Beat and raise your targets

Ever wondered why some public tech companies beat target and raise guidance?

Today we talk about the practise to follow in order to build a plan you can beat - so you can raise target and build momentum.

• (00:00) - Introduction
• (04:47) - It starts with targets
• (07:30) - Confidence level and balance
• (11:38) - Isn't it unambitious?
• (13:33) - Give a different target to leadership
• (18:53) - The plan for the rest
• (25:16) - What goes on the dashboard?

PS: Check out the ebook, "this is what strategic RevOps looks like"

Creators and Guests

Host

Mikkel Plaehn

Marketing leader & b2b saas nerd

Host

Toni Hohlbein

2x exited CRO | 1x Founder | Podcast Host

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.

With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.

If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.

[00:00:00] Toni: Hey everyone, this is Toni Holbein, you are listening to The Revenue Formula. In today's episode, we're going to talk about how you can beat and raise your revenue targets. Enjoy.
[00:00:14] Mikkel: Oh, boy, Tuesday again.
[00:00:17] Toni: Time flies, huh?
[00:00:20] Mikkel: I
[00:00:20] Toni: Wow, there's so much energy on this podcast. It's amazing.
[00:00:25] Mikkel: Yeah, I'm a bit tired today, I'm a bit tired today. There are so many things going on, it's like, I was literally thinking this morning, you know, you have the December rush? Where you're busy every day, work, at home, and, no, I know, but it was like, yeah, now it's starting. Now it's starting for me.
[00:00:40] Toni: But Mikkel, before we go into this here,
[00:00:44] Mikkel: here,
[00:00:45] Toni: Why don't you tell me, or us rather, Why you had to leave on Friday?
[00:00:53] Mikkel: Well, I was working from home, uh, and my wife was as well. Because, uh, so sad story, uh, going to a funeral. It was like a friend's father, uh, so it was not great, not happy about that. And then as we were ready to get out the door and go to the church for, you know, the ceremony, we get a call from the daycare and I, you know, the thing, you can just hear it.
[00:01:14] I was not in the room. My wife answers the phone. I can just hear, Oh no, this is not good. I know what this is. And then she's like, yeah. They just called, our daughter apparently put a bead up her nose and they're not allowed to do anything. So We, we have to go pick her up. I'm like, oh man. It's like, yeah, I, I can see that this is me who has to do it.
[00:01:36] That's fine. And then, um, got her home and, uh, you know how kids they get, it's like, no, don't touch my nose. You're not allowed to do anything. And no, I don't want to go to the doctor. I'm like, well, we can't let it stay in there forever. I was like, well, what do I actually do? Because I can't just put a finger in and then it's gonna get squeezed further in.
[00:01:53] And what do you do? Well, you Google. That's, that's what you do. And,
[00:01:56] Toni: wonder, did you, did you, was it, was it a thing you read or was it like a video you watched? No,
[00:02:02] Mikkel: I read, so I read, uh, a how to. from a hospital
[00:02:06] Toni: What was, what was, what was the search
[00:02:08] Mikkel: The search query was like how to get a beat out of my kid's nose. And there were a lot of blogger moms and blogger dads writing about their experiences.
[00:02:17] And then I found this, uh, hospital that wrote about, Hey, you don't need to go to the ER to get this thing out. You can actually try yourself first. The way you do it is you lie the kid down on your back and then you close the nostril where there's nothing in. And then you blow really hard into the mouth.
[00:02:33] And then it pops out, and I was like, that seems a bit weird, but okay, let's give it a go, because obviously a hospital wrote it, so I instantly trust you now. And then, you know, layer down, blow her in the nose
[00:02:45] Toni: No, in the mouth.
[00:02:46] Mikkel: sorry, in the mouth. And then I just get, uh, you know, the, what's it
[00:02:50] Toni: term? Snot?
[00:02:51] Mikkel: what's the term? Snot, no, yeah, yeah. All over my face. And then I was like, you know, clean my chin and I was like, ah, there it is. We got it out. High fives. So that was like my working from home day. not super productive, but
[00:03:05] Toni: so, now segue into the episode.
[00:03:07] Go.
[00:03:09] Mikkel: Well, you know, I'm good at raising kids. Uh, I don't beat them much, at all actually, so we're
[00:03:17] Toni: let's go with that. Let's
[00:03:18] Mikkel: gonna talk about, we're gonna talk
[00:03:19] Toni: go with that.
[00:03:19] Mikkel: how to beat and raise, uh, this is off the rails now, this is, we are actually gonna cut now, we're not gonna cut it, we never cut episodes, that's the thing, that's the thing, but now I'm awake, that's the, that's the
[00:03:32] Toni: So but you need to finish this. You can't just say beat and raise and then everyone has this image of a kid in their background.
