“Plans are nothing; planning is everything.”
That’s some good presidential advice from ol’ Dwight to set up the following discussion. I’m also partial to the universal insight Yogi Bera provided when he said, “If you don’t know where you are going, you’ll end up someplace else.”
Today, we’ve arrived at the big show, number five – Annual Revenue Planning. [Cannons boom, confetti explodes]
Great companies are awesome at revenue planning. However, we all know the universal truth that plans inevitably change, especially in today’s environment. Eisenhower’s statement that “plans are nothing” underscores the limited value of rigid plans that can’t adapt to change. On the other hand, “planning is everything” highlights the crucial role of the revenue planning process itself. The act of planning involves thorough analysis, consideration of alternatives, and anticipating potential challenges. This preparation will get your team and your company ready to respond to challenges and make informed decisions.
Start-ups often fail to see the value in a structured revenue planning process, leading to long-term setbacks due to factors like resource constraints and a focus on short-term gains. Mid-stage to mature companies struggle if they lack orchestration, structure, and clear roles in the annual planning process. RevOps is crucial in addressing these challenges. The primary goal of the Revenue Operations leader is to align and unify the systems and processes of Marketing, Sales, and Customer success to generate consistent, scalable growth. (Forbes). And perhaps the best vehicle to do this is to orchestrate an efficient annual revenue planning process in collaboration with the CRO, CMO, and CFO.
Goals for the revenue planning process
Your first step is to outline the revenue planning framework and gain buy-in from key stakeholders. If your business operates on a calendar year, July is the right time to get the ball rolling with your Sales and Finance leaders. In this initial phase, focus on:
- Identifying the leadership team’s goals for the annual planning process.
- Defining the expected positive business outcomes you want to achieve through a well-executed annual planning process.
- Anticipating potential challenges or roadblocks during the annual planning phase and developing strategies to mitigate them.
In your initial discussion with your CRO and CFO, ask them what they want from the revenue planning process with some preliminary feedback on responsibilities, accountabilities, and timeline.
What does a good annual planning process look like?
Here’s a breakdown:
- Clear Roles, responsibilities, and deadlines: This minimizes friction and delays.
- Cross functional collaboration: Identify the subject matter experts (SMEs) who will be the points of contact for each function
- Executive alignment: C-Level Checkpoints to maximize efficiency scheduled in October, December, and January and ensures alignment within their functions
- Understanding GTM strategy: It enables managers and leaders in Marketing, Sales, and Customer Success to grasp next year’s Go-to-Market (GTM) strategy and targets by December
- Data-driven assumptions: The process supports capacity plan assumptions with rigorous data analysis and benchmarking
- Meaningful growth and efficiency targets: It sets growth and efficiency targets that are challenging yet attainable, motivating teams while maintaining realistic expectations.
- Alignment with strategic initiatives: Next year’s RevOps and Enablement programs are aligned with the strategic plan for maximum impact
- Communication plan: All employees comprehend the company’s GTM strategy and targets by January.
Does your leadership team agree with this? Now is the time to align on goals for the annual revenue planning process.
The annual revenue planning calendar:
The first area to invest some time is in building an annual revenue planning calendar. Communicate with the Finance team – they may want to own a “master” calendar for the company but RevOps should certainly own the GTM detail in the calendar.
To eliminate silos of activity over the coming months, weave three planning “tracks” into your calendar: Go-to-Market Planning Productive Capacity and funnel; Targets, Compensation and territory design; and Systems, Tools and Processes to support the plan. Your plan should culminate in a GTM kick-off meeting beginning of January. The primary goal of this GTM kick-off meeting should be to articulate where we were, where we are today, where we are going, and how each of your roles is critical to achieving this plan.
