SaaS CEOs Want an Amazing and Predictable Revenue Engine but Frequently Settle for High-Quality Parts

Most SaaS CEOs have detailed plans for Corporate Strategy and Product Development, yet many lack a cohesive, cross-functional plan for their revenue engine. Rather than holistically, the revenue engine is planned and managed as a set of parts, namely Sales, Marketing, and Customer Success. Revenue Operations (RevOps) may be deployed to align these parts better, but finely tuning a disassembled engine is nearly impossible. Though common, managing go-to-market teams in this fashion is sub-optimal. Revenue growth and acceleration are crucial to achieving a successful exit, and building a complete revenue engine is vital to getting there, so why don’t CEOs emphasize building that engine?

The challenge begins with the top-down nature of most plans. Revenue growth and acceleration are paramount, so the starting point for annual planning is, “We are going to grow revenue XX% year-over-year.” A booking target is established, and Sales, Marketing, and Account Management work – mainly in parallel – to determine how to achieve the target. Coordination across functions is limited, data sources are inconsistent, and plans are built to fulfill the unique obligations of each part or function. The result? High-quality parts, but no engine.

To effect the necessary change and build a predictable engine, CEOs need to drive a collaborative planning process that looks at all processes that support revenue. Planning must be process-driven rather than departmentally-driven. Further, planning must be conducted from accurate and agreed-upon data sources. Planning begins at the Top-of-Funnel (TOFU) and flows through all funnel conversions – Raw Lead to MQL, MQL to SQL, etc. The planning process needs to incorporate conversions by Channel – Inbound, Outbound, Partner, and Other (ex: Marketplace). Pipeline requirements must be evaluated, and sales capacity must be planned. The impact of Customer Marketing activities and Account Management must also be quantified in terms of spend, upsell, expansion, retention, and churn.  Every conversion point must be planned, and conversion rates and capacity must drive booking estimates. All this – and more – must be planned cross-functionally and collaboratively to create a proper revenue engine.

Planning the revenue engine isn’t enough. CEOs must ensure that methods exist to manage the go-to-market execution daily. Mike Tyson said it best, “Everyone has a plan ’till they get punched in the mouth.” In the world of SaaS, leaders get punched daily. Campaigns fail to achieve desired demand-generation results. Specific channels may not deliver as planned. The pipeline is too small. Competitors change tactics. Sales win rates slip. There are many challenges to contend with. The revenue engine must highlight every miss or gap and help drive the problem-solving process. Perhaps most importantly, the revenue engine should help find future gaps-to-goal so that corrective action can be taken now. After all, today’s failing campaign is creating a future gap-to-goal.

Bottom line? SaaS CEOs will set top-down goals but must also steward the process-centric, cross-functional development of the bottoms-up revenue plan; that is how an engine is built. Working cross-functionally as an engine is the key to exceeding the plan and driving growth.