery, if you prefer.

The potential for a deal exists. Salespeople take action on opportunities in this stage to determine two things.

First, does the customer have a genuine need for the type of products and services we sell? Remember, activities during this stage may be more about creating demand for your products and services rather than merely responding to it.

Second, how will we differentiate ourselves to win the deal at the price we want? This differentiation can be directly through the products or services we offer. Or we can differentiate ourselves through the sales process and the way we engage with the customer.

This stage typically includes determining whether the customer has – or can obtain – appropriate budget. The more your product or service is innovative (at least to the customer), the less likely they are to have set budget aside at the start of the financial year.

Of course, this doesn’t mean the customer cannot find the budget. Demonstrate compelling value, and it’s often surprising how funding can materialize.

Finally, in this stage, re-ask the four qualification questions. You should now be able to articulate the answers with more conviction and certainty.

If not, you know what to do. Remove the deal from the pipeline.

The Customer Evaluating Stage

In this stage, the customer decides on which supplier to choose.

This decision means you have given the customer a formal quote, proposal, or merely indicative pricing.

One thing is for sure, however. The customer stakeholders are evaluating the value your company brings.

That’s why in many companies, this opportunity stage is called Proposal Made or suchlike. That stage name is okay, but I prefer Customer Evaluating because it more accurately reflects the activity both you and the prospect are doing.

For example, other activities during this stage might include proof of concept demos, reference visits, or delivery of a short video to demonstrate the solution.

Negotiating Stage

A common characteristic of this opportunity stage is that a close plan is agreed upon mutually with the customer.

This close plan may include the steps necessary to agree on the commercial terms and sort out the legal paperwork.

Either way, the customer commits in principle to going ahead, providing the final steps are completed satisfactorily.

Closed Won

The deal has concluded successfully. The contract (where appropriate) has a signature — time for a celebration.

After the drinks, you may want to read about how to measure opportunity conversion rates and win ratios in this blog post.

Closed Lost

The deal is not proceeding. Maybe, that’s because you have decided not to expend any more time and effort on the opportunity. Indeed, as my friend Bud Suse likes to say, “if you’re going to lose, you might as well lose early.

In other words, it failed the ‘four questions’ test we looked at in the earlier stages.

Incidentally, the Opportunity Stage Movement report is an excellent tool to identify and analyze these deals. It tracks the ‘From’ stage for all sales set to Closed Lost.

Alternatively, the customer decided the products or services from an alternative supplier offered a better solution.

Of course, there’s another scenario. The biggest competitor for many companies that offer project-based services is ‘Did Not Proceed.’ In other words, the customer actively decided not to go ahead with the project, or it simply fizzled out.

That brings us to a problem with the Closed Lost stage value. Salespeople don’t like using it.

The word ‘Lost’ implies that a competitor gained the deal at our expense. And of course, that’s not always the case. We might have ‘Qualified Out’ a deal. Or the customer made no purchasing decision at all.

But Sales’ resistance to marking deals as Closed Lost means that many sales pipelines are over-inflated. They contain deals that are unlikely ever to be won. That’s because no-one wants to change the status to Closed Lost.

If that’s the case, you might want to use two further opportunities stages.

‘Qualified Out’ means there an insufficient mutual benefit for either party to spend any more time and effort on the deal.

‘No Purchase’ means the customer has not committed to any supplier. Open opportunities that no longer have legs are the most significant source of over-inflated sales pipelines and forecasts. Create this opportunity stage to record the outcome of opportunities that have no realistic prospect of every proceeding.

Other sales processes

Not every sales deal in a company necessarily has the same sales cycle.

The sales process for new deals might be six months, for example.

However, the same company might sell consumables associated with the core products. These sales are transaction-based compared to the core product. On the transaction sales, therefore, we can use more milestone-based opportunity stages. ‘Quote Sent,’ for example, rather than Customer Evaluating.

The same business might also sell support contracts, renewable every year. A different set of opportunity stages might cover these repeat sales. These stages may reflect the more linear process associated with renewing the contract.

What about the other extreme?

Our customers Taylor Woodrow (construction) and Siemens Energy (power generation), have sales processes that typically span several years.

These companies have to operate within procedures and processes tightly defined by the purchaser.

Therefore, they have both created a sub-stage field to manage this additional complexity. This sub-stage field captures the status of a deal within the overall opportunity stage. The approach is much better than spawning opportunity stages because once more than four or five pipeline stages have been created, it’s hard to see the wood for the trees in dashboard charts.

Incidentally, too many stages are one of the 3 Common Problems with Opportunity Stages I list in this blog post.

Tip: Use Opportunity Record Types and Sales Processes to accommodate the variation on Opportunity Stages across different types of sales deals in Salesforce.

Opportunity Stage Exit Criteria

It’s essential to remove ambiguity in defining a transparent sales process and opportunity stages.

One way to achieve this is to create clear exit criteria. These exit criteria define the parameters of when an opportunity can exit one stage and move to the next.

Unfortunately, often, exit criteria focus on the sales person’s actions. They act as internal milestones. Tick off all the boxes, and then you move to the next stage.

However, in the customer’s mind, the deal hasn’t moved on one iota.

Instead, use what Brent Adamson (author of The Challenger Customer and The Challenger Sale) describes as a “customer-verified sales funnel.