[00:03:37] Mikkel: background. No, so the thing is, I, uh, so I Invest a small amount in, in stocks. And the thing is, ever so often, companies, they beat guidance. So what analysts in the market, yeah, yeah, yeah, yeah. Uh, what, what the market basically expects, right? And that's a plus, plus column.
[00:03:58] If you can beat guidance, you're doing really great. But if you actually raise your guidance in the same turn. then people will go ballistic, they will go totally ballistic. And it got me thinking that you and I had this experience, some years ago working at a company where we would miss and we would lose investor trust.
[00:04:18] And we, I mean, my takeaway, and maybe this story has morphed in my head over time, but we were basically unfundable because no one would trust us. We were unable to, to basically hit any of the numbers we put forward. And then something changed. We actually started hitting the numbers and I think we should get into how do you actually set a business up to potentially beat and maybe even race, uh, because that, uh, motivation it's going to build for the team, that trust it's going to build is really critical.
[00:04:47] Toni: Yes. And I think it's, it's also the time and the environment right now where we can start. To become sane again in the way of, so we're not going to talk today, like how to specifically kind of do it and kind of build this predictable revenue engine, kind of, we talked about this a couple of times already today, we're actually talking about, you know, setting targets, you know, if, if you really want to break it down, it's almost about setting targets and I think where we are now in the industry, so SaaS as a whole, if you will.
[00:05:14] You know, some people call it the golden age of SaaS is over and all of those sad stories and everyone is like, what am I, what am I doing here? Can I just please build a, I don't know, green fintech with AI in the background, please? Um, but you know, since some of that Some of those expectations have cooled a little bit.
[00:05:34] I think it's also now possible to start setting targets that are, uh, less so crazy, outrageous, satisfying the investor's thirst for growth, right? Uh, and are more going in a direction where it's like, well, that's, that's just good business practice to set the target that we can actually achieve, right? We talked with, you know, Chris Walker, about this to a degree.
[00:05:57] And he said, well, the model isn't wrong. The targets are wrong, but he's kind of going at the same thing. We talked with Dave Kellogg about, well, you really want to create a plan that you can beat. Because if you can't, well, beat, there you go. If you can't beat the plan, you're going to get fired. And he was, he was really talking, uh, more as a, as a hired CEO, CEO in this sense.
[00:06:16] In, in a much more real sense for us founders, if you get fired, it's, you get fired by the capital markets. No one is, no one is giving you money and you get basically kind of deleted because of that.
[00:06:25] Mikkel: And you might wonder, do I then have to be a CEO to listen to this episode? I actually think the answer is no, because if you're sitting as a marketing lead, a sales lead, a CS lead, whatever, then actually this still matters.
[00:06:35] This still applies just to the department.
[00:06:37] Yes
[00:06:38] Toni: and, and the reason is that, you know, those targets at the end of the day, they need to... Uh, like in a pyramid scheme, right, they need to trickle down, they need to kind of, you know, support each other, um, and the more little cracks and jumps in consistency you have in there, the more, what is it, sand in the gearbox you will have when you execute, right?
[00:06:58] and I think this is also a topic that, you know, when you, when you talk with the CEO to basically kind of bring this up and they're like, Hey, we should be, You know, this is what we should be giving to the board. This is what we should be giving to leadership. This is what we should be giving to the team.
[00:07:10] Mikkel: Yeah. The funny thing is also sometimes those targets they have, it's almost like they have a magnetic effect that will pull you up, but it can also have the opposite effect. If you have two, you know, what is it, two negatives, it will kind of push you further away.
[00:07:24] Right. So I think that's why this is an interesting topic today. Yes. And, and kind of to, to that point,
[00:07:30] Toni: I think that's why this is flow balance, right? Cause, uh, Chi Chach Me How or something like that. yeah, that's literally how it's pronounced. But he kind of has this flow, um, theory. And it's really about if it's too boring, you won't have optimal performance, but if it's hopeless, you also won't have optimal performance, right?
