With the economy stumbling, many revenue leaders are cutting costs. Rightly so—lean times call for lean operations, and downturns are a chance to right-size headcount and address other costs that ballooned during periods of growth.
But cost-cutting is only half of the battle—and too many sales leaders and executives miss the other equally important part of the equation: mastering revenue.
Executives who lead the market use recessions to optimize existing and potential revenue streams to make sure they're not leaving any revenue on the table—and to set themselves up for stronger growth when the economy picks back up.
Aaref Hilaly and Enrique Salem are both partners at Bain Capital Ventures and they sit on Clari's board, as well as the boards of other household name firms: DocuSign, Atlassian, and FireEye for Salem, and Felt and Recharge Payments for Hilaly.
They've ridden the downturn rollercoaster a few times and share their tips on focusing on revenue mastery heading into a recession.
The Revenue Collaboration & Governance Framework
Before diving into their advice, it's important to understand the lens through which many executives are viewing the economy these days, especially when it comes to running revenue.
There are three keys to mastering revenue:
- Improving your Revenue Collaboration & Governance strategy, with the goal of controlling every step in the revenue process—and ensuring every step is characterized by sound data, intelligent insights, and smooth, efficient collaboration within and across teams
- Achieving revenue precision, which means getting really precise about your revenue with clean, shared, up-to-date data so revenue is predictable and forecasts are accurate
- Identifying and stopping revenue leak, or revenue that you should be capturing but aren't due to breakdowns in the sales process or cross-functional coordination—and often because of a lack of insights into customer health and engagement
Here's how Salem and Hilaly see it.
Find the Most Efficient Path to Demand
You can't cost-cut or revenue-optimize without a clear picture of where your revenue is coming from.
"If you can see where the demand is coming from, then you can figure out how to go after it in the most efficient, effective, predictable way," says Salem. "It's really about having a pulse on the market and, frankly, not getting distracted where there isn't opportunity."
That means looking both inside and outside of your organization for insights that can lead you toward more fruitful areas and steer you away from weaker ones.
"You have to understand: What are the headlights you have on what demand looks like right now?" says Salem. "What are my leading indicators that are telling me what's happening in the market, and specifically within my business or category?"
Zoom out to incorporate the macro picture
Which sectors are strong and growing?
Which are weak and struggling?
No one was rushing to buy flights or hotel rooms during the 2020 downturn, for instance. They were investing in software that provided more transparency.
Don't waste time pursuing hard-hit areas, and operationalize this approach as part of your revenue governance protocols. For example, is there a process in place to screen SDR outbounding to ensure they aren't wasting time on industries that could be a dead-end right now?
Zoom in to segment customers for insights
Internally, segment your revenue by industry, geography, revenue/size, user count, and so on with the goal of identifying and focusing time and energy on stronger areas.
"There's still demand—people are going to buy software," says Salem. "But where is that demand? And how do you know where it is, and don't over-invest in putting resources against areas, segments, or verticals where it's not?"
Segmenting requires access to accurate, comprehensive customer data and real-time dashboards tied to relevant KPIs. Revenue Collaboration & Governance best practices call for every revenue-critical employee to have access to these insights so the entire revenue team is empowered to act on that data every day.
The net effect of building the macro and micro picture into your revenue governance and collaboration is enhanced revenue precision.
Sure, the macro landscape is dicey, but you've factored its key risks into your strategy. You're watching your segments carefully, which means you can proceed with higher confidence in your forecasts and, hopefully, drive efficiencies by focusing on the areas with the most revenue potential.
Prioritize the Highest-Quality Demand
In a downturn, not all demand is created equal. Existing demand already in the pipeline becomes much more precious.
"Your marketing spend to create demand in a downturn becomes less efficient because there's more of a headwind," says Hilaly. "So maximizing what's in your sales pipeline gives you your highest ROI because that demand has already surfaced, as opposed to trying to create new demand."
Again, you'll need to tweak your Revenue Collaboration & Governance framework to orient go-to-market teams around your existing pipeline. Everyone from SDRs to senior sales leaders should be collaborating around delivering for these potential customers, even if that means leaders have to step out of their traditional roles to pitch in.
