8 Managing Sales Revenue
Sales revenue reflects the potential income of a company. Companies use opportunity revenue data to analyze their sales pipelines and win/loss trends, manage the performance of their resources, and generate revenue forecasts.
Summary of Features
The key features of managing sales revenue include the following:
- Adding to an opportunity products and product groups the customer is interested in, either through the sales catalog (if integrated) or by selecting directly from inventory
- Entering revenue amounts for items (generally, units multiplied by price), which then become projected revenue
- Setting revenue-line item attributes, such as forecast inclusion, price, quantity, close date, and win probability
- Managing recurring revenue items, such as services or training plans
- Allocating and managing the sales credit amounts that opportunity team members receive
- Mass updating revenue lines, a feature that allows salespeople to select multiple revenue lines in an opportunity and apply common changes
Revenue items are products, services, or other items a customer might be interested in purchasing. You add revenue items by selecting a product group or product to associate with an opportunity. Revenue items are summed to calculate the opportunity revenue.
Revenue Item Pricing
When you create a revenue item, you can add a quantity and an estimated price. The application calculates the revenue by multiplying the estimated price by the quantity. You also can enter the revenue directly.
Note: When you update the revenue amount, the application does not update the quantity or estimated price.
Opportunity functionality provides a robust interface that allows sales personnel to add, manage, and track sales revenue. This topic discusses the main features of the revenue region in opportunities.
Using the Revenue Region
Use the Revenue region within the edit opportunity UI to add, remove, and manage revenue items.
To add a revenue item, add a row in the revenue table. Select either an item or a group in the product area of the table. If selecting a group, add a product group from the list of product group names. If selecting an item (single product), add the product from the list of products. To select product groups or individual product items from the sales catalog, browse the sales catalog, find the desired group or item, and add as a line in the revenue table. Alter the other editable fields as desired. Note the following about the field behavior:
- Close Date: Indicates the expected close date of the revenue item; initial value is the opportunity-level close date
- Forecast: Displays a check mark if the revenue item matches forecast criteria. Updated as soon as any of the following attributes are changed, without waiting for the you to save the record: Product Group, Quantity, Estimated Price, Revenue, Win Probability, Revenue Type, Expected Revenue, and Status.
- Product: For Type, select either Item or Group, then select associated group or product (see Product Selection, below, for more information)
- Quantity: Initial value is null or zero
- Estimated Price: Users can enter an estimated price, or deploying companies can use an external pricing engine
- UOM: Initial value based on product or product group selected; application picks the first UOM for the item in the list
- Revenue: If not overridden, application multiplies price by quantity
- Currency: Initial value is the opportunity-level currency
- Status: Initial value is in a category meaning Open; application picks the first status, alphabetically, belonging to the category
- Win Probability: Initial value is the opportunity-level win probability
- Best Case (Revenue): Initial value is revenue for the item or group (providing Revenue is greater than Best Case)
- Worst Case (Revenue): Initial value is null
- Sales Channel: Sales channel from which the opportunity originated; typically Direct or Indirect
- Include in Forecast: Initially set to When matches forecast criteria, but can be overridden to Always or Never
- Lock Owner: Checked value means revenue owner cannot be reassigned during territory realignment, nor does deal protection apply
- Partner: Organization participating in the sales effort for the revenue line
- Territory: Displays automatically assigned territories matching the product dimension
- Competitor: Initial value is null
- Reason: Used to enter reason sale was lost
- Actual Close Date: Read-only field set by the application automatically when user sets the status to a closed status.
Product selection in opportunities enables you to pick the most appropriate product for the customer.
In opportunities, you choose products (revenue items) using one of two methods:
- Product or product group selector: When you know the exact product to sell, select the product using the product selector. If you don't know the exact product to sell, select a product group using the product group selector, without selecting a product. You can search for products based on product name and description. You can drill down on a product name to view additional information about a product. By default, the product group selector displays the same set of product groups available in the sales catalog.
