PRM Phase 1: Growth PlanThe planning phase is responsible for defining the end results, the milestones and metrics, the resources to be allocated, the plan of execution, and the budget required to finance the PRM.
There are five steps to building an effective plan for Predictable Revenue Model: Set Targets, define Metrics/KPI’s, Allocate Resources, build an effective execution plan, and fund the project well. Each of these steps is outlined in more detail below.
Step 1: Setting the Targets
Setting a high growth rate is not trivial and will likely require quite a bit of analysis and internal discussion.
- A powerful way to get started is to ask, “If we were to grow by 100% this year, what would it look like?” It is important to set the bar to at least 100% so you can explore your full potential. Setting smaller goals such as 20% growth rate might seem “realistic” but it will not force you to think out of the box and see things you might have missed before. Fewer things tend to seem “far-fetched” when pre-conceived notions of what can and cannot be done have been removed.
- Always think Four Quadrants, not one. Resist the tendency to look for revenue growth by primarily acquiring new customers (Quadrant 3). Existing customers (Quadrants 1 and 2) can be an even greater source of new revenue.
Step 2: Metrics & KPIs
Metrics and Key Performance Indicators are the “markers” that keep teams on track towards consistently achieving a high growth rate. Amazon.com reputedly track over 700 different metrics. While most companies won’t need that many, there are some important ones to keep an eye on:
- Email campaigns – open rates, opt out rates, bounce rates, click-through rates, landing page form submits
- Website – overall traffic growth, bounce rate, which pages are entry, key search phrases, form submits
- Social Media – visits, likes, posts, mentions, forwards, etc.
- Prospecting – number of Sales Qualified Leads (SQL) turned in, number of SQLs accepted by Sales
- Sales – number on new prospects turned into forecast versus funnel, average deal size increase, average closing ratio, average sales cycles, reason why opportunities are lost, variances between the top and bottom sales reps (closing ratios, sales cycles, average deal sizes, etc.)
There are more, but even these will take most B2B companies a long way to ensuring High Growth Rate.
The best way to establish metrics and KPI is using the Four Funnel Frameworks to establish the numbers needed at each point.
Step 3: Resources Allocated
High growth rate requires both process-driven and result-driven managers. It is nearly impossible to find these not-so-similar qualities in a single person. Typically, the results driver is business unit or department head and the process driver tends to be a project manager. Both are equally essential.
Cultural changes are inevitable when a company transitions into high growth mode. Therefore buy-in and commitment from key people is essential to make it through to the other end of a turbulent journey.
It is also important to remember that you don’t have to do everything internally. In fact, most business processes can and should be outsourced, as there is no competitive advantage to be gained in building competency in these business processes.
Most Marketing Operations and Lead Generation activities fall into the category of operations that can and should be outsourced. A good execution plan makes it easy to outsource business processes and manage them by result.
Step 4: Execution Plan
In this context, an execution plan is different from a business plan. A business plan is very useful when entering a new area of business. It forces you to have a fundamental understanding of what you are getting into before you actually get into it.
An execution plan focuses on achieving very specific results in the business you are in today. It basically answers the question of who does what when. Almost all instances of missed revenue targets can be traced back to lack of execution, and this in turn can be traced back to lack of accountability. The execution plan focuses on accountability by providing the necessary information: what are the targets to be reached, who is responsible for achieving these, and how do we achieve them?
A viable execution plan details deliverables on a monthly basis, which then are rolled up into quarterly summaries, and finally signed off by those responsible for the deliverables. It typically has far more numbers than words.
If you really have an execution plan, your people know their numbers by heart.
Step 5: Budget
The last planning question is whether we have adequately funded the new high growth project.
This is the world of spreadsheets. Build a pro-forma execution plan for one year, broken down monthly, showing all the key metrics, expected revenues, AND what it costs to fund this plan.
When budgeting, it is not necessary to enter all possible costs here. However, it is critical that you have entered all the relevant ones. A cost item is relevant and must be budgeted for if:
- It is a new resource or system you must get that you currently don’t have in order to make the PRM work, or
- It is an existing resource you have to pull away from another project, which means you have to replace the resource on that other project. In this case, the relevant cost is the replacement cost.
Do not get bogged down in “accounting” costs such as properly allocating the portion of shared costs. If it is not either #1 or #2, it is not truly an incremental cost. It is most likely already paid for somewhere, and if you can get more use out of it even better. Do not include it here.
Getting the real incremental cost of funding the PRM is vital. Overstating or understating the costs can equally kill a PRM project. One kills it before it a PRM project is even launched (it look too expensive), and the other kills it in the middle (it looks like it is running over-budget). The second is the more costly of the two, as expenditures already made may be lost before the company can realize any returns.