From a revenue precision standpoint, the entire revenue team should have shared access to accurate and real-time deal-progression stats as well as key info around the prospect's use case, goals, and other qualitative data that can help you deliver a better buyer experience. Tracking these carefully can help you avoid end-of-quarter surprises.
Qualify Prospects Based on their Budget
Besides already living in your pipeline, another way to screen for quality is to figure out whether prospects or clients mulling an expansion have budget already allocated for the project in question.
"You have to start honing your ability to listen to the customer and understand: Is this a budgeted project, or is it something where you're going to have to search for budget?" advises Salem.
You'll need to calibrate Revenue Collaboration & Governance to qualify for budget in the early stages of talks and build that conversation into your deal tracking. You may need to coach reps to coax this kind of info out of prospects and customers and institute a threshold of when to pursue deals and when to drop them that's clear to everyone."
"When there isn't an allocated budget, don't spend time on the battle for the precious few discretionary dollars up for grabs," warns Salem. "Keep 'em warm, but don't go and pursue that opportunity."
Track Engagement to Prevent Revenue Leak
A cost-cutting climate invariably puts pressure on renewals, which means you need an all-hands and all-systems approach to mitigate churn. Customer success teams in particular need to probe customers about renewals earlier than they might have pre-downturn. They need to pay close attention to indicators that signal waning engagement.
"The moment you start seeing any drop in engagement, you're at risk," says Salem. Put yourself in the decisionmaker's shoes. "If you go into any kind of soft macro environment, they'll say, 'How's usage?' If usage is dropping, you're in the red zone."
A revenue platform like Clari helps you measure engagement across the customer journey using stats like call frequency. SaaS businesses, for example, can measure product usage per person and per account and integrate that information into their governance model. Accounts with few staff in the platform, for example, might trigger a coordinated response from CS to resuscitate the account well before a contract expires."
Stopping churn is also key to getting you closer to capturing what Hilaly calls total addressable revenue, which you can think of as the entirety of the revenue that you should be capturing without any breakdowns in Revenue Collaboration & Governance or revenue precision.
"That total addressable revenue is achievable," says Hilaly. "The change in mindset that you want to achieve is that you could get that higher number of total addressable revenue that normally is out of reach if you just get rid of the revenue leak on your way toward it."
There's No Substitute for Hustle and Leadership
It may sound cliche, but hustle is the silent requirement that every go-to-market team needs to internalize to drive deal activity in a dry climate.
"You have to engage with lots of different businesses, and lots of people inside those businesses," says Salem. "And you don't go to sleep at night until you've finished all of your action items—you follow through."
Revenue leaders should be asking themselves, 'What should hustle look like at scale inside my organization?' And how can I orchestrate Revenue Collaboration & Governance around it?
Hustle isn't just about working harder or longer but smarter and more focused. It's about leaders strategizing around what's necessary for the business in the current climate and disseminating that message throughout the organization so sales managers, reps, and SDRs know they're sprinting and hustling in the right direction.
Another point of differentiation can be your own leadership. Unlike a product or development team, sales teams tend to run like sports teams: top-down. Through one lens, leaders can sometimes be viewed as subservient to their sales teams. But run like a team, with a coach weighing strategies and driving plays to keep everyone aligned—Hilarly argues that can be incredibly powerful.
"A sales team's strength is that it's a coordinated unit and it operates with leadership from the top," says Hilaly. "That's sometimes offered as a negative, but I would argue that it's a positive because that's really efficient. A group of people working in alignment can achieve more than individuals."
The trick is having tools and processes in place to lead the team through a less-than-rosy macro environment.
"Lasting differentiation comes from having a deep understanding of these complex workflows around revenue and enabling people to manage them more efficiently," says Hilaly.
Run Revenue Like a Master with Clari
By focusing on efficiency, leadership, tracking, and hustle, business leaders can truly lead, guiding their teams through a rollercoaster macroeconomic environment.
Now more than ever, revenue leaders need the right revenue platform like Clari to manage their revenue process with full transparency and reliability from the board room to the front lines.
Book a demo today to see how Clari supports every aspect of the revenue process.
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