This document discusses ways for companies to create predictable revenue through operational alignment, execution, and readiness. It emphasizes analyzing the sales pipeline to identify issues. Key points include: - Pipeline analysis identifies expected revenue, issues with close rates, lead quality, or variations over time. - Advanced analysis adjusts for anomalies, identifies production gaps, and researches causes. - Expert analysis integrates trends over time and considers how time impacts customers and strategies. - The overall goal is driving predictability, focusing on customers and employees, and engaging consistently. Regular pipeline analysis can help companies address problems before revenue is affected.

1. Beating the OddsCreating Predictable Revenue in a Tough EconomyJohn RudowPresidentThe Rudow Group, Inc.www.rudowgroup.comBL007

2. Good Versus Great“A good hockey player skates to where the puck is. A great hockey player skates to where the puck is going to be.”Wayne GretzkyRetired Professional Hockey Player

3. Creating Predictable RevenueOperationalAlignmentOperationalExecutionOperationalExcellence!OperationalReadiness

4. Operational AlignmentStrategyOperational orBusiness PlansDay-to-Day Tactics

5. Operational ReadinessToolsProcessPeople

6. Operational ExecutionDrive PredictabilityFocus on Customer& Employee LoyaltyEngage with Consistency

7. 35% of deals being chased in a pipeline are a waste of time (not qualified).Gallup PollDrive PredictabilityPredicting what revenue is going to happen when … through disciplined, systematic pipeline and forecast analysis.Bad news early is good news!Can’t fix a problem if you don’t know about it!Know the “danger” zones!

8. Business Analysis and ManagementPipeline AnalysisFunction:Deal SizeVelocityWin RatioAdvance RatioIdentifiedIssues:AccuracyVolumeQualityFocus Area:ForecastSales ExecutionDemand GenerationDrill Down:Sales Process/MethodologyFilter AdjustmentMarketing ActivitiesMarketing FundingMarketing ExpertiseCOACHINGOpp Coach/MgmtCo-Sell/Joint CallsSales Skills Training

9. Pipeline Analysis FundamentalsIdentify/Define Steps or Phases of Sales CycleIdentify/Define Progression Ratio or Close Ratio for each Phase # OfLeads In# of Wins Out25%

10. Define Sales Steps or PhasesSOLUTIONQUALIFYDEVELOPPROOFCLOSE25%# OfLeads In# of Wins Out

11. Identify Close Ratios2001006750SOLUTIONQUALIFYDEVELOPPROOFCLOSE40040# OfLeads In# of Wins Out 50% 67% 50% 75% 80%40020%25%50%50%33%200100331710

12. Identify Close Ratios10%400SOLUTIONQUALIFYDEVELOPPROOFCLOSE40# OfLeads In# of Wins Out90%360

13. Identify Close Ratios20%200SOLUTIONQUALIFYDEVELOPPROOFCLOSE40# OfLeads In# of Wins Out80%160

14. Identify Close Ratios10040%SOLUTIONQUALIFYDEVELOPPROOFCLOSE40# OfLeads In# of Wins Out60%60

15. Identify Close Ratios67SOLUTIONQUALIFYDEVELOP60%PROOFCLOSE40# OfLeads In# of Wins Out40%33

16. Identify Close Ratios50SOLUTIONQUALIFYDEVELOPPROOFCLOSE40# OfLeads In80%# of Wins Out20%10

17. Pipeline AnalysisBasic AnalysisTotal pipeline production net revenueBalanced pipeline productionAdvanced AnalysisIdentify and adjust for anomaliesIdentify production gaps and drill downExpert AnalysisIdentify trends and drill downValidate/verify forecast

18. Calculate Pipeline ProductionCalculate total revenue of all opportunities in each phase.Identify close ratio for opportunities at each phase.Calculate net revenue by mulitplying gross revenue by close ratio Identify sales phases used in pipeline.Add all “net” revenue for all phases together.

19. Calculate Pipeline ProductionExample Pipeline Production Calculation using MSSP

20. Calculate Pipeline ProductionExample Pipeline Production Calculation using MSSP

21. Calculate Pipeline ProductionExample Pipeline Production Calculation using MSSP

22. Calculate Pipeline ProductionExample Pipeline Production Calculation using MSSP

23. Calculate Pipeline ProductionIndividual and Unique to Every Business!

24. Basic AnalysisHow ToTotal “Net” revenue not sufficient to meet the revenue goal for a given time periodVolume, Quality, Close Rates, Deal SizeSignificantly smaller amounts of “weighted” or “net” revenue in one phase compared to othersVolume, Quality, Close Rates, Deal SizeSignificantly larger amounts of “weighted” or “net” revenue in one phase compared to othersDeal Size, Velocity (stalls)

