Q: Dear SaaStr: How Do I Set the Revenue Goals for Next Year?
I try to model 3 overall plans for the year: C-90, C-60, and C-10, not just for the sales team, but the whole company.
The C is for “Confidence”. The odds you think you can hit it, from the CEO’s perspective. Here’s how to build them:
The base plan, the plan I use for the overall sales and revenue goals, is the C-60 plan. A plan I as CEO/founder/etc. have a 60% confidence we’ll hit.
And if we hit the C-10 plan, everyone should make serious money.
The C-90 plan (the one you should make almost certainly, unless you really screw up) I only use for financial planning with the CFO. We use that for worst-ish case cash planning … so we don’t overspend. I don’t directly share that with the team or externally.
- First, figure out the C-60 Plan.
- Then, from that, figure out quotas that are realistic, that at least 60% of the sales team can hit. You don’t want quotas no one can hit. That’s demoralizing and counter-productive. Use your top-performing reps to figure out what a Pretty Good rep can do.
- Pay them market if they hit these quotas.
- Pay them real bank if in the end, you hit the C-10 plan. And focus that back on comp for blowing out the quota.
How I do it, at 20,000 feet, at least.
(note: an updated SaaStr Classic answer)