- Sales catalog: In addition, you can browse the sales catalog to learn product details, search for products, or compare products. For more information on the sales catalog, see help topics for sales catalog.
All of the product selection mechanisms listed here are integrated with eligibility rules, if implemented. Eligibility rules ensure that sales personnel only offer the products that the customer is eligible to purchase.
Specifying a product on a revenue item is optional. During an early sales stage, you may not know the exact product to sell. However, you must specify either the product or the product group on a revenue line. You can't, however, add both a product and a product group on a single revenue line.
Adding Multiple Products at Once
You can add multiple products at once by selecting several products in the product selector and adding them to the revenue region.
Products are only committed to the database when you save or close the opportunity.
You can filter the product selector to only display product items or product groups within your sales territory.
Entering Quantity, Estimated Price, and Revenue
You can enter the quantity, estimated price (also known as unit price), or revenue amount for a revenue line. For automatic pricing, companies can integrate with an external pricing system.
The application determines the revenue amount by multiplying estimated price by quantity. You can change the default revenue amount; when you do, the application does not update the quantity or estimated price for the revenue line item.
Specifying Product Unit of Measure
Typically, you specify the unit of measure (UOM) for a product sold on a revenue line. For example, a product may be charged per minute, per day, or per case.
When you select a product from the product selector or the sales catalog, the application automatically enters the default UOM for the item. You can, however, enter a different UOM. When you do so, the application does not update the quantity or estimated price associated with the product.
The UOM list of values displays only the UOMs applicable for the product.
The product and product group selectors enforce eligibility rules that help you sell only the products that customers are eligible to purchase. For example, you cannot sell a wireless plan that is not available in the customer's geographical area. Depending upon setup, you may or may not be able to see ineligible products in the UI.
Companies use sales credits to report on salesperson performance and quota attainment, to aid in compensation calculation, and to facilitate forecasting by territories. Sales credit recipients and revenue amounts roll up the resource hierarchy for pipeline reporting and quota attainment.
You assign sales credits against individual revenue items using the Assign Sales Credits screens. When a revenue item is first added to an opportunity, the application sets the user who added it as the sole sales credit recipient receiving 100 percent of the sales credit.
Revenue Sales Credits
When assigning revenue sales credits, keep in mind:
- Only internal resources are eligible as revenue credit recipients.
- Revenue sales credits must add up to 100 percent.
- The Forecast Territory can be set to any territory assigned to the revenue item with Revenue or Revenue and Nonrevenue Forecast Participation.
Nonrevenue Sales Credits
When assigning nonrevenue sales credits, keep in mind:
- Both internal and external (for example, partner) resources are eligible as nonrevenue credit recipients.
- Nonrevenue sales credits do not need to add up to 100 percent.
- If the selected Allocation Style is Proportional to Revenue, the sales credit amounts adjust automatically and proportionally when the revenue item amount changes.
- If the selected Allocation Style is Ad Hoc Amounts the sales credit amounts do not change with revenue item amount changes.
- The Forecast Territory can be set to any territory assigned to the revenue item with Nonrevenue or Revenue and Nonrevenue Forecast Participation.
NoteTerritories with a Forecast Participation of Nonforecast are not eligible to be set as the forecast territory on either revenue or nonrevenue sales credits.
When you change the win probably percentage on an opportunity, the application automatically resynchronizes any revenue items whose win probability percentages were previously in sync with the opportunity win probability.
The following example illustrates the behavior:
- Opportunity win probability is 50%.
- Revenue item 1 win probability is 50%.
- Revenue item 2 win probability is 50%.
- Revenue item 3 win probability is 40% .
You change the opportunity win probability to 60%. The application automatically changes the win probability for revenue items 1 and 2 to 60% as well, because they were previously in sync with the opportunity-level win probability.
The win probability for revenue item 3 doesn't change, because it was not previously in sync with the opportunity-level win probability.
