Opportunity to Order Validation in CRM – When Is a Deal Really Closed-Won?

Modern CRMs like Salesforce and Microsoft Dynamics go far beyond traditional sales management, offering features beyond account, opportunity, and contact tracking.  They are open platforms that can be enhanced with additional Quote-to-Cash (QTC or Q2C) functionalities, including quoting, order management, service management, customer portals, billing, and more.

As a result, many organizations consolidate their QTC processes around CRMs. Typically, the first steps in this consolidation are implementing improved quoting through a CPQ (Configure, Price, Quote) package, followed by order management, service management and support, and billing integration.

Integrating quoting and order management into a single system is highly beneficial because the information needed to create an order is already available in the opportunity or quote. This integration enables full automation of order creation, saving time and reducing errors.

In this setup, the beginning of the Quote-to-Cash (QTC) process typically follows these steps:

Lead → Qualify → Create opportunity → Generate & Present Quote(s)
   → Opportunity Closed-Won → Create an Order
      → Start Order Processing...

For organizations requiring order validation or confirmation (e.g., background/credit checks, site surveys, product availability checks), the definition of a “closed-won” opportunity may vary based on stakeholders’ perspectives:

• Sales Representatives: They aim to close opportunities as quickly as possible for better funnel reporting and faster commissions, even if issues need to be resolved later.
• Order and Delivery Teams: They prefer having complete orders (including all forms, signatures, and data points) to minimize processing delays and avoid returning to sales for missing information.
• Financial and Compliance Steps: While processes like financial checks may not need to block the opportunity from being marked as closed-won, the order should not proceed until such checks are complete.
• Customer Experience: Simplifying the order placement process and collecting additional details later may enhance the customer experience.

Validation can occur at the opportunity level (before marking it as closed-won) or at the order level (as the first step in order processing). Both approaches are detailed in the following sections.

Opportunity-Level Deal Validation

Opportunity-level validation is applicable when all checks can be performed before an opportunity is closed-won, and the resulting order can be assumed to be correct. Opportunity-level validation can be implemented as follows:

• Ensure that all data points required to close an opportunity are there, add validation preventing transitioning to Closed-Won if they are not provided.
• If attachments are required (such as order forms) add attachment checking as well.
• Build an approval stage before transitioning to Closed-Won. Rather than have a rep closing his/her own opportunity, direct it to an order validation team and have them transition it to Closed-Won when everything is OK. For example, when modifying a standard Salesforce opportunity add a new stage with 99% probability:
  
   

  

• When using CPQ, move as many checks as possible to the quote validation stage.

Order-Level Deal Validation

Order-level validation assumes that the cleanup will take place after opportunity has been closed-won.

If, for instance, paperwork is bad and needs to be re-done, the order is put in “On-hold/pending paperwork” or a similar status. Eventually, if problems cannot be resolved, the order is canceled (usually with a reason code capture for analytics). Since sales teams do not work orders, a mechanism of resolving issues between sales and orders needs to be in place.

Opportunity- and order- level validations can be mixed. For example, for Internet service providers, requiring connector type can be ensured on a quote/opportunity. However, service availability at the requested location is usually checked once the order has been received.

Implications on Sales Funnel Reporting and Commissions

Order validation has significant implications on sales reporting and commissions. For example, it is not optimal to report new revenue (and calculating rep commissions) from Closed-Won opportunities alone. When orders fail validations and are canceled, this will not be reflected on opportunities. The same is true when orders are modified during delivery (e.g., one line item out of three is canceled).

Multiple data sources are required to obtain accurate reporting:

• Sales pipeline → In-flight opportunities.
• Sales bookings → Closed-won opportunities.
• Revenue projections → Orders (with a breakdown for ordered, canceled, delivered).
• Actual revenue → Billing.

In other words, reported revenue numbers follow the Quote-to-Cash flow:

Sales Pipeline → Booked → Delivered → Billed

For accurate commissions, adjustments need to be calculated along the way as the order is progressing from CRM to billing.

Conclusions

Organizations incorporating order validation or confirmation into their Quote-to-Cash (QTC) process may define “closed won” differently depending on whether the validation occurs at the sales opportunity stage or during the actual order phase.

Where this validation takes place has significant implications for reporting metrics (e.g., booked vs. actual revenue), commissions, win rates, order cancellations, and more.

A well-implemented validation process can:

• Reduce back-office costs by eliminating the need for order “cleaning” or “scrubbing.”
• Enhance the customer experience by shortening the time between deal closure and the start of delivery.
• Improve the sales rep experience with more accurate commission calculations.

Nextian has extensive experience and proven track record of implementing various aspects of Quote-to-Cash (from CPQ, through ordering to billing) on Salesforce and other systems, helping customers accelerate growth and increase customer lifetime value.

Contact us today to find out how we can help you!