CRM

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Setting up Account Hierarchies

Determining account hierarchies is one of the more nuanced decisions one must make when setting up a CRM. This matters since it affects the calculation of KPIs such as GRR, NRR, and churn.

For starters, it is always best practice to set up ultimate parent accounts in CRM.

Many people apply the rule that ultimate parents are identified by top level domain (TLD). However, we do not recommend this as many companies have regional domains (or at least regional domains with redirects). For instance, amazon.co.uk and amazon.ca should roll up to the same ultimate parent.

Generally, the best account hierarchy data comes from D&B.  Each entity has 4 DUNS numbers: (reference)

  1. site: unique number for the entity
  2. parent or HQ: immediate entity above the site
  3. Domestic ultimate: highest entity in a given country
  4. Global ultimate

In addition, each entity can have one or more of the following tags: (reference)

parent, subsidiary, HQ, branch

The tags are typically less helpful vs. the DUNS numbers.  For instance, an entity could have both a parent tag and a subsidiary tag if is owns more than 50% of entity B and is owned by entity C.

Getting back to DUNS numbers, you can have different hierarchies

  1. Single level: Just use the entities that are global ultimates
  2. (recommended) Two level: Use global ultimates and domestic ultimates. 
  3. n-level: Use global ultimates, domestic ultimates, and then n-level child entities

I recommend the 2-level approach.

A not unreasonable variation on the 2-level approach is the following.  Start with global ultimates.  When you close business on an account, create a child account each time there is a new buying center.  This of course requires careful governance – esp. if AEs get paid different rates on new logos vs. expansion.

I’m not familiar with sources other than D&B (ex: ZoomInfo) but I suspect they should be similar.

In terms of calculating NRR, you can then do at level one or level two.

Here are our recommendations:

  • Same company different geos = same ultimate parent account and possibly single account
    Example: Salesforce USA and Salesforce Europe. It does not matter if the regions are separate legal entities or if they have their own procurement.
  • Same company different independent subsidiaries = different ultimate parent accounts
    Example: Salesforce, Tableau, and Slack would each be different ultimate parent accounts. There is a grey area if purchasing were fully centralized but that is rare can could be handled by exception.
  • Same company different business units = same ultimate parent account and most likely same account
    Example: Salesforce Sales Cloud and Salesforce Marketing Cloud

Setting Up Opportunities

Our goal with setting up opportunities is to minimize complexity while still being able to handle the many use cases of SaaS contracting such at:

  • New business (in various forms such as paid PoCs, standard subscriptions, non-recurring services; or of various durations such as month-to-month, 1-year, multi-year, etc.)
  • Mid-contract changes (usually upgrades but sometimes downgrades or cancellations)
  • Renewals (early, on-time; or late; with or without contract changes)

Before getting too deep, we need to take a moment to understand two opportunity object fields: ‘Opportunity Record Type’ and ‘Type’ (often referred to as Opportunity Type). Opportunity Record Type should be used sparingly – only for opportunities that have very different sales processes – i.e. ones that progresses through different stages. In contrast, Opportunity Type is commonly used to classify opportunities.

In most circumstances, you should be fine with a single opportunity record type that handles all of the above use cases.

For new business opportunities, we agree with others who recommend using gerunds (verbal nouns) rather than milestones.  For instance: (Note: Several stage names could be used to describe predecessors or successors. In particular, “Discovery” is commonly used to label Stage 1 or Stage 2 and “Validation” is commonly used to label Stage 2 or Stage 3.)

