Schedule Revenue Over Time In Salesforce
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Every opportunity has a value.
That value is the revenue from the products and services you sell to the customer.
Yet here’s the thing.
The way you record that value on the opportunity has a major impact on the benefits your business can generate from salesforce.
Do it right and you get increased user adoption, better forecasting accuracy, improved pipeline management and superior analysis of individual salesperson performance.
Do it wrong and you get little or none of those benefits.
So what is the right way?
The right way is to use opportunity products.
If you are still in doubt, read Part 1 of this blog post. Part 2 will follow next week. Together, they explains 10 ways to increase your salesforce benefits by using opportunity products.
Product Benefit #1 – Improved usability
One of the best things about salesforce is that it’s easy to create fields.
One of the worst things about salesforce is that it’s easy to create fields.
And that’s what a lot of companies do. They create many salesforce fields to record revenue information about the products and services they sell.
Here’s a real-life example. It’s a screenshot from a new customer.
This customer created many fields on the opportunity page layout store revenue information. In fact, this is only the top third of the page. We couldn’t get all of the fields into the screenshot to keep it readable!
Not only did this customer have fields for revenue for each type of service they offer, they also had fields to track revenue over time.
It was, frankly, a pain in the tail to enter the information. User adoption is seriously impacted. And it is virtually impossible to create meaningful reports.
The way to avoid these issues is to use opportunity products. The screenshot below shows an opportunity with two products.
Salesforce becomes much easier for salespeople when opportunity products are used. Clicking and data entry is dramatically reduced.
Using opportunity products also makes prices much more accessible. For example, in manufacturing companies, or indeed any company dealing with many physical or tangible products, the prices have to be stored somewhere. Often that’s in a ring binder or online spreadsheet.
Using Products means it is much easier for salespeople to find the right price for each type of customer and product selection.
That means improved usability and increased salesforce adoption.
How to extend this Product Benefit
The GSP Product Selection Wizard makes it even easier to add products to opportunities. This means average deal size is increased, sales person productivity is improved and user adoption is raised.
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Product Benefit #2 – Improve Opportunity Accuracy
Robust pipeline visibility and reliable forecasting require opportunity amounts to be accurate.
This is unlikely if salespeople simply enter a single figure into the Amount field. The value of the opportunity is invariably going to be a guestimate.
Far better to use Products to calculate the opportunity amount.
This way, salespeople enter the unit price, quantity and any discount. It also means there’s a breakdown of the opportunity amount by product category and individual product item.
The value of each opportunity product line item is calculated. The total value of all product line items rolls up to the Amount field.
The result is much improved accuracy in opportunity values.
Tip: if you offer volume based pricing then don’t leave salespeople to work out prices outside of salesforce. There are four ways to manage volume based pricing directly within salesforce.
Product Benefit #3 – Improve Pipeline Visibility
Using opportunity products improves the accuracy of individual deal values.
But it also means that dashboard reports and charts are significantly improved.
For example, here’s the pipeline report from the customer that had lots of fields on the opportunity.
The reports lists the opportunities in the pipeline. But it’s a far cry from a concise, usable pipeline report needed to manage the funnel effectively.
Here’s the same information. This time we’ve re-built the report using Products.
The improved chart means the key information can be understood much more quickly.
Using products also means the pipeline can be analyzed by product category.
This means reliable forecasts can be created by individual products.
For manufacturers like Gilbarco Veeder Root, this is crucial information. These reports inform the production levels within the factory. For companies like Invennt, who provide consulting resources, it means accurate manpower planning.
And for everyone, it means the strength of the pipeline can be understood and interrogated by product category.
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Product Benefit #4 – Identify Development Needs
Look at the dashboard chart below. It show salesperson performance by average deal size.
The dashboard chart is a starting point for analyzing why some salespeople may have higher overall sales than others. However, to get meaningful information, that can help identify individual development needs, we need to dig deeper.
For example, the dashboard chart below analyses average deal size by product category.
Each product is allocated a category – Core, Optional, Service. The dashboard chart clearly shows that Dave is better than his peers at including non-core products in his deals. In other words, Dave increases the average value of his opportunities by including non-essential products and services.
Simply telling salespeople to sell more optional or non-mandatory products is unlikely to have a significant impact. Yet now we can identify the development needs of each salesperson more precisely.
Remember, the chart, in itself, does not tell us specifically how Sarah can increase her average deal size. Perhaps she needs to improve her technical understanding of other products. It could be she needs coaching on how to introduce the other services. Potentially she needs to work harder during the Investigation Stage of the sales cycle to understand better the potential customers’ needs.
Analyzing performance using opportunity products does not automatically give us the answer. But it certainly tells us where to start looking.
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Product Benefit #5 – Price More Selectively
When it comes to product pricing, one size certainly does not fit all.
Different market places will support different pricing. Countries and geographical regions may justify different prices. The cost of fulfillment may differ between territories or certain marketplaces will support a higher margin.
You may also chose to give not-for-profit customers a lower price. Some companies also have client-specific pricing. Perhaps you have exclusive pricing arrangements with strategic customers.
To handle this variability properly in salesforce means you need to use opportunity products. This is because using Products with opportunities means you can also use Price Books.
