From fantasy to reality: Embracing Bottoms-Up

FROM FANTASY TO REALITY: TOP-DOWN VS. BOTTOMS UP PLANNING

Ah, the irresistible seduction of hypergrowth—it's intoxicating, isn't it? Every startup founder has experienced that moment—the allure of aggressive growth targets often leads founders down a precarious path: the top-down financial model, seductive for its simplicity. I'm here to tell you that top-down forecasting is like wandering through a dense forest without a map; while you might have a rough sense of direction, you're destined to lose your way without a clear path. It's time to sharpen your pencils and plot your course with bottoms-up planning.

The Pitfalls of Top-Down

Have you ever noticed how setting unrealistic top-down revenue targets often leaves sales teams to deal with the consequences? When overly ambitious targets are not met, this often results in strategic inflexibility and strained stakeholder relationships. The fallout is severe. Based on inflated revenue projections, teams are scaled too quickly, leading to painful layoffs when targets aren't met. CROs, tasked with hitting these lofty goals, face impossible odds, resulting in high turnover. This isn’t just unproductive; it’s a fast track to a blame culture that erodes trust and your team’s morale faster than free pizza at a hackathon.

Why Bottoms-Up?

Here's the lifeline for startup founders looking to navigate out of this mess: the bottoms-up revenue model. This approach requires rolling up your sleeves and diving deep into the operational drivers of your business. It's about starting with the reality on the ground — actual sales data, realistic conversion rates, and genuine customer growth.

Mastering Bottoms-Up Planning: A Founder's Guide

Embracing a bottoms-up plan approach is about more than just shifting perspectives—it's about fundamentally changing how you operate to ensure sustainable growth and success. Here's how to make this pivotal change:

Start with Your Sales Capacity and Conversion Rates:
1. Analyze Historical Data: Review your sales data from the last 3-6 months to identify trends and establish a baseline for your key performance metrics.
2. Calculate Sales Capacity: Determine the actual average output your current sales team can achieve by analyzing their conversion rates, average deal size, and the number of deals closed per period.
Define Your Operational Metrics (Leading Indicators of Unit Economics):
1. Identify the critical operational metrics that influence your sales outcomes, such as the number of qualified leads generated, lead conversion rates, and average deal size.
2. Establish targets for each metric based on historical performance and realistic growth goals.
Align Your Marketing, Sales, and Customer Success Efforts:
1. Collaborative Planning: Ensure that your marketing, sales, and customer success leadership work closely to agree on the number of leads and opportunities needed to meet revenue targets.
2. Feedback Loop: Create a system for ongoing communication between marketing, sales, and customer success to adjust strategies based on actual performance versus targets.
Build Your Bottoms-Up Revenue Forecast:
1. Using your sales capacity and operational metrics, construct a detailed revenue forecast that accounts for the granular inputs from each part of your business.
2. This forecast should reflect realistic growth expectations based on your capacity and the effectiveness of your marketing and sales strategies.
Operationalize and Regularly Review Your Plan:
1. Visibility: Ensure that all relevant team members have access to the key metrics and targets, reinforcing transparency and accountability.
2. Quarterly Reviews: Schedule regular review sessions to compare actual performance against your bottoms-up plan, identify variances, and adjust your strategies accordingly.
Iterate and Refine:
1. Understand that your bottoms-up plan is a living document. As you collect more data and learn from your experiences, refine your assumptions, metrics, and targets to reflect your growing understanding of your business dynamics.
Use Technology to Your Advantage:
1. Leverage CRM and sales enablement tools to efficiently track and analyze your key metrics. Utilize financial modeling software to help build and adapt your bottoms-up forecasts.
Engage Your Entire Organization:
1. Foster a culture of data-driven decision-making. Ensure that every team member understands how their work contributes to the company's overall goals and how those goals are grounded in realistic, bottom-up planning.

In Conclusion: The Grounded Visionary Wins

Dreaming big is part of a startup's DNA, but realizing those dreams requires grounded, realistic planning from the bottom up. Transitioning to a bottoms-up approach requires commitment and collaboration across your organization, but the payoff is clear: more accurate forecasts, aligned teams, and sustainable growth. By focusing on the actionable steps outlined above, you'll avoid the pitfalls of top-down planning and set your startup on a solid foundation for success.

As James Clear perfectly states in his book Atomic Habits, "You do not rise to the level of your goals. You fall to the level of your systems."

Navigating a Dichotomy In Sales: A Balanced Approach

This weekend, an insightful conversation with Adam got me thinking about the common debate framing the methodology of "relentlessly disqualify" against "the long game" and how it presents a false dichotomy, suggesting an oversimplified clash between short-term gain and patient cultivation. This perspective overlooks the essence of a successful sales strategy, which is less about choosing sides and more about deeply understanding your Ideal Customer Profile (ICP) to guide them toward solutions that truly resonate.

Critics of swift disqualification argue it's short-sighted, yet could this perceived relentlessness not also be seen as a form of efficient guidance? Conversely, proponents of nurturing every lead suggest it's the long game approach and might not patience, in fact, yield richer outcomes.

