An organization can create a predictable revenue model to manage its sales processes and goals. By combining process recommendations and structural changes, a company can forecast and reliably track earnings.
By understanding how this model works, you can determine whether adopting it could help improve your organization.
We describe a predictable revenue model, share its benefits, and provide seven steps you can take to implement it.
What is Predictable Revenue?
A formulaic approach to creating predictable revenue creates consistency year-over-year and provides growth – not last-minute hustling and guesswork. As a result, you can predict how much revenue your business will generate in the future.
If it’s going to be effective, the approach needs to be systematic. There are three key steps:
- Getting to know your funnel
- Calculating a reasonable average deal size
- Determining timeframes
As soon as you have covered those factors, you can begin to plan your Predictable Revenue strategy. Identify the key points during your transition from preparing, prospecting, and eventually starting the sales cycle by analyzing the nature of your funnel. Putting together repeatable steps from there facilitates its progression.
To accurately forecast your revenue, you need to determine your average deal size. The next step is to estimate time windows for many key components of your sales organization.
This includes how long it takes new reps to ramp up, how long it takes to prospect, and how long it takes to close deals. You can leverage the framework effectively once you have accounted for all of those elements.
Terms used in Predictable Revenue
Cold Calling 2.0
A cold call is a way of contacting anyone and everyone to introduce a product or make a sale.
By avoiding the wrong people, Cold Calling 2.0 reduces waste and time. It introduces an outbound sales team that generates leads using real, actionable data. Data from that source provides contacts who are interested in your industry and your product.
“Hot coals” refers to a sales cycle’s uneasy, stagnant, uncertain period that sales organizations encounter before they break through from limited organic growth to proactive growth. Predictable Revenue is specifically designed to help companies through those kinds of stretches.
Layers of the onion
Teams can use this analogy to think about how to “layer out” their products and offerings. We want to enable prospects to choose how they learn about a company and its products – step-by-step.
Market response representative
A Market Response Representative qualifies leads that come in through a company’s website or by phone. Qualified leads are routed to the appropriate quota-carrying salesperson.
Sales development representative
“Outbound Sales” refers to the process of generating leads by making cold calls instead of closing deals or qualifying inbound leads.
Benefits of Predictable Revenue Models
Predictable revenue models may be created for a variety of reasons:
- Creating benchmarks: Predictable revenue frameworks define the revenue you might expect each month or quarter. Planning your spending around the minimum you might make each year can help you avoid overspending.
- Revenue growth: You can evaluate the steps you can take to increase revenue if you know your predictable revenue. To guarantee growth over the previous year, you may set goals that are a certain percentage above your predictable revenue.
- Enhancing strategies: You can evaluate your sales and marketing strategies based on predictable revenue. In periods of lower earnings, you may need to adjust your marketing and sales strategies.
- Measuring metrics: If you evaluate your predictable revenue in several steps, you may capture helpful metrics.
How to Create a Predictable Revenue Model
When creating a predictable revenue model, you can take several steps:
Analyze current strategies
You can restructure some roles and define your predictable revenue by understanding how your department operates currently.
Take a look at the marketing strategies you employ, the processes sales representatives follow, and the team members that carry out each task.
Implement new sales and marketing techniques
Consider how you market your brand across your various channels after you evaluate your current processes. This may include social media profiles, websites, ads, and emails.
You should think about how you can educate potential customers about your brand, engage your customers, and differentiate your company from others in the field.
Prospects can easily learn about your company and products with each marketing channel.
To establish predictable revenue, you need to set sales and marketing goals so that you can measure the results. If you are implementing new marketing strategies, consider how many clicks and visits your website will generate and how many contacts your sales representatives will make before you sell a product.
Restructure the sales and marketing teams
A company might restructure its sales and marketing teams to establish a predictable model framework. A marketing response representative, for example, might be created as a new role. Upon receiving a request or query, the person can handle it on behalf of the lead or person engaging with the marketing content.
A role such as this can eliminate the need to cold-call every ideal persona on a cold-calling list and standardize this step in the process. Afterward, the marketing response representative can deliver qualified leads to the sales team to confirm sales.
With this model in place, you can track your progress to make sure you are meeting your goals. Each team member should be aware of both the process goals, like how many emails are sent and the revenue goals.
You can use this new structure to predict revenue more easily and adjust your processes to reach and exceed these goals in the future. By comparing actual performance to planned performance, team members can validate if they meet their goals and, therefore, earn the revenue expected.
- Organize training programs
By providing training opportunities for your sales and marketing departments, you can ensure each team member succeeds as this can bring several changes. It may be necessary to train all employees on new processes, responsibilities, or products.The purpose of training programs is not just to meet company goals, but also to help employees develop their skills and improve their performance.
The Predictable Revenue framework presents an interesting framework that struggling sales organizations should consider leveraging. This model can be a useful model for anticipating both the results you want to see and for seeing the results you want to see.