00:00:02:03 – 00:00:24:13
John Smoak
In this video, we’re going to talk about defining your sales stages and naming your sales stages. In part one of three, we talked about naming stages. At this point we’re going to do our definitions. So first of all let’s start with our first stage. Whenever you have an identified opportunity, what are some of the what is some of the information you’re looking for?
00:00:24:15 – 00:00:49:23
John Smoak
Typically you’re looking to confirm the the viability of a prospect. You know, can they purchase do they have money? What’s their timing? Will this fix a problem? What made them be interested in something like this. So that’s typically our first stage. I’m calling that qualifying years could be different. Again these are just principles on how to define your stages and name your stages.
00:00:49:27 – 00:01:16:23
John Smoak
Yours very well could be different. The vast majority of the sales processes I’ve developed follow this process and have very generic definitions like this as well. The next stage we’ll call that stage two might be called a discovering stage, where you’re trying to uncover more information. You’re trying to confirm information like timing and budget and what is their decision making process.
00:01:16:23 – 00:01:39:19
John Smoak
And all the while, yes, you are trying to build credibility with the client, but you’re trying to gather as much information as possible. You’re trying to figure out the competition, if there is any it how likely they are they are to do it themselves, those types of things. So I call that stage discovering. You might call it validating.
00:01:39:21 – 00:02:09:24
John Smoak
There are any other names but any of that, whatever the definition you come up with, get your definition first and then name the stage. Next, I typically see things like validation, solution ING, those types of things where we’re validating what we learned already before maybe going to the next level, or we’re putting together solution, maybe floating some trial balloons with the client to get their take on your possible approach, get some feedback to make things better.
00:02:09:27 – 00:02:34:16
John Smoak
Then then you’ll go into more than likely a proposing stage, depending on how complex your legal terms and conditions are or how complex your offerings are. This could actually be a pretty complex stage if you have to get internal approvals for pricing, internal approvals to change terms and conditions, do you need to put together a presentation for the client?
00:02:34:16 – 00:03:00:11
John Smoak
They just need to put together a nice proposal. Or do you have some things that are determined that are that are pre do you have some things that are pre-built and proposal documents? Do you need to do a presentation? If you’re doing an oral or maybe in-person type presentation, that type of thing. This is where you would be putting those things together, possibly getting a lot of internal PiS on your proposal and that type of thing.
00:03:00:13 – 00:03:29:08
John Smoak
Once you have put together your proposal and shared it with the client, then you would go to your next stage. But in this stage, we’re actually doing a lot of internal work. We might float a trial closed with the client, especially if we have a sponsor. It may be that we’re going to do this proposal to our sponsor or someone who is supporting us with the prospect before we do the final formal presentation.
00:03:29:08 – 00:03:46:23
John Smoak
So we’re getting ready. Maybe you’re even doing some role playing with your manager. And then once we have proposed it, then we really go into what some people call closing, some people call negotiating. I’ve seen different names for this. And again, this is another one of those stages that could take some time. You might be going back and forth.
00:03:46:23 – 00:04:12:26
John Smoak
I’m on redlining legal terms and conditions. It just depends on how friendly your legal team is, how prospects, legal team is, where you’re getting those final terms and conditions. You’re probably also putting together timelines and putting together your internal team, possibly introducing your team to the client’s team. Those types of things. And then finally you go to a closed one stage.
00:04:12:28 – 00:04:51:28
John Smoak
Okay. So again, these don’t have to be your stages. I do like to use ING because you’re doing things, you’re qualifying, you are discovering information you are validating or solution in your proposing you for closing or negotiating. And ultimately you’re going to close. We’ll enter closed lost this opportunity. So those are just my guidelines that I recommend to you now for CRM systems like Salesforce, HubSpot, Zoho CRM, there’s also a requirement, once you have your stages, that you attach a probability to each of those stages.
00:04:52:02 – 00:05:19:12
John Smoak
I call that stage based probability. So these are always customizable to what you’re going to do. But an example might be the qualifying stage is at 0%. You don’t want to give any weighting to anything that is not qualified already. And then you might go discovering as 10% or 15 or 20, hold down the line all the way down to closing negotiating, which may be at 80, 85, 90% probability.
00:05:19:15 – 00:05:52:01
John Smoak
So again, I call that stage based probability. With CRM systems, when you move from one stage to another, your probability automatically changes. So in the scenario I’m showing here, if you moved from stage two discovering to stage three validating the probability, the standard probability percent field would go from 10% to 30% in this scenario. Now, while it’s in the validating or solution in stage stage three, you could change from 30% to 20 or 40 in a very subjective manner.
