Planning for Revenue Resilience. Download Our Free 2021 Planning Framework.

September 09, 2020 Written by Jake Sorofman

The abrupt arrival of pumpkin spice is always a sure sign that planning season is upon us—and this cycle promises to be particularly consequential. With the economy sputtering and all eyes on customer retention, companies are taking a hard look at their plans going into next year.

In preparation for these planning sessions, we thought we’d share a simple, proven framework to help revenue and customer teams think through their strategies for the next fiscal year by evaluating the performance and resilience of the five key levers of the revenue cycle:

1. Win rate

2. Average selling price

3. Deal velocity

4. Gross retention

5. Expansion

This framework follows seven key steps:

Step 1: Assess and benchmark revenue cycle KPIs

The resilience of your revenue cycle can be assessed by the strength of these five KPIs. Start by documenting your company’s performance relative to your goals and, where they’re available, industry benchmarks that help you understand what good looks like.

Step 2: Identify target areas

Next, rank these KPIs based on their relative performance to create a target zone for priority attention. Needless to say, your focus should likely orient to the lowest performing KPIs.

Step 3: Discover root causes

For each of these priority KPIs, perform a group SWOT analysis to discover potential root causes. Next, force rank these root causes based on its causal relationship to each KPI. Ideally, you’ll be able to partner with your data science team on this effort, but even in the absence of that resource, you should be able to form some solid hypotheses based on your team’s collective knowledge and experience.

Step 4: Explore solutions

Now comes the fun part. With the root causes defined and prioritized, you can move into solution mode. Here, you should brainstorm eight to 10 cross-functional ideas for improvement. This is a blue sky exercise, so don’t be constrained by available resources. That comes next.

Step 5: Establish priorities

Now that you have some inspiration for how you may want to tackle the challenge, it’s time to start thinking about impact and effort. For each proposed solution, rank the expected impact on the KPI and effort of achieving that impact on a scale of 1-5. Once you’ve scored each candidate initiative, plot them accordingly to determine where to invest:

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Prioritize the quick wins, consider major projects, punt thankless tasks, and consider fill-in jobs for a rainy day.

Step 6: Set goals

You can’t manage what you don’t measure. For each of the initiatives that you prioritize, craft an outcome statement as the basis of the goal you’re setting by defining what you expect to change, by how much and by when. 

Next, describe the action plan in clear and persuasive language to make it come to life as an initiative people can understand and get excited about.

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Step 7: Visualize the outcome

As an optional step, you may want to ask team members to each write and share a postcard from the future, which forces them to visualize the outcome as a way to make it real. Corny, sure, but this can really help create a personalized and indelible vision for change by framing the target outcomes in ways that contributing individuals can see in their mind’s eye.

You can download the complete planning playbook here, which also includes some editable templates that you can use for your strategic planning process.

Happy planning. Let us know how this works for you.

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