Forecasting in Salesforce
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Forecasting in Salesforce

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Lear how to generate sales forecasts in Salesforce and improve on Salesforce's standard forecasting features

Lear how to generate sales forecasts in Salesforce and improve on Salesforce's standard forecasting features

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  • 1. an eBook by
  • 2. Table of contents Why sales forecasting matters .................................................................................................. 3 The key role of the sales pipeline .............................................................................................. 6 Forecast Categories in Salesforce ............................................................................................ 11 Improving forecast accuracy ...................................................................................................... 15 Additional sales forecasting resources .................................................................................... 20 SalesClic background and contact information ...................................................................... 21Share this white paper!
  • 3. an eBook by
  • 4. Forecasting accuracy is a key component of sales performance Accurate forecasts are an essential part of resource planning They ensure that expenses match revenues They provide the link between corporate and individual goals (performance measurement) Recent research by Aberdeen Group1 shows that best-in-class sales performance is linked to forecast accuracy Companies that implement forecasts demonstrate higher revenue and margin growth… …as well as better attainment of quotas Yet B2B sales forecasts are rarely accurate Research by CSO Insights shows that less than half of B2B sales opportunities close at the amount or in the timeframe predicted1. Better Sales Forecasting Through Process And Technology, July 2012 Share this white paper! 4
  • 5. Modern CRM software like Salesforce is a great help It is a centralized repository for sales and marketing information Scalable sales and marketing database Available anywhere, anytime It combines administrative, logistical and reporting capabilities Flexible management of tasks, calendars, contacts, leads, opportunities, accounts… Built-in report library and engine Its validation rules and automated updates foster data quality and consistency Data quality is a prerequisite for business intelligenceShare this white paper! 5
  • 6. an eBook by
  • 7. Your first step is to create a sales pipeline The opportunity stages in your sales pipeline should reflect your sales process The 11 default Salesforce stages may not be appropriate for all businesses We generally advise to favor simplicity (e.g. fewer, well understood stages) over sophistication New: create a new stage (open, Creating pipeline stages in Salesforce closed/won or closed/lost) and give it a closing probability 1 Click the Opportunities tab and open an opportunity 2 In the Force.com menu on the right, choose View Fields Reorder: change the order of your pipeline stage to reflect your sales process Salesforce screenshot 3 Click Stage in the list of fields Replace: replace an existing pipe- line stage / use this carefuly (the corresponding opportunities will be 4 Use Opportunity Stages Picklist Values to reassigned) create, reorder or replace pipeline stages Salesforce screenshot Share this white paper! 7
  • 8. Tips for creating the right pipeline Create appropriate tasks for each stage in your pipeline Follow the buying process of your clients: your tasks for each stage of your pipeline should reflect their purchasing behavior Resist the temptation to multiply tasks! Too many tasks often reduce adoption and data quality A neat (and free) tool to manage stage tasks in Salesforce: Sales Coach Managing existing and new business opportunities in a single pipeline is a common challenge It is often easier and faster to sell into existing accounts Using the same pipeline to manage existing and new business opportunities can distort your sales forecastsShare this white paper! 8
  • 9. Managing sales processes in Salesforce “Sales Processes” is a feature available in the Enterprise and Unlimited editions of Salesforce It lets you manage multiple sales pipelines, potentially with varying structures (number and name of stages) To create Sales Processes in Salesforce: Salesforce screenshot Go to App Setup > Opportunities > Sales Processes First, create a “central pool” of pipeline stages Then, allocate stages to your multiple pipelines Distinguishing between existing and new business in Group and Professional is less convenient We suggest using simple and versatile pipeline stage… Salesforce screenshot … and filtering opportunities based on Type, using Opportunity ViewsShare this white paper! 9
  • 10. Should you use closing probabilities? The weighted pipeline is a common forecasting technique Each opportunity comes with a closing probability Forecast = Amounts x Probabilities (for a set of closing dates) Problems Opportunities are either 100% won or 100% lost… …and judgmental probabilities are notably inaccurate Conclusion Closing probabilities work in 2 situations Super tight sales process High-volume, transactional sales Relying on them can be misleading Suppressing them is not possible in Salesforce, but you can choose to hide them Share this white paper! 10