25. Basic AnalysisEnough RevenueWhat concerns you about this pipeline?Potential revenue shortfall.Revenue Goal: $700,000.00

26. Basic AnalysisBalanceWhat concerns you about this pipeline?Future revenue shortfall.Revenue Goal: $700,000.00

27. Basic AnalysisBalanceWhat concerns you about this pipeline?Potential stalls in sales cycle.Revenue Goal: $700,000.00

28. Basic Analysis SummaryKey PointsProvides visibility intoexpected future revenue production (volume)sales performance issues (e.g., close ratios, quality of leads, variations in revenue production month to month or progression ratios, etc.)Enables pre-emptive corrective actionsRequires use of sales cycle/steps/phasesRequires tracking of opportunities by step/phase (something is better than nothing)Can be managed easily in Excel/Spreadsheet environment

29. Advanced AnalysisIdentify/define standards for any or all of the following that will be used as a comparisonAverage opportunity sizeProduction by sales phaseNumber of opportunities by sales phaseAge (length) of entire sales cycleAge by sales phaseIdentify and adjust for anomaliesCompare pipeline adjusted actual to standardsResearch root causes for any gaps

30. Identify/Define StandardsFirst, estimateSecond, calculate based on data and verify

31. Identify/Define StandardsAverage opportunity sizeTotal RevenueBy Revenue Types (License, Services, etc.)By Business Line/Product LineNew Business/Add-on BusinessAverage length of sales cycleAll Revenue OpportunitiesBy Opportunity Types (New/Existing Customer)By Business Line/Product LineIdeal age (length) by sales step/phaseDivide average length of sales cycle by number of sales steps/phases

32. Identify and Adjust for AnomaliesElephantsCalculate Average Opportunity Size by Sales Step/PhaseIdentify Phases with Average Opportunity Size more than 10% - 20% larger than Ideal/StandardMiceCalculate Average Opportunity Size by Sales Step/PhaseIdentify Phases with Average Opportunity Size more than 10% - 20% smaller than Ideal/Standard

33. Identify and Adjust for AnomaliesFossilsCalculate Average Opportunity Age by Sales Step/PhaseIdentify Phases with Average Opportunity Age more than 10% - 20% greater than Ideal/Standard

34. Average Deal Size of $19,565 or 30% larger than Ideal.Includes a single deal worth $100,000Identify and Adjust for Anomalies

35. Identify and Adjust for AnomaliesRemoving the “Elephant” – a $100K Deal – makes the previous calculations more reliable

36. Identify and Adjust for AnomaliesAverage age for sales phase is more than 10% above standard, requiring a closer look at opportunities in that phase

37. Compare Adjusted to ActualsTo Drive $700K, with indicated close ratios, business ideally should have …

38. Compare Adjusted to ActualsWhat concerns you about this pipeline?Increasing shortfallPotential stalls

39. Compare Adjusted to ActualsUsing ideal age for comparisionAnomalies that require adjustment.Average opportunity size more than 10% - 20% less than standard (potential mice).Average opportunity size more than 10% - 20% more than standard (potential elephant).Average age more than 10% - 20% longer than standard (potential fossil).Not enough “weighted” revenue in any given step / phase compared to standard.Decreasing “weighted” revenue in previous steps / phases.Single step / phase with too much “weighted” revenue.Average age longer than standard in any given step / phase.Increasing age in consecutive steps / phases (forward or back).

40. Advanced Analysis SummaryKey PointsProvides visibility intoanomalies that degrade other calculationsexpected future revenue production (volume)deal size issuesvelocity issues (e.g. opportunity stalls, not enough opportunities, etc.)sales execution issues (e.g. issues with Develop phase)Enables pre-emptive corrective actionsRequires use of sales cycle/stages/phasesRequires tracking of opportunities by stage (something is better than nothing)Requires the formulation of “Standards” or “Ideals” to be used for comparisonsCan be managed (more complex) in Excel/Spreadsheet environment

41. Expert AnalysisIntegrate trending into analysisMany revenue engine issues are hidden except through trendingRoot cause issues often best highlighted through trendingIntegrate time into analysisTime plays critical role in deep analysisCustomer operates on their own timeSales strategies can influence time

42. Expert AnalysisDecreasing close ratios in a single phase over timeDecreasing “weighted” revenue in a single phase over timeIncreasing “weighted” revenue in a single phase over timeNet revenue “bubble” not moving forward through phases over timeIncreasing average age in a single phase over timeErratic average age in a single phase over time

43. Operational ExecutionDrive PredictabilityFocus on Customer& Employee LoyaltyEngage with Consistency

44. Creating Predictable RevenueOperationalAlignmentOperationalExecutionOperationalExcellence!OperationalReadiness

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