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How do you get more predictive and more foresight? You make GTM forecasting a part of your rituals.
And that's exactly what we discuss in todays episode
And that's exactly what we discuss in todays episode
Creators and Guests
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 from GrowBlocks. You're listening to the Revenue Formula. In today's episode, we're going to talk about how you can integrate go to market forecasting into your weekly execution cadence, both from a CRO's perspective, but also from a go to market leader perspective.
[00:00:17] Enjoy.
[00:00:22] Mikkel: have a GPS story for the intro.
[00:00:26] Toni: I mean, we're already rolling, so...
[00:00:28] Mikkel: So it's kind of weird to just start with the story. Hi Mikkel it's snowing outside F*** you Okay, let me just tell the story so
[00:00:39] You know not so long ago was summer remember those days
[00:00:42] Toni: Yeah. Well, barely.
[00:00:44] Mikkel: yeah barely and I was on holiday and we were in southern France
[00:00:48] Toni: Oh, that's right.
[00:00:49] Mikkel: And I don't know if I maybe I told this story before but we had rented a car And because the family, my family is now so big, we can't just, we're
[00:00:56] Toni: is it? Are we? Are we like
[00:00:57] Mikkel: we're five people, no no no, five people plus a baby stroller, plus luggage, plus wine, you know, takes a lot to kind of run that operation.
[00:01:05] And then when you go and rent a car you can't just rent a regular because then you know you get kind of a mini or something like that. So we were like very intent on renting.
[00:01:13] Toni: you basically to rent like a, an 18 wheeler
[00:01:16] Mikkel: Oh, we rent. We wanted to rent, right? No, we,
[00:01:18] Toni: And then you get the right minivan. You wanted
[00:01:20] Mikkel: yeah, we went for a like a van.
[00:01:21] And then I was like, well, if you do van, then it's just gonna be slightly small and it's perfect. If I go SUV, I've done that before then. It's not big enough. The boot is tiny and blah, blah, blah. Went to pick it up Cute for like two hours. Terrible. Terrible. They go, Sorry, we don't have the car you rented, uh, but we have this other one.
[00:01:37] I was like, can you, like, show me just what it is I'm walking into here? and show me the car. I was like, fine. Walk down to the parking lot. And I just, we can't find the car. Walk around forever, finally find it. And then I'm like, oh no. And this is like, uh, you know, Mercedes, uh, Sprinter, massive, like the biggest version they have.
[00:01:57] Uh, never drove such a big, long ass car.
[00:02:00] Toni: everyone who doesn't know, this is basically like those typical American yellow school buses,
[00:02:05] Mikkel: Just a bit smaller. Yeah, exactly. And I was like, so... You know, one thing is having that car to drive for the first time and putting your family in, but
[00:02:14] Toni: in southern France,
[00:02:15] Mikkel: and then in Southern France, where you haven't driven before, it's like, Oh no, this is going to be terrible.
[00:02:19] And then, you know, it's a great sign where you just, you can't get in the car because it's parked up against the wall with, with, you know, uh, you can't open the door. You literally can't get in. And on the other side, there's a super expensive BMW, same story. You can't get in. So I literally had to get a guy crawl through the back and into the car.
[00:02:36] Toni: it not your
[00:02:36] Mikkel: No, no, no, this whole operation takes like several hours and you know the temperature is high in those parking lots And I'm getting more and more like
[00:02:44] Toni: kids are pissed
[00:02:45] Mikkel: and I'm like, I'm gonna cancel this whole shit. We're just gonna do a cab And
[00:02:47] Toni: rrrrrrrrrrr,
[00:02:49] Mikkel: then finally we get in the car. I'm like, okay, just calm down for a second plug in the GPS and then let's go And then I couldn't plug in the GPS And I had to put my phone on the dashboard while driving in Nice, and a son who is like a bit finicky at this point, it's just a terrible experience.
[00:03:06] Terrible experience.
[00:03:08] Toni: Nice, so we burned through 5 minutes of the show?
[00:03:10] Mikkel: of the show. Thank you for listening, have a good one.
[00:03:14] So maybe you don't, I mean, maybe people don't know this, but literally the camera just went out. I had to run out, get a new memory card, pluck it in basically
[00:03:24] Toni: into the snow outside, it was snowing. Yeah,
[00:03:27] Mikkel: Had to pay for it myself, you know? So we were just starting over completely. Now it's a terrible episode.
[00:03:32] Is.
[00:03:32] Toni: Sorry. But we, hey, we have five minutes already in the bank. Yeah. So. And as long as they listen to those five minutes, it counts as a download. It's fine. It's fine.
