Revenue Operations Should Run Annual Planning
Revenue Operations Should Run Annual Planning
I’ve been a part of organizations where they hand RevOps “the plan” for next year.
“We’re going to generate $21M of new business, from these sources, converted at this clip, into customers that cost us X but are worth Y. Here’s the capacity math. Here’s the ramp-up. Now go deliver!”
How these operational plans dripping in revenue logistical requirements are generated without the involvement of RevOps is beyond the scope of this article. A sign of management that hasn’t worked with revenue operations before or does not fully understand the strategic value we add.
In this article we’re going to propose something even more radical than allowing RevOps to participate in the annual planning process:
Revenue Operations should RUN annual planning!
Builders and Operators of the Revenue Engine
In B2B, building long-term customer relationships is crucial. Revenue planning should consider the customer lifetime value (CLTV) and prioritize strategies that maximize customer retention and recurring revenue. Effective sales pipeline management is critical in B2B. Revenue planning should involve analyzing the sales pipeline, identifying potential bottlenecks, and implementing strategies to improve conversion rates. This is revenue operations’ wheelhouse.
RevOps is uniquely positioned to align the annual plan with the company's broader strategic goals. They can break down high-level goals into actionable targets for each revenue team, ensuring everyone is working towards the same overarching objectives. RevOps can establish key performance indicators (KPIs) to track progress towards annual revenue goals and make data-driven adjustments as needed. We can establish something I call Predictive Revenue Indicators which are the telltale signs that your revenue engine is performing to plan. Are your leads converting to opportunities at the expected rate? What about pipeline development velocity — are deals moving in the right direction and speed sufficient to satisfy plan?
RevOps, by nature, has a cross-functional view of all revenue-generating activities. They understand how marketing, sales, and customer success impact the bottom line. This holistic view is crucial for setting realistic, data-driven annual plans that align all teams around shared goals. RevOps has insights into the entire customer journey, from initial marketing touchpoints to post-sales customer success interactions. This allows for a comprehensive understanding of revenue drivers.
RevOps excels at collecting, analyzing, and interpreting revenue data. They can leverage this data to identify trends, forecast potential outcomes, and model different scenarios. This data-driven approach ensures that annual plans are based on facts, not just gut feelings.
By analyzing data from all stages of the revenue funnel, RevOps can identify opportunities for improvement and optimize the entire customer journey.
RevOps has a knack for streamlining processes and identifying bottlenecks. They can apply this expertise to the annual planning process, making it more efficient, collaborative, and less prone to errors or delays.
RevOps typically manages the technology stack that supports revenue generation (CRM, marketing automation, sales enablement, etc.). Their deep understanding of these tools can help automate parts of the planning process, track progress, and measure outcomes.
Being close to the technology and process gives RevOps serious advantages when they are empowered to lead.
Specific Benefits of RevOps Leadership
Improved Forecasting Accuracy: RevOps' analytical skills can lead to more accurate revenue forecasts, which are essential for effective annual planning.
Increased Collaboration: By involving all revenue teams in the planning process, RevOps can foster better communication and collaboration throughout the year.
Faster Decision Making: RevOps can help streamline the decision-making process, allowing the company to respond more quickly to market changes or opportunities.
Greater Accountability: With RevOps leading the charge, there's clear accountability for the success or failure of the annual plan, which can drive better results.
Let’s discuss what you can do to make the transition to RevOps run planning.
It starts by evaluating where you are today, and then mapping the path forward. Here’s the basic process.
Define RevOps' Role: Clearly outline RevOps' responsibilities in the planning process, including data collection, analysis, goal setting, process management, and communication.
Build Cross-Functional Support: Get buy-in from marketing, sales, and customer success leadership. Emphasize the benefits of a unified, data-driven approach to planning.
Establish Clear Processes: Create a documented process for annual planning that outlines timelines, deliverables, and roles for each team involved.
Leverage Technology: Use technology to automate tasks, track progress, and measure results. Consider tools like planning software, collaboration platforms, and data visualization dashboards.
Communicate Regularly: Keep all stakeholders informed of progress throughout the planning process. Share updates, celebrate successes, and address any challenges that arise.
Regular communication is vital to a successful planning cycle.
Let’s unpack what is required to navigate planning inside a B2B org.
The Planning Process
Annual revenue planning for a B2B organization is a strategic process that involves forecasting and setting revenue goals for the upcoming year. It's a crucial activity that helps align the organization's resources, activities, and initiatives towards achieving its financial objectives.
Here’s how it unfolds:
Review Historical Performance and Market Trends
Analyze past revenue data to identify patterns, trends, and growth rates.
Research market trends, competitor activity, and economic forecasts to understand the broader business landscape.
Set Revenue Goals
Establish clear, measurable, and realistic revenue targets for the year, considering both top-line growth and profitability goals.
Break down goals into smaller, achievable targets for different products, services, or customer segments.
Develop Revenue Models and Forecasts
Create detailed revenue models based on various factors like sales pipeline, customer acquisition and retention rates, pricing strategies, and market demand.
Use forecasting techniques (e.g., trend analysis, regression analysis, expert judgment) to project revenue for different scenarios.
Align Sales, Marketing, and Customer Success Strategies
Ensure sales, marketing, and customer success teams are aligned with the revenue goals and collaborate effectively to drive revenue growth.
Develop specific marketing campaigns, sales initiatives, and customer success programs to support revenue targets.
Allocate Resources and Budget
Determine the resources (e.g., personnel, technology, marketing budget) needed to achieve the revenue goals.
Allocate budget to different activities and initiatives based on their expected impact on revenue generation.
Monitor and Track Progress
Establish key performance indicators (KPIs) to track progress towards revenue goals.
Regularly monitor actual revenue performance against forecasts and analyze variances.
