Revenue Leadership

Part One - Prevent Revenue Plan Failure: Fundamental Risks & Critical Assumptions

Revcast was pleased to host a panel discussion featuring our own chief RevOps officer, Jeff Serlin, joined by HubSpot’s VP of RevOps, Erik Swenson. The discussion focused on key learnings and practical advice to prevent revenue plans from going off track as the fiscal year unfolds. This was moderated by Eric Boduch, former Pendo co-founder and now founder and CEO of startup venture studio 24 and Up. 

The following blog is part of a series of speaker transcripts from this webinar presentation, which you can also watch in its entirety on Revcast’s YouTube channel

Because this was such an information-packed panel discussion, the rest of the presentation will follow as separate transcript blog posts covering topics that include:

  • The importance of improving your ramp modeling and monitoring
  • Tips on thinking through hiring plans and attrition
  • Driving alignment across GTM functions for pipeline coverage and capacity
  • Bringing the concept of agile planning and optimization to RevOps

This first article below focuses on the fundamental reasons our panelists believe revenue plans are poised for high risk – and the importance of getting your key assumptions right and tracking those as KPIs in an ongoing way. (View part two focused on ramp modeling, and part three focused on monitoring of sales capacity vs. demand)

RevOps leaders provide experience-based advice on revenue planning and de-risking those plans.

Eric Boduch, Moderator 

Okay, welcome to the webinar Preventing Revenue Plan Failure. I'm your host Eric Boduch. We have two great guests here today: Erik Swenson from HubSpot and Jeff Serlin from Revcast. I'm going to kick things off by having Erik Swnson introduce himself. Erik, would you kick us off?

Erik Swenson, HubSpot

Yeah, happy to do so. And Eric, thanks for having me, excited to be here with some fellow planning nerds talking some very exciting topics, near and dear to my heart. A little bit of background on myself. I'm coming up on six years at HubSpot. The vast majority of that time has been sales ops and sales strategy, leading that team here, with the last two years specifically focused on leading our what I would call our Connected Planning function, which is really sales, marketing, and CS and managing that intersection. 

Prior to HubSpot, I'd been at companies big and small, big being like EMC Dell did some time at a company called Carbon Black, which was IPO’d and acquired by a VMware, and also time at a kind of a true startup called Activio, about five years there. So that's my background, and excited to share some of the painful scars on my back today, hopefully I can share some of those lessons with this group so you don't make the same mistakes that I've made over the years.

Eric Boduch, Moderator 

Thank you, Eric, Jeff, you're up. Can you give us a quick overview of your background and your current role?

Jeff Serlin, Revcast

Sure. Thank you, Eric. I currently I'm the CROO, which is Chief RevOps Officer at Revcast. There's a longer story, which I won't go into, except to say that I think we're in a very strategic role, and we should kind of have that same level of seniority and colleagueship against the other leaders of the go to market functions. I've been doing RevOps before that, SalesOps before that without the title for nearly 20 years now, eight different companies that I either was the first person in or was hired to lead an existing team and grow it and scout and take it to that next level. Marketo, where Erik and I would have been competitors, Intercom, Pendo - some of the notable ones I had the fortune or misfortune, depending on how you look at it. In the early years, of being a team of one or two and having to learn everything around RevOps, from systems to workflow to process to how to execute forecasting calls and QBRs and enablement. 

But the one consistent thing that I've always had to spend a lot of my personal time on is the planning function, the modeling function, all of the effort that goes into what you do want to get into the fiscal year, as well as reporting against that and helping with all the replanning that goes on. So excited to be here with both Erics, especially Erik from HubSpot to, as he said, talk about the battle scars and hopefully help folks avoid some of them, and at least think about some of these things as they go forward in their own companies. 

Eric Boduch, Moderator 

Thank you, Jeff, appreciate it. So why don't we jump directly into talking about revenue plans and why some, or should I say, many revenue plans fail to meet their goals? Can we start with you Erik?

