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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Play Offense When Predicting Revenue

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I got an email today from an exec at a company who I was with at a recent board meeting. I thought it was a powerful summary of part of our discussion, specifically around the sales pipeline for Q4 and overall sales execution. I’ve been in something like 91,293 pipeline reviews in my life and it continues to baffle me that experienced sales execs manage to snow the CEO and the board with “probability weighted sales pipeline.” I hung in there in this case and continued to make my point about playing offense on sales forecasting.

Rather than trying to summarize it, I got permission to just reprint the email. It follows.

One of the larger take aways for me was your insight on our attitude towards how we were predicting revenue. Prior to our meeting, we thought we were doing a good job of predicting revenue. We are working on 10 deals and we explained to you that we thought that 75% of these deals would close within the next 60 days or so.

You asked specifically, “which of those deals would close?”

Our answer, was “we feel confident that each of these deals has a 75% chance of closing”.

You pushed us and asked “which of these 10 deals has a 100% chance of closing?”

Our exec team looked at each other in silence.

We were hard pressed to answer that specific question. We couldn’t answer that question.

The takeaway for me was that we need to take the offense when it comes to predicting revenue. We need to change our mentality from Defense to Offense.

Defense was: Us allowing FATE to play a large factor in whether or not a deal closed. We accepted the fact that 75% of these deals will close, but couldn’t point to WHICH 75%. We were in “wait and see” mode and allowing fate to decide our monthly revenue.

Offense is: We feel good about these 5 specific companies signing and we are going to commit to them closing as a sales team and a company. We are going to keep on top of them, be proactive, and make sure they close. Fate will have VERY LITTLE to do with whether these deals close or not.

It is a subtle adjustment, almost semantic, but one that will make a very large difference in how we act, how we talk, how we think, and ultimately how much revenue we book.

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