Now Is The Time To Set Expectations For Revenue Contribution
With 26 shopping days until Christmas, you have 26 days left to wrap up all your 2019 planning. One of the items on your list should be top-line revenue forecasting. Typically, this is a sales exercise.
The sales leadership team looks at what they did last year and sets a goal for what they can do this year. Usually, they do this by adding some percentage on top of this year’s results.
This is woefully incomplete and usually results in missed goals and underperformance. It leaves out major factors that are likely contributing to your difficulty hitting and exceeding revenue goals.
Here’s what you’re missing.
Lost Revenue From Client Attrition
We see this almost every day: Prospective clients who declare they want to grow from $10 million to $15 million and need $5 million in new business to hit their goals. But they forgot that they’re going to lose $3 million of that current $10 million in revenue, so in reality they need $8 million in incremental revenue to hit their goals.
This is a big mistake, and it’s one of the main reasons so many people miss their goals. If you’re expecting to retain 100% of this year’s business next year, think again.
Your revenue plan needs to take into consideration replacing ALL the lost revenue, plus adding the incremental revenue you need to hit your growth goals. You’ll need a marketing plan to drive that new number, and you’ll need a sales plan to hit that new number.
While you’re in planning mode, this is a great time to look at your attrition problem and task your customer service team with reducing that number next year. Every dollar you can keep from leaving is one less dollar you have to replace. This can add up quickly and be the difference between hitting your goals and blowing them away.
New Revenue Opportunities From Current Clients
Not all revenue growth comes from new customers. Smart revenue experts look for revenue from current customers. Typically, it’s easier to drive revenue from people who already know, like and trust you.
Most of your customers might not even be aware you have other products and services to help them. Create ongoing educational marketing designed just for customers, to keep in touch with them and remind them of everything you do.
Creating content such as private webinars, sneak-peak offers for new products or customer-only content offers all provide your customers with the exclusivity they deserve. Treat them differently from your prospects, giving them offers the general public can’t get, and you’ll be able to count on them for additional revenue in your 2019 projections and forecasts.
New Revenue Opportunities From New Revenue Sources
Want to drive revenue? Then you need to create new revenue sources. This could mean adding consulting services to your product offering, or adding training workshops to your consulting offering.
Specifically, look at what your customers are asking about and what you’re capable of delivering, then start testing different offerings until you find one that can be grown over time.
You don’t have to boil the ocean to launch a new product or service. Think more like a software company: Deliver a minimal viable product/service to start, and as you see what’s needed, iterate on that offering over time.
This gets you to market quickly, helps you beat the competition and lets you evolve your offering based on customer feedback. In addition, you get to use the revenue from the sales of the new offering to grow it. It’s win-win for everyone.
Improved Contribution From Marketing
Want to do better than last year? Look to your marketing team for improvements in strategy, tactics, analytics and technology. If they drove 200 leads last year and this year you need 300, make sure they have the four pillars of success lined up to deliver BEFORE January starts.
If they drove 200 leads last year and this year you need 2,000, make sure you’re supporting them with a big bump in budget too. Don’t expect caviar on a tuna budget.
And if you’re giving them that big bump in budget, hold them accountable. Consider working in an SLA (Service Level Agreement). This means all leads are NOT created equal, and different types of leads have different value based on close rates and closed revenue data.
For instance, a whitepaper lead might be worth $20 and a webinar lead $200, but a demo lead could be worth $2,000. Figure out how much each type of lead is worth and back into the full value you need from marketing each month, and you’ll have the start of an SLA for your marketing team.
If you need $20,000 of lead value to close $10,000 in revenue each week, that’s what marketing needs to deliver. Whether they produce 1,000 whitepaper leads or 10 demo leads, they’ve delivered the targeted value and the rest is up to sales. That’s the power of an SLA.
Improved Performance From Sales
You’re going to want to elevate the same expectations in sales. If the close rate on proposals was 10% last year, don’t expect it to be 20% this year unless you’re revamping the entire back end of your buyer journey execution.
If you have a big bulge in your Revenue Cycle because you can’t move qualified sales opportunities into the Rationalization or Decision-Making stage, then don’t expect that to change – unless you change your sales process, how you nurture those leads or the content you’re providing at those stages of their buyer journey.
Also, if you’re planning an SLA for marketing, that includes an SLA for sales. Service level agreements go both ways. Sales has to follow up on all leads in 12 hours. Sales has to provide feedback to marketing on ALL content being used in the sales process. Sales has to use any lead-scoring or lead-qualification techniques on ALL prospects, and ALL prospects must be tracked in the CRM.
These are just a handful of requirements for SLAs that can affect sales.
Use This Year As A Guide, Not A Starting Point
Finally, most businesses don’t track results consistently month by month. This means no matter how nonseasonal you think your business is, your March is probably not the same as your August or your December. Take this into consideration when you set up 2019 revenue goals.
You should also take into consideration how prepared you are to start 2019. We already have a number of clients and prospects who should have started 30 days ago, but are waiting to get started in January.
No problem, except that they should NOT expect to have a great first quarter. Why? Simple, we’ll be doing work in January, February and March that we should have done in October, November and December.
This means that the first quarter will be equal to last year, at best. At worst, it could be down when compared to last year. And it will be challenging to catch up in the remaining months. Sad that the entire year can be lost before it even starts.
Planning for 2019 is a science. It takes time: time you have now, but won’t have in January. Get 2019 off to a wildly successful start by hitting the ground running in January with marketing, sales and customer service plans that include strategy, tactics, analytics and technology. This will ensure you not only hit, but exceed, your properly set goals month in and month out.
Doing what didn’t work last year is absolutely the wrong approach to setting your 2019 goals. No matter what you did last year, if you missed your goals, take a different tack this year.
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Posted By Author Mike Lieberman, CEO and Chief Revenue Scientist
Mike is the CEO and Chief Revenue Scientist at Square 2. He is passionate about helping people turn their ordinary businesses into businesses people talk about. For more than 25 years, Mike has been working hand-in-hand with CEOs and marketing and sales executives to help them create strategic revenue growth plans, compelling marketing strategies and remarkable sales processes that shorten the sales cycle and increase close rates.