The answer lies not in the extremes but in the nuanced application of both strategies. Reflecting on my upbringing in a linguistically diverse home with an amazing mother who speaks eight languages, I see the proper application of sales methodology, like being multilingual. Success comes from knowing which "language" to use in any conversation and adapting based on the buyer's context and unique problems.

Effective sales is about more than just tactics; it's a service to both your craft and your customers, requiring a tailored approach that skillfully combines elements of both disqualification and nurturing based on a profound understanding of the buyer's context.

This ongoing debate tends to oversimplify the spectrum of sales methodologies available to us. Like Ingeborg (my sweet mother, who turns 74 today. Happy birthday, mamá!), who navigated through eight languages with ease, we can learn to master the art of multiple methodologies, ensuring our sales approach is as multifaceted and dynamic as the markets and buyers we serve.

Essentially, the real skill lies in harmonizing these strategies, speaking both "languages" of sales with the grace and precision that complex, modern selling environments demand.

Lessons Learned as a Fractional GTM Leader

In this new section, we aim to bring you real-life lessons each week, either from us or from one of the founders we work with.

All names have been changed to protect the identities of others...

I love visiting my customers onsite. I mean, I really love it! This week, I had the opportunity to conduct an onsite workshop with a Founder alongside our amazing partners at GTM Partners. This workshop was with the CEO and Founder of a startup that just surpassed $10M in annual revenue. We'll call it "Company X". The founder, "Aaron," came into our meeting facing the all-too-common trials that test the focus of any ambitious startup. Through our conversation, several pivotal learning moments emerged, shedding light on the complex landscape of Go-to-Market (GTM) strategy and execution.

Holistic GTM Approach: Aaron recognized that Company X's hurdles weren't confined to one department. Instead, they signaled a comprehensive GTM challenge requiring a unified sales, marketing, and customer success strategy.
Don't Pay the Optionality Tax: Aaron realized the concept of the "optionality tax"—the cost of trying to appeal to every potential buyer, thereby diluting their message. He understood the critical need to focus on a specific market segment to enhance their messaging and positioning effectively.
Strategic Market Sequencing: Aaron recognized Company X's need to sequence its market initiatives thoughtfully. He had a moment when he realized the need to concentrate efforts on the most promising segments first to foster efficient growth rather than diluting focus across too many verticals.
Data-Driven Sales Strategy: Another insight was the need for a coherent sales motion rooted in data, precisely targeting the right segments. Aaron realized the value of using a cohort analysis of customer behaviors, deal sizes, and lead sources to refine their GTM strategy. This strategy is vital for aligning Company X's offerings with its most lucrative opportunities.
Executing Revenue Plays: We discussed the vital importance of defining clear revenue plays—deciding which market segments, products, and GTM motions would maximize deals and revenue. This requires a meticulous execution plan aligned with strategic objectives.
Embracing Transformation: It became clear to Aaron that what Company X needed was not mere optimization but a fundamental transformation in its GTM approach to achieve significant growth milestones.
Avoiding Costly Distractions: Aaron acknowledged the cost of distractions—pursuing too broad an array of opportunities could dilute focus and impede growth. He recognized the importance of declining less ideal customers to focus on more profitable segments.
The Value of GTM Partnerships: The advantage of partnering with specialized GTM partners illuminated the benefits of combining in-house strategy with external expertise for Aaron, promising a more rapid execution and growth.
Building a Go-to-Market Operating System: Lastly, we explored the necessity of a comprehensive GTM Operating System to align all company facets—sales, marketing, customer success, and product development—towards a unified strategy.

The meeting with Aaron was a testament to the transformative power of strategic reflection and the willingness to pivot towards more effective GTM methodologies. It was a reminder that growth is not just about scaling up but also about honing in, focusing on what truly drives growth in a distracting market full of shiny objects.

Content We Can't Get Enough Of

I’m genuinely excited to spotlight a groundbreaking approach to sales discovery: Diagnostic Selling, a new methodology introduced by the remarkable Becc Holland. This methodology elevates our understanding of the problems and challenges of each buyer persona by emphasizing the importance of diagnosing problems previously unidentified by the buyer.

Becc illuminates the concept of uncovering a “Misdiagnosis”—a belief held by the buyer that isn’t accurate, alongside a “Missed Diagnosis”—an issue the buyer has completely overlooked. The concept of Diagnostic Selling is guiding sellers to discover these critical gaps, aiming to shield the buyer from the negative consequences of these unrecognized problems.

