Predictable Revenue is a book authored by Aaron Ross, an early sales leader at Salesforce. The process itself can be loosely defined as a framework that uses a formulaic process to achieve year-over-year consistency and the ability for a business to scale. For SaaS B2B startups, Predictable Revenue has become the sales model du jour, elegantly solving the mysterious market entry problems most startups suffer at launch.
However, it may not be right for all companies. If it’s not a fit, it can waste millions in capital resources, take a year or more to figure out and unwind, and just as importantly, consume valuable senior management time that could be better spent on testing other channels. Here’s how to discover whether it’s right for your company or not.
Aaron does a nice job outlining the suggested changes for optimizing the sales organization, the outreach tactics, and metrics to pay attention to. For CEOs and VCs, the book outlines a process and rationality that limits risk and promises scalability, the holy grail for startups.
However, in my experience working with many startups Predictable Revenue is not a panacea for all sales marketing problems at all companies. SaaS B2B companies would be wise to see if their company meets the criteria below before pursuing a Predictable Revenue Sales model - and before investing a lot time and money on this approach.
3 Things to Consider Before Pursuing a Predictable Revenue Sales Model:
Consider the financial requirements of the sales model: it is predicated on an assumption that the lifetime value metric supports the cost of lots of salespeople.
Don’t fall victim to the CEO’s & Founder’s hiring trap: many CEOs and Founders want to apply the latest successful model and expect it to work, without considering the context of the buyer environment. Early stage companies should take the necessary steps to determine if the Predictable Sales Model could work for your company before hiring a sales leader.
Remember that the company life cycle and market acceptance influence success: Early sales growth tends to be filled with lots of hypothesis about the right industries, the right size companies in an industry, the right buyer, and mediums for creating awareness. This process yields lots of false positives, false negatives, and empty promises. In short, it’s unpredictable.
The Predictable Revenue Sales Model can be a tremendous asset to companies in the right space, and at the right time in the company’s growth and recognition cycle, but it is not an automatic guarantee of success. Founders and CEOs should think long and hard about where their company is before deciding if the Predictable Revenue Sales Model is a fit.
For more information on Predictable Revenue and whether it will work for your company, please download the whitepaper below: “Predictable Revenue Sales Model for Startups: Does it Work, and Will it Work for Your Company?”