Forecasting in Salesforce

an eBook by

Table of conTenTs

Why sales forecasting matters

The key role of the sales pipeline

Forecast Categories in Salesforce

Improving forecast accuracy

Additional sales forecasting resources

SalesClic background and contact information

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an eBook by

forecasTing accuracy is a key componenT of sales performance

Accurate forecasts are an essential part of resource planning

Recent research by Aberdeen Group1 shows that best-in-class sales performance is linked to forecast accuracy

Yet B2B sales forecasts are rarely accurate

They ensure that expenses match revenues

They provide the link between corporate and individual goals(performance measurement)

Companies that implement forecasts demonstrate higher revenue and margin growth… …as well as better attainment of quotas

Research by CSO Insights shows that less than half of B2Bsales opportunities close at the amount or in the timeframepredicted

1. Better Sales Forecasting Through Process And Technology, July 2012Share this white paper!

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http://www.csoinsights.com/Publications/Shop/Sales-Performance-Optimization




modern crm sofTware like salesforce is a greaT help

It is a centralized repository for sales and marketing information

It combines administrative, logistical and reporting capabilities

Its validation rules and automated updates foster data quality and consistency

Scalable sales and marketing database

Available anywhere, anytime

Flexible management of tasks, calendars, contacts, leads, opportunities, accounts…

Built-in report library and engine

Data quality is a prerequisite for business intelligence

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The opportunity stages in your sales pipeline should reflect your sales process

Creating pipeline stages in Salesforce

The 11 default Salesforce stages may not be appropriate for all businesses

We generally advise to favor simplicity (e.g. fewer, wellunderstood stages) over sophistication

Click the Opportunities tab and open an opportunity

In the Force.com menu on the right, choose View Fields

Click Stage in the list of fields

Use Opportunity Stages Picklist Values to create, reorder or replace pipeline stages

New: create a new stage (open, closed/won or closed/lost) and give it a closing probability

Reorder: change the order of your pipeline stage to reflect your sales process

Replace: replace an existing pipe-line stage / use this carefuly (the corresponding opportunities will be reassigned)

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your firsT sTep is To creaTe a sales pipeline


Salesforce screenshot

Salesforce screenshot7

http://www.salesclic.com/sales-funnel-blog-en/the-sales-funnel-how-should-it-be-structured/




Tips for creaTing The righT pipeline

Create appropriate tasks for each stage in your pipeline

Managing existing and new business opportunities in a single pipeline is a common challenge

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

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 forecasts


http://appexchange.salesforce.com/listingDetail?listingId=a0N30000001y3VzEAI




managing sales processes in salesforce




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To create Sales Processes in Salesforce:

“Sales Processes” is a feature available in the Enterprise and Unlimited editions of Salesforce

Distinguishing between existing and new business in Group and Professional is less convenient

Go to App Setup > Opportunities > Sales Processes

First, create a “central pool” of pipeline stages

Then, allocate stages to your multiple pipelines

It lets you manage multiple sales pipelines, potentially withvarying structures (number and name of stages)

We suggest using simple and versatile pipeline stage…

… and filtering opportunities based on Type, using Opportunity Views




should you use closing probabiliTies?

The weighted pipeline is a common forecasting technique

Problems

Conclusion

Each opportunity comes with a closing probability

Forecast = Amounts x Probabilities (for a set of closing dates)

Opportunities are either 100% won or 100% lost…

…and judgmental probabilities are notably inaccurate

Closing probabilities work in 2 situations

Relying on them can be misleading

Super tight sales processHigh-volume, transactional sales

Suppressing them is not possible in Salesforce, but you can choose to hide them


http://www.salesclic.com/sales-funnel-blog-en/should-you-really-decompose-closing-probabilities/




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forecasT caTegories – The concepT

They are a parallel ordering of opportunities

“Forecast Categories” are the basis for Salesforce’s standard forecasting method

The correspondence between pipeline stages and forecast categories is based on your experience

The categories are common to all opportunities…

…and reflect their likelihood to close

The allocation of opportunities to forecast categories is based on sales rep declarations (though subject to review)

The opportunities contained in the pipeline are allocated to forecast categories based on how advanced they are in the sales process

Suspect

Pipeline stages Forecast categories

Prospect Pipeline

Analysis Best Case

Negotiation Commit





creaTing forecasT caTegories in salesforce

Click the Opportunities tab and open an opportunity

In the Force.com menu on the right, choose View Fields

Click Forecast Category in the list of fields

You can change the name of each Forecast Category For each stage you can choose the Forecast Category you need

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sTrengThs and weaknesses of forecasT caTegories

Strengths

Weaknesses

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

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 B2B


http://www.salesclic.com/sales-funnel-blog-en/the-importance-of-closing-dates-in-b2b-sales-forecasting/




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avoiding The Time Trap

B2B sales forecasts are very sensitive to closing dates

Solutions imply smart, real-time monitoring of 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

Hunt down outdated opportunities

Identify stagnating opportunities early

Check expected closing dates 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 time


SalesClic screenshot

http://www.salesclic.com/white-papers/a-test-of-forecasting-methods/




leveraging your hisTorical daTa

Use your pipeline dynamics to inform and potentially amend your judgment

There are a few prerequisites to using your historical data for sales forecasting

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

You need a track record of at least a full sales cycle

You want to use daily data points

Real time forecasts are better…


Pipeline dynamics, as calculated and displayed in real time by SalesClic for Salesforce





using mulTiple forecasTing Techniques

Forecasting research is adamant: using multiple methods always improves forecasts

A potential “forecasting portfolio” :

The weaknesses of multiple, weakly correlated methods tend to average out

In that context, even 100% judgmental forecasting methods help

A simple average works

Salesforce’s forecast categories Weighted pipeline using historical closing probabilities and stage durations

Forecast based on “daily closing rates”


The forecasting box of SalesClic for Salesforce combines multiple, B2B-specific forecasting methods


https://docs.google.com/a/nimble-apps.com/document/d/1BjTKxi3zXFu75QOXrqbRfDT_lIXAiDPis-qitfWb4cs/edit




building deTailed scenarios

Sales simulations have multiple advantages in B2B

Useful tips to build better sales simulations

They protect your forecasts against the elephants in your pipeline

They flesh out the implications of your assumptions

They let you assign more realistic quotas

Focus on the story, not the outcome

Build multiple sales scenarios

Involve multiple stakeholders

Work backwards from objectives


SalesClic for Salesforce lets you build and save detailed, opportunity-by-opportunity “what if” scenarios


http://www.salesclic.com/sales-funnel-blog-en/4-tips-to-improve-your-sales-scenarios/




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 reps


http://www.salesclic.com/white-papers/a-test-of-forecasting-methods/

http://www.salesclic.com/sales-funnel-blog-en/should-you-really-decompose-closing-probabilities/

http://www.salesclic.com/sales-funnel-blog-en/4-tips-to-improve-your-sales-scenarios/

http://www.salesclic.com/sales-funnel-blog-en/rehabilitating-the-judgement-of-sales-reps/




conTacT us

About Salesclic

How to reach us

SalesClic is a sales pipeline visualization, analysis and forecastingsolution for B2B companies.

SalesClic integrates seamlessly with Google Apps, Highrise andSalesforce.

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Forecasting in Salesforce

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