Adjust Strategies and Tactics
Be prepared to adjust strategies and tactics based on market conditions, competitive landscape, and performance data.
Implement corrective actions to address any shortfalls or capitalize on opportunities.
By following a structured and collaborative approach to annual revenue planning, B2B organizations can increase their chances of achieving their financial objectives and driving sustainable growth.
You need to break down your revenue engine into components, and then feed your plan through these components while checking your assumptions. Is the entire system capable of delivering the plan?
Generating growth requires a well-oiled machine, with each component playing a critical role in achieving the desired outcome: consistent, predictable revenue growth. To understand this process fully, we must break it down into its constituent parts and examine how they interact.
Your plan needs to work from top-to-bottom.
The Top of the Funnel: Generating Leads
The first step in the revenue generation process is lead generation. This involves reaching out to potential customers and sparking their interest in your product or service.
Defining Your Ideal Customer Profile (ICP): The foundation of lead generation is a clear understanding of your ideal customer profile. This includes demographics, firmographics, pain points, and buying behaviors. This allows you to target your efforts effectively.
Outreach Strategies: There are many ways to reach potential customers, including cold calling, email marketing, social media outreach, content marketing, and paid advertising. The choice of strategy depends on your target audience and budget.
Lead Qualification: Not all leads are created equal. It's essential to qualify leads based on their fit with your ICP and their level of interest. This helps focus your efforts on the most promising prospects.
Unless you know who you’re talking to, what problem you’re solving, and how you are reaching them… your plan is worthless.
Only by mastering this TOFU (top of funnel) understanding can you ensure you have adequate energy to reach your revenue plan.
The Middle of the Funnel: Converting Leads to Opportunities
Once you've generated a pool of qualified leads, the next step is to nurture them into opportunities. This involves building relationships, educating prospects about your product or service, and addressing their concerns.
Lead Nurturing: Lead nurturing involves providing valuable content and information to prospects over time. This can be done through email drip campaigns, webinars, social media engagement, and other channels.
Sales Engagement: Sales representatives play a crucial role in converting leads into opportunities. They build rapport, understand prospect needs, present solutions, and handle objections.
Opportunity Qualification: Opportunities are qualified based on their budget, authority, need, and timeline (BANT) or more complicated frameworks. This helps determine which opportunities are most likely to close.
Your plan must indicate your pipeline sources and how those sources will perform in terms of leads, opportunities and clients yielded. In order to calculate this you will need historical data paired with conversations with marketing and sales about what recent changes they are seeing in prospect behavior, marketing channel and messaging performance, among much else.
The Bottom of the Funnel: Converting Opportunities to Customers
The final stage of the revenue generation process is closing deals and converting opportunities into customers. This involves negotiating terms, addressing final concerns, and getting contracts signed.
Closing Strategies: Effective closing strategies involve understanding the prospect's decision-making process and addressing any remaining obstacles. This may involve offering incentives, providing additional information, or demonstrating the value of your product or service.
Onboarding and Implementation: Once a deal is closed, it's important to onboard the new customer smoothly and ensure a successful implementation of your product or service. This sets the stage for long-term customer satisfaction and retention.
Do you have the capacity at the CS-level to onboard all the customers you are calling for? Can your integration team deal with surges in the pipeline? Am I converting deals at the clip I expected or is there an impediment in the funnel?
These are all important questions.
Here’s another key question: what’s all this costing?
The Spread Between Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLTV)
Customer Acquisition Cost (CAC) is the average amount of money you spend to acquire a new customer. This includes marketing, sales, and onboarding expenses. Customer Lifetime Value (CLTV) is the total revenue you expect to generate from a customer over the entire duration of their relationship with your company.
The spread between CAC and CLTV is a critical metric for evaluating the health of your revenue generation process. Ideally, your CLTV should be significantly higher than your CAC. This indicates that you're acquiring customers profitably and that your revenue generation efforts are sustainable.
Of course, your CAC isn’t a single number.
It is different for each pipeline source, based on which team member(s) engage with the client, which resources are used to convert them from lead → opp → client, and much else. You need to work with FP&A to math out your CAC across these different segments, and your CLTV.
Now you can do work designed to decrease the acquisition cost and/or enhance lifetime value by creating more upsell opportunities or creating other revenue tailwinds.
Ensuring Sufficient Revenue Logistics
To reach your revenue plan, you need sufficient revenue logistics in place. This includes:
Capacity: Do you have enough sales representatives to handle the volume of leads and opportunities?
Pipeline Management: Are you effectively managing your sales pipeline to ensure a steady flow of deals?
Forecasting: Are you accurately forecasting revenue to identify potential gaps and adjust your strategies accordingly?
Sales Enablement: Are you providing your sales team with the tools, training, and resources they need to be successful?
By carefully managing these logistics, you can ensure that your revenue generation machine is running smoothly and that you're on track to achieve your revenue goals.
RevOps = Strategic Partners to Executive Team
Revenue Operations unique position at the intersection of marketing, sales, and customer success equips them with a holistic perspective that is invaluable in the annual planning process.
In a fast-paced business landscape, agility is key.
RevOps' ability to quickly adapt to changing market conditions and customer preferences allows for timely course corrections and ensures that the annual plan remains relevant and effective throughout the year.
Entrusting RevOps with the annual planning process is not merely a matter of delegation; it's a strategic investment in the future of the organization. By harnessing their cross-functional expertise, data-driven approach, and process optimization skills, RevOps can drive revenue growth, improve operational efficiency, and foster a culture of collaboration and accountability. With RevOps at the helm, the annual planning process becomes a powerful tool for achieving sustainable success in the dynamic world of business.
That’s why Revenue Operations are the ideal strategic partners for the Executive Team, and why they should run the annual planning process.
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