Forecasting in Salesforce

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 ...................................................................... 21

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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
predicted

1. Better Sales Forecasting Through Process And Technology, July 2012
4

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 intelligence

5

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

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 forecasts

8

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:

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…
… and filtering opportunities based on Type,
using Opportunity Views

9

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
10

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

12

Creating forecast categories in Salesforce
1 Click the Opportunities tab and open an opportunity

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


3 Click Forecast Category in the list of fields


4 You can change the name of each Forecast Category

5 For each stage you can choose the Forecast Category you need

Salesforce screenshot Share this white paper!
13

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 B2B

14

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 time

16

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

Real time forecasts are better… Pipeline dynamics, as calculated and displayed
in real time by SalesClic for Salesforce

17

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”


The forecasting box of SalesClic for Salesforce
combines multiple, B2B-specific forecasting
methods
18

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 objectives

19

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

20

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

Forecasting in Salesforce

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