“Salespeople and their managers should use a combination of rep activities and customer ‘verifiers’ or behaviors to track the progress of a deal. This explicitly encourages reps to focus on achieving specific outcomes in the best way instead of merely executing activities in a prescribed way,” says Adamson.

In other words, it’s all very well to create fields and even validation rules to control when an opportunity stage can be advanced.

However, base these controls on the customer’s buying behavior, not merely the pre-defined list of activities that you expect the salesperson to fulfill.

Opportunity Stages in Lightning

Salesforce Lightning includes some great new features that increase the power of Opportunity Stages.

Lightning Sales Paths for Opportunity Stages

In Lightning, the Opportunity page layout can display the stages.

Salespeople can click on the path arrow to move the opportunity to the next stage.

Also, there’s an option to include a description, tips and other information for each Opportunity Stage.

For many businesses, this is an essential tool for helping salespeople to understand the specific meaning of each stage. It also means there are explicit exit criteria and other important information directly on the opportunity.

Kanban view of opportunity Stages

Lightning extends the traditional List Views in Salesforce.

The Kanban view of opportunity stages gives salespeople a dynamic display of all deals.

Salespeople drag and drop opportunities from one stage to another. It’s a quick and easy way to update many deals and get and up-to-date pipeline.

What Next?

If you want meaningful visibility of the pipeline, then it’s essential to get your opportunity stages right.

If the stages don’t reflect your sales process, or they are ambiguous, then pipeline reports are not reliable. In turn, this means you cannot conduct useful funnel reviews or create reliable sales forecasts.

How To Change Opportunity Stages In Salesforce

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

Popular eBook

Download The 12 Must-Have Dashboard Charts

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

Popular Articles

Related Blog Posts

 

Why You Need To Compare Average Closed Won Opportunity Size

 

How to use opportunity conversion reports for superior results

 

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

 

5 Easy Tips That Will Make Opportunity Probability Your Trusted Friend

To Exceed Year-End Quota, Apply These Q4 Sales Strategies Now

To Exceed Year-End Quota, Apply These Q4 Sales Strategies Now

It’s that time of year.

Q4.

When sales teams around the world are under pressure to get deals closed to meet year-end quotas.

I have worked with many companies in that situation.

And here’s what I’ve found:

The most successful executives apply five Q4 sales strategies.

Q4 Sales Strategies

These sales strategies do not guarantee they hit quota. However, they do put these executives and the sales teams in with the best possible chance of success.

Here are the five Q4 Sales Strategies they use:

  1. Sort the wheat from the chaff.
  2. Determine whether there is enough pipeline to hit quota.
  3. Prioritize time and energy on high impact deals.
  4. Create a close plan for each high priority opportunity.
  5. Protect themselves against margin-eating discounts.

So here they are:

Five Q4 sales strategies you can apply right now to achieve year-end quota.

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

1. Sort the wheat from the chaff

Here’s the first Q4 sales strategy these executives apply.

They weed out deals that with the best will in the world are not going to close successfully in Q4.

It’s February 2017.

Sarah Jones is under pressure to boost her sales pipeline.

The pressure is coming from the VP of Sales. “Come on, Sarah, you’ve got lots of potential in that territory of yours. Let’s ramp up the pipeline.”

You can’t blame him.

The Board set aggressive growth targets for the year and expect the VP of Sales to deliver.

Sarah works through her Accounts.

She picks a prospect with whom she had a meeting three months ago. “I reckon there’s a decent chance with this one,” she thinks.

Sarah creates an opportunity in salesforce.

“It’s bound to close sometime this year,” she says to herself hopefully.

Of course, Sarah doesn’t want to put herself under any unnecessary time pressure. That means she enters the Close Date as December 31, 2017.

The pipeline has increased. Job done.

That scenario plays out in companies around the world.

There are three ways to sort the wheat from the chaff with Q4 deals.

a) Review Opportunity Stages and Get Real

In Sarah’s company, here’s what the pipeline looks like by the time we reach mid-Q4.

There's often a surge of deals due to close in December when we look at the pipeline in Q4.

There’s a surge of deals due to close in December.

But how realistic are these opportunities?

For example, if the sales cycle is typically three months, then are the deals in the prospecting and investigation stages of the sales pipeline realistically going to close in Q4?

In other words, the first step is to review deals by Stage and Close Date. Remove dormant deals from the pipeline. Move deals that still have legs, but realistically won’t close in Q4, to a later date.

b) Review Opportunities by Created Date

Here’s another way to assess the strength of the Q4 pipeline.

Look at deals due to close in Q4 by Created Date.

If the sales cycle is 3 months, carefully examine deals that have been open substantially longer as part of your Q4 sales strategies.

Again, if the sales cycle is 3 months, carefully examine deals that have been open substantially longer.

Shake them out of the tree if they’re unlikely to close this quarter.

c) Analyse Pipeline Quality Metrics

In addition to the age, two other deal metrics provide insight on pipeline quality.

  • Number of Close Date month extensions.
  • Days since last Stage change.

This dashboard table highlights these quality metrics for deals due to close in Q4.

This dashboard table highlights these quality metrics for deals due to close in Q4.

We can see, for example, the Oxted Manufacturing opportunity has been open 237 days, the Opportunity Stage was last updated 100 days ago and the Close Date has moved four times from one month to another.