If this has your attention too, I highly recommend exploring the following resources:

Impacts vs. Business Problems vs. Tactical Problems vs. Root Causes vs. Pain: This asset offers a detailed exploration of the nuances between various types of problems and their implications. It’s an essential read for anyone looking to refine their diagnostic skills. Read more about Impacts
The 12 Types of Problems Buyers Want to Solve: Understanding the specific problems buyers are looking to address is crucial. This guide categorizes the 12 types of problems, providing sellers with a roadmap to tailor their solutions more effectively. Discover the 12 Types of Problems

As a “bonus asset” for those interested in elevating their Cold Email & Prospecting skills, Becc offers a one-sheeter on “How to Craft a Stellar Cold Email”. This concise guide is packed with insights and strategies to enhance your outreach efforts. Craft Your Stellar Cold Email

Becc Holland’s Diagnostic Selling methodology not only elevates how you engage with potential buyers, but it also equips you with the tools to make a meaningful impact on their decision-making processes. Go check it out already!

From Playstation to Product Pioneer

Derek Osgood , the visionary Co-Founder and CEO of Ignition , chatted with us on our recent episode of the Revenue Reimagined podcast. 🚀

In this episode, Derek lays bare the intricacies of product development and launch strategies he's mastered by launching over 100 products.

He shares invaluable insights on:

🏭 𝗖𝗿𝗮𝗳𝘁𝗶𝗻𝗴 𝗮𝗻𝗱 𝗲𝘅𝗲𝗰𝘂𝘁𝗶𝗻𝗴 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝗹𝗮𝘂𝗻𝗰𝗵 𝗽𝗹𝗮𝗻𝘀 𝗮𝗰𝗿𝗼𝘀𝘀 𝘃𝗮𝗿𝗶𝗲𝗱 𝘀𝗲𝗰𝘁𝗼𝗿𝘀 𝗮𝗻𝗱 𝗰𝗼𝗿𝗽𝗼𝗿𝗮𝘁𝗲 𝗰𝘂𝗹𝘁𝘂𝗿𝗲𝘀.

🛠️ 𝗢𝘃𝗲𝗿𝗰𝗼𝗺𝗶𝗻𝗴 𝘁𝗵𝗲 𝗵𝘂𝗿𝗱𝗹𝗲𝘀 𝗳𝗮𝗰𝗲𝗱 𝗯𝘆 𝘁𝗲𝗮𝗺𝘀 𝘄𝗶𝘁𝗵 𝗵𝗲𝘁𝗲𝗿𝗼𝗴𝗲𝗻𝗲𝗼𝘂𝘀 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀. 👥
𝗦𝘁𝗿𝗲𝗮𝗺𝗹𝗶𝗻𝗶𝗻𝗴 𝗹𝗮𝘂𝗻𝗰𝗵 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀 𝗯𝘆 𝗺𝗶𝗻𝗶𝗺𝗶𝘇𝗶𝗻𝗴 𝘁𝗵𝗲 𝗱𝗲𝗽𝗲𝗻𝗱𝗲𝗻𝗰𝘆 𝗼𝗻 𝗮𝗻 𝗮𝘀𝘀𝗼𝗿𝘁𝗺𝗲𝗻𝘁 𝗼𝗳 𝘁𝗼𝗼𝗹𝘀.

🌈 𝗥𝗲𝗰𝗼𝗴𝗻𝗶𝘇𝗶𝗻𝗴 𝗮𝗻𝗱 𝗰𝗮𝘁𝗲𝗿𝗶𝗻𝗴 𝘁𝗼 𝘁𝗵𝗲 𝗱𝗶𝘃𝗲𝗿𝘀𝗲 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁𝘀 𝗮𝗰𝗿𝗼𝘀𝘀 𝗼𝗿𝗴𝗮𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝘁𝗲𝗮𝗺𝘀.

📈 𝗧𝗵𝗲 𝗮𝗻𝗮𝘁𝗼𝗺𝘆 𝗼𝗳 𝗮𝗻 𝗲𝘅𝗰𝗲𝗽𝘁𝗶𝗼𝗻𝗮𝗹 𝗚𝗼-𝗧𝗼-𝗠𝗮𝗿𝗸𝗲𝘁 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆.

❌ 𝗗𝗲𝗺𝘆𝘀𝘁𝗶𝗳𝘆𝗶𝗻𝗴 𝘁𝗵𝗲 𝗺𝘆𝘁𝗵 𝗼𝗳 𝗽𝗿𝗼𝗱𝘂𝗰𝘁 𝘂𝗻𝗶𝗾𝘂𝗲𝗻𝗲𝘀𝘀.

🎧 𝗗𝗶𝘃𝗲 𝗶𝗻𝘁𝗼 𝘁𝗵𝗶𝘀 𝘁𝗿𝗲𝗮𝘀𝘂𝗿𝗲 𝘁𝗿𝗼𝘃𝗲 𝗼𝗳 𝘄𝗶𝘀𝗱𝗼𝗺 𝗯𝘆 𝘃𝗶𝘀𝗶𝘁𝗶𝗻𝗴 𝗼𝘂𝗿 𝗽𝗼𝗱𝗰𝗮𝘀𝘁 𝗼𝗿 𝘁𝘂𝗻𝗶𝗻𝗴 𝗶𝗻 here or 𝗼𝗻 𝘆𝗼𝘂𝗿 𝗳𝗮𝘃𝗼𝗿𝗶𝘁𝗲 𝗽𝗼𝗱𝗰𝗮𝘀𝘁