The Revenue Formula

By Toni Hohlbein & Raul PorojanBusiness Management

The Revenue Formula episodes

July 11, 2023NPS Sucks
Net promoter score is terrible - it's become useless for SaaS. We discuss the problems with it, and how to fix it.
(00:00) - Introduction
(01:39) - The old framework: Net promoter score
(04:47) - The problem with NPS
(06:21) - It's self-correcting
(07:29) - A metric that can be gamed nicely
(09:35) - Promoter today, detractor tomorrow
(10:15) - A honeypot for promoters
(11:35) - Are the teams using it? And what is it needed for?
(11:56) - OK, NPS sucks. Now what?
(12:28) - If the focus is retention & satisfaction, listen here
(24:13) - For word of mouth - listen here
Also mentioned in this episode:
Earned Growth Rate from HBR
NPS isn't a leading indicator of churn from Gainsight
PS: NPS was developed in the 90s by Bain & Co -- before SaaS really came around.
32 min
July 04, 2023Drive customer growth
The biggest growth lever you have? It's your customers. In this episode we talk about CSMs, incentives and 4 common expansion strategies.
(00:00) - Introduction
(02:17) - The CSM rule of thumb
(04:39) - It's decided then, this year we focus on our customers
(08:31) - The role of the CSM
(11:33) - 4+2 ways to drive expansions
(12:06) - Usage
(12:53) - Tiered
(13:31) - Add-on
(13:56) - Products
(14:14) - The add-on you can do today
(20:03) - The 2 bonus tricks
(21:27) - Track decisionmakers
(22:52) - Incentivizing CSMs
29 min
June 29, 2023Special: Revenue Planning (With Ben Murray)
We’ve been zinging finance a bit on the show. Today we decided to invite a SaaS CFO, Ben Murray.

We talked about how the two functions should create a solid revenue plan together - how to manage crazy ambitions and much more.

(00:00) - Introduction: Finance + RevOps
(03:52) - How the CFO sees RevOps
(05:22) - The focus is on sales and marketing
(07:09) - Getting operational
(08:32) - CFOs
(10:43) - What planning looks like
(15:02) - Hidden improvements
(24:22) - Driving the plan forward
(26:16) - Creating flexibility in the plan
(31:01) - Selling to the CFO
(33:16) - Making the case
(38:53) - Where should RevOps report to?

About Ben
Ben is a fractional CFO and founder of TheSaaSCFO.com and TheSaaSAcademy.com
Want more from Ben? Check out his newsletter here https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
42 min
June 27, 2023Pipeline coverage is worthless
You have a pipeline coverage ratio (PLC) of 10x. Is that good? Is it bad? Will you hit target? Will you team understand it?

The only thing you know for sure: It needs a winrate of 10% to work out.

But how do you use it operationally? Well.. It's pretty difficult. We dive into the problems with PLC in this episode.
(00:00) - Introduction
(01:26) - Pipeline coverage isn't helpful
(11:53) - Pipeline coverage gets impacted so many ways
(13:47) - This is how you can use PLC
(16:33) - What's the alternative?
(22:15) - The "boring" answer
(24:06) - Unblended PLC

PS: Want a masters degree in B2B SaaS? Head over to the revenue letter.
26 min
June 20, 2023Churn is dying, let’s save it
You can calculate churn however you want. The problem? Churn as a metric will start to lose meaning.
Toni and Mikkel discuss the different options to make it useful.
(00:00) - Introduction
(01:58) - What churn was used for
(04:35) - The intention behind churn
(07:36) - Churn definitions from public companies
(10:46) - The most brutal churn
(12:42) - So what do you do with churn?
(18:43) - Collateral damage
(21:19) - Churn defined, now what?
(23:11) - Vintages of customers
(25:09) - Creating future churn
(26:45) - But.. How to improve it?

Sources
You can check how different companies report churn here (http://christophjanz.blogspot.com/2017/12/how-public-saas-companies-report-churn.html )
Watch Dave Kellogg's presentation on churn here.
Something you want us to cover? Drop us a note on [email protected]
31 min
June 13, 2023Want predictable revenue? This'll help
The most predictability businesses have for revenue is the forecast. But what are some other simple steps you can take to build more predictability on revenue?
Toni and Mikkel discuss non-magic steps you can take towards predictable revenue.
The industrialization of sales (05:09)
How to go about it (06:32)
Giving targets to your team (08:31)
Steer clear of magic (10:31)
The 10% rule (11:02)
Give quarterly targets (13:44)
Where will you add a buffer? (14:47)
How do you get to quarterly targets? (19:41)
Too much cushion? (21:33)
Focus on the 10 percenters (25:30)
The board and the plan (26:50)
Interested in GTM live? You can sign up here
32 min
June 08, 2023Special: Leah Tharin on Modelling PLG
Product led growth is still all the rave. But is PLG right for you? How do you build the business case and how do you think about modeling it out?
We're not experts in PLG. Fortunately we brought on Leah Tharin who is to discuss it.
Here's what we covered:
First: Is PLG right for you? (07:54)
2 stages where you can implement PLG (09:54)
PLG is not about acquisition (11:08)
Can you easily explain your offering? (17:44)
Modelling PLG (21:02)
Product Qualified Accounts (30:57)
Operating cadence for PLG/PLS (40:04)
You can check out Leah here:
www.leahtharin.com + her linkedin: https://www.linkedin.com/in/leahtharin/
Enjoy!
45 min
June 06, 20234 Steps to create data trust
"I don't have that number!"... "where did you get that data from?".. Ugh, so many objections to data, and the worst part? You get stuck chasing data perfection (which is an endless endeavour). Instead, follow this simple framework to create data trust.

And the best part? It's self validating over time.

In the episode, we discuss:
The problem with data (02:19)
Biases that break data (04:00)
How to build data trust (10:24)
First step: Go on a data diet (11:18)
Establish accountability for the numbers (17:45)
Pressure test the system (20:52)
Monitoring the data (22:42)
Expanding the data (25:31)
Wrapping up (31:03)
PS: No joke. Write a long review and get a book. Send a screenshot to [email protected]
34 min
May 30, 2023Want sales consistency? Try this
If you want predictable revenue, you need sales consistency. Not a "backlog" quarter where 80% of deals close in the last two weeks.
That's pretty stressful - so we decided to share 3 ways you can work towards more consistency in your sales.
We covered:
The Unicorn of Sales: Consistency (01:47)
The 80% of sales efficiency (05:00)
#1 - Onboarding & offboarding (05:23)
#2 - It's all about opportunity supply & demand (12:44)
#3 - It's all about the mindset (24:24)
Bonus: Fix to consistency (28:42)
Interested in the revenue letter? You can join here: https://growblocks.com/revenueletter/
32 min
May 23, 2023The best ways to screw up comp plans
There are things that just shouldn't be in sales comp plans. And then there are things that definitely should be.
In this episode we talk about a simple approach to drive the right behaviour for you and the sales team.
Clawbacks (04:47)
Step functions (08:40)
Capped comp (10:42)
Cliffs (12:56)
Put this in your comp plans: Kickers (14:18)
Negative kickers or debuffs (18:28)
Contract length (18:40)
Free months (22:30)
Positive kickers aka buffs (23:24)
Sales rep consistency (23:32)
Intra Quarter Pacing (26:08)
Quarter over Quarter consistency (27:10)
The fifth quarter (28:50)
Double bubble (30:09)
Wrapping up (31:29)
You can check out GTM live here: www.growblocks.com/gtm-live/
Email us with questions at [email protected]
34 min