I don’t know about you, but those figures do not give me a great deal of confidence that the deal will close in Q4.

So that’s the first of the Q4 sales strategies:

Sort the wheat from the chaff.

Doing this will help hugely in subsequent recommendations.

By the way, an easy way to obtain these reports is to download the free GSP Sales Dashboard if you are not already using it.

 

2. Determine whether there is enough pipeline to hit quota

This Q4 sales strategy recommendation is critical.

The answer to the question of whether you have sufficient pipeline to hit quote is a major influence on your Q4 sales strategy.

But first:

How do we know if the pipeline is big enough?

One option is to take the deals you have already won and add the full sales value of the pipeline.

That’s likely to give you a positive feeling. The two added together will likely exceed target.

Unfortunately, it’s not realistic. I doubt you are going to win 100% of your sales pipeline.

A more pragmatic way is to set a realistic probability of winning each deal. Then use this to calculate the Expected Revenue of the pipeline.

Remember, in salesforce you do not have to accept the default probability associated with each Stage. Modify these probabilities on individual opportunities.

An essential Q4 sales strategy is to determine whether you have enough pipeline to meet year-end target.

Then, to determine whether you have enough pipeline to hit Q4 target, create a report based on Expected Revenue. Include both Closed Won and pipeline deals.

Compare the total value in the report with your target.

Now you have a choice:

  • If the Expected Revenue exceeds target, focus on closing the deals you already have.
  • If the Expected Revenue is smaller than your target, you need to decide if it is realistic to increase the pipeline with deals that will close in Q4.

Q4 sales strategies are influenced by whether there is enough funnel to meet quota.

It may not be easy to find deals that realistically will close in Q4.

The circumstances will be different for every business. However,

  • Are there existing customers to whom repeat sales are possible?
  • What about upgrades?
  • Can you make cross sales to customers that bought certain products?

Only you know the answer to these questions.

However, in my experience, it’s a mistake to seek-out new pipeline with smaller prospects.  Often, there’s an assumption these lower value deals will close more quickly.

However, it often takes as long to close a smaller customer opportunity because the relative importance of the deal is greater.

Ideally, don’t leave it until the very end of the year or Q4 to measure pipeline against target.

The GSP Target Tracker is a powerful way to compare won and pipeline deals with target throughout the year. For each month and quarter, it gives a clear indication of whether you have sufficient weighted pipeline to achieve quota.

 

3. Prioritize time on high impact deals

The third of the Q4 sales strategies sounds obvious:

Focus time, resources and energy on opportunities that make the most significant contribution to quota.

However, there are three dimensions to prioritizing Q4 opportunities:

  • The sales value of the deal.
  • The probability of winning the deal, and
  • Whether multiple small opportunities can combine into one larger deal.

You can prioritize on the first two dimensions by creating a report that lists the opportunities by Stage, Amount and Probability:

You may also want to adapt the report to show the pipeline by customer type.

As part of your Q4 sales strategy, prioritize opportunities by stage, amount, probability and customer type.

This helps you prioritize deals with existing customers that despite their Stage may have a higher probability of a successful outcome.

Consider also, whether there are Accounts with multiple opportunities.

In the GSP Sales Dashboard, we include a table and report that shows the pipeline by Account.

In the GSP Sales Dashboard, we include a table and report that shows the pipeline by Account.

In the GSP Sales Dashboard, we include a table and report that shows the pipeline by Account.

In this example, High Hill Estates has opportunities due to close in Q1 AND Q2. Is it possible to amalgamate these deals into one larger opportunity, with a successful close in Q4?

Easily identify the deals you and your team will focus on using a separate field “Q4 Focus” field.

As part of your Q4 sales strategy, focus on deals that will have a high impact on year-end revenue.

Having done this analysis, the goal now is to stick to your higher priority deals. Don’t get distracted!

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

4. Create a Close Plan for each high priority opportunity

Many businesses will create a Close Plan for important deals.

The Q4 sales strategy brings this to a head.

However, there’s no need to overdo it.

Create the close plan using a simple rich text field on the Opportunity.

Alternatively, enter it into the Chatter feed for each Opportunity.

This is the approach used by many of our customers has the advantage that managers, colleagues and other internal stakeholders can comment and collaborate on the close plan.

Here’s another common element of this Q4 Sales Strategy:

Agree a Go / No Go Date with the customer.

This is not the date you expect the deal to close. Nor is it a commitment by the customer that you will win the deal.

Rather, it is the deadline date by which you and the customer will aim to close the deal. One way or the other.

This date for example, might be 15th December.

The outcome may be a win or a loss, we don’t yet know. The Go / No Go date is the point at which you both agree the deal cannot be closed in Q4 and you will instead revisit the opportunity in the New Year.

In salesforce, record these dates in a custom field. Track them through a report and Q4 dashboard chart.

The previous Q4 sales strategies are about identifying realistic deals, prioritizing effort and achieving a successful outcome.

The final Q4 sales strategy takes a different approach.

 

5. Protect yourself against damaging discounts

We all know discounts and volume related deals are sacrificed in return for Q4 close dates.

Indeed, many companies have inadvertently trained their customers to leave purchases to the end of each quarter.

However, this Q4 sales strategy is to keep track of the rationale for each discount and give-away.

For example, you give a discount or preferential terms because the customer agrees to buy 100 units over three months (e.g. in a framework agreement).