[00:03:42] Mikkel: So today, we are going to talk about basically a way to use go to market forecasting. is something we've talked a bit about. One of the challenges we've seen and discussed a bit recently is the only way companies can predict where they're going to end up is the sales forecast. This is probably the only point they have to really know where they're going to end up.
[00:04:02] And there's a couple of problems with that. Yes.
[00:04:05] Toni: I wouldn't even say that go to market forecasting is like a thing you do. I think it's more like a, you know, a thing you are or something like that. When you think about sales forecasting, right, it's not just you buy a sales forecasting tool and now you've done sales forecasting, right?
[00:04:19] It's kind of a tradition that you build in the organization. It's, um, it's trillion. So we looked it up actually BCG did an investigation on this. It's 1 trillion hours spent, uh, and wasted on sales forecasting every year. Um, and, uh, no, obviously not.
[00:04:36] Mikkel: It's like, it's, that's the revenue leakage number. I was like, what is happening
[00:04:40] Toni: need to cut this out as well. But, uh, so there's lots of time, you know, spend on those sales forecast, uh, sessions, right? And it's not just a methodology that you kind of pick or some kind of tool that you pick. It's also kind of the way you kind of go about this and, and the way you train and teach your reps around this, right?
[00:04:55] And it's really kind of a. Um, it's a, it's a way of executing to a degree, right? And I think when we are talking about go to market forecasting, it really kind of goes into the same direction. It's not a thing you do, a methodology, a pick or something like this. It's a way of thinking about running your engine at the end of the day.
[00:05:11] Right. Um, and, uh, you know, but what we've seen a lot is you have your sales forecasting, which is giving you predictability. Uh, while you execute, right, you have maybe financial planning that gives you predictability, so to speak, you know, between execution periods. and some people do annual planning.
[00:05:34] Uh, I mean, almost everyone does annual planning, let's just say it like that. And um, they give you some predictability, right? We sometimes joke and everyone is hitting Q1. It's like, yeah, exactly. And some people then have. Maybe, you know, half yearly kind of resets or rebase lining or something like this to kind of have new predictability.
[00:05:52] Mikkel: Oh, we messed up the plan. Let's do it over.
[00:05:53] Toni: Yeah, exactly. Um, uh, but, but you don't have anything in between. You don't have anything that, you know, really is giving you, um, a couple of quarters ahead and in updating. Right. Um, and I think this. kind of piece of gap of knowledge, you know, for you, I think this is where go to market forecasting is kind of landing.
[00:06:12] Right. And I think what we spend it to spend some time on today is not to talk about how it works and, you know, you know, you need to buy grow blocks and you need to kind of do this, it's more about, well, how do I, how do I integrate this into my day to day? How, you know, what do I, what do I use go to market forecasting for
[00:06:30] Mikkel: Yeah. I think this is really the rituals.
[00:06:32] And like you said, you don't need, necessarily a solution. It's obviously a great help to run what we're going to go through, but you can totally do this without. And probably some folks are to a degree, um, but it's really about building out the ritual that puts you on the right track at the end of the day.
[00:06:47] Toni: And when you, so we were kind of grasping for a metaphor, uh, you teeing in this, this, uh, uh, session now, but think about. Um, thinking about driving a car, I mean, I'm from Germany,
[00:06:57] Mikkel: Germany. Yeah. You love cars.
[00:06:58] Toni: it's always about cars. Um, so thinking about driving a car, so I would say, you know, this metaphor that's used over uses like the rear view mirror, right?
[00:07:07] Kind of you're looking into the past. I think this is very much Finance has that problem largely, right? They do the accounting after the fact. You could say BI in many cases, kind of all the dashboards that you have is kind of, you know, for the past. and then you have looking out through the windshield and I would say that's that sales forecasting for you, right?
[00:07:26] Kind of, you see in fairly, very high resolution, uh, you see what's going to come at you. in a couple of
[00:07:34] Mikkel: nothing.
[00:07:35] Toni: or something like that. But at the same time, it's really difficult to see, I don't know, kilometer away or to see, you know, behind the next bend or corner, for example, right? You don't have that.
[00:07:46] So what is it that you use, to have a little bit more smartness around this? You know, nowadays you have. You know, you have a GPS, you have like a little thingy, either in your phone or a nice, not, you know, in the, in the dashboard, you have something that tells you, Hey, in 300 meters, you need to take exit 15, um, and you know, then you need to turn left afterwards,
[00:08:07] Mikkel: so maybe switch lanes now so you're not screwed.
