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.
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:
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.
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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.
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.
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.
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.
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.
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.
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.
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.
Investigating ( or Discovery).
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.
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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.
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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.
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.
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.
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.
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.
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