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Do the opportunity stages in Salesforce match your sales process?

If they don’t then you’re not alone.

Especially if you’re still using the standard opportunity stages that come out-of-the-box with Salesforce.

And of course, you can modify them.

But what to?

I’ve seen this question provoke many heated discussions.

However, getting the opportunity stages right is essential if you want accurate funnel visibility, robust sales pipeline management and better sales performance reviews.

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

 

Opportunity Stages Explained

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

Used in reports and dashboard charts, the opportunity stage is a critical component of funnel visibility and sales pipeline management.

 

Opportunity Stages and Probabilities

In Salesforce, an Opportunity Probability is associated with each Opportunity Stage.

In Salesforce, an Opportunity Probability is associated with each Opportunity Stage.

This means that when a salesperson selects an Opportunity Stage, the deal inherits this pre-set probability.

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

Salespeople can override the default probability.

This might be relevant, for example, because of the type of customer, the strength of the existing relationship or buying track record means we can be more, or less confident in a deals’ successful outcome.

 

Opportunity Stages and Forecast Categories

The Forecast Category in Salesforce is a way of grouping Opportunity Stages.

It’s a useful method of summarizing the pipeline and in some businesses, helps to define the sales forecast.

The Forecast Category in Salesforce is a way of grouping Opportunity Stages.

The Forecasts Tab makes extensive use of Forecast Categories.

However, the Forecasts Tab is not something I recommend many companies use. It’s a relatively complex way of generating sales forecasts and tracking sales versus quota.

I believe there are better ways of measuring sales performance the pipeline versus target.

 

Why opportunity stages are important

Opportunity stages are critical to pipeline management and sales forecasting.

Let’s take an example.

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

Chart shows how Opportunity 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 May.

The breakdown shows that of this amount, 40K is currently at the Prospecting Stage, $50K at the Investigation Stage and so on.

This blog post explains four charts that use Opportunity Stages to give great insight on funnel size.

Furthermore, opportunity stages and the relationship with probabilities are essential for accurate sales forecasts. Read this blog post to find out more about sales forecasting in Salesforce.

 

Opportunity Stage Best Practices

There are five essential best practices that deliver effective opportunity stages in any sales environment.

1. Opportunity Stages are unambiguous

Many times I see opportunity stages that are vague.

This is a major mistake.

Why?

Because it’s impossible to get proper visibility of the sales funnel 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 don’t know and neither did they.

Best practice: Opportunity stages are unambiguous and salespeople understand the meaning and definition of each stage.

2. Opportunity Stages reflect the sales process

In the ideal world, 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 often difficult to know where we are in the customer’s buying process. With complex purchases, often the customer doesn’t even know.

The result?

Opportunity Stages should 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.

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 exactly how to do that.

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 likely to be different. Often it will be much shorter.

The way to handle this is by using Opportunity Record Types. Create different record types for each sales process that is clearly 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

Here’s what happens if you have too many Opportunity Stages.

 It's impossible to see the wood for the trees. Pipeline visibility reduces rather than increases.

In other words, it’s impossible to see the wood for the trees. Pipeline visibility reduces rather than increases.

This often happens when business try to get too granular in tracking opportunity movement. If your sales cycle truly is lengthy, create separate sub-stage opportunity stages.

Best practice: Don’t over complicate things. Stick to four or five pipeline stages for optimum funnel visibility.

4. Opportunity Stages are action oriented

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

There’s usually significant interaction with the customer during the sales process. In this scenario, action-oriented opportunity stages are better than milestone-based stages.

Qualifying rather than Qualified. Customer Evaluating rather than Proposal Sent.

This is because the Opportunity Stages track the status of the deal within the sales process over a period of time. That period of time might be weeks or even months. The sales person is likely to be doing a number of things to move the opportunity on during this period.

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

5. Opportunity Stages are up to date

This is an operational sales issue.

Salespeople must keep the opportunity stage on each opportunity up to date. If not, then the 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 May 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 sceptical 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 stages on opportunities. Emphasize this in pipeline reviews and sales performance meetings.

 

Recommended Opportunity Stages

Here are the opportunity stages used by many of our customer with B2B sales processes.

Prospecting.
Investigating (alternatives might be Discovery, Qualifying).
Evaluating.
Negotiating.
Closed Won.
Closed Lost.
Qualified Out.
No Purchase.

Let’s have a look at each one.

 

Prospecting Opportunity Stage

Opportunities in the Prospecting Stage represent your long-term pipeline.

Often no budget or timescale has been identified by the customer. The Close Date is uncertain and likely to be several months in advance. Indeed the customer – if asked – might not agree that a potential deal yet exists.