[00:08:09] Toni: yes. Um, and I think this is, this is, if you want to kind of cut it up, that's kind of almost how you can think about. Uh, you know, your reporting, your sales forecasting, and then you go to market forecasting, right? And now thinking about this, so it's obviously immensely useful, right?
[00:08:25] Having a GPS in your car, it's like, well, you can drive without it, it's no, no question. Will you, will you get to where you want to go fastest with the GPS? Probably yes. Right? You're not going to. Uh, I mean, I'm still old enough to have had like a map, like a book
[00:08:39] Mikkel: yeah. Or stopping and
[00:08:42] Toni: and basically my, my parents, I think they're divorced because of that, you know, that's basically the reason.
[00:08:47] And then it was me sometimes, you know, trying to read this anyway. Um, and, um, and I think today we're basically kind of talking about, you know, how, how you can, you know, integrate this GPS into your like, into your
[00:08:57] Mikkel: your ritual. Yeah, yeah. I also think it's important just to maybe level set what go to market forecasting actually is before we run into, into the ritual.
[00:09:05] Um, so, I mean, we've, we've talked about the sales forecast. It's really, you know, you have these opportunities. You have a closing probability and a closing date and an expected kind of contract value. And with that, you can start estimating how much revenue you get when. The thing is for. For leads, let's say inbounds, a regular demo request, you know how, how quickly or how slow for that matter, it, it takes for that to become an opportunity and you know how long it takes for an opportunity to become a customer.
[00:09:32] So you have kind of the time, you also have ACVs that you can use, which is kind of, you know, similar to what you then do with sales forecasting and you have all the conversion rates, right? So you can actually start forecasting. On a marketing level, if you have a hiring plan for SDRs, doing outbound, you know you're going to hire, let's say five folks next quarter, the ramp time, the average production, you can start forecasting, right?
[00:09:55] And the other side is, yes, you can start forecasting how much local acquisition is going to come. Do you have the capacity to tackle them? And that's really what it's about. It's being able to, you know, look at the full funnel, essentially, rather than just the sales forecast, which is, you know, just one part of the entire bowtie.
[00:10:11] Toni: Yeah. And basically kind of with a little bit of foresight, which no one would agree or would disagree that that's useless with a bit of foresight, making some of those decisions, basically in a smarter way. Yeah.
[00:10:21] Mikkel: way. Yeah, so how, how do we use it? How, how should people build up rituals to, to use the power of go to market forecasting.
[00:10:30] Toni: So I would kind of split into two separate parts, just to kind of keep it simple for everyone listening. I think one is, um, you know, sometimes it's called the CRO meeting or the commercial leadership or GTM executives or whatever, basically the GTM team. In my case, it was myself. As you know, the boss, and then it was, uh, VP Marketing, VP Sales, VP Inside Sales, VP CS, and, uh, VP Revenue Operations.
[00:10:59] Yeah. Yeah. And I think those kind of meetings happen across organizations. I think if you're in an organization that is... I would say 250 people and up, maybe sometimes earlier, but 250 people and up, you will have that kind of, you know, C level VP structure in place for the commercial part. And I think in smaller organizations, you basically have the CEO or, you know, one of the co founders being the quasi CRO, basically kind of managing this piece specifically.
[00:11:27] Right. And I would even recommend, yes, you will have an executive leadership meeting with, you know. Uh, your commercial leaders and your product leaders and your finance leaders and stuff. but even early on, I would recommend having kind of a carved out session only with a commercial leadership team, by the way.
[00:11:41] Um, whether or not that's led by the CEO, by the CEO, it doesn't, doesn't matter, but you know, carving some of that out, I think is extremely important, right? So this is number one and then number two, well, then, you know, how, how can all of that stuff trickle down and inform the different departments that are rolling into this, meaning marketing, sales, CS, right?
[00:11:59] and that's kind of the other part of the equation that we're going to talk about today, right? So number one, in the, let's call it the go to market exec weekly, you basically kind of have, one focus on what's going on this quarter. Are we going to hit this quarter? Yes or no, right? And, um, You know, usually this is a, you know, VP sales conversation because you know, no one else knows really much about this.
[00:12:23] Right. but what you want to do here instead in a go to market forecasting perspective, you want to number one, understand, all my other metrics that I'm not forecasting, are they trending? Are they projected to, you know, go in the right direction? Right. You want to basically be have the, have the ability.
[00:12:39] to also keep your, you know, CMO accountable for actually hitting the MQL target. Um, and it's really difficult to do that without a forecast on MQLs. Kind of where you're going to land on MQLs. Are you, are you hitting the expectation that you were kind of said you would? and that kind of really, uh, then accounts for all kinds of other metrics as well.
