Taking a focused approach to value creation in the upcoming months will be the strategy for companies looking to maintain and accelerate growth during uncertainty. Now is not the time to be agile; it’s a time for clarity among the chaos. Last week, SBI gave a high-level overview of the suggested annual planning process. During this and the weeks ahead, we will take a deeper look into each step with recommendations on creating and tracking your growth plan.
Where are you now? Step 1 - Establish a Fact Base.
Before diving into the planning process, Revenue Operations needs to lead the charge in collecting data to establish one fact base that the entire leadership team agrees is the source of truth. Your team will need to understand how far along your company is on the Revenue Growth Maturity Model to make stage-appropriate bets.
Recommendations for establishing your fact base.
- Evaluate your firm’s performance to understand how you are executing against KPIs.
- Use leading and lagging indicators to evaluate which metrics are key to your firm’s goals.
- Leverage identified metrics to decide which initiatives will help you make your number.
Start with a look-back across five critical buckets and associated KPIs.
- Sales & Marketing Productivity - Sales rep productivity expressed in terms of new business bookings/revenue, number of new deals, and existing bookings/revenue.
- Sales & Marketing Plan - Look at the organizational structure, quotas, compensation, and talent. You will also want to look at the revenue plan to include renewals, upsell, cross-sell, churn, potential, and lead generation/MQL generation to achieve that plan.
- Market Positioning - Market growth rate, economic outlook by sector. Client size, deal size, deal profile, single product deals, and multi-product penetration as compared to the competition.
- Revenue Goals - Revenue goals by product line, and geography.
- Customers & Prospects - Potential by market. New markets of entry.
By using leading and lagging indicators, you can establish the fact base and identify potential areas for value creation.
With leading indicator KPIs, comparative benchmarks will determine possible reasons these KPIs are surpassing or not meeting those benchmarks and find areas to pull back or invest. Areas to consider are sales and marketing spend, pipeline coverage ratios, sales rep turnover, and percentage of selling time. Identifying these KPIs will give you insight into efficiency, performance conditions, pipeline quality, demand generation, and key talent needs.
Give the same evaluation and consideration for lagging indicators, including marketing attribution, annual bookings, retention rates, renewals, expansion, new logos, rep quotas, and win rates. These KPIs will shed light on Customer Success, performance conditions, prospecting, headcount, and sales processes.
Benchmarks will vary by industry, customer lifecycle, and other conditions, but general guidelines will help teams understand where they might be exceeding expectations or underperforming. When you have a solid base of key data points and a clear picture of the current state, the identification of potential growth levers and placing critical bets doesn’t seem as daunting of a task. Looking for a framework to accelerate growth in 2023? Click here for a guide.
