5 Steps to Predictable Revenue

Thursday May 03, 2018

One of the biggest challenges for CFO’s is predicting the revenue side of the business. It isn’t easy, but you can do it. In this article, I will tell you how to do it.

I was in a meeting one day, with a CFO, and I asked him, “What is the biggest headache for you as a CFO?” , he replied, “Predictable Revenue, I can manage the operating side of the business, but that darn sales department is all over the map!”  One of the biggest headaches for the CFO is the inability of sales to predict the amount of revenue that they will deliver to the business.

We have worked with many companies over the years, and, you know what, most of them have never figured this out. So, I can completely relate to the CFO dilemma.

So how do you create Predictable revenue in your business. There is no exact answer, but in our experience, there is a recipe that can get you there 9 times out of 10.

Step 1: Know your metrics.

It all starts with the numbers. You see, sales is a profession of probabilities and this is the biggest headache for most CFOs. When you are dealing with probabilities and not absolutes, it can be hard to predict revenue. As a result, just like at the casino, you must work the odds.

This means that you must start tracking your metrics. Start looking at your revenue as a series of ratios and activities and stop guessing.

There are two factors that come into play when you start managing metrics – Time and Numbers.

Time

Sales takes time. Deals don’t close overnight. This means that you must understand how long it takes for your sales team to move a deal from lead to cash – your sales cycle. It may be 2 weeks, and it could also take years. Understanding this will create the right expectations for revenue.

Numbers

Once you understand the length of your sales cycle, you can now start analyzing your numbers. A great sales team will only close 30% of the opportunities that show interest in their solution (We call this the close rate). Based on this knowledge and your average deal size, you can now work out the number of prospects your team must converse with on a monthly and weekly basis to generate the revenue you need to keep the CFO happy. These are your numbers.

Step 2: Improve your Selling ability

Stop selling your Product and start selling your value. Your prospect could care less about your product, service or solution. They are only interested in what it can do for them! So, tell them! Wait, don’t tell them, ask them! Help them understand the benefits they will receive by asking strategic questions. I won’t go into that here, you’ll have to trust me for now.

Step 3: Talk to the right people

Are you speaking to the people that have the ability and the money to buy from you?

This is the number one challenge for salespeople. It is usually created by the management team as they put pressure on the reps to drive the numbers. As a result, their reps are “making stuff up”. If you are going to make a sale, there are two things to consider:

1. You must be speaking with the person that signs or influences the front of the check, and not the back of the check.

2. They must also have urgency to solve their problem. Money always follows the urgency!

Step 4:  Create a Sales Culture

We have a saying,  “Hope is not a sales stage!”  So, stop hoping and start selling.

Sales are not just for the sales team. Everyone in the company must be focused on revenue and understand the impact it has on them. This means that everyone sells. The receptionist is making the prospects comfortable with you. The technical team is looking for the next opportunity to help the customer. The customer service team is making the customers ecstatic about your solution. Marketing is focused on creating a pipeline for the sales team to close. Finally, of course, the sales team is focused on selling and only selling.

Step 5: Integrate marketing and sales

Are your reps doing everything?

Are they creating proposals, doing tech support, creating marketing materials, and washing the dishes?

Is your marketing responding to the request of the day?

Do you have any kind of strategy?

Marketing and sales need to be joined at the hip. There should be an integrating marketing and sales strategy that walks the prospect through your sales cycle from lead to cash in the bank. This is usually the biggest inhibitor to predictable revenue. In order to do this properly, you must understand the core value proposition that your company delivers to your customers. You must also understand the key market that responds to this value proposition. Now you have to align everyone, every message, and every process to deliver on that value.

Remember that sales is a profession of probabilities. There are no absolutes. However, if you are able to put these 5 steps in place, then you will at least put the odds in your favor and maybe, just maybe, make the CFO happy.

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Questions about how you can more effectively develop predictable sustainable growth? Contact us for more information.