Your annual plan is the foundation for this message and that’s why it needs to be comprehensive and completed early. It would be ideal to time this with the sales kick off meetings but this is hard to plan for as could happen between January to April
Below, you’ll find our Annual Revenue Planning Calendar template. This calendar provides a detailed description of all deliverables in the planning process and can be used as a collaborative tracking tool across teams. We’ve split out two tabs in this sheet, the first for start-ups (to keep focussed on the essentials) and the second for Mid-Market to Enterprise companies
One of the common pitfalls we have seen at this early annual planning stage is that different teams build different calendars and you end up having gaps and overlaps in the content they cover. Finance has a calendar, Marketing have one and RevOps have one. Whether or not RevOps owns this calendar, it’s important to have one document for GTM planning with one set of deadlines for all.
Once you’ve laid out the first draft of your detailed planning calendar, it’s time to kick off the process with stakeholders. This is why it’s important to identify the SMEs that take responsibility for each of their areas across the departments.
You will make the kick-off of the annual planning process flow so much easier if you’ve invested in a continuous planning process throughout the year. This is because the key metrics, and assumptions you will use in next year’s plan are already being continuously reviewed based on this year’s plan. You won’t be reinventing the wheel.
Each company’s fiscal period can be different but assuming you are calendar year, the ideal timing for kicking off the planning process is late July early August. By now, you hopefully have conducted a Bi-Annual Market Assessment. This exercise sets the foundation for strategic change in the coming quarters and will inform the high-level direction for next year’s annual plan.
The revenue planning kick-off meeting
You should have this kick off meeting by the second week of August. You want to provide guidance and leadership and get clear buy-in on the work ahead by all key stakeholders. So prepare well for this with a deck including an initial RACI matrix of who you want to be part of the Planning team that you can send in advance for pre-reading. Typically, you will want the CRO or head of Sales, the CFO, the head of RevOps, the CMO, and the head of HR/Recruitin in this first meeting.
Agenda for the kick-off meeting:
- Goals for the annual revenue planning process: Finance; Marketing; Sales; Customer Success. Have we captured the goals for each team in one document for alignment and transparency?
- Key planning milestones and dependencies. Do we agree on what needs to be done, by whom, and what we need from each other to make it happen?
- Annual Revenue Planning model: Key assumptions. This is the preliminary introduction to the capacity model that will need to be built or refined for next year including high level Sales Productivity number
- Key GTM metrics for next year. There are MANY metrics that can be tracked. What does the team think are the top 10 indicators for success next year?
Download our free template for Annual Revenue Planning Kick-off Deck
Start with the goal in mind and work backward:
To make sure that you are ready to roll out the plan at your January kick-off event, and that all sales compensation plans will be ready, work backwards from these key milestones as you plan your calendar so something like this;
- GTM Planning Kickoff meeting: Early August. Covers the agenda and goals outlined above.
- 1st Draft of Sales Capacity Model: Mid-September. Includes core assumptions such as current sales productivity, capacity, ramp times, attrition assumptions, and high level targets and quota
- Review Sales Planning Model with CMO and CRO: Mid-September. Clarify marketing’s role and targets generating qualified sales pipeline to support the sales capacity model and any strategic initiatives
- Review Strategic initiatives with your CRO: End September. Important discussion on what strategic initiatives you will be planning to lift productivity within the sales organisation and what productivity lift is expected from each
- 2nd Draft of Sales Capacity Model: Early October. Refine earlier assumptions and incorporate budget costs, hiring details, and potential “what-if” scenarios.
- 1st Review of GTM Plan with CEO & CFO: End October. Discuss the capacity model, strategy, headcount, and budget.
- 3rd Draft of Sales Capacity Model: Mid-October (November?). Refine assumptions and begin modelling Sales Targets and Quotas based on actual sales productivity.
- 2nd Review of GTM Plan with CEO & CFO: Early December. Finalize any outstanding issues before the plan’s approval.
- 4th Draft of Sales Capacity Model: Mid-December. Refine assumptions and ensuring alignment across the respected functions
- Final Review of GTM Plan with CEO & CFO: Mid-December. Confirm the plan and make final adjustments based on the prior year’s actual results.