[00:12:58] Right? Similar, so for metrics that you might not be looking at, at a, at a weekly basis. You don't necessarily have to, you only want to know when something is going wrong basically, um, which are, you know, ACV, conversion rate, sell cycles, all of those delays. You don't want to look at this daily or weekly or, you know, sometimes even monthly.
[00:13:16] But when there's something that's going off, you want to know immediately, right? Kind of, it's one of those, it's one of those disciplined things, basically. Um, and, and those would be things, if there's something wrong, you would want to tackle that in that session. You want to be like, hey, We're producing all the MQLs we need to, we have hired all the people we need to, we're still gonna miss because you give too much f*****g discounts.
[00:13:37] Um, and you want to have that discussion there, right? Not, not in your QBR afterwards, right? and that then enables you, based on the problem that you're seeing, to have very tactical... Uh, discussions with the team, uh, to maybe start running projects with a RevOps leader in there, to have conversations about, Hey, I'm falling short on my MQLs most likely.
[00:13:58] can we find some, something somewhere else to kind of, you know, you know, switch in and help us, you know, close that gap. Um, and what's even more important is, um, you can now use that. To have a conversation next week about it. That was that's by the way, that's you know, you know this Mikkel, but one of my main Issues.
[00:14:17] And that's why I always, you know, overhire on, on the capabilities of the RevOps leader, I'm really not well organized,
[00:14:27] Mikkel: No.
[00:14:29] Toni: you know, and, um, and, you know, I can be, I can be, uh, maybe a tough guy at a meeting, but next meeting I'll, like, I forgot about
[00:14:36] Mikkel: Yeah, the slate is clean.
[00:14:37] Toni: yeah, it's like there was a new shiny thing somewhere else. And it's like, I focus on this. So, you know, you want to have a way to follow up on these things. Right. And this is, this is very tactical around this quarter.
[00:14:47] What. Usually simply is completely forgotten as the stuff about next quarter, right? It's always like, yeah, yeah, you know, future Toni's problem. Who cares?
[00:14:58] Mikkel: It's like marketing is talking about it, but no one really cares because, Hey, look at the target this quarter. That's what we need
[00:15:03] Toni: need to. Yeah. We have a, we have
[00:15:05] Mikkel: Yeah, exactly.
[00:15:06] Toni: problem. Not, not, you know, not next quarter. but really what you want to be discussing here is basically one of your, your, your inputs, your drivers, your leading indicators, so to speak. Right. And those are really things.
[00:15:16] that might have come out of your gap plan from the year, right? Oh, you know, the bottom up gets us to 20 million, but the CFO wants to get us to 22 million. We need to find bets that can solve those 2 million. How are we tracking against those? They usually don't have an impact this quarter. They usually have an impact kind of in the future.
[00:15:33] You want to be, you know, making sure that works out. You want to make sure that, um, Is hiring on track? You know, are you, are you, are you basically kind of shooting yourself in the foot already now by like, Oh, you know, we are too low on hiring and so forth. Right. You want to discuss some of the pipeline developments.
[00:15:48] You want to discuss new markets. You want to discuss all of that stuff that is ultimately moving the needle for you. that you, um, that you in today's world, maybe have on a Trello sheet somewhere or scribbled on a notebook somewhere, but basically usually forgetting about, right. And you're forgetting about it.
[00:16:05] Uh, because number one, very rarely are people talking about next quarter, besides finance. Finance is talking about next quarter all the time. Um, or, uh, because it's basically kind of unclear for you, how important is that actually to talk about that problem right now? Right? Is it, is it a million dollars important?
[00:16:21] Because it sure feels like my 10, 000 problem that I have today is bigger than the 1 million problem I have next quarter, right? And if you, if you don't have that. If you don't have that measuring stick, um, it's really difficult. And in addition to that, I would even say, I would even say it could be that U.
[00:16:38] S. CRO, VP of RevOps. You know, it's a million dollar problem over there, but if you have, you know, trouble communicating that this is a million dollars and it's more than a 10, 000 problem that, uh, your VP of sales has right now, guess what? You're not going to be executing anything. You know, you need to have these guys or ladies understand that, you know, the, the, the big kahuna problem is over there.
[00:17:02] If you can't, you know, you will basically kind of run into inaction. They will go back to their desk and be like, okay, let me jump on the next call here to close a deal for this quarter. Right. Um, and I think these conversations and it's, you know, it's also, that's why I'm saying it's a different way of thinking about it to a degree, right?