Erik Swenson, HubSpot

yeah, sure. I think there's a long list we could talk in here. I think I'd probably if I had to pick just a couple, you know, I think for me, there's the, there's this kind of very, or you talk about what good looks like, there needs to be, you know, really, this concept of sequencing and alignment, you know, not just within the sales organization, but sort of, you know, all the, all the internal orgs that feed into sales. I'm thinking of, you know, product launches. I'm thinking recruiting. I'm thinking financial and budgets, like to me and over my career, that continues to be kind of the common thread in terms of why plans were not successful: we didn't quite have that interlock cross functionally, that's really needed. 

And you know, when you don't have that interlock, it's very easy to hit potholes that you did not expect, or, quite frankly, just run out of time, right? And when you're doing you're building an annual plan that's very easy to be optimistic and you know, particularly with the founder, it's easy to be really optimistic about how quickly we can grow, and it's so critical to be grounded and have that interlock between those cross functional org. Is finance aligned with our growth expectations? Is there budget to support it? Basic things like do we have enough recruiters in seat to hire the sales reps needed to hit those plans? And so you think about success or failure does come across you, not just in that sales org, but the cross functional dynamics. Are they interlocked, and are they aligned to achieving that success? And that's probably - do a whole other session on that. But to me, that's the biggest driver of the issue.

Eric Boduch, Moderator 

What about you Jeff, thoughts?

Jeff Serlin, Revcast

Yeah, I agree with the ones that Erik mentioned. I agree that there's a long, long list, and we can probably do an hour or two hours just on this. A couple of them that come to mind. One is expanding on what Erik said is the lack of a planning process and calendar, which does, as he mentioned, integrate all of these functions. It requires you to take a look at recruiting and recruiting resources. Can you actually hire what you have in there? It requires you to go in the right sequence in order. It requires you to have the right people in the room for reviews of are you interlocking the demand gen part of the business and the selling part of the business? It demands that you look at your budgets for, say, enablement, if improving the things that come from that are important. And it also provides a decision making framework. Who makes the decisions at the end of the day to make sure you align? 

I think the second thing is you sit in a room and you tend to look at spreadsheets and you come up with ‘out of this world’ assumptions. “Let's just increase the win rate by 5% because it's got to be better than where we are, and if we do that, it means that we need less deals, or we're going to get to our deals faster or less costly.” But you spend no time putting together how you're actually going to achieve that. So you forget that next layer of the tactics to actually enable the improvements that you might drive in the plan.

Slide image during the panel discussion

And the one that's been very frustrating to me are the ones you're showing on this slide is collecting all of the data required to make those good decisions. Can I even collect an accurate representation of how folks have ramped over the years and make some decisions off of that? And you know, the tools - we do this in spreadsheets, they get big, they get heavy, they get brittle. They're hard to look at, hard to visualize. So that makes it hard to do assumptions. That makes it hard to show people what the output of those assumptions are. I can go on and on, but those are the three big ones that I think lead to ultimate failure.

Eric Boduch, Moderator 

Now, Jeff, you mentioned assumptions in particular, you were talking about just increasing the win rate. So why don't we dive into, dig into some of the fundamental assumptions. Erik, let's start with you - the key assumptions that drive plans?

Erik Swenson, HubSpot

Yeah, sure. We at HubSpot, we think about these assumptions really in three categories, demand, capacity, execution. And so from that demand perspective, you're thinking about marketing qualified leads. You're thinking about BDR, BDR meetings generated. You're thinking about inbound partner registrations, those sort of things. Do we have enough of those sort of units of demand in order to justify hiring 10 more sales reps, to justify increasing productivity by three points, increasing quota by three points, those sort of things. It starts really with demand. 

And you know by incorporating those pieces into your plan, it's also a great way to create accountability, right? You want to have aligned accountability between in this example, your Chief Marketing Officer is accountable to the business to deliver X units of demand to the sales organization this year. And we're going to measure it according to X terms and conditions, and we're going to measure it and report on it on a monthly, quarterly basis, et cetera. 

And you sort of get into the capacity piece of it. Capacity for us is really not just headcount, but it's also tenure mix, and it's also through the lens of, how are our ramping new higher reps performing? Do we have the right kind of, you know, metric of humans in seat to be able to respond and react to these demand inputs coming into our business?

And then you can move down to execution, where you've got deal creation, close rate, ASP, those are sort of I would say isolated into the sales org, where they are independently accountable for those. 

