Quarterly Revenue Planning

It’s the beginning of a new quarter – the last of the financial year for most businesses here in Australia.  So in the last few days I completed my usual start-of-quarter routine:  Setting revenue objectives.  I thought I’d share this relatively simple process with you because I find it extremely useful in identifying areas I need to grow to achieve my revenue target.

Let’s say to meet my annual year on year growth expectations I need to reach $300,000 revenue in total for this coming quarter.  Now I work backwards from here…

Firstly, I break my potential revenue sources in half between existing customers and new business.  Then, for each of these groups, I break it in half again.  So I end up with these four groups:

Existing customers – Run-rate business:  Sales from your existing customers that are buying more of what they already have.  These are generally transactional sales that require the least effort.
Existing customers – Upsell & cross-sell:  Selling more products and services that you offer to your existing customers.
New business – Market growth:  Selling your usual product/service stack to customers that are in the same industries or in other ways similar to your existing customers.
New business – Green fields:  Taking new or transformed products/services to new customers in new markets.

These are the four groups from which I’m going to achieve my revenue target for the quarter.  Now I want to allocate specific revenue goals to these areas.  Because it’s been a tough start to the year, I really want my sales team to focus on driving revenue from the “low-hanging fruit” – our existing customers.  We all know that hunting new business is harder and takes more time than farming business from existing clients (don’t we?).  As such, I don’t want my sales team spending much time chasing large chunks of new business this quarter.

In this case, I might allocate a revenue goal of $150,000 to group 1, $100,000 to group 2, $50,000 to group 3 and none at all to group 4 – again, I don’t want the sales team tied down developing new products to sell in new markets this quarter.

The next process is to look at my existing sales pipeline and determine what revenue is already expected in those groups, and what the revenue gap is we need to make up to achieve the revenue goal.  For example, my sales team may already have $75,000 of run-rate sales in the pipeline, which leaves a gap of $75,000 to achieve the $150,000 I’m looking for out of the first group.  You repeat the same exercise for the other groups.  It’s then a matter of coming up with appropriate marketing and sales strategies to close the revenue gaps and ultimately achieve the overall revenue target.

In the end, you and/or your sales team get a clear picture of where to focus efforts for the quarter and you know everyone is working towards the same goal – something many small businesses struggle to achieve.

This is quite an abridged version of the process, let me know if you’d like me to elaborate!

Clayton Moulynox - Evolve IT Australia
We fix business problems, not computer problems –  Develop, Solve, Evolve.