The Revenue Architect

Making the Most of Annual Planning

November 25, 2021

The Revenue Architect

Join host of the show Jeff Ignacio, as he dives deep into incredible businesses and their Go-To-Market capabilities.We’ll explore how founders, executives, middle management, and RevOps leaders & practitioners achieve their success. The podcast is not only an inspirational guide for those looking to start or scale a business, but also serves as a practical companion to building a world-class revenue function.

On this episode Jeff dives deep into the nine steps of a successful Annual Plan.

1. Setting the topline (new or renewal)

2. Defining your universe of accounts

3. Segmentation

4. Coverage

5. Capacity

6. Capability

7. Quota

8. Comp Plans

9. Kickoff

Tune in to Season 2!


Connect with Jeff on LinkedIn or email him at

Jeff Ignacio
Host of The Revenue Architect Podcast

[00:00:00] Jeff Ignacio: Welcome to season two of the Revenue Architect. I'm your host, Jeff Ignacio. We're going to load up on the topics you care about revenue operations, sales, marketing, customer retention, and growth. So if you're the superhero team of one, looking to switch into RevOps or a CRO leaning into growing your business, this is the place to be. Without further ado, let's go.

Welcome back to the Revenue Architect. It's been a while since our last episode. As many of you know, I changed jobs. That's greatly impacted my ability to deliver episodes at regular intervals. For those of you who don't know, I moved from a high growth startup to an incredible company called Amazon AWS. I think you may have heard of it.

In my new role. I serve as the chief operating officer to my revenue leaders. So I made a conscious transition from an ever expansive RevOps shop, where you're responsible for everything to a dedicated, focused chief of staff type role. The one from breadth at a startup to one of narrow deep focus. And I think it's been a wild ride. I think many of you who have made that transition in either direction from large companies to small company or from small company to large company, you can relate.

But first, I want to talk about the shape of this podcast and how its vision will move going forward. I'm going to start mixing in a number of different formats for the Revenue Architect. As you know, we've had a ton of incredible guests here on the pod. Their insights have elevated everyone's understanding of developing growth engines I'll continue to bring on guests, don't worry, I'll keep inviting great, excellent folks to explore the wide world of revenue, thought leadership, and in practice.

Many listeners have asked for my opinion on several important topics. So these episodes are meant to give a spotlight to some of those thoughts. And these thoughts are always continuing to. So these solo episodes are going to attempt to bring to life some of those deeper insights that I'd like to share.

So if you have ideas or guests for those guests-focus episodes, burning topics, please email me at Jeff J E F F at sales IQ I read every email. So please know that I may very well expound upon a topic from the inbox that came from you. So, in advance, thank you.

Since it's Q4. I thought it made sense to walk through a process that's on everyone's mind as we head into the new year, I'm talking about annual planning. For those acronym-obsessed organizations, you'll probably call it AP and I'll refer to it as such going forward. So if you don't know what AP is, rewind the clock, go back into the episode and know that it stands for annual planning.

So what's up with AP and why is it important? The purpose of AP is to align the team and everyone within the organization around a handful of priorities that once completed will move the company closer to achieving its intermediate and short-term objectives. Again, that's two time horizons, intermediate and short-term objectives.

The intermediate timeline being, let's just say three to five years. Nothing too crazy. You're not looking at the next century and the short term as a one-year window, nothing shorter. Cause you definitely want to start planning for the next fiscal year. So during it, my time at Intel, a long time ago, we ran concurrent processes called SRP and LRP.

SRP stood for a short range planning and just as its name suggests, it's a continuous planning motion where the business exam is examined on a rolling basis. That's a pretty tough slog for many organizations. It's taxing on all the executives and all the folks who are doing all the analysts. So I'm going to cover a short range in this episode, and we'll basically role-play a typical planning process. The one that occurs as early as August and runs through the end of December, or sometimes carries through January Hopefully your reps aren't getting their account comp plans in March. So you definitely want to have all this buttoned up so that your sales reps kind of have an idea what they're selling into at the beginning of the year.

LRP, which I won't cover today stands for long range planning. This is an executive exercise examining all of the different businesses within the business. The one difference here is that the planning horizon is three to five years out. This delves into future casting and greater. It's an aspirational exercise that challenges the business of what it can become tackle those BHAGS, B H A G S or rather the big, hairy, audacious goals.

So let's talk more about that shorter window, one year out, the next year. It's the end of 2021, so I'm talking about what will 2022 look like. AP is no fun. You have your day job. I have my day job. And now we're talking about layering on a whole other work stream on top of the already stressful day to day. Sorry, but not sorry.

Great companies are so because they execute, execute, execute. AP is an opportunity to work hand in hand with our peers in marketing, sales and finance. Each of these teams needs to define how their planning cycle is going to plug into the greater operating plan. There are two motions that work in concert to intentionally create friction, not conflict.

A good type of friction is born from healthy tension. It allows the business to examine what worked, what didn't, external threats and reaffirm the opportunity at hand. Finance starts with a well-informed top-down growth target. And from there, the marketing and sales teams develop a bottoms up view of the business.

The tops down can be driven by a number of criteria. Some are objective while some are subjective. Objective growth targets could be grounded in the overall growth of the market. That's one way of doing it. Perhaps the pie you're competing for is expanding. So why not match one for one the growth rate of whatever external research partner you're leveraging Gartner or Forrester, for example, perhaps your product or service is the upstart cannibalizing share from incumbents.

Maybe that share erosion rate is the rate you want to use. Whatever you use, there is rigor, backing your approach, and you can never fight at least a data-driven approach. So let's break down, planning into nine digestible parts.

