When Repeat Opportunities Are Right (And When They Are Not)
When it comes to managing repeat or recurring opportunities, companies often make one of two mistakes:
- They do use repeat opportunities when they shouldn't, and
- They don't use repeat opportunities when they should.
These mistakes happen when businesses try to figure out how to deal with commonly occurring scenarios where they receive multiple payments and must forecast revenue over time.
The consequences of these mistakes?
- Your sales process and opportunity stages are more complex than necessary.
- It's challenging to get accurate funnel visibility.
- Pipeline quality metrics on the size and quality of the funnel become distorted.
- Opportunity conversion rates or win rates are devoid of meaning.
- Revenue recognition and reports forecasting revenue over time are unreliable or hard to produce.
So, here are five examples of how repeat opportunities may—and may not—be appropriate in Salesforce. I'll explain whether recurring opportunities are the best way to handle each situation.
- Multi-year contracts.
- Proof of concepts.
- Free trials.
- Framework or umbrella agreements.
- Recurring orders.
I'll also reveal the question you can quickly answer to determine whether repeat or recurring opportunities are needed.
Recurring Opportunities Explained
Companies often consider creating repeat or recurring opportunities when they receive revenue over time. For example, when a three-year contract is invoiced annually, or a chargeable proof of concept precedes a longer-term contract.
The critical question to ask that helps you understand whether repeat opportunities are needed is whether future revenue is at risk.
If the answer is yes, then repeat opportunities are probably required.
However, you don't need recurring opportunities if the answer is no.
Let's see how that applies in the first scenario.
Multi-year Contracts
Based in Toronto, Applanix provides advanced positioning and orientation systems. Their motto is: "If it drives, flies, or floats, our tailored positioning solutions get you moving in the right direction."
Applanix provides warranty and support contracts for its hardware and software products, which last one, two, or three years.
Let's take the case of a three-year contract. There's an opportunity to manage the initial sale of the warranty. The customer signs a contract for three years but is invoiced annually.
However, the revenue in years two and three is not at risk because the customer has signed a three-year contract. Nevertheless, many companies make the mistake of creating separate opportunities for each year. They do this to track the revenue arising each year.
Instead, Applanix uses the GSP Product Schedules app to schedule revenue over time. The app allows Applanix to have complete visibility of revenue recognition and accurately forecast revenue over 36 months.
Improve forecasting by scheduling opportunity
revenue over time.
This approach also means spurious opportunities do not distort pipeline visibility, and Applanix has accurate and reliable opportunity win rate metrics.
But what about the renewal? Applanix wants to sell the customer a new warranty at the end of the contract, so a renewal opportunity that aligns with the end of the warranty period is automatically created using Salesforce Flow.
Proof of Concepts
In some businesses, the customer undertakes a chargeable proof of concept before committing to the primary purchase.
Sometimes, a multi-year contract covers the primary purchase, and we already know how to handle these.
But what about the proof of concept?
Based in London, Yapily provides data services to the banking industry. Its products are relatively complex and require effort from both Yapily and the customer to implement them.
Naturally, customers want to try before they buy, and Yapily facilitates this through a proof-of-concept implementation. The proof-of-concept fee covers Yapily's costs and ensures the customer's commitment to the trial.
How should we handle this in Salesforce?
The answer is two opportunities. The first opportunity relates to the proof-of-concept. The second refers to the primary purchase.
We take this approach because the customer does not explicitly commit to proceeding with the primary purchase once the POC is complete (they usually do, but it's not guaranteed).
The two opportunities' sales process and closing strategies are different, and their values vary significantly. Yapily wants to track both deals in the pipeline and allocate revenue recognition in Salesforce to the appropriate months. Using two opportunities enables the company to achieve this.
Free trials
Of course, not all pre-purchase periods are chargeable. In many cases, the customer receives a free trial period, with the option to purchase at the end of the trial.
Book4Time uses this approach. The Toronto-based company provides SaaS-based applications to major hotel chains worldwide. At the end of the free trial, customers can try out the software for a month and purchase it.
The company has only one opportunity to represent the deal. The Close Date is the end of the trial, and Trial/POC is a critical opportunity stage.
Manage subscription products in Salesforce
and track recurring revenue.
For Book4Time, tracking the monthly recurring revenue (MRR) and churn rates is critical. To do this, the company uses the GSP Subscription Manager app. The app provides advanced MRR and churn metrics, automated renewal opportunities and other features necessary for managing subscription-based products in Salesforce.
Repeat opportunities in framework agreements
Many companies agree on framework or umbrella agreements with customers, and I've written a comprehensive post on how to handle the various types in Salesforce, which you can find here:
4 Types of Framework Agreements You Can Manage in Salesforce.
Let's take an example of a drawdown agreement here and a 'repeat order' type in the section.
Gilbarco Veeder Root (GVR) is one of the world's leading manufacturers of gas pumps and retail equipment. Based in Greensboro, North Carolina, the company sells globally to the main gas and petrol retailers.
All parties benefit when GVR agrees to a long-term framework agreement with a customer. The customer gets price certainty, and GVR receives a purchasing commitment for a significant volume of gas pumps.
This commitment often involves a minimum and maximum number of pumps over a defined period. The customer 'draws down' the volume, usually in line with a gas station refit or expansion program. These orders come from various regions and divisions within the gas retailer and are often spread over several years.
GVR handles this using an opportunity to represent the framework agreement. The opportunity enables the company to manage the sales process and track the pipeline of framework agreements. However, the framework agreement only has a notional value—no money changes hands when signed.
The company also uses separate opportunities to represent the customer's orders.
Each opportunity has its own sales process with activities relating to technical specifications, delivery, stakeholder management, and fulfilment. However, the framework agreement covers the main terms, conditions, and pricing.
In other words, GVR uses repeat or recurring opportunities to manage and track the pipeline of deals that will result in physical orders and invoices. Filters are needed on reports and dashboards within Salesforce to display the appropriate opportunities, but this approach provides complete visibility of sales performance and clarity on upcoming production volumes.
Recurring Orders
Based in Kent, WA, Ammex is a leading supplier of disposable gloves and other personal protection equipment. The company sells its products to companies of varying sizes and industries.
Ammex aims to establish framework agreements with many large customers. The company uses an opportunity to manage the sales process associated with the framework agreement. Once agreed upon, the Ammex ERP system stores the pricing arrangements.
Customers place regular orders using the ERP system's portal. Because they are relatively small and frequent, these orders often occur without the direct knowledge of the Ammex account manager. In other words, repeat or recurring opportunities are not used.
However, the team creates key account plans using the GSP Account Planning app. Orders on the ERP system are pushed into Salesforce weekly and linked to the key account plan.
Create Key Account Plans that drive business
development and sales.
As a result, account managers have high-quality visibility into each customer's business volumes, purchasing trends, and performance versus target.
Steps You Can Take Now
Here are three actions you can take now.
- Ask whether future revenue is at risk in your business. That will help you decide whether you need repeat or recurring opportunities.
- Review the following apps.
- Revenue Schedules by GSP. Schedule opportunity revenue over time.
- Subscription manager by GSP. Everything you need to manage subscription products and track advanced MRR metrics in Salesforce.
- Account Planning by GSP. Create key account plans for critical customers in Salesforce.
- Read the blog post 4 Types of Framework Agreements You Can Manage in Salesforce.
Over to you.
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