  • Stage 1: Qualifying (or Prospecting; Demoing)
    • Buyer’s Journey: Becoming Aware (or Awareness); Learning; Researching (or Research)
    • Primary entry criteria: Discovery/demo meeting scheduled between the AE & prospect.
    • Primary exit criteria: Discovery/demo meeting held between AE & prospect. The AE can either advance the opportunity to the next stage to indicate it is qualified OR disposition as Disqualified.
    • Only allow opportunities to be dispositioned as Disqualified at Stage 1.  It will help to have DQ reasons, especially ‘no show’ as well as other reasons linked to your qualification framework such as ‘need,’ ‘timing,’ etc.
  • Stage 2: Developing (or Analyzing Need; Assessing Business Value; Designing Solution; Discovery; Evaluating;  Scoping; Validating)
    • Buyer’s Journey: Considering (or Consideration)
    • Primary exit criteria: Prospect has broadly agreed on scope and high-level close plan
    • (Many refer to this stage as “Qualified” but that is a past milestone.)
  • Stage 3: Proposing (or Discussing Commercials; Customer Evaluating; Deciding; Pricing; Selecting)
    • Buyer’s Journey: Evaluating (or Evaluation); Assessing Value; Validating Solution
    • Primary exit criteria: Prospect receives initial proposal
  • Stage 4: Negotiating (or Closing; Contracting; Finalizing Agreement; Legal; Procurement)
    • Buyer’s Journey: Deciding (or Decision)
    • Primary exit criteria: Signed contract
  • Stage 5: Provisioning (or Pending Review)
    • For strong governance, one should not let reps mark opportunities as Closed Won. Instead, once the contract is signed, reps should advance to Provisioning so that the Deal Desk (or Sales Finance) can ensure all post-contracting processes are followed.
  • Stage 6: Closed Won / Closed Lost
    • For Closed Lost
      • Capture the loss disposition: No Decision; Internal Build; Competitor. If lost to competitor, capture the competitor name.
      • Capture the primary reason in a drop down: Price/Budget; Timing; Product/Capabilities/Features; Unresponsive/Went Cold; Power/Authority; Need/Value/Fit; Other (link to required text field)
      • You can also have a free text lost description field for rep to elaborate a bit. This is quite helpful when reengaging closed-lost opps in the future
      • A rare but often helpful idea is to have a field for ‘Follow Up Date’ to start re-engagement.

Assuming you have a  single opportunity record type as we recommend, these same stages will apply to expansion (upsell and cross-sell) and renewal opportunities.  For renewals, initiate the opportunity stage in either Proposing (if renewal is opt-in) or Negotiating/Closing (if renewal is opt-out).

For renewals, it is extremely tempting to set up a separate opportunity record type. One rationale for doing this is to reflect higher probabilities at any given stage. But, this is much better handled by using a Workflow rule as described here.  Other rationales are to reflect milestones (completion of QBRs) or customer health; again, these are better handled though other means – the former via Tasks and the latter via a separate field on the Account record.

Three opportunity types (not opportunity record types) will accommodate the use cases:

  • New Business (for new accounts or new standalone instances in existing accounts)
  • Amendment (for mid-contract changes typically due to upsell of additional seats or cross-sell of add-on products)
  • Renewal

One does not need separate opportunity types to neither distinguish between PoCs, standard subscriptions, or non-recurring services nor various durations since those can all be derived from opportunity product line items and contract terms. The same holds true for renewals – timeliness (early, on-time, delayed) and direction (upgrade, downgrade, flat, termination) can also be derived from other fields.

Opportunity Probabilities

Reps and managers are prone to either sandbagging or happy eyes. Hence, they are notoriously bad to setting accurate opportunity probabilities.  Instead, we recommend creating a Workflow rule to set probabilities. This rule should consider:

  • [common] Opportunity type
  • [common] Stage for SMB deals and Forecast Category for Enterprise Deals
  • [less common] Segment (geography and/or industry if applicable since company size is already reflected in the choice of Stage or Forecast Category)
  • [less common]  Account Health (for renewal oppotunities)

Probabilities should be updated periodically (we recommend quarterly) by looking at win rates over the prior 2 to 4 quarters. To do this, pull the start-of-quarter open pipeline with close dates in-quarter including the fields you’ll leverage in the Workflow rule. For highest forecast accuracy, probabilities should be based on conversion rates [ ($ won by end of period of opps open at start of period) / ($ of opps open at start of period) ] rather than win rates [ ($ won) / ($ won + $lost) ].  Dollar-based rates are similar to count-based rates if the ASP of won deals is similar to lost or pushed deals; otherwise, dollar-based rates are more accurate.

Though we do not recommend it, one could add a probability override field. If one does so, we recommend restricting the use of this field to trusted RevOps personnel.

Calculating ARR

If you have a CPQ solution (ex: Conga, DealHub, Salesforce, etc.), then it it is relatively straightforward to calculate ARR based on Contract records.

If you do not have a CPQ solution, all is not lost.  You’ve got at least two options.

The first is to leverage a 3rd party analytics tool. One can DIY this using a BI tool on top of a data warehouse, but it is much easier to leverage a purpose built tool such as: (alphabetical order)

The second is to add an “ARR change” field to your opportunities that is distinct from the amount field. With this option, assuming you maintain meticulous discipline on adjusting that field, you can sum “ARR change” across all closed won new business & amendment opportunities as well as all closed won and closed lost renewal opportunities.