[00:17:16] Kind of these conversations, they're really just the starting point for a little bit of a mindset shift. Um, and if you, if you achieve to have that mindset shift, I think what's going to come out of this is very. You know, it's kind of, that's, that's the ultimate goal of go to market forecasting to basically just be a little bit more predictable to the degree where you could say, I am very predictable and you know, with all the wonderful things coming out of this, no, no layoffs, you don't need to, uh, you know, have, you know, worries about the board meeting, you know, you can kind of very clearly say it, but that point we can, you know, do the next funding round.
[00:17:49] You have confidence in your decisions, et cetera, et cetera, et cetera. So that's, That's how you can run the CRO meeting, I think, kind of, that's a, that's a very solid way to kind of do that.
[00:17:58] Mikkel: Yeah. And I think we, I think we've covered it also a couple of times before with some of the stuff like they discuss. They already know the problems ahead of the meeting and blah, blah, blah, blah.
[00:18:08] And I think that's the second layer. The way they know there's a problem and what the solution is, each of the members of that CRO meeting, they have their own cadence, right? So should we hop to the second kind of the layer down?
[00:18:20] Toni: down? Actually, yes, but, but before I do that, so one, one really cool point that you just made there, right, is really the, When you think about the sales forecasting meeting, it's not like people walk into the sales forecasting meeting and then get surprised what the sales
[00:18:32] Mikkel: no, no.
[00:18:34] Toni: all of them individually have gone through their own thing. They've tweaked it. They have like, they have a story for this deal and the story for that deal. And that they're ready. They're ready to talk. Right. And, you, you want to have the same thing be, you know, uh, informing the, the members of the CRO team to have the same conversation, right?
[00:18:53] So let's go to, uh, maybe the marketing piece first.
[00:18:55] Mikkel: Yeah, so marketing is one of the members in there and I kind of alluded to it. I think one of the challenges is a lot of marketing leaders. They know the quota they're in is baked for marketing.
[00:19:05] It's fully baked. Uh, just starting up a new campaign. It takes, you know, a month's work probably. Right. And when you start factoring in stuff like velocity. You're probably looking at, let's say six months, right? So the, the quarter is done. And I think one of the challenges, if you only rely on sales forecasting as your predict, you know, your predictive model or whatever we call it, it means the problems you're gonna flag is for this quarter probably also means that the tools you have are focused on this quarter.
[00:19:33] So what is the CMO gonna do when he or she goes to the leadership meeting with the heads of demand, heads of events, heads of whatever they're, go kind of focus on the problems this quarter where they really can't. Actually move the needle much. They just, frankly, they can't. They can do a lot of enablements and tactical plays together with sales But they're not going to be able to bring in a material impact on inbound volume,
[00:19:54] Toni: If you, if you think about it, I think what, what happens, you know, with this ultra focus on this quarter, which is, you know, I don't even want to say it's a bad thing, but there are some bad things coming out of this. Um, and I mean, you and I have this, you know, sometimes, right? It's like, Hey, you know, I have a problem right now, Mikkel, we need to hit this quarter.
[00:20:10] And, and what ultimately happens because. You know, we know this whole methodology. I'm not saying we are the greatest executors of it, but we know the whole methodology and then it always, you know, pulls you towards either some bottom funnel performance shit that is, you know, no, they are not there and we've done this before, or it's some bottom funnel tactics, right?
[00:20:31] Kind of, can we do, can we do something on the material, you know, in the closing? Can we do something like, you know, and you basically focus on. You could say almost the wrong part of the funnel, uh, by default, because that's the only part of the funnel that has an impact this quarter, but marketing should be focusing way further up.
[00:20:48] Mikkel: Exactly right.
[00:20:49] And I think that's where, you know, when you realize that the quarter is fully baked and most marketing leaders know this. I think the really good ones, they've built some kind of a model in a sheet and know it, but the challenge is it's not going to really be connected to reality, right? Once the quarter starts, it's, it's done.
[00:21:04] So it's more of a, I think a mental model more so than anything. I think the challenge I've faced is when you then head into the meeting, you are so focused on this quarter and that's fundamentally the wrong thing because you know, next quarter, there's going to be a conference. So that's Q2 and then Q3 deals are going to arrive from that.
[00:21:21] So you better make sure that that is being executed really well. And I think that's where you, you want to be able to use basically some kind of a forecast on leads and know, are they actually progressing, right? Because you're going to have different leads. And that's, you know, if you listen to Refine Labs and Chris Walker, he talks a lot about splitting the funnel, unblending the funnel, and it's because we've come from a time where.