[00:07:50] You kind of need to find that stretch kind of area. Anyway, so what we're going to talk about today is really, and it's, it's super counterintuitive, but we've seen this now, a couple of our customers actually do it like this and we're like, you know, okay, cool. Let's do an episode on this. So they're basically talking about different confidence levels of the plan.
[00:08:10] that they're giving to different people in the organization.
[00:08:13] Mikkel: Yeah. Yeah.
[00:08:14] Toni: so what their, what their basic kind of. The highest probability, the highest confidence of the plan, that's what they're giving to the board. Let's just call it the C95, confidence level, 95%, C95. That sounds like a corporate thing.
[00:08:31] So my wife is at Novo, right? Novo Nordisk, for everything they have there. It's either three or four letter abbreviations, even if I wanted to spy on kind of what's going on in Novo Nordisk, I wouldn't
[00:08:42] Mikkel: anything. That's good.
[00:08:45] Toni: Anyway, so C95, that's, um, that's basically kind of the, um, the plan that they want to give to the board, kind of the highest confidence level.
[00:08:54] Right. And this is already a big change from one or two years ago with, you know, some of the same customers actually, where they arguably. Almost gave the, you know, this, you know, confidence level 60 percent to the board, right? Because you wanted to triple, triple and whatever, and, uh, you knew this was, this was, this was a stretch, I mean, more than a stretch, right?
[00:09:16] More than a stretch already, but that's, that's the plan that you then did give to the board and then things happen around it, right? I think having this development now, and we see this, you know, more and more that folks are basically giving. The, the higher confidence plan, and you could say the less ambitious plan, the more realistic plan, all of those boring words around it, they're basically kind of putting this forward to the board and there's still tough conversations around, is it enough?
[00:09:41] You know, um, you know, is that enough for us to reach the next milestone? If this is the top line growth that we're seeing, can we support the size of the organization behind it? All of those really uncomfortable questions, which are great to have in planning and not in execution. Yeah. So, so basically kind of, that's what they're putting forward.
[00:09:59] And what does it mean to kind of put a confidence level 95 percent plan forward? Well, basically, uh, what they're doing to a large degree is they're taking. their past performance from last year, and then they're seeing what additional resources they might have, seeing how those resources have performed in the past, and then creating, you know, taking that insight and creating the forward looking plan, right?
[00:10:25] In very simple words, what was our gross retention expectation for last year? Okay, what's our, what's that expectation for next year? Maybe with a little bit of a bump. Same with net retention rate. Nothing crazy. Nothing like, oh, we want to, you know, add 20 points to this. Nothing crazy. Take, take what you kind of had last year, overlay it for next year with a little bit of an adjustment, obviously.
[00:10:49] same with Your ability to generate revenue from the marketing side, same with ability to generate revenue from the outbound sales side, if you have something like this. and then if you do decide to spend more money on some of the channels that are scalable, that you know really well, for example, it could be content.
[00:11:08] Uh, on the marketing side or events, or it could be outbound sales. then you basically kind of, for each of these additional investments, you then have a somewhat predictable outcome that's going to come out of this, right? Kind of, that's the C95. C95
[00:11:20] Um, and the idea is something really needs to go, um, upside down for you not to hit this, right?
[00:11:28] You want to kind of put yourself into. Um, a really good position to not only achieve this plan, but ideally beat it. Yeah. Yeah. That's, that's really what you want to achieve.
[00:11:38] Mikkel: So there's, there's a bit of also a conundrum because you, whether you're actually the CEO or CRO or VP, marketing, sales, whatever, you still want to show a bit of ambition. Right. And so when you go to someone and say, Hey, this is what we C95.
[00:11:53] It's going to be a bit conservative by, by default, right? So how do you navigate that, that conversation, you know, and I think it's smart not to put forward your most ambitious plan where there's so much risk inside, uh, because then you, you know, you're chasing the goal rather than having a chance to get ahead of it.
[00:12:09] I think this was also something Dave Kellogg talked about. How do you navigate that conversation? Number one,
[00:12:13] Toni: one, it's this, this is really about stakeholder and much more specifically shareholder management. You want to, you want to make sure that they, trust you with this stuff. You want to make sure that you don't have emergency board meetings in June and re forecasting and all kinds, basically all the scar tissue that everyone has from the last two years and before.