Keep a record of the rationale for the discount or special terms.

That’s because, let’s say, it turns out the customer only ever orders 80 or 90 units.

You won’t always go back and negotiate a retrospective price increase. However, this information is invaluable when negotiating future discounts.

Use this information now when the customer is putting you under pressure on a Q4 close.

Look back over historic deals. Did the customer fulfil their side of the bargain? If not, use this information to strengthen your negotiating hand.

The Chatter feed on each opportunity is a good place to record the rationale for discounts and other terms given away in return for customer commitments.

That’s the fifth of the Q4 sales strategies that successful executives apply:

Keep track of the rationale behind the agreement and make it easy to find when you are under pressure.

Our blog post, 10 Expert Tips To Improving Discount Control gives more advice on avoiding unnecessary give-aways.

If you think others will benefit from reading this blog, please share on LinkedIn or Twitter.

[sta_anchor id=”offer” /]

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

Popular eBook

Download The 12 Must-Have Dashboard Charts

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

Popular Articles

How To Plug A Leaking Sales Funnel In The Right Place

How To Plug A Leaking Sales Funnel In The Right Place

Everyone in sales has a leaking funnel.

That’s the nature of the game.

It is, after all, why the sales pipeline is typically displayed as a funnel. There are fewer deals at each successive stage in the sales process.

If the funnel wasn’t leaking, you would win 100% of deals. (If you ARE winning 100% of deals then you have pipeline management issues such as sandbagging).

In fact, for reasons we’ll come to, sometimes there are not enough deals leaking from the funnel.

That’s because opportunities hang around in the sales pipeline long after they have any realistic chance of closing successfully. These opportunities over-inflate the sales pipeline and eliminate any chance of accurate revenue forecasting.

This means two questions for every sales manager are:

  • Is the sales funnel leaking to a reasonable extent? And,
  • Is the sales funnel leaking in the right places?

If the answer to either of these questions is ‘No’, then there’s a third question:

  • What should I do about it?

So here’s our four step guide to plugging a leaking funnel in the right places.

  1. Measure funnel leakage.
  2. Determine where the funnel is leaking.
  3. Understand why the funnel is leaking.
  4. Decide what action to take.

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

All four steps go together. If you don’t know how much the funnel is leaking – and where – then you can’t decide how best to plug the leaks.

1. How to measure funnel leakage

Here’s the Leaking Funnel dashboard chart and report.

salesforce dashboard chart based on the leaking funnel report.

Create this chart using a Stage Movement report. The report shows the ‘From’ Opportunity Stage for all deals that have been set ‘To’ Closed Lost.

In our case, the chart covers Opportunities where the Stage movement occurred in the last calendar quarter.

The leaking funnel dashboard chart and report show, for example, 17 Opportunities moving to Closed Lost directly from the Prospecting Stage. In other words, 17 deals that were in Prospecting, leaked from our funnel in the last quarter.

Early Stage funnel leakage

All other things being equal, there’s nothing wrong with deals leaking from the funnel at early stages in the sales lifecycle.

If the opportunity qualification process is working effectively, this is exactly what should happen.

Deals are investigated:

If there isn’t a win-win for supplier and customer, the opportunity is qualified-out.

But how much early stage leakage is too much?

Using conversion rates (win rates) is one way to gauge this. Are win rates are broadly in line with what you expect? If so, then you probably don’t have an overwhelming early-stage funnel leakage problem.

On the other hand, if you do have an early-stage leaking funnel issue, consider the actions outlined in Section 4 of this post.

Late Stage funnel leakage

What about deals leaking from the funnel at late Stages in the sales cycle?

Look the chart and report in our example above:

Is there a problem? 11 deals in the quarter were lost directly from the Negotiation Stage.

This is not good news. As Bud Suse says, “there’s nothing worse than coming a close second”.

Opportunities leaking from the funnel at late stages waste time, energy and resources and drain morale.

It looks like we have this very problem in our example.

Read on, to see how to investigate further and decide on the right course of action.

2. Determine where the funnel is leaking

Knowing that we have a leaking funnel late in the sales cycle is only the starting point.

Before we can take action, we need to analyse the problem further.

Let’s start by looking at the same report summarized by salesperson.

Salesforce report that shows the leaking funnel for each salesperson.

This report shows the ‘From’ Stage for all deals that have been set to Closed Lost for each salesperson.

It looks like all salespeople have something of a problem. They are all leaking deals at late stages in the sales process.

Let’s reformat the report again to look at the leaking funnel problem from a different angle. For example, compare new versus existing customers:

Leaking funnel of new customers compared to existing customers.

So now we have a much deeper understanding of where the funnel is leaking:

We have a real problem in losing deals to new customers, late in the sales cycle.

We can reformat the Leaking Funnel reports in a variety of other ways to analyse further, but you get the idea. First, we measured overall funnel leakage. Then we investigated where in the sales process deals are slipping from the pipeline.

Now we need to understand why it is happening.

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

3. Understand why the funnel is leaking

So now, we have identified specifically where the funnel is leaking.

However, there’s no point taking action just for the sake of it. We need to understand why deals are being lost.

Here are some ways to do that.

Get feed-forward from prospects

This is the most powerful way:

Get insight from prospects with whom you’ve lost deals. Ask them where you went wrong. Find out how you could have acted differently to win the deal.