- Launch GTM plan: January 2nd. Roll out the Productivity targets and Quotas along with the compensation plans to the Sales and Customer Success teams
Regarding reviews with the CFO and CEO, experience suggests that three formal checkpoints are the most efficient way to get through this process. Ensure these meetings include key stakeholders like the CRO, CMO, CFO, CEO, head of RevOps, and the RevOps analyst and Finance analyst always as shows alignment. Avoid scheduling extra sessions as they tend to lead to delays, “analysis paralysis,” and confusion. Extra modelling cycles can be a huge time sink for RevOps and Finance. Clearly outline decisions that need to be made before or during each meeting to avoid unnecessary follow-ups.
Communication and change management:
One of the key areas of agreement you want to have coming out of the revenue planning kick-off meeting is an understanding of roles and responsibilities for the different team members. Communication on planning process and the cadence for updates to stakeholders is vital for a successful revenue planning process and communication the targets, quotas and compensation plans. If you don’t already use a tool to track roles and responsibilities for different functions, we recommend the RACI model. More information can be found here (link) about RACI and means the following:
- Who is Responsible for performing the work?
- Who is Accountable for the work?
- Who Contributes to the work?
- Who is Informed after the work is completed?
Here’s what your RACI matrix for annual planning might look like. You can download this template below.
Download our free template for RevOps RACI Matrix
Start building your annual plan:
So you’ve had your kick-off meeting and have agreement on the process! Boom! Fist bump. Now let’s come back to the importance of starting early and keeping to the deadlines. As you look at the calendar, you see that there is a lot of work to be done across a number of teams. If you are going to plan effectively, it’s important to hit your deadlines because all of the outputs from the plan flow from this! This is the grand orchestration for the coming months and requires dedication and more importantly focus. Here are the most important outputs of the annual planning process:
- The GTM Strategy documented. This includes the models themselves and a strategy summary document, which is typically in a deck format. Most importantly, there must be a “plan of record” that everyone agrees to so that there is no confusion over what the targets are.
- The go-to-market (GTM) productive capacity and efficiency models. This has two important components: the Productive Capacity Model (typically owned by RevOps) and the Marketing funnel (Typically owned by Marketing).
[Insert links for capacity model blog posts] - The Financial Plan and Budget. This model is owned by the Finance team and incorporates the Operating Expenses Budget (OPEX) and Financial forecast for the coming 1-3 years. This model often includes “what-if” scenario plans to assess the cost/benefit impact of different resource allocation strategies
- Systems, Tools and Processes. All changes to the systems, tools and processes should be agreed and projects in place along with IT sign off so they will be implemented on time
- A Company Kick-off plan. Specifically, an outline of the content that will be presented to align all employees around next year’s plan
- Quotas, Compensation Plans and Territories issued & signed off. Quotas and territories rolled out, and compensation plans issued and signed off ideally within the first week of the year
Implementing a revenue planning automation platform can significantly streamline your planning process, saving time, reducing errors, and enhancing overall efficiency. Automation tools like Lative orchestrate complex planning activities by connecting the top down plans with bottoms up operating data to have a cohesive overview of the organisation. This not only speeds up the decision making process but also minimizes human error and ensures consistency across all planning stages.
Regardless of your company’s stage, you need a revenue planning framework. By implementing the strategies discussed you can significantly streamline this process and produce plans that are realistic, attainable and build healthy high performing organisations.
If you’d like to learn more about Lative, please visit our home page, book a product demo, or reach out to our team. We’d love to hear from you!
About the Authors
Werner Schmidt and George Erskine
Werner Schmidt, CEO and Co-founder of Lative, has over 20 years of experience in Revenue Operations with companies like Forcepoint, Aruba Networks, Citrix, and Sage.
George Erskine, advisor at Lative, has led Revenue and Sales Operations for companies like Adobe, Saba Software, Propel Software, and SolarCity.