00:05:52:01 – 00:06:11:13
John Smoak
It’s not very objective, it’s just kind of a gut feel type of thing. The thing is, and the reason I call it stage based is because then when you change the stage again from stage three to stage four, it’s going to change to 60% probability. So it’s going to override the change you made. It always lines up with the stage.
00:06:11:13 – 00:06:36:18
John Smoak
The probability does until you change it. And then it stays that way until you change it again. Or you change your stage and then it goes along as well. Little teaser in part three of this video series, I’m going to show you how to get really good at forecasting probability. As a reminder, probability is really just a confidence level that you’re going to close a deal.
00:06:36:25 – 00:07:05:03
John Smoak
That’s what it is. Confidence level. I’m 60% confident. I’m 90% confident. My problem with stage based forecasting is you could have to deal that are in stage five rights closing, negotiating that last stage before won or loss. And one of those deals you feel really really good. About 95% confident. Another of those you might feel 60% confident with stage based probabilities.
00:07:05:03 – 00:07:25:25
John Smoak
They’re both going to come in at the same percentage level. In my case, 80%. It doesn’t take into account differences like in one. I’ve got a sponsor, I’ve got a lot of good feedback. They work with us a lot and provided a lot of information to us. So that’s why I feel 95% confident we’re going to win this deal.
00:07:25:27 – 00:07:51:14
John Smoak
The other one, I’m 50 or 60% confident, and that’s because they’ve been very close mouthed. They haven’t shared much information. I said that even though they didn’t share with me a sense that they had this put together by a competitor, and maybe they’re just using me as a check price, that type of thing. So even though I’m in the closing stages because I’ve proposed both of them, doesn’t mean I have equal confidence level.
00:07:51:14 – 00:08:18:09
John Smoak
So that’s one drawback of stage space probabilities. So again, think of probabilities as confidence level. Now another thing that is stage based is forecast category. And so same thing if I’m in the discovering stage and I’ve got that set to for example a pipeline category, I change to stage three. It might stay pipeline of a change. It’s stage four go to best case.
00:08:18:12 – 00:08:45:10
John Smoak
So forecast category has more to do with timing okay. And so when I do a forecast for the end of the quarter and I’ve got six weeks left to go, I might put commit on a forecast category of an opportunity down. Highly confident. I’m going to close between now and the end of the quarter. There might be another opportunity and just as confident.
00:08:45:10 – 00:09:11:01
John Smoak
So my confidence level in two different opportunities in this scenario is 95%. The thing is, I’m willing to commit one of those to this forecast period because we’ve already got all of the red lines completed. We have a date for signatures. Everything’s lined up. I have another one. I’m just as confident we’re going to win it. I just don’t know if it’s going to be this quarter or slide into next quarter.
00:09:11:01 – 00:09:33:24
John Smoak
There’s a lot of occasions coming up. We still got a little bit of work to do in terms and conditions. High level of confidence. Just don’t know what the timing is. That’s what we might mean by a best case scenario for this forecast period. I’m going to commit these three opportunities. Best case I may be able to pull in these other opportunities that I have listed as best case.
00:09:34:02 – 00:10:00:08
John Smoak
So that’s really the takeaway is the probability percentage is your confidence level. The forecast category is the timing. So I may have a forecast. Maybe I’m in the second month of a quarter and I’ve got two again two deals that I’m confident losing both of them I know I’m going to close one this month, but I’m not sure I’m going to close the second one.
00:10:00:08 – 00:10:20:28
John Smoak
So for this month I commit one and I say best case to the other. If we change the range of that forecast, instead of it just being this month, the second month of the quarter, let’s take it for the full quarter. I know I’m going to get both of those deals either this month or next month, certainly within the quarter.
00:10:20:28 – 00:10:46:21
John Smoak
So now a forecast category on that second opportunity instead of best case is commit. I am willing to commit to. We’re going to close it in this quarter, maybe not this month but in this quarter. So again probability percentage that is your confidence. You’re going to close it. Forecast category is the timing based on whatever the forecasting period is that you’re going to be looking at.
00:10:46:23 – 00:11:21:21
John Smoak
Now again I believe there are shortcomings to the probability percentages that are stage based. In our next video, I’m going to lay out a much better, more granular, objective way to handle probabilities confidence levels. And I’m also going to show some free tools that I use that I’m going to offer to send to you. If you sign up and give me your email, and I think you’re going to be really excited about what those more accurate forecasting processes are.