A Price Book is a selection of products along with their List Prices. Here’s an example.
Let’s say you have a product with a standard List Price in the United States of $1000.
Using Price Books means you might have the following List Prices for this product
- $1000 for standard customers in the USA.
- $900 for strategic customers in the USA.
- $800 for not-for-profit customers in the USA.
There could be many additional variations based on geography or territory. For example, the Eurozone Price Book or UK Price Book may have different prices than the straight-forward exchange rate equivalent. This may reflect differences in fulfillment costs or variances in what the market will bear in those territories.
Here’s how these prices get applied.
The salesperson defines the price book that will apply to each opportunity. The Price Book contains the products and prices that apply within that price book.
Chose the right price book on the opportunity and you have the right set of prices.
You can even go a step further.
Not all products need to belong in each price book. Perhaps, for regulatory, commercial or technical reasons, a specific product cannot be sold in Europe. Then simply exclude from the European Price Book. When the European Price Book is added to an opportunity, the product will not be available for selection.
Automated price book selection
You may have spotted the potential human error with Price Books.
What happens if the salesperson adds the wrong Price Book to the opportunity? The result is incorrect prices are given to the customer.
There’s a way to avoid this problem and it won’t cost you a penny to implement. It’s the GSP Auto Price Book Selector. It’s free on the AppExchange.
The Auto Price Book Selector automatically assigns the relevant Price Book to an opportunity. It ensures the right prices are given to the right customers.
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Product benefit #6 – Track Revenue Over Time
Very often revenue associated with a sale is not invoiced in one go.
Quite the reverse.
It may take many months for the revenue to materialize. For example:
- Service contracts, with regular, repeat revenue over one, two or three years.
- Framework agreements, in which goods and services are ‘drawn-down’ over time.
- Professional services, with projects that may take several months to complete.
In each case, it’s important to track how revenue materializes over time. This results in improved revenue forecasting and more predictable cash flow.
To do this, you need to use opportunity products in conjunction with standard or custom product schedules.
Here’s what a salesforce dashboard revenue chart and report look like based on product schedules.
The chart and report don’t show the ‘gross’ value of deals. Rather, they measure the scheduled opportunity product revenue.
Many of our customers forecast scheduled revenue over time in this way.
How to extend this Opportunity Product Benefit
There is a challenge in salesforce with keeping opportunity product schedules aligned with the opportunity close date.
For example, let’s say the close date on the opportunity is April 1. The revenue on each opportunity product may be scheduled to start May 1. But what if the close date changes? It means the revenue schedule must be adjusted. In salesforce, this has to be done manually. But that means the adjustment is often forgotten about!
The solution to this is the GSP Schedule Shifter.
The Schedule Shifter automatically moves opportunity product schedules when the Opportunity Close Date changes. This maintains the accuracy of revenue forecasts.
Here’s a short video and more information on the Schedule Shifter in action.
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Product Benefit #7 – Increase Price Discount Control
To reduce the amount of discount given away, use opportunity products to implement discount approval processes.
Here’s an example of how price discounts can be calculated and managed using opportunity products.
The sales person enters the discount percentage for each opportunity product. In this case, 10% discount has applied to each opportunity product.
The total discount amount rolls up to the opportunity. That’s $4,000 in this example.
The overall price discount on the opportunity is 5.7%. That’s because although 10% has been applied to each opportunity product, the value of each line item is different. In other words, across the board, the discount on this opportunity is only 5.7%.
We can see that on this opportunity, the discount amount has been approved. This is done using the standard approvals functionality in salesforce.
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Product Benefit #8 – Close Deals More Quickly
Using Products opens the door to two ways that radically speed up deal closure.
First, accurate products on the opportunity means they can be output into a quote document. This avoids salespeople having to re-key and re-enter information. It also means templates containing the up-to-date set of set of terms and conditions are used consistently across the business.
These electronic signature applications integrate tightly into salesforce. They make it super-easy for customers to commit to contracts in a robust, legally binding way.
Our customer, project management training provider ILX, take it even further. They have embedded the process of validating whether a PO is required, and capturing that number where appropriate. This means they have a super-tight contract signature process.
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Product Benefit #9 – Sell Bundles Of Products
One way to increase average deal size is to sell bundles of products.
Our customers use product bundles in two key ways.
First, to group technical products together. The bundle of products comprise the solution offered to the customer.
Secondly, they offer promotional product bundles. These bundles offer discounts or additional products that are available for a limited amount of time. They are intended to drive sales for a specific period.
There is no pre-built product bundle capability in salesforce. So instead, use the GSP Product Bundle Wizard.
The wizard contains features that enable system administrators or product managers to create product bundles easily. Salespeople have a user-friendly interface for selecting the bundle and adding the component products to the opportunity or quote.
Price book integrity is preserved, which means that bundles can only be added if they match the price book associated with the opportunity.
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Recorded Webinar | 10 Ways To Win Big Using Opportunity Products
Watch the full webinar with Gary Smith and Nick Ambrose from GSP, and special guest Robby Johnson from Ellison Technologies. Gary, Nick and Robby explain and demonstrate all 10 ways to win big using opportunity products.
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