[00:12:36] I don't know when I have this anymore. Um, and, uh, and you know, the reason why that is, is if you miss plan, what really happens is it's not like, Oh, we missed top line. You're also overspent. You're also super inefficient. All of your metrics going to look shit. and you're running on a run out of cash much faster.
[00:12:56] And those are just blunders that were kind of, you know, I don't want to say okay, but that were survivable a year or two, well, two years ago. Uh, not so anymore. It's just that, that might be the end of the journey right there. Right. So basically the boards are also getting a little bit more conservative and, and want you to put the, you know, the, your best guess, your honest best guess forward.
[00:13:17] Right. And then still there will be a conversation, they will nudge you and so forth. and by the way, having kind of a data driven way to kind of navigate that conversation would, you know, obviously, you know, very much advisable. So to the board and the shareholders, you give kind of a C95 plan and try and get away with that.
[00:13:33] but then, you know, you basically have the leadership behind that, right? So that's the next step. And in my experience, what usually happens is that, depending on the seniority of that leadership, and you will have different, different levels and different, you know, cuts there. you want to ideally be as close as possible to what the broader investors kind of are seeing, because it's kind of.
[00:13:55] It has also something to do with visibility, right? You want to, you want to create just a little bit of a buffer there, you know, whether we call it the C90 or the C85, you know, it doesn't really matter, but you want to create a little bit of a buffer there that closely aligns, but still has a gap, right?
[00:14:12] And I think the main difference between those two levels, leadership and the board, is really that, for the operational folks, you should be... thinking about, uh, re baselining on a quarterly, on a, on a half yearly, basis. What does that mean? Well, the plan that he gave to investors, that's really the budget.
[00:14:35] It's locked in for the year. You're not going to get out of this. That's the CEO, the CFO, they're kind of, you know, signed this in blood and it's over, right? You can't. It's really not cool if you change that, right? But for your leadership that sits below, things will change throughout the year, right? As we sometimes say, well, everyone hits Q1, but then Q2, Q3, the problems are starting to hit.
[00:14:55] and those problems might be because you as a team decided not to hire as much, or not to spend as much, or whatever might have happened. And this... inability to spend will translate to, lower targets being able to be achieved. And if you, if you're not re baselining, if you're not kind of staying realistic, basically if you're not an ongoing rolling C90 plan for the leadership, because If you defund suddenly, it doesn't, it's not a C90 anymore.
[00:15:22] Suddenly it's a C80, C75, whatever. If you're not rebaselining, um, you basically kind of, uh, decrease the ability for leadership to maneuver and make the right decisions. Because they're basically kind of trying to hunt something that is, that everyone around the table already knows is lost. and the only...
[00:15:40] The only other alternative is that they don't know it's lost and they're kind of making basically wrong decisions because of, you know, not being, not being smart about it. Right. So you kind of want to avoid that and you want to give your leadership team a little bit of wiggle room to re baseline on a quarterly or half annual basis.
[00:15:56] And what does it mean? Well, it's like, how many people do we have? You know, do we have conversion rates are going, by the way, not only down, but maybe up. So you wanna re-baseline on that sense as well. You don't wanna suddenly have leadership run around with AC 1 0 5,
[00:16:09] Mikkel: Yeah, yeah, yeah.
[00:16:10] Toni: right? You wanna, you wanna keep it there.
[00:16:12] and basically the, the difference between what you give to the board and, and what you execute on with the leadership is really, you know, some. Some bets should be in there. Yeah. Some things you want to achieve that, you don't know yet how successful they will be, but you wanna, you wanna start, you know, pushing the envelope a little bit, uh, which then comes with some of those bets in there that should, to a degree, be priced in, into the achievements that you wanna, that you're hunting for with, um, with the rest of the leadership team.
[00:16:39] Yeah.