Opportunities and their revenue items share common attributes, for example, status or win probability percentage. For several attributes, under certain conditions, the application automatically synchronizes them so that they are the same. In addition, the application updates certain opportunity and revenue attributes based on the values of other attributes.
The attributes that the application synchronizes or updates automatically are:
- Win probability
- Close date
- Include in forecast setting
- Win/loss reason
NoteAn attribute is said to be in sync if its opportunity and revenue item values are the same, and if the revenue item is in the same status category as its opportunity. If a revenue item and its opportunity both have undefined values, they are considered to have the same value.
Opportunity and Revenue Attribute Synchronization
The application synchronizes certain revenue item attributes based on the opportunity-level attribute, under certain conditions.
Synchronization occurs for the following attributes:
- Win probability
- Close date
- Include in forecast setting
- Status (not status category)
Consider the following example of close date synchronization:
- An opportunity with an Open status category has a close date of July 14, 2014.
- Revenue items 1, 2, and 3 have the same close date and they are in the same status category.
- Revenue item 4 has a different close date, but the same status category.
- The close date of the opportunity is changed to August 14, 2014. The application automatically sets the close dates of revenue items 1, 2, and 3 to the same close date as that of the opportunity. The close date of revenue item 4 remains unchanged, because it has close date that was not already in sync with that of the opportunity.
Opportunity Status Updates
The following scenarios explain the behavior when opportunity status is updated:
- Opportunity status is updated to
a Won status:
- The application updates the opportunity win probability to 100 percent. It does not update the win probability on in sync revenue lines.
- The application updates the opportunity sales stage to the last stage of the sales method.
- Opportunity status is updated to
a Lost or No Sale status:
- The application updates the opportunity close date to the current date. It does not update the close date on in sync revenue lines.
- Opportunity status is updated from
an Open status to a Closed status:
- The application enables the opportunity win/loss reason attribute.
- If an opportunity primary competitor has been defined, the application updates the revenue competitor to the opportunity primary competitor for all opportunity revenue items, if they are not already defined. This behavior applies only to the close opportunity and mass update opportunities flows.
- Opportunity status is updated from
a Closed status to an Open status:
- The application disables the opportunity win/loss reason attribute.
- The application sets the opportunity win/loss reason attribute to "undefined". It does not update the win/loss reason on in sync revenue lines.
Revenue Item Status Updates
The following scenarios explain the behavior when revenue item status is updated:
- Revenue item status is updated to a Won status: The application sets the revenue item win probability to 100 percent.
- Revenue item status is updated to a Lost or No Sale status: The application sets the revenue item close date to the current date.
- Revenue item status is updated to a Closed status: The application enables the revenue line win/loss reason attribute.
- Revenue item status is updated to
an Open status:
- The application disables the revenue item win/loss reason attribute.
- The application updates the revenue item win/loss reason attribute to "undefined".
Opportunity Win/Loss Reason Updates
When an opportunity is in an Open status, the opportunity win/loss reason attribute is disabled. Win/loss reason is activated when the opportunity is set to a Closed status. When the opportunity win/loss reason is updated, the application updates all opportunity revenue items where the win/loss reason attribute is in sync.
Opportunity and Revenue Competitor Updates
If a primary competitor has been defined at the opportunity level, when the opportunity status changes from an Open status to a Closed status, the application updates the revenue item competitor to the primary competitor for all items that don't already have a competitor.
TipIf a revenue item without a competitor is set to closed and the opportunity is saved, the application displays a dialog box that allows the user to copy the opportunity primary competitor to the revenue items without competitors.
This above behavior applies only to edit opportunity and close opportunity flows, not to the mass update flow.
When assigning sales credits, you can lock the sales credit recipients of a revenue line by setting the corresponding Lock Owner checkbox on the line. This setting prevents the recipient from automatic replacement when assignment is run.
Generally, you don't need to lock resources who are members of a forecast territory on the sales credit. However, you should consider locking ad hoc or non-territory-based recipients, such as partner resources, to prevent automatic assignment from removing them as credit recipients.