We prefer to call it feed-forward not feedback. That’s because you then apply the lessons going forward to future opportunities.

Read How To Stop Salespeople complaining about Marketing Leads for a great example of insight gathered this way.

Discuss the issue with salespeople

Have an open conversation about why the situation is occurring.

We’ve facilitated many of these discussions. Having an external, independent facilitator is a good way of ensuring an open, no-blame discussion.

This approach is particularly powerful when it combines with advice and insight directly from the prospects.

Implement a Reasons Lost field

Many companies have this type of picklist or text field on the Opportunity. Often, a validation rule ensures information is entered whenever a deal is set to Closed Lost.

Sometimes this yields useful information.

However, it’s tough to get the depth of information that can truly make a difference using this method alone.

For example, all too often ‘Price’ is the reason the deal was lost. Yet how frequently is that truly the case in your business. Instead, qualitative information is the key to making real change and a difference to future conversion rates.

For more advice read How To Stop Closed Lost Screwing Up Your Funnel.

4. Decide upon action to plug the leaking funnel

Now we’re finally ready to take some action!

Of course, the appropriate action depends upon the results of our analysis and investigation into why the funnel is leaking.

Depending on the situation in your business, here are some actions you can take.

Early Stage leaking funnel

  • Validate the opportunity qualification criteria and process. Check deals are not qualified-out too early.
  • Ensure timely and thorough follow-up on early-stage opportunities for new customers. Make sure they’re not ignored in favor of warm deals from existing customers.
  • Re-focus marketing and lead generation activities on target customers in the right segments.
  • Implement lead nurturing programs to ‘warm-up’ customers before contact from salespeople.
  • Implement lead scoring to identify and prioritize the early stage opportunities for follow up.
  • Implement a feedback process from Sales to Marketing or Telesales (or whoever generates the early stage opportunities in your business). This communication must explain when and why new deals are qualified-out. Use this feedback to improve lead and opportunity qualification criteria.

Late Stage leaking funnel

  • Improve the investigation stage in your sales process. Ensure time is not wasted by salespeople chasing deals they have little chance of winning.
  • Define your ideal customer and make sure you have a framework for assessing potential deals. Bob Apollo has excellent advice on this.
  • Implement a bid / no-bid approval process. If you operate in a big ticket, RFP environment, get formal sign-off to pitching for a deal.
  • Review the process for identifying all stakeholders in the buying center. Check that key stakeholders are not being left out of the communication process early in the sale.
  • Submit contracts and legal documents for review earlier in the sales process. Get technical and legal issues on the table earlier, before everyone gets too entrenched in their position.
  • Get the right balance of focus and pressure. Are sales people chasing too many lame duck deals?
  • Check for dormant deals and evidence of sandbagging. Do some opportunities remain outside the pipeline until the salesperson is confident a deal is to be done? If so, then it’s interfering with your visibility of the funnel and conversion rate metrics.
  • Implement a lessons learned process to capture valuable information that will reduce funnel leakage in the future.

All funnels leak.

It’s where, when and how that the funnel is leaking that’s important.

Use the Leaking Funnel report in your business today to find out if you have a problem. Then dig a little deeper to figure out the right action for the right type of leak.

Free sales pipeline dashboard

Install the free GSP Sales Dashboard from the AppExchange. Includes the leaking funnel chart. Measure the size, quality and trend in your sales pipeline using the dashboard.

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

Popular eBook

Download The 12 Must-Have Dashboard Charts

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

Popular Articles

Related Blog Posts

 

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

 

How to use opportunity conversion reports for superior results

 

3 Killer Pipeline Quality Metrics To Highlight When To Be Sceptical

 

Stop Guessing! How to Measure Your Top Accounts on Salesforce Dashboards

How To Fix a Broken Lead Process In Salesforce

How To Fix a Broken Lead Process In Salesforce

You probably don’t remember Monty Python’s Flying Circus.

It’s a surreal comedy group from the 1970’s. It’s how John Cleese and Michael Palin first made their name.

In one famous sketch, Palin arrives at the Argument Clinic or for an argument. Cleese is happy to oblige. They go round in circles, contradicting each other over and over.

You can recreate a similar scene:

Ask a room full of Sales and Marketing people to agree how the lead process should work in salesforce.

You’re guaranteed a bun fight.

I’ve run hundreds of salesforce implementation workshops. And here’s something I’ve experienced:

No subject causes more debate than that surrounding the lead process.

However, resolving this debate is critical to an effective lead process in salesforce. Unfortunately, often that doesn’t happen with clarity.

The outcome is an ineffective lead process. Consequently, there is ineffective lead qualification, reduced revenue and poor marketing and sales performance information.

It also means a lack of lead conversion metrics that quantify the contribution of leads to revenue.

Let’s understand what causes this debate. Then we will define a lead process in salesforce. Do this as one of the core components of effective Sales and Marketing alignment in your business.

(By the way, don’t forget, you can download the lead process diagrams used in this article).

Difference between a lead and an opportunity

There is often dis-agreement between Sales and Marketing on the difference between a lead and an opportunity. Yet clarity is essential.

Unfortunately, that is harder than it sounds.

Why is there so much confusion? After all, most Sales and Marketing people will acknowledge that a lead is the first step in the sales cycle.

Here’s why it’s a problem.

