Shooting the Messenger
As CFO, you get asked all the complicated mathy questions. And often, no one wants to hear the answer. Some companies can treat their CFOs like a jack-of-all-data-wrangler — which is not the level of strategic involvement you probably had in mind. You’re supposed to be focusing on cash flow, investment, and the bottom line. But you’re stuck trying to get marketing, sales and operations to talk to each other. The worst part is, everyone’s failures fall back on the CFO — ‘Just find us a way to make payroll’ — as if you can magically produce cash…
Revenue is not the CFOs Job
The reality is, you report on revenue, but it is not your job to make revenue happen. You require skilled functionaries in marketing, sales and operations to make sure that their functions are causing revenue to grow month over month. Revenue growth is critical to your job, but you’re not in control of it. How do you get the organization to consistently grow revenue?
Top Line Revenue FACTs
The top line revenue number in your P&L is driven by 4 Factors that we won’t find in the general ledger:
- Flow → How many deals does your organization produce?
- Average Sale → What is your average sale price?
- Conversion Rate → What is your conversion rate?
- Time to Close → How long does it take to close a sale?
If the 4 FACTs are not improving, then your revenue is declining. There are no exceptions. As a finance guy, this obviously makes total sense to you, but it goes over the head of many.
Understanding all of the Dimensions
The magic of Predictable RevOps is managing how the FACTs change over time by all of the segments like:
- Channels
- Product Lines
- Sales Rep
- Client Industry
This means that not only do you know how the top line is changing, you know why its changing. You’ll feel clarity and confidence in the revenue number. Which in turn will allow you to project confidence to the CEO, vendors, investors and executives.
It’s not all about Revenue
Traditionally sales teams focus only on revenue and new business. But you know that an account that we lose money on, hurts our bottom line and cash. Its a powerful thing to be able to analyze contribution margin by all of the sales dimensions. In Predictable RevOps, we call this Sales Based Costing. Sales Based Costing ensures not only that revenue is growing every month, but also that each product line, channel, and and sales team are growing their contribution to operating cash. Sales Based Costing aligns the sales and delivery team with your finance work so that the entire organization is driving revenue & profit.
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PredictableRevOps.org maintains the documentation of the PRO Framework and provides training certification for Partners and clients that wish to use PRO within their businesses.
PRO is sponsored by SalesInsights.io, a reporting and dashboard tool implementing the PRO Framework.
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