How to Navigate the Rest of 2023
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The past few quarters have been anything but smooth for revenue teams. The road to revenue is always challenging, but the macroeconomic environment has introduced once-in-a-decade obstacles for teams to navigate. Buyer priorities have changed, customer needs have shifted, and companies are scrutinizing every penny they spend. Has your revenue process kept up?
It’s likely that your annual plan is at risk and your targets for future quarters need to be recalculated. You need complete visibility into the realities of your business to confidently predict outcomes in future quarters. You have to be able identify areas of strength and weakness across your revenue process and focus your team’s efforts appropriately.
This may feel like a difficult task, but difficult does not mean impossible. While the macroeconomic conditions are new to many businesses and operators at today’s companies, it’s far from the first time there’s been a downturn. Many of the most successful companies of all time were born during tough times (Apple, Facebook, Amazon.com, Airbnb, to name a few). And a study done by Harvard Business Review found that not only do companies survive downturns, but 9% of them actually come out stronger.
One of these companies was Concur, which tripled profits through the Great Financial Crisis of the mid-2000s, and was acquired by SAP in 2014 for $8.3 billion. We spent time with Steve Singh, who was Concur’s COO through that period and is now a Managing Director at Madrona Venture Group. We wanted to learn how he helped Concur navigate tough times and get his advice for today’s revenue leaders . You can hear the full conversation on this episode of The Run Revenue Show (Apple | Spotify).
“Could we control the macroeconomic environment? Not a chance in the world. But could we benefit from it? You bet we could.”
Singh understands the importance and competitive advantages of driving toward predictable revenue, even amid uncertainty. He says, “Being able to predict revenue allows you to better determine where to invest, where to allocate additional investment. If you don’t know where you’re going to land on revenue, you’re at a massive disadvantage.”
Too many leaders view predictability as a fool’s errand in today’s climate. Too much is changing too fast, they’ll say. They attempt to weather the storm by hunkering down, dramatically cutting costs, and crossing their fingers for smoother sailing. While cost-cutting is helpful, it’s only half a strategy. A full strategy requires managing costs and mastering revenue.
And according to Singh, revenue mastery comes down to a company’s aptitude for instrumentation, visibility, and discipline.
Your revenue process needs to be as tight as possible. This is what Singh calls “instrumentation” — collecting and analyzing the right data to effectively adjust processes, models, and success criteria.
“The companies that are the most successful understand what to focus on and are really well instrumented. They understand every metric of their business in real-time — from pipeline creation, to conversion, to implementation and customer retention.”
Beyond understanding what’s happening, leaders have to go out of their way to understand why things are happening. This kind of detailed understanding is nearly impossible without the right data instrumentation. You have to capture and analyze the right metrics to determine the best path forward. The standard Singh recommends holding yourself to is this: “I want to be better at understanding my business, the industry I’m operating in, the customers I’m serving. I want to be better at understanding those things than anyone else in the world.”
This is how you can regain control in an uncertain environment. The deeper you understand the metrics driving your business, your industry, and your customers’ behaviors, the better suited you’ll be to adjust and evolve processes. The closer to real-time you can receive and respond to these insights, the better off you’ll be. Instrument a system for a constant stream of data, apply meaningful analysis and interpretation, and make informed decisions about the best areas of focus for your business.
“Over-invest in instrumentation. Find insights that are not completely obvious to the outside world and leverage that information for your benefit.”
The key to maximizing the value of this instrumentation is to make its data and insights widely visible across your entire company.
Key data and metrics should not be reserved for executives. Rather, intentionally democratizing that data is a rising tide that lifts all boats. You need to trust your entire company with this information and create the expectation that their priorities and behaviors are guided by it.
“The more information you share across your enterprise, the better your people can perform.”
Your revenue team needs to have a single source of truth — one place to go to understand trends, pipeline conversions, competitive pressure, win rates, retention risks, and everything in between. Every revenue-critical employee should be given the training for proper and efficient use of this tooling, and you should set the expectation for proficiency.