Many Prospecting opportunities will be qualified-out directly from this Stage. That’s fine. Either there was no solid opportunity that could be driven out. Or the sales person decided this opportunity wasn’t one to pursue.

But some of these opportunities will mature into viable and important pipeline deals.

Sometimes companies will filter opportunities at the Prospecting stage out of pipeline reports and dashboards. That’s fine, if you’re focusing on deals that might close this month or next month. But tracking the size of the Prospecting pipeline is an essential sales management activity.

 

Investigating Stage

Use a term such as Discovery or Qualification if you prefer. The sentiment is the same.

The potential for a deal exists. Positive actions are being taken on opportunities in this stage to determine two things.

Firstly, 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 rather than simply responding to it.

Secondly, are we a good fit (among potential other suppliers) for 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.

This doesn’t mean budget cannot be found. Demonstrate compelling value and it’s often surprising how funding can materialize.

 

Evaluating Stage

The customer makes a decision on which supplier to work with. A formal proposal or quote may have been given. But it may simply be that indicative pricing or costs estimates have been supplied.

One thing is for sure though. The value your company brings is being evaluated by the customer stakeholders.

Other activities might include proof of concept demos, customer reference visits or creation of a short video to demonstrate the solution.

 

Negotiating Stage

A close plan has been mutually agreed with the customer. This may include agreeing the commercial terms and sorting out the legal paperwork.

For advice on how to track each of these stages in a report and dashboard read, “If you only create one dashboard chart make it this one”.

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The customer has made a commitment to go ahead. In many cases this is based on a (hopefully electronic) signature on the contract. Time for celebration. Read about how to create opportunity win rate reports.  

Closed Lost

This is the standard salesforce value for deals that are not going ahead.

There is though, a problem with this stage value. Sales people 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 mark deals as Closed Lost means that many sales pipelines are over-inflated. They contain deals that are unlikely ever to be won. But no-one wants to change the status to Closed Lost.

So bring on two further opportunities stages.  

Qualified Out

Mutual agreement with the customer that there’s insufficient mutual benefit in this case.

The sales person is no longer pursuing the opportunity. Create this opportunity stage to capture management information on deals that are not being pursued.

But here’s the thing.

In the majority of cases, opportunities should only transition to this stage from the early stages of Prospecting or Discovery. Read how the From / To report describes the movement in Opportunity Stages.  

No Purchase

The deal is dead, but the customer has not made any purchasing decision.

Open opportunities in this state are the biggest source of over-inflated sales pipelines and forecasts. Create this opportunity stage to record the outcome of opportunities that no longer have legs.

Read how to create sales metrics that identify deals that are over-inflating the sales pipeline.  

Other sales processes

Not every sales deal has a gestation period of several months or longer.

The sales process for new deals might be protracted. But the same company might sell consumables associated with the core products.

These sales are more transaction-based. Here we can use more milestone-based opportunity stages. ‘Quote Sent’ for example, rather than Evaluating.

The same business might also sell support contracts that are renewed every year. These repeat sales might be covered by a different set of opportunity stages. 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) have sales processes that typically span several years. Typically selling to government agencies, these businesses have to operate within procedures and processes tightly defined by the purchaser.

A sub-stage field has been created to manage this additional complexity. The field captures the status of a deal within the overall opportunity stage. This approach is preferable to proliferating the opportunity stages. That’s because once more than four or five pipeline stages has been created it’s hard to see the wood for the trees in dashboard charts.

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

Read about the “3 common problems with Opportunity Stages and how to avoid them“.  

Opportunity Stage Exit Criteria

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

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

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

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

Instead, create what Brent Adamson (author of The Challenger Customer and The Challenger Sale) describes as a “customer-verified sales funnel”. “Sales people and their managers use a combination of rep activities and customer ‘verifiers’ or behaviors to track the progress of a deal. This change explicitly encourages reps to focus on achieving certain outcomes in the best way instead of simply executing activities in the 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.

But base these controls on the customer’s buying behavior, not simply 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.

The Kanban view in Lightning allows salespeople to click on the path arrow to move the opportunity to the next stage.

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

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

For many businesses, this is an important tool for helping salespeople to understand the specific meaning of each stage. It also means there’s 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.

The Lightning 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.

12 Must-Have Charts For Your Salesforce Dashboard

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How To Change Opportunity Stages In Salesforce

So that’s our comprehensive guide to Opportunity Stages in CRM and Salesforce?

Got a problem? Need more advice?

Don’t hesitate, get in touch and we’ll give you a helping hand.

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

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