CRM Migration

SalesOps.io provides the following 2-3 month plan for CRM migration: (template file – ODS/Excel)

Additional CRM migration best practices:

  • Hire an expert (resist the urge to do-it-yourself)
  • Time the project so that Final UAT & Rollout avoid key sales periods, esp. end of quarter and end of year.
  • Assign an internal project manager
  • Clean your data (esp. duplicate accounts & invalid contacts) prior to migration.
  • Current CRM Usage Documentation: Know which features you wish to keep using after the migration and budget for them. For instance, many out-of-the-box features in Hubspot will require licensing 3rd-party tools when using Salesforce.
  • Maximize the use of standard objects and fields in the new CRM.
  • Decide on your account hierarchy (parent/child)
  • Decide on how you will use leads & contacts
  • When you roll-out, maintain tight CRM governance (ex: only RevOps can alter objects, create accounts, etc.)

Data Enrichment & Cleansing Best Practices

  • Data collection & entry
    • Standardize data entry: Establish consistent formats and guidelines for data entry across your organization.
      • Use mandatory fields thoughtfully
      • Ensure consistent use of drop-downs and picklists
      • Limit the number of fields to those that drive actions and/or key decisions
      • Establish naming conventions for fields (e.g., capitalization rules) to maintain uniformity across your records
    • Validate data upon input: Use data validation rules to prevent errors and inconsistencies.
    • Automate data entry: Employ tools to automatically populate fields with data from external sources (e.g., LinkedIn, company databases).
    • Integrate CRM with other systems; eliminate data silos
    • Don’t load junk lists
  • Data maintenance and cleansing
    • Regularly review and clean data: Schedule periodic data audits to identify and correct inaccuracies, duplicates, and inconsistencies.
      • Completeness: Measures the percentage of key fields (e.g., name, email, phone number, address) that are filled out.
      • Timeliness: Tracks how recently data has been updated.
      • Consistency: Evaluates if the data entered across different fields or systems is uniform. For example, the industry name for a company should not have multiple variations (e.g., “Tech” vs. “Technology”).
      • Validity: Ensures that data entries conform to the rules or formats defined (e.g., valid phone number format, correct email syntax, or adherence to industry-specific codes).
      • Uniqueness: Measures the number of duplicate records in the system.
    • Deduplicate records: Use deduplication tools to merge duplicate records and maintain a single view of each customer.
    • Update contact information: Regularly update contact information, including email addresses, phone numbers, and job titles.
    • Remove inactive / unengaged records: Delete or archive inactive records to streamline your CRM database and improve data quality.
    • Regularly identify and eliminate low-quality data such as hard bounces, spam entries, or contacts from free email domains that may not represent legitimate leads
    • Encourage CRM users (sales, marketing, customer success teams) to provide feedback on data quality. If they encounter incorrect or incomplete data in the system, there should be an easy way for them to flag these issues. These flagged records can then be routed to the data management team or automatically queued for cleanup.
  • Data enrichment
    • Enrich data with additional information: Use data enrichment tools to add missing or incomplete information, such as company size, industry, and social media profiles.
    • Leverage third-party data sources: Integrate with third-party data providers to enhance your CRM data with demographic, firmographic, and behavioral information.
  • Data Governance, role management, & security
    • Implement data governance policies: Establish clear policies and procedures for data collection, storage, and use.
    • Ensure data security: Protect your CRM data from unauthorized access, breaches, and loss by implementing robust security measures (e.g., encryption, role-based access controls).
    • Comply with data privacy regulations: Adhere to relevant data privacy laws (e.g., GDPR, CCPA) to protect customer data.
    • Data Change Logs: Track how frequently data is updated, and by whom, to ensure timeliness and accountability.
    • Departmental Ownership: Sales owns contact data, Marketing owns lead data, Customer Success owns account data, etc.
    • CRM Administrator: An administrator monitors overall data quality, generates reports, and enforces data governance policies.
    • Backup your data so you can prevent loss and easily roll back to a previous state if necessary
  • Training & user management
    • Train users on data entry and data management best practices
  • Data segmentation & organization

Data Enrichment & Cleansing / Hygiene Vendors

Outside of using spreadsheets, some useful tools include:

(*) = Recommended

Lead-to-Account (L2A) Routing

(*) = Recommended

Slack/Teams-to-Salesforce Integration

(*) = recommended

Consultants

(alphabetical order; * = recommended)

Footnotes

1 My employer Insight Partners is invested in Discern

2 My employer Insight Partners is invested in Rattle

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