Is Your Sales Funnel Big Enough to Reach Your Revenue Target?
Many managers that use salesforce are still not gaining the insight they expected about the sales funnel and their revenue goals.
Sure, they’ve got salesforce dashboards set up. These give visibility of the sales funnel and sales performance. But its still a challenge to create a robust sales forecast. And they can’t use salesforce to give a definitive answer to that most fundamental of questions.
Is my sales funnel big enough to make my revenue target?
But it’s worse than that. Knowing you’ve enough sales funnel to make your target for this month is one thing. But what if it only contains early-stage Opportunities? Deals that may take two or three months to close. How confident can you be then of achieving this months’ target?
Fortunately there’s a sure-fire way to use salesforce.com to know whether you’ve enough sales funnel of the right type to meet your revenue target. Not just the target for this month. The quarter’s sales target too. Indeed, businesses that have configured salesforce in the way we describe here, can get a clear picture of how likely they are to achieve the full year’s target. Here’s how it works. And when you’re done watch the accompanying video.
Monthly Sales Target
First you need a new custom object and a new tab. Let’s call it Monthly Sales Target, although it doesn’t really matter how it’s named. If Monthly Sales Quota, Revenue Objective or Monthly Sales Forecast make more sense in your business, that’s fine.
The Monthly Sales Target is where the sales target per person, per month, will be stored. There’ll be a record in salesforce for each sales person for every month of the year. If you track performance against target quarterly, rather than monthly, that’s fine. There’s simply going to be four records per sales person per year, rather than 12.
The ‘Month’ and ‘Year’ fields on the Monthly Sales Target tell us the time period to which the target relates.
Here’s the most important field, Sales Target. This is the target or quota for the sales person for that month. Every month may have the same Sales Target figure, or they may vary to reflect seasonal trends. It’s up to you.
Compare Sales Funnel to Monthly Sales Target
So how do you know whether you’ve enough sales funnel to meet the Sales Target figure?
You need some code that automatically links each Opportunity to the relevant Monthly Sales Target. You can either build the code yourself or you can have us implement it for you. If we do it, reckon on around 5 days of work including the configuration, reports and dashboards.
Here’s what the code does. It looks at the Opportunity Owner and the Opportunity Close Date. Then it links the Opportunity to the Monthly Sales Target that matches the Owner and the From / To dates.
If the Close Date subsequently changes, then the code ‘unhooks’ the Opportunity from that particular Monthly Sales Target and links it to a new one.
Sales Funnel Metrics
Next, the code ‘rolls-up’ the value of all Opportunities to the Monthly Sales Target.
Now you get some critical metrics on the Monthly Sales Target to help you understand whether you’ve enough sales funnel to meet your revenue target. These include:
- Won Amount. The value of all Opportunities that have an Opportunity Stage of Closed Won.
- Funnel Amount. The value of all Opportunities in the sales funnel.
- Weighted Sales Funnel. The value of all Opportunities in the sales funnel, based on the Expected Amount (the Opportunity Amount multiplied by the Probability).
- Expected Revenue. The value of Closed Won Opportunities plus the Weighted Sales Funnel.
This last one is the killer metric. It’s the figure that shows whether this sales person has enough sales funnel, combined with the business they’ve already closed, to meet their sales target. In our example above, the month target is £30,000, but the Expected Revenue is just under £25,000. We don’t have enough! This is emphasised in the percentage comparison figures on the right, and the embedded chart showing a shortfall.
But there’s more to it than that. Look at the chart to the right of the salesforce page. It provides more detail on the sales funnel Opportunities associated with this Monthly Sales Target record.
Let’s say you look at the Monthly Sales Target for the current month. If your deals typically run through a 90-day sales cycle, then you don’t want to see very much in the Prospecting Stage. The likelihood is that these deals aren’t going to close in the current month. Alternatively, if it’s the Monthly Sales Target for three months’ time, then sure, lots of early-stage funnel Opportunities are a good thing.
Sales Funnel Dashboard
But what about the company or team-level sales target. Is the sales funnel big enough to meet those targets? The dashboard chart and underlying report give us that information. And using the Expected Revenue, the reports give us a robust sales forecast, one that will stand up to detailed scrutiny.
Of course none of this replaces the need for proper sales funnel management. The Opportunity Probability still needs to be reliable in each case. But it does give the sales manager the tools necessary for effective sales funnel management. This is especially the case if the Monthly Sales Target reports are used in conjunction with other salesforce dashboards and reports that identify the poor quality deals that over-inflate your sales funnel. Weed out the lame ducks that give a false sense of future revenue!
Let us know if you’d like our help to know whether the sales funnel in your organisation is big enough to meet your sales target.
Watch Gary demonstrate the salesforce funnel management solution described in this blog in this video.
This post was originally published by The Gary Smith Partnership at http://garysmithpartnership.com/sales-funnel/.
About the Author
Gary Smith is a CRM industry veteran and implementation specialist. He has extensive experience in delivering both the technology enablers and the business change required for full benefit realisation. Follow Gary on LinkedIn
As well as our own events and webinars, Gary regularly speaks at conferences to share his experience and expertise in helping businesses all over the world significantly grow revenue.
Gary is a certified salesforce.com Sales Cloud and Service Cloud Consultant and a Marketo Certified Consultant. He also has an MBA gained with Distinction from London’s City University.
Gary is also a British Cycling qualified coach and you’ll find him most Saturday mornings at the Lea Valley Youth Cycling Club in east London teaching kids how to get down a steep mountain biking course quickly and safely!
Find out how Gary and his team work with clients around the word by visiting our website www.garysmithpartnership.com.