Knowing how much capacity and runway you have at any time to generate enough pipeline and ultimately achieve your revenue target is a crucial responsibility for a company’s top revenue leader.
Developing that annual pipeline capacity plan involves much back-and-forth with finance, marketing, and often also board members. But that’s only the beginning: everyone must execute and be measured against it, with an expectation that they will respond and adapt as necessary when real-world dynamics materialize.
But often, the annual capacity plan becomes “reference shelfware,” reviewed infrequently as real life unfolds because it’s no longer considered relevant.
Instead, what if that plan stays activated and dynamic as a companion to your ongoing responsibilities, much like a real-time driving or navigation app as you take a long road trip, feeding you data about faster routes, delays, weather, hazards – all affecting your ultimate ETA?
As our team at Revcast helps Chief Revenue Officers, Chief Sales Officers, and other revenue leaders who ‘own’ the numbers, here are some of the most common – and solvable! – challenges we see getting in the way of achieving active revenue capacity management…
Lengthy Planning and Re-Planning Process:
A big energy investment is made to put together your revenue plan. Getting alignment and acceptance can be a lengthy process. If a re-planning effort is needed mid-year, there is concern about the level of complexity to repeat this process again.
In many situations, the revenue plan relies heavily on assumptions about the key contributors to achieving your number, instead of actual data or even good benchmarks. This can result in low confidence. Those assumptions may include:
- Quota targets and attainments - by segment and by quota types
- Headcount / reps in seat - often with attrition or leave times being an afterthought
- How to best structure your sales org
- Ramp times
- Marketing and BDR/SDR contributions
- Conversion rates
Ideally, your planning process should take significantly less time yet deliver stronger alignment across sales, finance, marketing, and the board. It starts by integrating and keeping all of your relevant historical data (or starting to track that now if you don’t have it) in a central source like Revcast, so that everyone gains transparency and can conduct rapid scenario modeling.
With a strong data and automated analytics solution in place, customers see planning cycles cut down from months to weeks, with re-planning happening even faster and more smoothly. Revcast customer Rimsys was able to build their initial plan in less than one day vs. what normally would have taken them weeks before they could share and collaborate with their stakeholders.
Low Command of Revenue Capacity Data:
As a sales or revenue executive, it’s incredibly frustrating to not have the data you need on revenue plan history and performance within a reasonable time frame to support your critical decision making. It’s just as frustrating to also have blind spots, things you aren’t even aware that you don’t know, because it’s so time-consuming and tedious for your teams to cobble the data together. Data is kept in multiple places, often with different data governance (or lack of) rules, so RevOps or other analysts must work to normalize and report on it.
As an example, one Revcast customer learned that they were over-paying reps by hundreds of thousands of dollars, due to incorrect ramp time assumptions. It wasn’t until the actual, real-time data was combined in Revcast and tracked against the plan that this insight was even visible to them.
You benefit from such a centralized solution by knowing how actuals are causing deviations (positive or negative) from your revenue targets, including:
- Actual ramps by segment, by sales manager
- Actual start dates, highlighting the impact of hiring delays
- Actual attainment by segment, by sales manager
- Actual attrition or updated forecasts on personnel leave times or employment status changes
- Actual marketing and BDR/SDR contributions
Difficulty in Producing Scenarios for Stakeholders:
Your original plan is your guide, but once everyone gets underway in your current selling climate, it’s important to refer back to your goals and make adjustments as you go. It’s when changes are needed that the friction can increase with other GTM stakeholders and Finance, because without the right solution, you can’t easily show why you are recommending a change and what that will mean.
These conversations and adjustments are greatly helped when you can produce two things:
- Instantly calculate the impact on your revenue projection when something about your capacity changes – and to catch that early enough before it creates a bigger domino effect
- Illustrate and compare various data-backed scenarios and their cause-effect to address an issue or, even better, to seize upon a growth opportunity
Spotting Risks - and Opportunities - Early:
When you have a solution that is always bringing together your plan, your historics, and your actuals, you are more likely to earn the “agile” badge because now you can be alerted as risks or other outliers arise. It’s even better when you surface favorable revenue trends and over-achievement sooner.
For customer GRIN, their VP of Revenue Operations said that with Revcast they were able to: “uncover hidden growth opportunities, allowing us to allocate more quota on the street while reducing our cost structure.”
As another example, a Revcast customer can see how much impact a delayed hire can have on revenue, and how that can’t be (easily) made up without making another adjustment elsewhere.
Bonus: when all of that data is accessible to your sales managers, they too have visibility into where plan deviations are happening and how that affects their revenue target. Because the whole team is empowered with that information and early alerting system, everyone has the potential to earn their “agile” badge.
The Future for CROs in Revenue Capacity Management:
These are not the type of insights that traditional deal-focused revenue forecasting solutions are designed to provide. What CROs and their sales and RevOps leaders should prioritize is looking weekly at their capacity at the moment, because that directly affects pipeline and deals later down the line.
As McKinsey & Company authored in 2023 about how CROs are propelling growth: “When data are limited and sales cycles are long, focusing solely on converting opportunities into deals is not always effective. Instead, a pipeline should be built.”
As we work with our Revcast customers on their pipeline capacity planning and revenue performance management, we see a number of benefits materializing for those revenue executives:
- Confidence in the plan, alignment, and its execution
- Increase chance of achieving (or exceeding) revenue goals
- Ensure efficient, well-managed use of budget
- Ensure accountability across the go-to-market pipeline: marketing, sales, and yes even HR
We invite you to reach out to see how Revcast’s reporting and insight alerting supports CRO-level decision making: Get a demo
