Webinar Recap: How to Nail your 2023 Sales & Marketing Planning

By: Michael McEuen  |  December 14, 2022

Companies attempting to create Sales and Marketing plans for 2023 are likely tired of hearing about “growth in uncertain times.” This ominous phrase has been with us for a while — but what is happening in the market, and how can we effectively plan for it?

To answer that question, Mainsail’s Director of Demand Generation Michael McEuen welcomed Michelle Pietsch of Minot Light Consulting to provide a roadmap for nailing a Sales and Marketing plan for next year. Both Pietsch and McEuen have experience helping early-stage companies develop go-to-market (GTM) strategies.

The full webinar is available to watch HERE. Below are Mainsail’s top takeaways.

Setting the Scene: What factors are at play in today’s market?

In taking an honest look at the current state of the market, Pietsch and McEuen noted three important trends.

Most sales reps are not hitting their quotas.

According to 988 companies polled by RepVue, only 3% of software companies have sales teams hitting 75% or more of their quotas (85% of quota is a reasonable goal). Missed quotas are not due to sales rep performance alone, but also a symptom of poorly created forecast models that the quotas were formed from. Looking to 2023, it is going to be essential to develop realistic sales models that are rooted in historic performance, market trends, and account for rep ramp times and attrition.

EBITA is back because investors are focused on efficiency.

For several years, many companies — especially venture-backed ones — have focused on “growth at all costs.” Now, the Rule of 40 is back in style, in which companies must consider both growth and profit as factors that define success. In times of unrelenting growth, companies could invest heavily in headcount, and this metric was less important. Today, leaders need to be laser-focused on balancing efficiency with growth and anchoring on the Rule of 40.

The average cost per acquired customer (CAC) in software has been increasing.

Studies has shown the average CAC for software companies increasing 60%+ over the past 5 years. This is putting pressure on marketing teams to increase efficiency due to market costs getting more expensive. Your budget doesn’t stretch as far as it used to.

With this as a baseline, how should Sales and Marketing teams approach 2023?

“By being scrappy and pipeline-focused,” says McEuen.

Pillar 1: Unpack your target revenue number

When setting your target revenue number for 2023, you want to ensure that it’s a stretch for your go-to-market teams but attainable. Start by looking at historical trends, focusing on the most recent 1-2 quarters (given how drastically the market has been shifting), and examining year-over-year performance to understand seasonality. Scrutinize your pipeline and look at existing and potential revenue sources. Then, make conservative bets around that pipeline and those sources, knowing that what is working today might not work in six or nine months.

Once you have defined a feasible shared revenue goal, delineate expectations for each function within your GTM team, ensuring Sales, Marketing, and Customer Success are all working together and understand what is expected of them. Assess what (and who) each team needs to be successful and define the actions they will take to hit their goals.

“If you as a sales leader can’t unpack how your sales team gets to their number, then that’s the biggest problem,” says Pietsch.

For Sales, consider:

  • Cost of hiring new employees, ramp time, potential churn
  • Number of sources expected/needed from Marketing
  • Number of closed deals needed to hit your target
  • Likely conversion rates of MQLs and sales-sourced opportunities
  • Tools and processes needed to close deals

Marketing should consider:

  • Cost of hiring new employees, ramp time, potential churn
  • Cost of acquiring leads, lead ramp time
  • Historical rates of close, MQLs, and opportunities
  • Pipeline required to hit the sales team quota
  • Tools and processes needed to generate pipeline

As they work toward a shared revenue goal, be sure Sales and Marketing remain unified and collaborative. Be clear about (a) the percentage of pipeline that Marketing is responsible for and (b) how you define success (such as the number of sales opportunities needed) so both teams are motivated around the same metrics.

As a backup for hitting revenue goals, Pietsch also suggests that companies have Sales put an outbound motion in place. “Something about your plan is bound not to work, so it’s important to have outbound sales in your back pocket,” she said.

Pillar 2: Account for seasonality, sales cycle, capacity, and market costs

Pillar 1 assumes you are fielding a top-line number from (most likely) a CEO and/or CFO and then aligning GTM elements to achieve it. Pillar #2 presents the complementary, bottom-up approach in which you account for the factors impacting the ability to sell in 2023.

Consider seasonality.

When we measure growth, we often do so around linear models, but most businesses have seasonality. This year, for example, Q3 was troublesome and didn’t align with a linear revenue model. To help make quota for an entire year, account for seasonality in your planning, looking to historical trends and anticipated market shifts to spread out your expectations. Perhaps Q1 and Q4 will be the highest-growth quarters?

Consider sales cycle length.

If your sales cycle requires 60-90+ days, account for the pipeline that needs to be created well in advance. Frontload your pipeline across Sales and Marketing to help close the year out on a high note. Understand how much pipeline you need and in what stage to be successful.

Consider sales capacity.

The ability to sell correlates with the retention of productive, ramped AEs. When planning your sales year, ask:

  1. How many AEs are fully ramped today?
  2. How many are currently ramping?
  3. How many AEs need to be fully ramped in each quarter to meet 100%, 85%, and 50% of quota?
  4. How many deals will each rep need to close to hit revenue goals?
  5. What’s your team’s true capacity?
    • The active number of selling days (accounting for holidays, offsites, and sales kickoffs).
    • The number of active selling hours per day (removing internal meetings, admin work, etc.) by running time studies.

