Adds Weighted Probability for More Accurate Sales Forecast
The majority of CRM software systems today provide a standard model for reporting monthly and quarterly forecasts. It is based on where each opportunity is in the sales cycle and how likely the sales representative believes they are to win the business. The forecasted amount remains the same unless the representative manually changes it. The probability of winning the business however increases as the opportunity moves through the sales cycle.
Example 1: Considering only Forecasts with a High Probability
In the example below, we have a new business opportunity for $5,000 dollars. As the opportunity moves from the introductory to the proposal stage, the probability that the representative will win the business increases from 20 to 80 percent. Our forecast will show that there is an 80% chance of winning this deal for a total of $5,000 dollars.
Discovery
Proposal
20%
80%
$5000
$5000
Using this model, Sales Managers typically report on sales with a high probability of closure. While this approach (based solely on probability of winning the sale) may be suitable for some, it does not always provide management with an accurate representation of the monthly or quarterly revenue the company will realize.
Example 2: Using Weighted Forecast Amounts
Let’s say you are in the office furniture business and you have a new business opportunity for that same $5,000 dollars. You are in the proposal stage and give it an 80% probability of winning the sale, but this opportunity is a bit different. It is a sale for five new desks, five new chairs, and three bookcases. You are pretty confident that you are going to win the sale for the desks and chairs, but the bookcases are a ‘nice to have’ and the client has expressed a reluctance to buy them. In example one, you have given the sale an 80 percent chance of closing for the full $5,000 dollars, but this is no longer accurate. The bookcases are $1,000 dollars and the client indicated they might not purchase them so unless the sales representative manually goes into the system and changes the dollar amount to $4,000 dollars you have an inaccurate forecast.
Commence CRM provides you with the ability to use a weighted average for the sale and calculates the dollar value for you.
In this example, 80% is the weighted average for the actual dollar value of the sale (i.e the percentage of business you expect to win). A weighted average of 80% on a $5,000 sale is, you guessed it, $4,000 dollars. The system automatically lists this as the forecasted amount and updates the reports and sales funnel resulting in a more accurate representation of the company’s monthly and quarterly revenue.
Discovery
Proposal
20%
80%
$1000
$4000
What’s nice about Commence CRM is that each new opportunity can be managed the way you prefer, some based solely on probability of closure and some on weighted average. Very few CRM solutions offer this level of functionality for sales.
About Commence:
Commence Corporation is a leading provider of CRM software for small to mid-size businesses. The company offers a robust suite of business applications that rival enterprise level products costing much more. Capterra.com and Business-Software.com recently listed Commence CRM as one of the “Most Popular” CRM products in the industry.
source http://www.commence.com/blog/2017/04/25/commence-crm-leapfrogs-competition/
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