Salesperson’s definition of a lead

To a salesperson, a Lead can come as easily from an existing customer or known prospect, as a brand new one.

The lead can be repeat business for an existing customer. Or a new prospect, freshly arrived through the door.

Either way, the sales process has started. It may not be advanced enough to warrant an Opportunity in salesforce.com. However, sales engagement hast at least commenced.

So, from a salesperson’s perspective, a lead reflects a broad range of early stage, potential opportunities that require immediate action.

Marketing person’s definition of a lead

A Marketing person’s perception of a lead often varies in two important ways.

First, a Lead is a person or business that will potentially make a purchase at some undetermined point in the future.

Marketing may hand the lead to Sales, but not necessarily with the expectation that a sale will immediately result. The lead is a potential customer that may engage in a future sales process. Conversely, to a salesperson, a lead is someone entering the sales process right now.

Second, to Marketing a lead is very often a new company or person. The business or contact may not have existed previously in the database. Indeed, the primary role of Marketing in many businesses is to increase the overall lead database for long-term benefit.

Salespeople are under pressure to close deals in the short term. Marketing want to nurture the Lead. Unfortunately, this contrast in expectations frequently results in Sales complaining about the quality of Leads created by Marketing.

Salesforce lead process

Sales and Marketing often fail to agree on the difference between a Lead and an Opportunity. This directly obstructs the implementation of an effective lead process in salesforce.

So what constitutes a lead in the salesforce.com CRM system?

In fact, salesforce uses the term Lead in several different ways. Let’s take them step by step.

  • Lead as a brand new enquiry

Start by thinking of a Lead in salesforce as a brand new enquiry, from a business and person you’ve never previously heard of.

For example, let’s say you have a Web-to-Lead form set up on your web site. Web-to-Lead is an easy way to integrate salesforce with your web site. It means anyone that fills in your Contact Us form is automatically created as a lead in salesforce.

Now the lead exists. What’s the first thing that should happen in the lead process? Check for duplicates by clicking on the Find Duplicates button on the Lead page layout.

This will identify any matching Leads or Contacts that already exist in your salesforce database. Let’s assume you don’t find any.

Now you make an outbound telephone call to the Lead. Essentially, one of three outcomes will result from this part of the lead process.

  • The Lead is a dead end

It turns out the person isn’t interested in any further dialogue. Perhaps it was a student simply looking for research information. Either way, set the Lead Status to Closed. No further action is anticipated, although you don’t necessarily delete the Lead from the database.

  • The Lead is a definite maybe

The Lead is moderately interested in your products and services. He doesn’t want to speak to a sales person – at least not yet. Nevertheless, you agree to send a brochure, product specification or price list. So this time set the Lead Status to Contacted. You might also create a follow up Task to call the Lead again in the future.

  • The Lead is a sales Opportunity

The Lead agrees to a meeting or phone call with a Sales person. Or he requests a quote. In other words, he gives you some indication that he’s a legitimate potential customer. He’s a Qualified Lead.

This time leave the Lead Status alone. Instead, click on the Convert Lead button. Salesforce will convert the Lead into three separate records; an Account; Contact; and Opportunity.

Here’s the process in a flow chart diagram.

Lead process diagram for qualifying a new Lead.

The Account represents the business or organisation. The Contact is the person employed by that organisation. And the Opportunity represents the potential sales deal.

It’s this early stage Opportunity that many Sales people will regard as a Lead.

Indeed Sales people may be reluctant to use the term Opportunity. It raises expectations about the outcome. It creates visibility of the deal in the sales pipeline dashboard. And from the salesperson’s perspective, the Lead may – or may not – have been properly qualified by Marketing before it was converted to an Account, Contact and Opportunity.

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

All legitimate issues. Before we address them, let’s deal with several other ways salesforce uses the term Lead.

  • Leads that match existing Lead records

Let’s go to back to our person that filled in the Contact Us form on your web site.

In our example, we assumed that no existing Lead or Contact matched our new Lead. We established this by clicking on the Find Duplicates button on the Lead page layout.

What if one or more matching Leads is found?

Click the Find Duplicates button on the Lead page layout to find matching leads

No problem. Use the Merge Leads button to merge the various Leads into a single record. Then make your qualification call.

Here’s the lead process diagram.

Lead process diagram for qualifying a lead with match to existing lead.

  • Leads that match existing Contact records

How can an existing Contact be created as a Lead in salesforce? There’s a number of ways.

For example, Leads can be created by importing the spreadsheet that contains a list of people that came to a booth at an exhibition. Some of those people may well be existing Contacts.

Or, a Web-to-Lead form on your web site that allows visitors to register for an event. When an existing Contact registers she’s created as a Lead. Likewise, the same thing happens if you’re using Web-to-Lead to enable visitors to download a document from your web site.

In any of these cases, when you click on the Find Duplicates button you may find there’s a matching Contact.

Click the Find Duplicates button to find Leads that match.

Here’s three ways to deal with the Contact-as-a-Lead situation.

  • Convert the Lead without making a Qualification call

    During the Lead conversion, salesforce will help you merge the Lead into the existing Contact record. If the Account Owner is already actively engaged with the Contact – on an existing Opportunity for example – then perhaps it isn’t appropriate to make the qualification call.