[00:21:43] You know, marketing was pressured to create more leads now, now, now. And it's the normal behavior when you're at this quarter and there's a challenge. It's easy to get MQLs. If you have a lead scoring model, it's easy. You do an ebook, you get a ton of them, prop up the score. And then here you go. Sales turned into nothing.
[00:21:57] So you want to be able to unblend it. And I think that's one level to understand. Are we actually bringing in. You know, the hand raisers, the hard inbounds that we need, that we know confidently are going to progress into revenue.
[00:22:09] Toni: And I think as marketing leader, you want to know two things. You want to know like, Hey, are we, are we projecting all of those different, you know, metrics, leads, MQLs, whatever. And, you know, in the different splits and cuts, are we projecting to hit that, you know, by the end of the quarter, the month, the year, but you, at the same time, you also want to know, well.
[00:22:28] Are those things actually, you know, projected to result in revenue and by when, right? It's kind of, it's two forecasting pieces. One is on the metric itself to hit, but then also connecting it back to revenue, because that's the ultimate conversation that you need to have. And I was like, recently I was on a sales call and, um, the lady was, telling me a bit of a story that she had at, you know, one of her jobs, which was like, uh, you VP marketing role.
[00:22:51] did a big campaign, you know, it worked or it didn't work. And then basically the CRO after two or three months came and was like, okay, you know, you got to shut this down now. And she was like, no, but you know, why? You know, it's, it's working. It's like, I don't see any money from this. This thing doesn't work out.
[00:23:07] Well, guess what? Six months later, there was suddenly money coming out of this
[00:23:10] Mikkel: the funny thing is, especially when you then deal with finance, they will calculate probably a CAC Payback. Are they going to cohort it?
[00:23:15] No, they're not. So you're going to look really bad in some of the quarters when you're ramping. And it's just fact of life and you need to have that understanding. And then when you are faced with a challenge, you need to be able to inspect your funnel and understand where the opportunities are. And I'm not just talking about necessarily the type of leads.
[00:23:31] You're usually going to have a requirement to deliver a set value to a given market to feed the reps, which makes sense. But the thing is, when you run a lot of paid advertising, you're going to see that the cost per acquisition from those channels and markets are going to vary quite a lot. UK in Europe is way more competitive than Scandinavia because everyone from US who wants to enter EMEA, they go through that.
[00:23:54] And so if there's a challenge, if you actually start, you know, inspecting your funnel a bit more, it enables you to find some of the solutions. It might not be the perfect solution that you go and say, Hey, we can cut down spend in UK and then net net actually end up on target by just transferring that budget to Scandinavia.
[00:24:10] It might not be a great conversation to have because it's going to suck for the UK team, but it might be great for the business. And I think that's where, again, if you build in this ritual of actually having a forecasting methodology for marketing, it also enables you to actually analyze what changes you need to make.
[00:24:26] And I think that's, that's the power.
[00:24:27] Toni: think we could talk tons more about the
[00:24:30] Mikkel: and I can talk hours about it, so.
[00:24:32] Toni: one of those topics, but let's move on to, uh, on the sales side. Right. So, and I think this is, um, when I sometimes talk about it's like, well, but we have a sales forecast, so why do we need to go to market forecast as well?
[00:24:43] And I think, I think that's a fair, it's a fair statement. what I would say though, is, um, they're really. Two things, where, where I think, augmenting your sales forecast with the kind of, you know, in a context of a wider piece can be really important. Right. So number one, in your current quarter, you know, you're in current quarter and, um, you, uh, are only two weeks in maybe one weekend, three weeks in doesn't matter.
[00:25:09] if you look at your current sales forecast. it will not actually tell you whether or, whether or not you're going to hit target. you, it will shoot somewhere far below the target that you want to shoot at. And you know, that's okay because they will, you know, more deals will be coming and, you know, those deals that you have in pipeline will develop and some of them will close and eventually you kind of, you know, you will get there, right?
[00:25:33] The point is though. The sales forecast here doesn't actually tell you anything about the end of the quarter. It's just not true, right? And this is really, if you go back to the method, uh, the, um, metaphor here, it's, yes, you can see the end of the road, but you can't see the next twist and turn, right? And your quarter is too long in most cases.
[00:25:52] To actually have a sales forecast that covers that whole thing. Right. And I think that goes up to teams with a, you know, a sales cycle of, uh, four to five months, I would say, you know, once you go into six months, I think it's, you know, you enter a quarter and you kind of can see it clearly, um, but below that you have this variability in there.
[00:26:10] Right. So having, you know, at the outset. Uh, having a good understanding of where you're probably going to end. Um, I think that's extremely important and, uh, and, and useful. Obviously, once you get to the end of the quarter, you know, the GPS will not tell you that there's someone crossing the street. You, you know, you need to see that, need to, you need to navigate around that.
