How to Create a Predictable Revenue Plan With Sales In 5 Steps
If you want to create a predictable revenue plan with sales that gives you a more realistic chance of hitting your numbers, give some thought to a broader market strategy where each product plays a role versus a marketing plan for each product.
If you’re in product marketing, you know all too well how this works. Sales signs up for a number and then everyone does whatever’s necessary to hit the number.
Here’s the problem with that approach. Sales forecasts change by the day (or hour) and you’re faced with the impossible task of trying to hit a moving target. Not exactly the best use of resources, and it doesn’t scale!
If you take a more methodical market-driven approach to determining your sales goals, it’s easier to create an execution plan to meet them. You just have to look at the market a little differently.
Let’s say you have an artificial intelligence (AI) software platform. According to a Gartner Group article in January 2024, they expect AI software to grow at a CAGR of 19.1% over the next 6 years.
On the surface, that means your revenue should be growing by at least 19.1% to keep pace with the market. If you’re growing less, you’re giving up market share. If you’re growing more, you’re gaining market share.
5 Steps to a Create Predictable Revenue Plan
Follow these five steps and both sales and product marketing can collaborate to meet revenue targets with a lot less stress.
1. Determine the Forecasted Growth For Your Product Category
If you read the Gartner report, there are multiple categories or slices of the AI market. It’s likely the same scenario for your product category. Find the slice that’s closest to your platform and use the growth rates for that slice. Otherwise, you run the risk of overestimating or underestimating your growth potential.
2. Determine the Productivity of Your Salesforce
This is a big part of fleshing out your market strategy. If you have 20 account executives, each with a $1.5 million quota, assume you’ll generate $30 million, give or take. Then determine if $30 million represents a growth rate for you that’s equal to, more than or less than the growth rate (e.g., 19.1%) for your product category.
If it’s more, the size and productivity of your salesforce is not an issue. If it’s less, there are a lot of levers that can be pulled to reach your desired revenue goal in an organized fashion that also scales.
- Do you add salespeople?
- Do you raise the quotas for your salesforce?
- Do you add more horsepower to your demand generation efforts? (a lot to unpack here)
- Do you focus marketing and sales on specific market segments?
- Can you further streamline the sales process without alienating buyers?
- Some combination of all the above?
This is the ideal opportunity to collaborate with your sales leaders and agree to a sales goal that your organization can and should meet based on the market growth. Then you can agree on which of the following items above are necessary to make it happen.
Keep in mind, you’re basing this on market data not “what sales thinks they can do.” Here’s the other thing to keep in mind. I don’t know of any sales leader that would sign up for a revenue number that results in lost market share.
3. Identify Your Most Lucrative Markets
Here’s a simple exercise. Look at your revenue from last year and determine the vertical market segments (retail, healthcare, banking, etc.) that comprised 80% of your revenue. Don’t do it for each product. Do it for the portfolio as a whole. Products come later!
These are the segments where you most likely have the best balance of revenue growth and customer successes. The goal here is to first understand your current sweet spots so that strategically, you’re always playing from a position of strength.
The next thing you want to evaluate is the remaining runway for growth in each market segment in terms of both new accounts and add-on sales to existing customers. Based on your findings, list your segments in pecking order for growth over the next 1-2 years.
4. Determine the Highest Value Product Solutions for Each Vertical Segment
Get a clear understanding of the market dynamics in each vertical segment and determine how they’re shaping the strategic priorities of your target customers in areas of their business that are most relevant to your products.
Then modify your base positioning for those products and tailor it to each vertical market so that buyers are confident you understand them. The more relevant your positioning, the more value your products have in their eyes.
5. Create the Execution Plan
This is the part where a lot of tough decisions have to be made because it’s all about resources.
Between product marketing and sales (strength comes in numbers), you’ll create the to-do list required to hit your numbers along with the budget and resources necessary to execute the plan.
Expect both disciplines to be pushed hard by senior executives to justify your needs. Here’s why this is so important.
Let’s assume your resource requests are realistic, and let’s also assume you’re not going to get everything you ask for. For each thing you don’t get or get less of, it reduces your odds of meeting your revenue goals.
Now you can put on your analyst hat and estimate the probability of meeting your goals based on the resources you’ll get. For example, product marketing and sales might agree on a 70% probability of meeting their revenue plan based on cuts to their initial resource budget.
The point is, you want to set realistic expectations right up front, for whatever they’re worth. The worst thing you can do is agree to hit your goals with less than ideal resources, and then fall short without any caveat.
Essentially, the organization is making a conscious decision to go after its goals with less than ideal resources. The alternative is just agreeing to goals that are handed down, everyone working like their hair is on fire, and hope like crazy you get there.
Hope Is not a strategy!
Truer words have never been spoken when it comes to meeting your sales goals.
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