  • Convert the Lead and then make a Qualification call

    This is the common approach when it’s the Account Owner that is dealing with the Lead. He or she merges the Lead into the Contact record and then makes a call to the Contact.

  • Make a qualification call before Converting the Lead

    This approach is used most frequently when Marketing or Inside Sales is dealing with the Lead. They make call to the Lead, cognisant of the fact that the person already has a relationship with the company. Following the conversation the Lead is converted, but Marketing or Inside Sales make a human decision on whether to simultaneously create an Opportunity.

Here’s the process diagram for the last of these scenarios.

Lead process diagram for lead qualification with match to existing account or contact.

To Convert a Lead without creating an Opportunity, check the box “Do not create Opportunity upon conversion” during the convert process. It’s underneath the Opportunity name on the Convert Lead page layout.

At the end of the Monty Python scene, Palin and Cleese continue to argue about whether the argument is finished.

However, you can do better than that.

You can resolve the argument about lead processes in the workshop. And then build the lead process in salesforce; it’s a sure-fire way to increase sales and marketing alignment.

Free lead process diagram download

Are the lead process diagrams in this article useful to you? Simply Download the diagrams in Powerpoint. Use them starting point for creating your own lead management process.

And now, kick-start lead metrics in your business by installing the free Lead Conversion Dashboard From GSP in your salesforce environment.

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

Related Blog Posts

Are Sales Right To Complain About Marketing Leads?

Should Salespeople Generate Their Own Leads?

The Mini Dictionary of Marketing Automation Terms

Who’s in your invisible sales pipeline?

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

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

Schedule Revenue Over Time In Salesforce

Take our new app for a test drive today

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

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

However, here are two common mistakes companies make in Salesforce:

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

The result?

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

So, here are five examples in which you may think repeat opportunities have a role to play in Salesforce.

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

Here’s a simple way to answer this question:

Decide whether future revenue is in jeopardy.

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

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

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

Repeat opportunities with software as a service

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

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

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

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

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

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

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

Repeat opportunities with insurance premiums

Based near Toronto, Aboriginal Insurance Services (AIS) sells insurance products to the Indigenous Native American communities across Canada.

For example, the community will purchase motor insurance to cover all vehicles operated by the municipal area.

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

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

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

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

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

12 Must-Have Charts For Your Salesforce Dashboard

Download the FREE eBook from our website today

Repeat opportunities with service contracts

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

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

The customer pays an annual fee for support.

However, MAM doesn’t use repeat opportunities.

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

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

Repeat opportunities with Proof of Concepts

Another London based customer, Modernis, provides advanced analytics and consultancy services to the insurance and reinsurance markets across the UK, USA and Europe.

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

However, the sales process often involves two distinct stages.

First, Modernis provides chargeable proof-of-concept access to its platform. Later, once customers have experienced the value that the platform brings, Modernis sells a contract that runs for several years. This contract incorporates an annual license charge.

To manage this, Modernis create two opportunities.

The first opportunity represents the sales process for a chargeable proof-of-concept.

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

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

Instead, it depends on a successful outcome to the proof of concept.

Modernis also forecast the future revenue on the full contract using Schedules. This is because once the contract is signed, the revenue is not in jeopardy. Therefore, a repeat opportunity is not required.

Framework agreements in Salesforce

Gilbarco Veeder Root (GVR) is one of the world’s leading manufacturers of petrol pumps and retail equipment. Based in Greensboro, North Carolina, the company has a Salesforce deployment covering six continents.

A GVR opportunity often relates to a large site re-fit program for one of the major petrol retail companies.

The refit program may take the retail petrol company several years to complete. It’s likely to require a significant purchase from GVR.

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

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

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

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

GVR handles this with a single upfront opportunity.

The company uses custom revenue schedules to predict the volume and revenue that is anticipated each month. The GVR Account Manager updates the schedules each month with the actual orders.

This allows GVR to track the projected volume (upon which the commercial terms were agreed) with the actual volume ordered by the oil company.

Recommended blog post: How To Manage 4 Types of Framework Agreement In Salesforce.

Implementation points to consider with repeat opportunities:

  • Consider triggering the repeat opportunity automatically. This avoids the subsequent opportunity being forgotten about. That trigger happens when the first opportunity is won or at some other predetermined point in the process.
  • Measure the win-loss ratio for the repeat opportunity separately to the initial opportunity.
  • Consider using Products and Schedules to forecast the revenue over time. Read this blog post for more advice on how to do this.
  • Consider custom revenue schedules if you need additional flexibility. For example, if you need to record the status (not due, invoiced, paid) on individual schedules, then you will need custom revenue schedules.

Not every sale results in a single payment or transaction. However, only use repeat opportunities when it is right to do so. And if it isn’t right, then try revenue schedules instead.

Add Products To Opportunities Quickly and Easily

Interested in this app? Get in touch with us today

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

Popular eBook

Download The 12 Must-Have Dashboard Charts

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

Popular Articles

Related Blog Posts

How to Use Product Schedules to Improve Your Revenue Recognition

Link Close Dates To Product Schedules To Avoid Warped Forecasts

How to Bring Your Salesforce Opportunities to Life with Products

5 killer examples of recurring revenue forecasts in salesforce

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

How To Stop ‘Closed Lost’ Screwing Up Salesforce Dashboards

No-one likes a loser.

Or to be thought of as a loser.

So the term ‘Closed Lost’ is not going to be a favorite for your average salesperson.