[00:26:30] so the GPS at that point will be, you know, less. Uh, less insightful than, than looking through the windshield. Right. And I think that makes total sense. Um, and I think then the other piece is really, well, what about next quarter? Right. Um, and for me, it was always like, Toni, who gives a shit about next quarter?
[00:26:47] Right. When I talked with my reps, like, Hey, you know, but how's next quarter's pipeline looking? And, um, and they were kind of, you know, brushing this away. Uh, and they were brushing it away because they just simply didn't know, you know, it's not only that they didn't care that much, which I understand, VP sales different though, but the problem is they couldn't know, uh, because they just don't know which deals I'm going to have.
[00:27:08] and therefore they can't tell me with, with that methodology of looking at the deal and projecting where they're going to land, they maybe have. You know, each two or three deals that they know, like, ah, they're probably going to push into next quarter. And that's going to become next quarter sales forecast.
[00:27:22] But everyone knows that's like, that's actually not the number that you're going to hit, right? Um, so having the ability to kind of actually understand what's going to happen next quarter and that being fully integrated with this other silo next to you, which is marketing. And understand, you know, how's, how's, how's next quarter, you know, going to look like with what, you know, Mikkel is screwing up on the marketing side or what, you know, HR and talent attraction is screwing up on the hiring side.
[00:27:49] That is extremely valuable right there. Right. Um, and that might kind of change some of your hiring decisions. It might change some of, you know, the, the gap plans and the, you know, cost corrections or whatever you want to call it. Uh, tactically, that you still might have time five months prior versus two weeks prior, right?
[00:28:06] Um,
[00:28:06] Mikkel: I think a key point here is also that, you know, fixing next quarter is not Greg's job. The ae. Yeah. He, he has very little control over that and he wants to commission check for this quarter. That's what he's focused on and he should be. He actually should be right? It's the leader of sales if he or she is managing outbound SDRs that has a job to do to make sure that the hiring plan is on track, like you said, that we're, you know, actually delivering on the average production an SDR has, marketing, et cetera, right?
[00:28:34] So it's not the AEs, which is, which is even more funny.
[00:28:38] Toni: And so this is, this is, I think where, you know, we're not advocating to, you know, kill sales forecasting. I just said, you know, the other day at a call with, uh, the EBSTA CEO, great guy. He's called Guy, by the way. Um, great.
[00:28:50] Mikkel: Great Guy. Guy.
[00:28:51] Toni: Um, and, uh, um, I, you know, everyone should buy AppStar or Clari or, you know, Gong forecasting or whatever is out there.
[00:29:00] I think it's extremely valuable. Um, but I think a go to market forecast, you know, enshrines that, um, that sales forecast really nicely and gives some additional insights that are, uh, that are going to help you be more predictable. Right. Kind of the, the other piece around coaching and the, the minute details.
[00:29:16] You should be using some kind of different software for that.
[00:29:20] Moving to the forgotten child,
[00:29:21] Mikkel: Yes.
[00:29:22] Toni: customer success. Uh, I was recently kind of doing a revenue letter, um, sub stack revenue letter, if you, if you want to join that. Um, and I was talking about, you know, go to market forecasting and customer success, and I was comparing it to.
[00:29:37] You know, a house project. So kind of, we're currently building out the attic at home. My wife is managing all of that. I wouldn't, you know, I have two, in Germany, say we have two left thumbs or something like this. and, um,
[00:29:47] Mikkel: two, anyway, yeah, not left. Okay, good. Go.
[00:29:51] Toni: you got it. uh, so the thing is, right, when you do this attic work, right, someone needs to put in the, the new windows, someone needs to do the flooring, then we have like, you know, the, the, the plumber for the bathroom and then, and what is the job that's done in the very end?
[00:30:08] It's the painter. The painter comes in at the very end, right? And basically what happens in all of those, and I talked to a couple of painters about this because I think it's kind of funny, but what happens basically in all of those building projects, not just our shitty small attic, but like a real building building,
[00:30:24] Mikkel: real building building
[00:30:25] Toni: is that the painters Basically, they come in last.
[00:30:28] But the overall project has a very clear deadline and like massive fines connected mostly to it if you kind of blow through the deadline. So what happens is like all the other guys, the carpenter, the window guy, the bathroom guy, the I don't know what guy and lady, they all go over just a little bit, just a little bit.