[00:16:40] Mikkel: I think one of the reasons I also like this, this part is I reflected over, so I'm going to present at a marketing, meetup soon. And I reflected because it's, it's planning season. And what I've heard from a lot of folks is they get this stretch target. Fine. Um, but then what they focus on is how to close the gap.
[00:16:57] Which is a normal kind of, oh, fuck, there's a gap. We need to close that gap throughout the year. We have 12 months. Let's go, go, go, go. What they're forgetting is you have the 80%, right? You have the, the, your, basically your bread and butter that you cannot afford to mess up. You cannot afford to mess it up.
[00:17:14] Because if you do that gap is going to be even more and it's going to be really hard to close. So I think there, you know, this, this kind of structure means with the C95, you basically ensure you have the house in order. This is, we need to not mess up basically. And then as you move a layer down to let's say C85, then you can say, okay, these would be the bets, but we still need to nail the core.
[00:17:35] Toni: And I think what's really, what's really important, right?
[00:17:37] We're really talking about the different hierarchy levels throughout your organization. And we're going to talk about the team in a second. I think what some people are getting wrong is that they giving different, different confidence level plans without them realizing this or knowing this or doing this consciously to different parts of the funnel.
[00:17:55] You know what I mean? It's a, you give the crazy stretch target to marketing and maybe then you give Uh, lesser server stretch to sales because it's, it's more bottom up. It's more pyramid basis is a bit clearer and so forth. And what you then create is you create a tension between the departments because those targets just don't align or don't support each other.
[00:18:15] and, uh, and there you need to be careful that you really kind of put the targets in place with the right confidence level across those different teams and yes, it gets complicated, especially with time delay and all of those things between those different funnel steps. Yada, yada, I'm not going to talk about this, but it's really, really important to keep this in mind, right?
[00:18:34] So I, what we're, what we're advocating for is to have different confidence level from top to bottom the pyramid, not from left to right of the bowtie, right? Kind of that needs to basically be the same depending on, um, on the seniority, if you will, right? Now moving to the next, and you know, I think people can.
[00:18:53] Uh, getaway, but just having two different plans or confidence level plans. you can have, you know, three different versions of it if you want to. Um, but ultimately, uh, the, the last, the last team that needs to be aligned to is, is to a degree, the rest of the organization here, right. And again, we're specifically focusing on the go to market teams here.
[00:19:13] And basically what we're seeing in the operational plan being across those organizations is, you know, whatever the number is, but let's just say it's a C80. So they're, they're basically executing the, the team's executing on a confidence level of 80, which basically means you created a bit of a buffer or stretch between what the team is gunning for.
[00:19:33] And what the leadership is gunning for and needs to deliver, right? And the reason for this is to a degree it's operational, um, to a degree it's, you know, just makes sense. So, if you go through your sales team, and I think we've talked about this plenty of times, right? So if you have your different quotas set up, uh, let's just say you have a million dollars in quota for, I don't know, 10 million dollars in quota for your sales reps.
[00:19:57] really what the demand gen and opportunity side of the house will deliver is probably only 8 million of that. Eight, maybe sometimes nine, sometimes seven, depending on how it works out. Right. Which basically means the whole system is set up to have the AEs hit 80%. And what do you then tell the AEs?
[00:20:16] Like, well... 80 percent is what I can promise you I will deliver if you, if you execute like your class of, of AEs is executing in terms of conversion rate, ACV, sales rate, all of that stuff, the other 20%,
[00:20:28] Mikkel: in order to
[00:20:29] Toni: in order to get to target 200%, basically your full OTE, you need to either, outperform your class on one of those, uh, dimensions, or you need to pick up the phone yourself or your Rolodex and start networking and get more opportunities in, right?
[00:20:43] Those, those are the only ways you can basically kind of reach the a hundred percent and go beyond. 80 percent here makes total sense, right? Kind of that, that is super straightforward. I think, thinking, you know, about the same with CS, for example, I think what you want to do is you want to have, you know, past gross retention rate, past net retention rate.