But again, demand capacity, execution is that framework that we keep coming back to, and quite frankly, go into the actual planning process and are defined as KPIs. And when we talk about strategic upside, we talk about, to use Jeff's example, like we think things are gonna get 5% better, we try and correlate those expectations into these KPIs, and say, How are we going to make something X percent better? Is that realistic? And then you can have the right business conversation around it, of who's accountable to do it, what's it going to cost, et cetera.

Eric Boduch, Moderator 

Jeff, maybe you can add or dig into a little bit, or expound upon risks and opportunities that arise from the assumptions.

Jeff Serlin, Revcast

Yeah, every single one of those variables that Erik mentioned that you plug into a plan that drives some outcome can be a risk or an opportunity, every single one of them, especially as you deviate from the baseline of where your business has been operating. And it's important that you understand the magnitude of those risks, and it's also important that you understand the opportunities. 

And to give you some examples, you know, we mentioned one earlier: If you're planning on hiring in, say, Q2 more sales reps and SDRs than you've ever hired in the past, like, say, as many as you hired in the second half of last year, all of last year, but you haven't put into place the recruiting resources or the other infrastructure that's needed in order to do that. You've all sudden put a risk in your plan. And if you haven't considered that, you are going to be perpetually behind, because add to that attrition, which you have to backfill to getting the right amount of butts in seat, but more importantly, getting the right amount of street quota and capacity in street in order to get to your number.

Screenshot image from Revcast product showing alerts on hiring actuals vs. plan

So if you plan incorrectly for ramp, for your ability to hire, or for any of those KPIs we mentioned before, especially if you're planning on improving them without a plan, actually improve them and measuring the improvement and someone being accountable for that improvement, then you've added tremendous risk in your plan. And when you do that from the beginning, which is what you're doing when you create a plan, it's really hard to dig your way out of that. 

But on the opportunity side, there's also potential benefits. For example, if you're ramping faster than you thought, because you actually did hire a great person to do onboarding, and you reconfigured all of it, and you've kind of figured out why the best ramped sell faster, you have an opportunity now to either delay hiring by a month or two and save costs, or you have an opportunity to keep hiring on plan and de-risk the plan. So I wouldn't think of these only as terms of risk. You can also think of them in terms of opportunity if you exceed some of these things. 

And lastly, I would say it's important, as I said, to understand the magnitude of the risk. If you raise quota by say 10% across everyone which your finance lead would like you to do, it might result in a reduction of zero reps that you need in your plan, right? So are you really getting a lot of benefit versus the downside of the morale and attainments and the winning locker room, or it might result in you reducing your needs by five or six reps, which is significant. So I think you have to constantly look at the sensitivity for somebody in the assumptions that you put in and how much risk and relative risk they do.

Erik Swenson, HubSpot

I was going to jump in there and just, I think there's some great points made there by Jeff. What I would say to the the audience here, folks who've dialed in to hear us speak today are probably in the weeds of planning, right, and I think maybe just a call to action for this group is just, you know, thinking about a lot of this is on this group to to be on top of that, to be cross-functionally communicating. 

I'll go to the example that Jeff gave. If you're going to hire, you know, a world record number of SDRs early in the year, you've got to give recruiting a heads up there, right if, if you go to them 90 days out and say, “Hey, I need, you know, a world record number of SDRs” and they don't have recruiting capacity for it, you're going to be in deep trouble. You've got to give them multiple periods of months notice. Just think about it from their perspective. They have to go find recruiters, get those recruiters enabled and in seat before those recruiters can actually even go execute on the hiring plan that you've built, right? 

So just a call to action to this group to always be thinking about what other cross-functional groups need to be involved and aligned to this plan. You know, they're not the recruiting team very frequently isn’t coming to me saying, “What's going to happen in six or nine months?” It's very much on my team and us to push awareness out to them of anything that is sort of abnormal, just to Jeff's example there.

Eric Boduch, Moderator 

That was a great add. And I think those changes, right, require a sense of agility like as hiring plans change, as targets change, you know, as attrition is higher or ramps or slower, or whatever happens to affect, you know, the plan, having the agility to adapt is extremely important. And I know we have one of our final you know questions will be covering agility in the process and how we make revenue operations think through this idea of continuous agile planning.

View the entire presentation to hear more!

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