[00:30:47] Mikkel: And it compounds. When you're squeezed, it's
[00:30:49] Toni: It's the painter. And I think it's the same with CS actually sometimes, right? They're sitting on the long end of like outputs being produced from marketing and sales and so forth. And then they sit there and I think kind of go to market forecasting for them. Number one, it's like, well, now we can see up the funnel.
[00:31:07] It's the opposite problem that marketing has. Marketing want to see down the funnel. They wouldn't, they want to see up the funnel. Um, so they know, okay, by the end of next quarter. we will have so many more customers in those regions and I need to staff against that. And guess what? Oh, it's not according to the financial plan that you set out.
[00:31:25] Surprise. It's different. Um, and, um, and then the question really is like, uh, it's also kind of the support folks you need and the different languages. So especially Europe, right. Um, and different time zones and so forth. and that just enables them to forecast in a smarter way, right. To do the staffing in a smarter way, not to have.
[00:31:41] have too high or too little kind of support.
[00:31:43] and I think then the other thing is also, as they're new, you know, if, if you depart from this, Hey, last year's gross retention rate is going to be this year's gross retention rate, and we're just going to do it across the board and, you know, if, if, if you stop doing that and go to a, something that's more granular, that's more on the cohort level, like, Oh, this is a deal was outbound, uh, in the mid market in, I don't know, Europe and, and that cohort has a very specific way of, you know, of churning and upselling, um, then you basically automatically account for changes in the funnel that you might not be aware of.
[00:32:20] Um, either staffing somewhere differently or marketing does a campaign or whatever. All of these things suddenly get, you know, included in this piece. And it basically kind of helps you to figure out, well, You know, how is my GRR going to change with those top funnel changes happening? And we had like one, and I think we mentioned this the other, on another show, we had one example where one team was like cranking up the outbound a lot.
[00:32:43] and guess what, you know, as, as we put into the model kind of outbound going up. Their, their gross retention rates started dropping and the customer was like, the model is wrong. You know, this can't work out, you know, you guys suck. and then we kind of, you know, looking into this with them, it's like, well, it's because you're, you're outbound, uh, you're outbound cohorts, they comparatively to the other stuff that you have in the customer base.
[00:33:06] They perform differently. They perform worse actually. And that is overall pulling down your gross retention rate. Right. and for them to know this at that point, instead of a year from then, when it would basically hit them, extremely valuable.
[00:33:19] Mikkel: And this is something that he or she, like the leader in that department can bring up
[00:33:24] In the leadership meeting, right? And pre emt, so I think we talked with, uh, the godfather of CS who said, CS should have the power to say, no, you're not going to close that deal because it's going to impact our net, uh, net dollar retention or whatever, right? Here you actually have the foresight so you can help make the necessary changes and it makes the business way more efficient.
[00:33:44] I think finance is going to love you for doing that.
[00:33:46] Toni: Probably, yes. And I think again, right, we talked about the different departmental pieces here. Um, and I think what's really powerful is you have like one connected whole, so no, no silos, anything, one connected whole, that's kind of the whole go to market. But then you have very specific siloed views into this thing.
[00:34:05] and the, and the conversations you now can have as you kind of roll up and down in this kind of tradition that your ritual that you're building. Um, you'll be talking the same language. You'll be talking about different problems, but you will be able to translate those problems into the language of the, the one that's being affected, right?
[00:34:24] And, and honestly, this is the good or the bad thing about SaaS. Everyone is affected back and forth all the time, right? Kind of having a way in the same language in order to tackle that, I think is extremely powerful.
[00:34:35] Mikkel: That's it that's it so do you have kind of a forecast for how many reviews we'll have by end of year
[00:34:43] Toni: Um...
[00:34:43] Mikkel: What did it say? The predictive model. More, right? Way more.
[00:34:48] Toni: a, that's a really good good question.
[00:34:50] know how we are, how many thousands we have right now.
[00:34:52] Mikkel: right now? I don't know. I think there's a few listeners out there who probably could, you know, just open up the phone, drop a review, five, six, seven hundred words. That's the easiest. Yeah.
[00:35:02] Toni: Um, you don't need to write 500 words. There's a lot of stuff to write on a phone. I think you could say I could, well,
[00:35:09] Mikkel: just do that. But
[00:35:10] Toni: But the other thing is you could just say, you know, the hosts have a good chemistry, heard this a lot, by
[00:35:15] Mikkel: Yeah, yeah, yeah, yeah, yeah, yeah, yeah. We were referred to as the old married couple by now. You know that. Yeah. Yeah. That's the thing now.
[00:35:24] That's it. So thank you so much, Toni.
[00:35:26] Toni: for listening. I hope you enjoyed it. Thank you very much, Mikkel. Thanks everyone else. Bye bye.