[00:21:01] Uh, broken down into the different teams. So for example, the SMB team should have a different GRR net retention rate target than the enterprise team, for example. Right. and, um, and you probably want to push the envelope there also a little bit. You don't just want to see what you have achieved last year.
[00:21:16] You want to have one or two points on top of that. So it doesn't need to be, you know, necessarily 20 percent so confidence level, 20 percent difference doesn't mean 20 percent in general. It's just. You know, it could be an, an, an gross retention rate if you're sitting at 85%,
[00:21:30] Mikkel: uh, 88
[00:21:31] Toni: uh, 88 percent would be great.
[00:21:32] Right. Uh, et cetera, et cetera. Right. Um, and then for marketing, how would you do it for marketing, Mikkel?
[00:21:37] Mikkel: Probably the, the, the same, to be honest, you also need to stretch that target. you also need to cascade it to the different teams, carrying different budgets, supporting different goals. Right. and I think you still want to stress the fact that you have the bread and butter that you cannot afford to mess up on.
[00:21:51] And then you do need those initiatives on top as well. Um, you, you definitely need them in marketing as well. It gets tricky. To your point, when you start factoring in the time piece, because marketing is way early, like when you're Q4, which we are now, you're building for Q1 and Q2 right now. and I think that's where you as a marketing leader, you know, probably last quarter, you should have an idea of what the targets look like so you can start supporting.
[00:22:15] Whatever growth is there. So you're, you're already on plan basically. Um, but yeah, I, I, I would probably look at the, Hey, this is the confidence level and the number associated with it from marketing we need to create for Q1, Q2, you probably need to take that view for marketing because of the time. And then I would, you know, start breaking that out to the different channels and the owners respectively.
[00:22:36] And obviously you need to talk heavily with those folks as well. If you look at stuff like paid. You're going to have some places where there's opportunity to invest more and others where you're just tapped out. And if you're tapped out, you know, you need to basically find other means of spending that cash.
[00:22:52] And if, you know, and I've not, I've not seen it yet that you are unable to find a place to spend it, but if you're struggling there, you probably want to tap RevOps or ultimately the CRO, if that's who you're reporting to and say, hey, we have a bit of an issue here with some of the, you know, resources being allocated.
[00:23:08] Toni: but, but, but ultimately, right, I think, um, I think the marketing team as with any team. I think there needs to be, you know, a stretch target being set. Um, I think in marketing always gets a bit more complicated, right? You have the performance team and then the stretch target might be around cost per lead or whatever, you know, whatever it's going to be, uh, for the events team might be different and so forth.
[00:23:34] So there's always, I think with marketing just gets a little bit more complicated.
[00:23:36] Mikkel: It, it's complicated 'cause there's so many levers you can pull, but ultimately you as a team need to have one shared goal you work towards. Then you can go to the performance team and say, well, how are we gonna achieve whatever opportunities?
[00:23:48] 'cause that's what we decided as a team where we have high predictability that can turn into revenue. Well, if you're doing performance marketing, then a way to get there with, you know, the same budget and a higher target is to have a lower cost per acquisition. So cost per lead, right? Another could be lifting the conversion rate of a landing page.
[00:24:06] And depending on what you look at, you're going to know as a professional, having worked with it for a couple of years, how realistic that is going to be, right? And I think that's where you as the leader need to navigate the confidence levels. Uh, where they are depending on the plan. Um, and I think this is, this is the tricky part for me sometimes is, Do you say that it's a stretch goal?
[00:24:28] And allow some like calmness for the team? Um, because on one side they might feel a bit more pressure. Sure they own a target, but this is probably the first target they're gonna own. Right? There's a difference in when you're sitting at the table basically.
[00:24:42] Toni: I think, um, I think what's really important is you need to, you need to make sure that if you're setting those consecutive stretch goals, right? You set a stretch goal for marketing, which then, It's the baseline goal for sales, and then they have a stretch. You need to be super careful with that. I think you basically need to create kind of the bedrock needs to be aligned across, and then every team has something on top.
