How to Make Your Revenue Growth More Predictable
December 14, 2021 | Written by Alex Smith
CEOs and revenue leaders across enterprise SaaS all grapple with forecasting revenue numbers—that all-important ARR.
Executives and leaders want accuracy. Not just in the final number (ARR will be X on X date) but the journey (ARR will grow every quarter by X).
Getting these forecasts wrong means agitated investors and difficulty making strategic decisions.
Leaders should be able to look at a pipeline and say that a deal has X chance of closing within X months.
Often executives can’t accurately make these predictions—but that doesn’t mean it can’t be done.
Leading research and consultancy company Gartner coined the term customer verifiers, and it means a company has visibility on when a prospect has advanced from one purchase stage to the next.
If you can break your pipeline into clearly defined stages, you can start making predictions.
In this article, we’re going to take a look at why this is so important.
The first step most companies miss is to break your sales cycle down into clear stages that, when followed methodically, increase the likelihood of a sale.
I think of this a bit like the stages a couple go through before getting married.
What Marriage and Enterprise Sales Cycles Have in Common
Getting married is one of the biggest deals anyone will make.
It’s a lifetime of commitment, shared finances, children and many hours of Netflix.
Although the future of a relationship can be difficult to predict, there are a few clear milestones that indicate that it is more likely to lead to marriage. These are:
Similar milestones exist in the enterprise sales process, and effective sales teams are clear on what they are. At a basic level, it may look like this:
The further we progress down the sales cycle, the higher our chances of making a sale. However, most sales teams do a bad job of defining the key milestones in sales because they don’t have reliable customer verifiers.
How Most Companies’ Sales Process Works (No Customer Verifiers)
Most enterprise sales cycles are highly unpredictable. As the sale progresses, the pipeline value isn’t weighted—at least not with any accuracy.
Salespeople report to management that a deal is “close” and “will close soon”, but there is little evidence to back up these claims.
Revenue leaders are left looking at a big pile of deals and hoping some of them close. From A to B in the graph, there is a huge dead zone of time where the prospect hasn’t made concrete commitments, and their likelihood of buying is unpredictable.
How Your Sales Process Will Look with Customer Verifiers
Companies that accurately predict pipeline value have a clear set of commitments that their salespeople guide prospects through.
These companies break the sales process into smaller steps and systematically elicit commitments from the prospect at each stage.
As the sale progresses they clearly see the prospects’ commitment, and subsequently the likelihood of the deal closing.
These commitments—or customer verifiers—are vital if you want to build predictable, scalable and effective sales processes.
Numbers You Can Believe In
If your customer verifiers are well-defined commitments, your pipeline value and revenue predictions become reliable.
The sales leader looking at the figures below has a clear view of their pipeline and can start making predictions and taking action.
In this case, they should be worried about the top of their funnel. In four quarters, a dip in revenue may be coming—but at least they can act now.
Multiple Bitesize Wins = 1 Enterprise Deal
Customer verifiers are clear commitments built into the sales process. If you get these verifiers right and get buy-in from the sales team, your sales revenue becomes predictable.
Which means no more sleepless nights and a clear view of the future!
At Cuvama, we help companies build a sales process with customer verifiers at its heart. In the next article, we’re going to show you how we do it.