This was one of the keys for Singh during his time at Concur. He says, “You’ll be amazed at what your people are able to accomplish when you share information and make data available to them.” A member of his team started to see a product usage trend that was concerning. Corporate travel bookings for future quarters were down in unusual ways in certain industries. The team triangulated this data point and came to understand that it was a leading indicator of the tougher economic times that laid ahead for those industries. As a result, they were able to pull back on certain bets, double down on others, and maintain their consistent growth rate.
Singh and Concur then saw an unexpected virtuous cycle: “When you outperform in one part of the business you start to outperform in other areas of the business. It’s a great flywheel effect. You can’t outperform unless you know the metrics, what your performance is, what the best use of capital is. Success begets success.” Complacency is a far bigger risk than innovating new ideas. Encourage your teams to think outside the box, take well-informed risks, and run structured experiments.
Every member of the company will come to understand the imperative to leverage data to make decisions. And every executive will see the many benefits of creating a culture of transparency and empowerment. The result is that every team and individual has a high degree of confidence on where their time and energy is best spent and can tackle those priorities relentlessly.
Instrumentation and visibility give you the means of wrestling back control of your destiny and determining where to focus. The next step is executing with discipline.
Knowing where to focus is only a small part of the battle. The much more difficult part is executing with discipline — avoiding all the shiny objects that will inevitably emerge and threaten to distract you and your team from the main goal. It’s critical to maintain a small set of meaningful priorities and to emphasize their potential impact.
“Great businesses are built over decades. The team that wins is the one who can drive consistent, disciplined action based on data and instrumentation.”
Singh recommends maintaining two lists: one that outlines priorities the company is pursuing and another that outlines all the other things the company is intentionally not pursuing. This forces comprehensive thinking and ensures clarity of purpose with a lasting impact: “How people learn to prioritize becomes a superpower for the company.”
In the current macro environment, you’ll likely find a cohort of companies or buyers who are more likely to invest in your solution than others. This should be an “all hands on deck” scenario with galvanized efforts across your revenue team. Marketing programs, outbound programs, sales trainings, and customer value journeys should all be purpose-built for squeezing every drop of revenue from this cohort. And leaders should adjust their forecast based on the pipeline creation and conversion trends for that specific segment.
Singh adds, “The reason discipline is important is because it brings out all the flaws in your business. The components of your business that are weak show through, and you can go fix those problems.” For example, you may start to see poor performance against a certain competitor in this cohort you’ve defined. You can adjust your strategy to sharpen the competitive learning, enablement, and tactics for this competitor and set yourself up for improved performance now and in the future.
A measured, disciplined approach to your team’s efforts allows for constant intake of real-time data and an ability to augment strategies accordingly. This is the key to navigating an ever-changing environment and reshapes your company’s DNA in a way that will persist in good times.
CONCLUSION: YOUR REVENUE PROCESS
You need to control the controllable – in the face of changing customer needs, reduced budgets, and less spend, your process has to be as tight as possible. You need complete visibility into the realities of your business so you can identify and stop all forms of revenue leak. You may not be able to control the macro, but you can control your commit.
“There are always going to be variables you can’t control. You can always learn from these variables and find opportunities to leverage them to drive performance across your enterprise.”
You can control how you instrument your data, how you provide visibility to all revenue-critical employees, and how you execute your priorities with discipline. Using the macro-environment as an excuse for missing your forecast won’t keep you in-seat for too long.
Dig into the data. Adjust your processes. Focus on your teams. The more you and your team are looking for them, the more you’ll find areas of opportunity. And the more you condition your team to operate this way, the easier it will become to exploit these opportunities.
Forecasting is more than just a bottoms-up number-calling exercise. It’s the ability to have command and control over your business. To ensure the right people are collaborating with the right data. And to create a set of governed processes that will maximize success in the short- and long-term.
You can be part of the 9% of companies who emerge from this downturn stronger. It’s difficult, yes. But far from impossible.