Yet Closed Lost is the standard Opportunity Stage picklist value for removing a deal from the pipeline. And it’s a picklist value that salespeople hate to use.

Impact of not setting deals to Closed Lost

But here’s the problem.

Failing to set dead wood opportunities to Closed Lost has a number of adverse consequences:

  • Over-inflation of the sales funnel. Managers and salespeople do not have a robust view of the strength (or weakness) of the sales pipeline.
  • Incorrect sales performance reports. Effective management of the sales team depends upon having accurate information e.g. opportunity conversion rates. These reports, in turn, require unsuccessful deals to be closed out.
  • Salesforce clutter. It gets increasingly hard to see the wood from the trees in salesforce. This makes it more difficult to focus on the opportunities that have true value.
  • Lack of funnel leakage information. It becomes impossible to understand at what stage opportunities are leaking from the sales pipeline.
  • Reduced competitor information. It becomes more difficult to identify how many deals and of what type of deals that are lost to competitors.

How to use the Closed Lost Opportunity Stage

No self-respecting salesperson likes to set an Opportunity to Closed Lost. But that doesn’t mean it hasn’t got a place on the Opportunity Stage picklist.

Closed Lost is appropriate in the right circumstances. It’s appropriate when a deal has been lost to a competitor during a pitch, tender or other competitive situation.

So let’s not beat about the bush. If another business has won an opportunity at our expense then the salesperson should set the deal to Closed Lost.

But many of our clients that have high quality pipeline visibility and sales forecasting accuracy, also use two additional Opportunity Stage picklist values.

Additional Opportunity Stage picklist values

In addition to losing to a competitor, there are two other reasons why deals should be removed from the pipeline.

  1. The customer doesn’t make a purchase. No deal takes place – for anyone. Yet salespeople often have an anathema to using Closed Lost to describe the outcome of these opportunities.So instead of Closed Lost, many companies use an Opportunity Stage picklist value such as No Purchase to remove these deals from the sales pipeline.
  2. The opportunity is qualified-out. In fact this is a legitimate reason for ‘losing’ a deal. As Bud Suse says, coming a close second is a cardinal sin in sales. Don’t waste time, effort and resources on opportunities you are unlikely to win.So instead of Closed Lost, many companies use an Opportunity Stage picklist value such as Qualified Out to remove these deals from the sales pipeline.

Gather additional information on Closed Lost deals

Adding two more Opportunity Stage picklist values in addition to Closed Lost is not necessarily the end of the matter however.

Businesses, quite rightly, often want to gather more information. They want to understand the underlying reasons why a deal was removed from the pipeline.

One way to do this is to create a Reasons Lost picklist field. A validation rule forces salespeople to make a selection from this list.

The problem with this approach is that sales people invariably select a value relating to Price. Which might indeed be the case. But it’s rarely the only reason. (Failure to communicate value might be the true reason!).

There is no killer solution to this problem. However many of our customers gather information on Closed Lost deals in a qualitative format. They have a text field called Lessons Learned in which salespeople identify what could have been done better in the sales process.

It’s not perfect. But experience shows it does provide more information in a useful format than simply selecting from a Reasons Lost picklist. Use this information to analyse sales processes, up-skill and develop salespeople, modify the pricing and discount strategy, develop new product features and create a culture of learning and sharing.

What to do next

The first step is to create additional Opportunity Stage picklist values to Closed Lost. Then educate salespeople and other users on the circumstances when each value is appropriate.

Now that you have done this, here are five ways you can benefit from the removal of dead opportunities from the sales pipeline.

  • Pipeline visibility. Get a robust view of the sales pipeline. Use this blog post to learn how to do this, If You Only Create One Dashboard Chart Then Make It This One.
  • Win Rates / Opportunity Conversion Rates. Analyze variance in win rates between teams, individuals and territories. Use this blog post, Measure And Compare Opportunity Win Rates Across Sales Teams.
  • Stage Movement Analysis. Understand at what stage in the sales process your team is removing deals from the sales pipeline. Determine whether it is early or late in the sales cycle. It’s chart #5 on our list of 12 Charts That Should Be On Your Sales Dashboard.
  • Competitor Analysis. Understand the ratio between deals lost to competitors versus Qualified-out and No Purchase. Apply this information to evolve sales strategy and tactics. Present the data in an informative way using our 5 Tip Guide To Effective Salesforce Reports.
  • Improve sales morale. No-one likes a loser – so don’t force your salespeople to feel like one. Acknowledge to the team that not every deal can be won; not every customer will make a purchase; and that some deals aren’t worth pursuing in the first place.

Closed Lost isn’t the always the only problem with the Opportunity Stage however! Read more about our sales process and opportunity stage recommendations.

And one final step. If you haven’t done so already, sign up to our email list to be the first to receive more advice and tips on maximizing your salesforce benefits.

Awesome Pipeline and Sales Performance Visibility

Download the FREE Dashboard from the AppExchange today

Popular Apps

GSP Target Tracker

Track targets in Salesforce including won and pipeline deals

Popular eBook

Download The 12 Must-Have Dashboard Charts

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

Popular Articles

Related Blog Posts

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

How to use opportunity conversion reports for superior results

10 Expert Tips To Improve Discount Approval Processes

How To Spot Neglected Accounts You Should Be Focusing On