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(At LEAST!) 36% of B2B companies can't reliably predict or forecast revenue
Let’s put that headline stat in context for you.
Every time we do a GTM Made Simple Roadshow, we share the 15 Go-to-Market Problems and ask people to tell us their top 3.
36% tell us that being unable to reliably predict and forecast revenue is one of their top three problems.
But if you look at our Summer 2023 Economic Impact Study, half of the companies are missing their 2023 targets.
That leads us to believe the percentage of companies unable to reliably predict or forecast revenue is a lot higher.
Let’s dig in, diagnose, and unpack this problem.
(We already did a post about another of the top 15 problems: sales has to rely on heroic sales players instead of repeatable, scalable sales plays)
Whose fault is it that you can’t predict revenue?
Ah, the question we love to ask on GTM teams, and better yet, the question we love to answer (as long as the answer is “not my department”).
Clearly the blame for failure or an inability to forecast revenue lays squarely at the feet of the Revenue Team, right?
Come on, you know by now it’s not that simple!
After all… we live by the following credo so strongly that we had shirts made. (Sarah’s 18-year old daughter shockingly turned down the opportunity to take one with her when she left for UVA this summer…)
Diagnosing and addressing the real problems
Everybody loves to blame sales . . . especially marketing.
But when you’re working as a cohesive, integrated, holistic GTM team, you need to take a deeper look at the root causes of GTM problems.
Marketing Pipeline
Do sellers feel like there is quality pipeline coming from marketing? How can you back up that feeling of theirs with data? Is the pipeline solidly within your ICP? How well is it converting?
It’s a common (but toxic) dynamic for marketing to claim they’re doing everything right and sales is falling short, or vice versa. These teams need to work together and diagnose pipeline problems without blame or recriminations.
If forecasting relies on pipeline evaluation, we have to define the quality of the opportunity and set expectations that both sides agree on. Otherwise, marketing teams (urged on by CEOs and CROs) will load their pipeline with 4 - 6x the pipeline to “mitigate their risk” and have sellers chasing down bad business.
If you have to choose between a smaller, excellent pipeline and a larger, cruddy pipeline, the temptation is to choose the bigger pipeline. But take a look at your TRM, ACV, and close rates and think strategically about whether that is really the best choice.
Pipeline Goals
Do Sales, Marketing, Product and Customer Success teams each have specific pipeline contribution goals?
Are leaders incentivized accordingly?
These are the four functional contributors to the GTM team as we see it, so it might make sense at your company for each to have a component they own.
An oversimplified version:
Sales owns outbound and partner-generated pipeline
Marketing owns inbound, event, and community-generated pipeline
Product owns PLG pipeline
Customer Success owns renewals (and maybe part of upsells)
Forecasting Methodology
What methodology do you use for forecasting?
Dysfunctional: the methodology is that the HIPPO (the highest-paid person in the room) picks a number out of thin air without being able to explain, justify, or show a plan to achieve it.
Bottom-up means sales and sales leadership provide deal-by-deal projections.
Top-down means rev ops/finance use current and historical data.
Hybrid means sales and finance agree.
Hybrid+ means sales, finance, marketing, customer success, and product all agree.
Most companies use a combination of top-down and bottom-up forecasting. However, marketing and intent data also gives key insight into buyer engagement that can support better predictability.
We need to evolve past the artificial hand off that many of us used a decade ago: marketing creates leads and sales executes on them.
Treating selling as a cross-functional GTM activity will allow you to evolve past that and get a clearer picture of pipeline health.
Sales Process
Do you currently have a consistent, measurable sales process?
Is everyone trained on it?
Are you able to use the process to diagnose and fix problems, or do you use it for vanity metrics?
Without measurable sales process statistics (or buyer journey data for PLG or marketing-led sales motions), you won’t be able to accurately predict using a top-down methodology. You’ll need to focus on a deal-by-deal evaluation of your pipeline with a strong sales leader who is able to see through cracks in deals.
Join us for our next GTM Made Simple Roadshow
So many attendees of our roadshow say that it’s like GTM therapy.
At our roadshows, we share the 15 problems, and attendees get together in groups to talk through them using our workbook.
The attendees are all senior-level (director-level and up; mostly VP and C-level GTM leaders), which provides a camaraderie and safety to share that we haven’t seen anywhere else.
Here are upcoming dates, with 2024 cities announced but not scheduled yet:
November 3, 2023: Los Angeles (register here)
December 8, 2023: San Jose, CA (register here)
February 2024: Tampa, FL
March 2024: Austin, TX
April 2024: Atlanta, GA
Introducing Analyst Hours
We had our first analyst hour last month, and we were joined by Airslate CMO Shawn Herring to talk about how automation is driving pipeline. Watch the replay here.
This week, we’ve got a powerhouse analyst hour hosted by Lindsay Cordell in conversation with Demandbase’s Moira van den Akke and Snowflake’s Hillary Carpio about:
The 5 distinct and unique types of ROI
How to show the ROI of ABM and advertising using this ROI model
How to consistently show the value of ABM across silos and teams
Happy October, and as always, hope this newsletter is useful to you in your GTM efforts.
Love,
The GTM Partners Team