  • 11. an eBook by
  • 12. Forecast categories – The concept “Forecast Categories” are the basis The correspondence between pipeline stages for Salesforce’s standard forecasting and forecast categories is based on your experience method Pipeline stages Forecast categories They are a parallel ordering Suspect of opportunities The categories are common to all opportunities… Prospect Pipeline …and reflect their likelihood to close Analysis Best Case The allocation of opportunities to forecast categories is based on sales rep declarations (though subject to review) Negotiation Commit The opportunities contained in the pipeline are allocated to forecast categories based on how advanced they are in the sales process Share this white paper! 12
  • 13. Creating forecast categories in Salesforce1 Click the Opportunities tab and open an opportunity2 In the Force.com menu on the right, choose View Fields Salesforce screenshot3 Click Forecast Category in the list of fields Salesforce screenshot Salesforce screenshot4 You can change the name of each Forecast Category5 For each stage you can choose the Forecast Category you need Salesforce screenshot Share this white paper! 13
  • 14. Strengths and weaknesses OF FORECAST CATEGORIES Strengths This method uses whole opportunities, not percentages, thus reflecting the hit or miss nature of B2B sales In Salesforce, managers can review and potentially revise (based on their experience) the allocation of opportunities to forecast categories They can also consolidate the resulting sales forecasts at various levels of their Salesforce organization Weaknesses For all its thoughtfulness, this forecasting method remains 100% judgmental It doesn’t specifically deal with closing dates, which are the main source of forecasting errors in B2BShare this white paper! 14
  • 15. an eBook by
  • 16. Avoiding the Time Trap B2B sales forecasts are very sensitive to closing dates Small errors on closing dates can generate large errors on sales forecasts Research shows that closing dates are frequently optimistic Potential (and distorted) link between closing dates and discounts Solutions imply smart, real-time monitoring of closing dates Hunt down outdated opportunities Identify stagnating opportunities early Check expected closing dates SalesClic screenshot against historical performance The red dots in SalesClic for Salesforce leverage the historical data stored in your Salesforce to help you spot outdated closing dates and stagnating opportunities in real timeShare this white paper! 16
  • 17. Leveraging your historical data Use your pipeline dynamics to inform and potentially amend your judgment Your Salesforce database contains a treasure trove of untapped business information (e.g. historical closing probabilities, durations and time-to-wins) Opportunity Views let you refine your analysis by product line, deal amount and territory for an in-depth understanding of your sales process There are a few prerequisites to using your historical data for sales forecasting You need a track record of at least a full sales cycle You want to use daily data points SalesClic screenshot Real time forecasts are better… Pipeline dynamics, as calculated and displayed in real time by SalesClic for SalesforceShare this white paper! 17
  • 18. Using multiple forecasting techniques Forecasting research is adamant: using multiple methods always improves forecasts The weaknesses of multiple, weakly correlated methods tend to average out In that context, even 100% judgmental forecasting methods help A simple average works A potential “forecasting portfolio” : Salesforce’s forecast categories Weighted pipeline using historical closing probabilities and stage durations Forecast based on “daily closing rates” SalesClic screenshot The forecasting box of SalesClic for Salesforce combines multiple, B2B-specific forecasting methodsShare this white paper! 18
  • 19. Building detailed scenarios Sales simulations have multiple advantages in B2B They protect your forecasts against the elephants in your pipeline They flesh out the implications of your assumptions SalesClic screenshot SalesClic for Salesforce lets you build and save They let you assign more realistic quotas detailed, opportunity-by-opportunity “what if” scenarios Useful tips to build better sales simulations Focus on the story, not the outcome Build multiple sales scenarios Involve multiple stakeholders Work backwards from objectivesShare this white paper! 19
  • 20. Additional sales forecasting resources White paper – A test of B2B sales forecasting methods Blog article – Should you really decompose closing probabilities? Blog article ­ 4 tips to improve sales scenarios – Blog article – Rehabilitating the judgment of sales repsShare this white paper! 20
  • 21. CONTACT US About Salesclic SalesClic is a sales pipeline visualization, analysis and forecasting solution for B2B companies. SalesClic integrates seamlessly with Google Apps, Highrise and Salesforce. How to reach us Send us an email Send us a tweet Visit our AppExchange page Visit our LinkedIn page Visit our website Visit our Facebook page © Nimble Apps Limited - 2012 21