Hey, Toni from Growblocks here! Welcome to another Revenue Letter!
This weekly email is my way to share knowledge and build a community of people who love to learn more about growing revenue in a data-driven and scientific way.
Anything in particular you want to hear my thoughts on? Drop me an email, and I might use it in my next article.
If you missed last week’s Revenue Letter, I talked about why Sales forecasts are useless (or at least, why they’re not as good as you think).
TLDR:
You can only get them accurate 2-3 weeks before the end of the Q
They’re subjective and rely on inputs from reps
They don’t account for all the opps that will be created
And they only forecast newbiz, giving you dangerous tunnel vision
While I think they’re great at Sales coaching, they’re not so good at giving you the entire revenue picture.
If you want to have revenue predictability, you need to forecast your entire Go-To-Market.
Not just what your Sales team has in their pipeline for this Q.
The Execution Problem
Of course, managing your entire GTM is a lot easier said than done.
According to
and OpenView’s latest benchmark, GTM execution is the biggest thing keeping founders up at night.What do we mean by execution in this case?
It means hitting your targets again and again and again.
Building a predictable revenue engine.
And running the GTM team with confidence.
I’ve talked with several CROs about this execution headache and asked them what tends to be their biggest blockers.
I kept getting 3 answers.
Aligned targets across the board
Let’s face it, your GTM is complex.
You have hundreds of metrics that influence each other.
It’s hard enough to align them in one spreadsheet as it is.
And setting the right targets can be virtually impossible.
Clear ownership
Even if you have the correct targets on everything, who’s actually in charge of them?
You leaders and their lieutenants must be clear on which metrics and initiatives they own, and what the expectations are by when.
Because if you don’t have enough opportunities to feed your AEs next quarter, somebody should be there to pick up that dropped ball before it kills your revenue engine.
A strong execution cadence
These numbers need to be hit.
Every day, week and month.
Changes are acceptable - but only if the overall revenue target is not at risk.
In many organizations, this is difficult, even in the best of times.
Now add the chaos from layoffs, market changes, and disruptive trends like AI.
It’s no wonder so many leaders have a hard time keeping up.
But by moving your focus away from the Sales forecast and into the GTM forecast, you can slowly begin to answer those problems, and get on the path of predictability.
So, what exactly would a GTM forecast look like? What do you actually have to consider in every stage of the funnel?
GTM Forecasting
First, when we talk about GTM Forecasting, what we’re actually talking about is forecasting your entire bowtie. Not just sales.
Metrics that matter to revenue, like inbound, opportunities, retention expansion, etc.
Imagine you want to do that. What would that look like?
What might go through your mind first is, so, do you want Marketing to sit in a smelly room for an hour every week and have them commit and pinky-promise which lead will progress to opportunity?
That’s not just silly. It's also impossible, given the sheer amount of leads.
And yes, if this is what I were to suggest, this indeed would be stupid.
But you need to shift the paradigm.
Instead of humans calling whether a lead deal or customer will progress. You should use a machine that is trained by your own data.
Rather than asking marketing to sit in a room, you should just refresh a dashboard that uses the specifics of a lead, deal, customer, or whatever object to determine how likely this customer journey will convert throughout the funnel.
So let’s dive into what this means for each team in the GTM:
Marketing Forecasting
Marketing teams have one major flaw. There’s a disconnect between opportunity production and Sales pipeline.
There’s an inherent velocity problem.
A lead can take up to 6 months to become an opportunity. And the typical Sales forecast will only look at opportunities, ignoring the 6 month lead time.
But those leads are incredibly vital, especially if you have longer sales cycles.
If you’re producing too much for your capacity, you’ll have an overworked Sales team and leaving too many deals on the ground.
Too little, and you’ll have Sales not hitting target and you probably missing revenue
By forecasting leads and opportunities 6 months in advance, you can begin to see the risks to your pipeline early and address them now.
What Marketing Forecasting here looks like is simple:
Sit down with the team and figure out what you are going to do differently to drive revenue.
Feed these inputs, e.g. campaigns, or budget increases, or simply “are working on this handover, this should increase our CVR” into the forecast. And do it on a level of input that you are comfortable with. e.g. this campaign should deliver 250 leads over the next 2 months
Then see how your forecast changes. How much revenue lands and when.
This alone gives you some crazy new skills.
You can now connect your leading indicators all the way down to revenue, distributed over time (think this or next quarter)
You can isolate the different channels and initiatives. Some call it “unblend” the funnel. All the way down to revenue. So what actually drives $$$
These new skills give you a radically different way to run marketing.
But they also make you a serious partner at the money table.
In every step, you want to forecast every metric in terms of revenue impact
Sales Forecasting
Keep doing your traditional sales forecasting. But I think this is, by now, simply mislabeled. It’s your weekly sales enablement with real-life case studies. ;)
An actual sales forecast should give you three simple things.
It should give you a decent “forecast” ahead of time. Not 2 weeks before the Q-end
It should stop relying on Reps’ input or the lack thereof
It should take into account what has happened in the last few months top funnel, impacting sales now
Because it’s part of a GTM-wide Forecast, the Sales forecast now becomes an order of magnitude better.
Did Marketing struggle last quarter? How much of a problem is this going to create for you now?
Did our outbound team start quitting and you were unable to hire enough back fast enough? What does this mean for your Pipeline Coverage?
Did your ACV drop last quarter, did sales cycles go up? Even with everything being great on the top funnel, how is this impacting your quarter now?
And those things you kind of want to know early enough so you can still react.
Either argue for taking down your targets. Or for deploying tactics that can fix the short term.
Customer Success Forecasting
My wife and I are currently building out our attic. It’s a big project. Thank God that with her, we have at least one capable project manager in the family.
But when you talk to the carpenter, bathroom guy, electrician, painter... all of them know only one of them is going to get screwed with the timeline.
Guess who?
The painter.
Why? Well, he is the last one in the project. Whatever screwups every single one before made, he will be the one that has to finish the job on deadline—being totally squeezed in the process.
Well, Customer Success is kind of the same here.
They sit at the end of a long line of things that need to be done. All of that input could definitely help them make better decisions.
In the SaaS world we treat CS like the painter. But unlike the painter, we make sure not to let them know that the process before them produced significantly different results than planned.
Customer Success Forecasting solves 2 main issues:
What is the newbiz funnel actually creating? Not the excel plan. But what is REALLY going to happen? This gives you clarity on where and whom to hire to get onboarding and support done.
Instead of a top-down last year’s GRR number, this team can get bottom-up cohort-based numbers that will differ from team to team. And if sales is ramping up outbound, producing more churn, this will get factored into CS’s forecast.
The Future of Forecasting
I believe that the companies emerging from the “growth at all costs” era successfully are the ones who adopt GTM forecasting.
Why would you not use all the data you already have?
Why would you leave your company’s view of the future to a few reps inputting (or not) information into a CRM?
Why would you not use the recent advances in data and work with it to give those magic features to Marketing, Sales and CS?
And the way you bring this information to work for you is to guide your GTM Execution.
This gives you:
Fully aligned targets across the GTM
It gives everyone clarity on what needs to be done, by whom & when to be successful
It gives you real-time data to check in daily on actual performance, but it also gives you a clear insight on forecasted future performance to make decisions already today.
This, for me, is the modern backbone of excellent GTM Execution.
Dive deeper into the topic on Growblocks.com and ping me when you are ready to jump on a call.
P.S. My Marketing team clearly has too much time on their hands. Check out our new trailer for GTM Forecasting. Coming soon to a commercial meeting near you.