How to Choose Your Opportunity Stages
At the core of RevOps and Salesforce are Sales; at the core of Sales are Opportunities; and at the core of Opportunities are Opportunity Stages. However, in the hundreds of companies I have worked with to improve their processes, only a few have their stages right. The positive effects of having Stages right are colossal for a company, including forecast accuracy, improving salespeople's confidence, and getting the Sales-to-Marketing steps right. To help with this vital step, this blog explores how to get your Opportunity stages right by breaking down the concept into 5 categories.
Understand what an Opportunity Stage should be.
Based on best practice and my experience, I would recommend an Opportunity stage:
Is a chronological point in the sales process.
This is a point which would not tend to be reverted from, such as moving to a stage like ‘Proposal Requested’.
Is not an ongoing process like ‘Build Business Case’
Is easily understood by sales, finance and management
The name of the stage has to be clear throughout your organisation
A new starter should intuitively understand the name
Represents a distinct change in the likelihood of closing (winning or losing) the business.
An easy example is ‘Closed Won’ or ‘Closed Lost’; however, ‘Proposal Sent’ is also a good example.
Is not shown better elsewhere.
An example would be ‘Quote Sent’. This should be shown on the Opportunity with more detail such as how many Quotes have been sent and when. Therefore ‘Quote Sent’ should not be an Opportunity stage for many companies.
If you are using Leads, it is generally agreed that the Opportunity process starts once a Lead becomes sales-qualified (SQL) and is converted from a Lead or a marketing-qualified (MQL) status.
This may sound obvious; however, many companies deviate from the guidelines with stages such as ‘Build Business Case’, which falls foul of many of the rules.
Understand your Sales Process
Some companies already have Opportunity Stages, some use generic ones, and some have a woolly definition based on the salesperson's opinion. Whichever bucket you fall into, I would recommend holding a workshop with your salespeople. Following the workshop, you should understand an Opportunity's chronological steps. You want to finish with 5 to 8 Stages; however, you should record all possible steps at this stage.
To identify the steps, look for specific points in the sales that fit into the points in the previous section.
I have always found that drawing a process diagram with the various teams is vital to understanding their processes. It can also give you valuable insight into different levels of adherence to processes within your organisation. If you have multiple distinct teams, I recommend using the process diagrams created with the largest team to build on with the other teams. You will often find that the process is a lot more similar than you had previously thought.
Choose your Stages
Now you have your distinct stages, you probably need to reduce the number and ensure that they work for everyone. I once worked with a company with 64 Stages for their 65 salespeople due to organisational scar tissue. The approach we took to reduce them was to bucket them together. For instance, they had 12 stages for different loss reasons; we reduced this to 1 and added a Loss Reason field. We also found that they had stages with different names for different departments which could be easily combined into one to make reporting easier. This led to their having 8 active stages and being able to forecast as well as compare and integrate their processes. During this process, it became clear that one of their divisions had them right, and the other departments soon followed their lead. This is often the case; however, you will benefit from having a senior stakeholder involved to make final calls.
One call that needs to be made is on the final name of the Stage. This should be no more than two words, distinct, obvious, and relevant to your business. This is tougher than it sounds and many companies have pulled me in to help them decide on the naming element alone.
In defining your stages, make sure that you consider what their probability should be and write clear ‘entry and exit’ criteria. This will come in handy later on.
Test your Stages
Once you have your stages it is time to fire up a Sandbox with Opportunity data in it. For this reason, I recommend using a Partial or Full Sandbox. It is important that you have real historical data.
Once you have your Sandbox, change the Stages of the Opportunities to fit your new Stages. You should have a clear mapping of old to new stages, so this can be done via dataloader or Picklist replace. You will then be able to test key elements, namely:
Reports
If you need to make new reports for this process then do, don’t spend too much time trying to understand the filters on an outdated report that hasn’t been run in a year.
Probability
The number of Opportunities which reach this stage that then become closed won, not a finger in the air.
Validation rules
You will often need to alter the formulas if they ensure fields are populated at specific stages. I recommend using probability to control field population for future-proofing.
Other department's processes fit in.
Always consider the process from other departments like Marketing and Compliance.
The Admin should initially do this testing; however, it is vital that the Sales, Management, and related departments like Marketing also test. This should follow full UAT structures.
Post Change
Once this is all in and agreed upon, keep a close watch on who uses the stages correctly and run diagnostics quarterly to ensure that the probabilities are correct. This is vitality important and will highlight required changes, as well as training opportunities.
This process can take time to perfect but is very important. If you would like help with any part of this process, please don’t hesitate to contact us.