[00:25:03] Um, if marketing over delivers great, suddenly sales will also overhit without the sales guys having achieved their stretch. I think what's really, what's dangerous is to cascade those stretch goals, by the way. I think that's, that's a, that's a terrible way to kind of go about this.
[00:25:16] and then I think for, you know, even for the team level, Right.
[00:25:20] So what, what is the number you put on the, on the dashboard? Right. I think it should be this C90 that the leadership is basically, you know, gunning for, um, to, you know, make sure that like, Hey, we, we are successful. We're hitting, we may be overhitting or we're getting super close. Um, but yes, the individual contributors, they have, you know, if you summed all of them up together.
[00:25:41] They would actually kind of go a bit further than that, which is, in sales, is a totally normal thing, by the way. Um, and, and I think some of that, some of that way of thinking, um, at least I've installed successfully in CS as well. I think marketing is always a bit difficult, actually, kind of with, with that specific thing, right?
[00:25:58] But, to your point, That then allows you to talk about, well, that part is stretched. That is what I expect of you, dear individual contributor, dear manager, or, you know, whoever. but yes, that part is stretched, but that's what I need you to deliver, right? To kind of, for all our basic... Some people will, um, even miss their, um, C90,
[00:26:18] Mikkel: Yeah,
[00:26:18] Toni: right?
[00:26:19] So that, that's, that's the logic. Some people will, will even, you know, miss to deliver on what, you know, was deemed to be, you know, super straightforward, um, and then some other people need to over perform for you to actually get there, right? And I think this is how you balance the whole thing out, right?
[00:26:33] And again, I think the,
[00:26:36] Mikkel: the
[00:26:37] Toni: way to do it is, um, uh, you know, giving the C95 to the board. Have your leadership on the
[00:26:43] Mikkel: C90,
[00:26:44] Toni: C90, you know, refresh this quarterly or biannually, depending on your sales cycles, have the team and now having around, you know, 80 percent kind of confidence level, what in some cases now might happen is you might actually beat the expectations that you have given to the board and what you can do now.
[00:27:01] which is very different from, you know, what we're all used to, you can actually have like a gated approach to unlock additional, uh, pieces of funding. Um, and I don't mean kind of, you know, do another incremental funding round with the investors, but basically, you know, Dave Kellogg also talked about this, it's like, Hey, we have this wishlist of things that we want to do.
[00:27:23] If we, you know, hit those goals. All of us can go to the, to the, to the, to the wishlist and pick one, pick one for us. Right. And, and, um, that is basically the conversation you then suddenly can have with the
[00:27:35] Mikkel: And we heard the same thing from Udi, right? When you look at Gong, they've done some crazy brand investments.
[00:27:42] And his point was, well, the way you get buy in to do it is make your numbers, meet those numbers. If you can't meet the numbers, then forget about it. Then you're not going to be able to go and pick those wishlist items.
[00:27:54] Toni: And really, this is, this is the situation that you want to be in. You want to be able to, you know, beat your, uh, beat your, uh, targets. And then, you know, ideally kind of raise them and you raise them by way, not in a, Oh, we can just do more with less, but Hey, you know, we could actually kind of execute on this.
[00:28:10] If we have a little bit more funding, we can do those three plays in addition. and then basically kind of, you keep updating this, right?
[00:28:15] Mikkel: So question for you. If we look at these three layers, right. And you start at the top. So C95, this is the plan you will most likely always be able to hit if you dumb it down.
[00:28:27] Toni: right?
[00:28:27] Mikkel: Then you have the next layer, so let's just say C85 or C90 for that matter. You will hit that in, in many cases, right? It will require effort.
[00:28:36] Sometimes you will miss, sometimes you will meet, sometimes you will beat. And then you have the C80, C85. This is the one you will hit occasionally, if you're being honest, right? And if you put that forward to the team, how do you navigate the whole, well, we've missed and people might think, Hey, you know, this is.
[00:28:53] This is the target, uh, I was given and we're missing, this is not very motivating, or will I get fired, like, how, how do you navigate that part?
[00:29:01] Toni: I think the, and I was kind of trying to kind of say this a little bit earlier. So the, the high five moment should be predicated on a C90, C95. Basically what the leadership's having, right? That should be the dashboard. That's what everyone is pushing towards. But if you do the math, you know, what every individual contributor has, if you kind of sum it all up.