Plan for attrition.

Expect to lose a least one top performer that is fully ramped. Look for early indicators of churn and be prepared for the impact it will have on your team.

Not many people consider employee churn, but it’s important for sales leaders to talk to frontline managers about which employees are getting itchy to get out the door so you can potentially account for their departure” – Mike McEuen

Understand what your marketing metrics are telling you.

To effectively plan a year in Marketing, you will need to define the number of opportunities that need to be generated per quarter to hit source-pipeline goals. To do so:

  1. Analyze historic data with an emphasis on averages from the previous couple of months. What is your cost per MQL? Per SQL?
  2. What budget was allocated for events, social media, paid ads, and digital?
  3. If everything stayed static, how much budget would you require to hit your goals next year?
  4. Segment MQLs into two funnels: high intent (free trials, demo) and low intent (content downloads, events, webinars) to provide a more realistic look at effective areas of investment.

Pillar 3: Improve efficiency instead of adding headcount

When presented with aggressive growth goals, a common mistake is to throw more bodies at the problem, especially at bootstrapped or early-stage companies. Ironically, says McEuen, a bigger team doesn’t always mean more productivity. In fact, there are risks to moving too quickly away from a scrappy approach.

“Watch out for too much headcount, bloated processes, and too many internal meetings. This year, we can’t spend our way out of a problem,” says McEuen.

Instead, Peitsch and McEuen say you should work to make your current team as efficient as possible.

Implement the following Sales Efficiencies:

  1. Tighten SLAs for demo request follow-up
  2. Improve meeting show rates with reminders and more touchpoints
  3. Improve the SDR-to-AE handoff process and customer experience
  4. Track and audit the team’s time to motion
    • Understand reps’ time inefficiencies due to laborious systems/processes
    • Conduct time studies and audit calendars

Implement the following Marketing Efficiencies:

  1. Improve win rates by developing new, focused messaging and strategic narratives
  2. Get laser-focused on your ideal customer profile (ICP), and don’t get distracted by new industries. Instead, focus on replicating processes and specializing in submarkets
  3. Increase average sale price (ASP) by tightening qualifying criteria
  4. Optimize campaigns for sales opportunity creation. Determine which elements indicate high intent and conversion rate
  5. Test your website to improve conversion rates. Change the headline, streamline forms, improve the user experience to offer faster calendar access. These small tweaks can drastically change conversion rates for little to no cost.

Pillar 4: Place three big bets to create cross-team areas of focus

In each quarter, McEuen says, your team can pull off three large, focused projects. These “big bets” are important because they encourage alignment and drive motivation across all functions.

To define your big bets, look at the company’s top objectives and consider your team’s big opportunities. Each of your bets should align with the company’s goals while also lifting one key Sales or Marketing metric — such as win rate, Average Sales Price (ASP), lead-to-opportunity rate, or meeting show rates.

Once you have your bets, build an ICE score to help prioritize them. “ICE” scores consider Impact, Confidence, and Ease to give you a sense of how hard a project will be as compared to its potential impact. Then, set your priorities and get to it. Be sure to test and measure as you go.

Pillar 5: When it comes to strategy, discuss and bake in assumptions

When placing your big bets, Pietsch recommends that you work closely with Sales and Marketing to bake in assumptions and set reasonable goals and timelines. Being intentional on the front end will ensure success and buy-in down the line.

Create a model per big bet.

Don’t bake multiple bets into one model. There are too many unknowns, and your chances of nailing all three bets are low, so your model will be unreliable. Instead, create realistic and conservative model variations per big bet.

Be patient and set reasonable timelines.

Give each bet time to play out. Don’t give up too early. Be vocal and communicative about your bets and be sure leadership has buy-in to your goals and timelines.

Be practical regarding your team’s ability to execute.

Don’t assume success in unproven GTM motions or channels. Don’t bank on ramp times decreasing. Be cognizant of how your bets will impact your reps’ day-in-the-life, and be sure to enable them with the tools they need to succeed.

Be sure not all three bets are on the sales side.

Remember: hitting your revenue goals shouldn’t only depend on your Sales team. Marketing must support the sales cycle, and both teams must remain aligned and work together to be as efficient and successful as possible.

Moving forward in 2023

These may be uncertain times, but they are not impossible. To succeed in Sales and Marketing in the new year, leaders need to be pragmatic. Take the time to deeply unpack your revenue number and develop playbooks and systems to empower your teams to achieve them. In your planning, account for seasonality, sales cycles, capacity, and market costs.

When times get tough, avoid the temptation to hire more bodies. Instead, 2023 is going to be all about developing efficiencies using the tools and team members you already have.

Beyond the day-to-day, it’s also going to be important to place a few big bets that can work to motivate and align your Sales and Marketing teams. These, like your top-line revenue goals, should be measurable, achievable, and thoughtfully developed, with consideration for the many factors impacting company growth in the new year.

Mike is a Senior Director of Demand Generation at Mainsail. He helps Mainsail’s portfolio companies build, optimize, and strengthen their demand generation & sales impact strategies.
More by Michael McEuen
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