How to Optimize Your Opportunity Amounts

17123250059_5479539f4f_z

A deal closes. The gong sounds. And after the clapping ends, what’s one of the first question everyone asks?

How much is it worth?

That number can be a little complicated. Sure, a deal might be for $75,000. But you have to drill down a little deeper because that figure mean a lot of different things. For instance, is it just for one year or longer? The answer to that can lead to a ripple effect of other questions that can have an impact on things like the commission paid to the sales rep, maybe a referral bonus to a partner, when you need to think about the renewal as well as cross-sell and upsell possibilities.

The trouble is that in native Salesforce, there’s only one field for an Opportunity — the Amount.

Before Result

When I look at an Opportunity, though, I want to know everything about it. That’s because when my manager has questions, I go off whatever is in Salesforce. I can’t emphasize this enough: Everything should be clearly documented in Salesforce so everyone can see all of the relevant numbers. That will allow you to understand the complete terms of an Opportunity.

So, how do we go about adding other relevant information? There’s a simple way to eliminate any possible confusion around an Opportunity. At LeanData, we create custom fields associated with an Opportunity that add important information for Contract Term, Annual Contract Value (ACV) and Monthly Revenue Renewal (MRR).

STEP ONE: First, to create a Contract Term field you need a new custom field on your Opportunity object. Make sure to select Number as your Data Type. Name this field Contract Term and customize any other required field information. Then you need to determine the field’s level of security and which page layout to place it on. Once you’ve done this, you’ll now be able to enter the Contract Term — length of the contract — for that opportunity. The Contract Term will be used to calculate other metrics, including Annual Contract Value and Monthly Revenue Renewal.

Step 1

STEP TWO: Create an Annual Contract Value field on your Opportunity object. This time, make sure to select Formula as your Data Type. Enter Annual Contract Value as your field label and select Currency as the Formula Return Type.

On the Enter Formula Page, make sure that the Simple Formula tab is selected. Opportunity also should be the value in the Select Field Type drop-down menu. Then click on Insert Field and select Amount in the drop-down menu. Now, click on Insert Operator and select “/ Divide.” Then select Insert Field again choose your newly created Contract Term field. This will divide the Amount field by the value in the Contract Term field. Just to be safe, I like to then click on Check Syntax just to make sure there are no syntax errors. Then you need to determine the field’s level of security and which page layout to place it on. Once you’ve done this, you’ll now be able to see the Annual Contract Value of the opportunity.

Step 2 - NEW

STEP THREE: Finally, we’re going to create a Monthly Recurring Revenue field. We do this by creating a new custom field on your Opportunity object. Make sure to select Formula as your Data Type. Enter Monthly Recurring Revenue as your field label. Now select Currency as the Formula Return Type.

On the Enter Formula Page, make sure that the Simple Formula tab is selected. Opportunity also should be the value in the Select Field Type drop-down menu. Then click on Insert Field and select your newly created Annual Contract Value field. Now, click on Insert Operator and select “/ Divide.” In the formula box, enter “12” after the “/” symbol. This will take the value in the Annual Contract Value field and divide it by 12. Again, just to be safe, I click on Check Syntax to make sure there are no errors. Then you need to determine the field’s level of security and which page layout to place it on. Once you’ve done this, you’ll be able to see the Monthly Recurring Revenue of the annual contract value of the opportunity.

Step 3 - NEW

RESULT: Now whenever I go to an Opportunity, I don’t just see the Opportunity Amount. I can see the full picture of the length of the contract (Contract Term), the Annual Contract Value and the Monthly Recurring Revenue.

After Result

Now I’ll understand the whole story when we’re celebrating that $75,000 deal.

 

 

About the Author

Jonathon J. Leon Guerrero is a pre-sales solutions consultant and head of Sales Operations at LeanData.

More Content by Jonathon J. Leon Guerrero
Previous Article
Competing Sales Ops Roles: Fixer Versus Strategist
Competing Sales Ops Roles: Fixer Versus Strategist

When the research firm TOPO holds periodic gatherings for sales operations professionals, the sessions typi...

Next Flipbook
A Lead's Journey to Find the Right Home
A Lead's Journey to Find the Right Home