One: setting the top line, new or renewal

Two: the finding your universe of accounts.

Three: segmentation

Four: coverage.

Five: capacity

Six: capability,

Seven: quota,

Eight: comp plans,

Nine: kickoff.

There's a lot more to it, but hey this is a podcast, I want the train to arrive at the station on time. If you're a curious about a fully fledged process, reach out to me at my email

So top line growth is generally out of the hands of the go-to market teams, but you can bet that V2 or V3 your top line is going to be well-informed from your bottoms up by the first few runs. So one of the key deliverable shaping the narrative is going to be a go-to-market operating model, similar to the three statement, financial models.

The go-to-market operating model is a linear model cascading top to bottom from pipeline generation to closed business, new or renewal. Baked into this is a bottoms up QA check, matching the size and maturity of the organization to execute the pipeline generation ratios, close ratios and everything in between. Think about it as your ability to assess the business. Through the operating model. Now we have a ballpark revenue targets.

We need to start developing our universe of accounts. This is where having an outstanding focus on data. Quality is important if you're selling to the enterprise. Well, it's a lot easier to identify potential customers. There are a few far fewer companies with 5,000 employees than less. If you're selling it to the SMB, your current account model may be very different. Sole proprietors individuals. They may be within your ideal customer profile or your ICP. It's just not realistic to have a comprehensive account universe loaded into your CRM for the SMB. Do the best you can, but don't break the bank with high calorie expenditures to do so. Be reasonable. My advice here is to start early and establish your master data management, your MDM strategy. Do you update your accounts quarterly? Well, that seems disruptive. In my opinion, perhaps by annually is more reasonable. It's less disruptive, but not so rigid that your inflexibility causes heartburn in the organization.

Next up is segmentation. This is the exercise where you're going to group the universe of accounts into categories, which shared characteristics. It stands to reason that pooling accounts will lead to the shortest path to meeting prospects and customers where they are mindshare, sales practices, and the ability to show and demonstrate your expertise in that industry or your geography, for example. Some common methods to segment is any combination of geography, size, industry, product readiness, maturity, and technographics.

From there we layer on the coverage model. What does the inbound versus outbound versus partner mix look like? What roles are needed. Fully cycle reps versus an increased specialization model SDRs develop qualified pipeline with spot on personas or ICP. An important mechanism, in my opinion, that cannot be overstated is the formation of territories. There are many ways to skin the cat, many ways to cut territories and it warrants its own episode. We won't do that, unfortunately, the outcome of a territory cut is that you'll have a set of accounts within a patch. The likely and best reason for doing this is that you develop these deep relationships between your prospect, your customers, and the rep, as much as I'd like to think sales and marketing is a quote unquote numbers game. It's a human experience and relationship driven profession, and nothing can replace that.

The fifth item is to develop capacity to meet the needs of the business. This is the fun exercise of asking for programmatic spend and headcount. How many people need to be hired. What level of expertise? When do they need to be brought in? How do we ramp them? If they are new roles, how do we sufficiently prepare them without necessarily having had this role in house before? This is definitely an episode all by itself. Unfortunately we won't get there. We'll have to do it another time. But one thing to note here is that in the operating model, we talked about way back in the episode is that there are ratios to be considered between these roles. For example, is it reasonable to have a team of 20 report to one person? Probably not, particularly sales reps at 20 to one, you're looking at little to no individual attention. If you look online, you'll see a wide range of responses and leadership around this topic. In my experience, enterprise sales orgs would be better served with having six to eight reps while transactional sales motions via inside sales reps can get away with a much higher span of control, maybe eight to ten.

Sixth quota. As a rev ops practitioner, I can tell you that no matter what number you dish out, not everyone is going to be happy. And that's okay. This isn't a happiness business. If rev ops operated under a banner of pleasing everyone, we would this dismally fail that charter. Quota should be no less than the targets. Call it a thank you captain obvious moment. But then there's a discussion of over assign. Why do we over assign? Not everyone does it, but the thinking goes like this. It's an insurance policy to hedge against the normal distribution of performance. Now I'm probably going to go out on a limb here, but not everyone in your sales org is going to achieve target. If you're in a 99.9999% of companies where that's true, then over assign as a buffer or an insurance policy against telling your board you're going to fall way behind target. Now dovetailing after quota is to develop comp plans for the field. Comp plans, again, is another episode all to itself. And even that would shortchange the myriad of ways that comp can be shaped. Every business is going to have a multitude of different plans for good reasons, differences in roles, geographies, segments, product offerings, level. They're all going to lead to an arsenal of plans. My quick advice on the topic would be to keep it simple, be transparent and be receptive to feedback.

Lastly, the coup de gras, the kickoff is the Superbowl of events for the team, the annual kickoff, the sales kickoff, whatever you want to call it, SCO. It's a rallying cry to celebrate the wins, learn from your losses and gather everyone together in one place. The goal is to set the pace for the next year.

Business goals have been defined and distributed, hopefully at a reasonable time, January, it's pretty early. They've just wrapping up and coming back from the holidays. February seems to be the hotspot when I talked to folks. March to me feels way too late.

Now each attendees should walk away and know what they are responsible for and are rightfully equipped to execute in the new year. That's what the planning process is all about. Avoiding the haphazard, stumbling into the new year.

Now, if you're curious about running your own or improving your AP process, please feel free to ping me directly. Over time, we're going to build out a community for revenue architect subscribers. There we'll be able to learn from each other.

I want to thank you as always for tuning into the Revenue Architect. So if you found this useful smash that like button, and please subscribe. Thanks again.

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