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.
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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