[00:29:18] Might overshoot on that number. Well, that's there by design, and you can be pretty clear about this and... In sales, everyone is pretty clear on that, actually. In CS, you can be pretty clear on this. And I think in marketing, sometimes it's a bit more complicated, but you can be pretty clear on this as well, right?
[00:29:32] Um, and makes total sense. You can't just, you know, bet the farm on everyone hitting 100%. It doesn't work like this. Some will miss, some will leave, some will like screw up, some will overachieve and, you know, you balance it out and get there. Um, and that's how I would navigate the whole thing, right? And yes, um, if, so in a sales environment, It's, it shouldn't be a given.
[00:29:53] It shouldn't be a confidence level of 100 percent that everyone is hitting their full OTE. That's, that's not how that should work at all, you know, you should make sure that they get to a decent payout, that they kind of are supported, you know, most parts of the way, let's just say 80%, 75%, whatever , but then the rest to get to the big payout, they need to be exceptional, they need to be above average, they need to Either, again, beat their class and how they're executing on those opportunities, or they need to put in more work and get more opportunities themselves.
[00:30:23] and that, that kind of thinking and, uh, that kind of, target setting and stretch goals and so forth, I think that should be a de facto across the whole organization. And that's how you get, I think, and it's, it's tricky. Uh, but I think this is how you get an organization to... Uh, not be bored because it's too easy.
[00:30:45] Um, and not, you know, have them lose hope, but basically kind of have them right there in the middle. Right. and overall, if you suddenly miss and you fail and everything. But still the company is celebrating, you know, you feel like you're in the right spot and you feel like, Hey, why, why am I failing when, you know, everything is going well, that it must be a me thing.
[00:31:04] It can't be a company thing. The other way around is much worse. And, and then you kind of get into this doom cycle. So therefore it's like, you know, have ways to celebrate those targets. Um, and again, kind of use that, you know, achievement as a positive force. But for the individual contributors of all the teams below, and you know, depending on how much cascading you want to do, you know, set targets that are a little bit higher, um, than, than what you actually need in order to hit the board plan.
[00:31:31] Mikkel: ballpark.
[00:31:32] Toni: Wonderful!
[00:31:33] Mikkel: So, by the way, it's not that long ago, we shipped an ebook and that one, I would say overperformed relative to my expectation, at least the first week. So that was pretty good. So if you've
[00:31:46] Toni: hit your stretch goal, Mikkel.
[00:31:48] Mikkel: yeah, all I was laughing when I said the goal to him was like, yeah, no way. This is like, what are you dreaming?
[00:31:53] Um, but anyway, we wrote a book basically with I think four or five Senior RevOps, as companies like HubSpot, Gong, it's not the classic, you know, ebook that feels like a brochure, just advertising our company. No, no, this feels like an actual book, by the way. We probably, we even discussed whether we should charge money for it.
[00:32:10] Toni: And put it on Kindle.
[00:32:11] Mikkel: And put it yeah, yeah. Actually, yeah, it's still on my back burner. I need to do that. and we've gotten... Quite a lot of great feedback, actually, from folks reading this book. Someone even took a picture from a holiday on a walk with the Kindle, by the way. That was hilarious. So if you haven't seen it, if you want to see what some of the best teams are doing to manage and grow their revenue, you should go to our website, find the ebook.
[00:32:32] It's called, uh, this is what Strategic RevOps looks like. I'm still waiting for
[00:32:35] Toni: to our biking friend
[00:32:37] Mikkel: Drew,
[00:32:38] Toni: a picture, how he's reading it while he's biking somewhere. What is it, in Colorado or something like this? Waiting for you! Okay Mikkel, just to kind of wrap it up... So we talked about, you know, beating and raising your targets, really put a more conservative, I can achieve this plan to Board of Investors to make sure you have the difficult conversations now and, um, a basic kind of building trust.
[00:33:01] You give a slightly discounted version to the leadership team because that's the thing everyone is going to be hunting for. You want to probably re baseline that quarterly and biannually in order to make sure, you know, that still kind of stays achievable. And then you really try and give stretch goals.
[00:33:16] The operational plan to the rest of the organization to really kind of push in the right direction. Mikkel, thank you so much for today. It was a pleasure.
[00:33:24] Mikkel: And thanks for listening everyone. Bye.