Term sheets can be intimidating as a first time founder. As it is likely the first time you’ve seen a term sheet, the intricacies of the deal can be difficult to…
3 Questions you Need to Answer if You Plan to Hit Your Quarterly Goals
Q2 is here. Now every startup CEO will set out to accomplish the big wins that will catapult the company forward. But big objectives will ultimately come down to small details. So the very first question…
Q2 is here. Now every startup CEO will set out to accomplish the big wins that will catapult the company forward. But big objectives will ultimately come down to small details. So the very first question must be answered: are you prepared to hit this quarter’s goals?
Surpassing your quarterly goals won’t happen by accident. Instead, careful planning and the right expectations to execute are the best ways to set up your team for success. Before you allow a few errors to knock you off a great start to 2017, ask yourself the following three questions:
What does each rep need to do to hit their goal?
The best way to hit the big revenue number for the quarter is to break it down into small steps. Jason Lemkin has a great breakdown that helps identify the component parts that can drive a successful sales performance.
To start, plan for each rep to close about eight to twelve deals a month. With that as a baseline range, here is Lemkin’s outline for what needs to be done to stay on track:
- Deliver 50-100 qualified leads to a rep each month
- Allow time for at least three demos and three phone calls to close each deal
- Expect reps to have time for 30-40 demos and 50-60 phone calls each month (at least 20 works days are needed for the month)
Multiply your average contract value (ACV) by 24 and 36 and you’ll determine the range of monthly recurring revenue (MRR) an account executive (AE) is expected to reel in for the quarter. Divide your Q1 revenue goal by the median expected MRR each account executive is expected to add over the course of the quarter. Do you have enough AEs to earn the revenue needed for the quarter?
And do you currently have the pipeline to feed enough qualified leads? It’s essential to have a formidable group of SDRs filling the funnel so AEs can hit their marks. It’s also important to relay your expectations to AEs of the numbers of calls and demos they should expect to achieve their quota for the quarter.
Do you have the right kind of leads?
While it’s easy to look at the quantity of sales leads and feel confident that the formula Lemkin lays out will pay off, one of the easiest ways to slip up and miss your quarter numbers is having your team take their eye off the ball of quality. Never forget: you don’t need to grow unnecessary leads.
I’ve written previously about the importance of categorizing your leads and filtering out the bad ones. This is a crucial step to ensure you haven’t stuffed your pipeline with junk that will only burn an AE’s precious time over the course of the quarter. Get your SDRs focused on delivering quality prospects or else they may serve as the weak link that keeps you from obtaining your goal. If you’re worried about the long-term trends on the quality of your leads, use why revenue per lead–an essential metric for any startup hell-bent on building a solid and robust pipeline.
Who do you need to hire? (and when do you need to hire them?)
Two of the biggest mistakes that will keep you from hitting your Q1 numbers are 1). Not appreciating how much time it’ll actually take to hire high-quality people 2). Not appreciating how long it will take those people to be up-and-running at 100 percent productivity.
New hires may not arrive as fast as you’d like or be as productive as you’d hoped. However, if you run the numbers on your sales pipeline and you don’t have the headcount to qualify enough leads or land enough deals, hiring will be your first objective of the quarter. Determine the company’s greatest weakness: Is it a lack of AEs? Not enough SDRs? Are there too few inbound marketers to help build the funnel? Headcount may be your first priority of year if an insufficient staff threatens your revenue goal. You don’t want to hoist unrealistic expectations on your team and hurt morale when the group fails to reach its ultimate milestone.
Regularly updating investors on the pace of lead qualifications, hiring plans, and the number of deals your team closes over the course of the quarter is one of the best ways to maintain great communication while you aim for these goals. Seek their feedback if you encounter problem areas, as your group of investors if often one of the best resources to rely upon for specific problems to solve.