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  • Writer's pictureAlex Handsaker

What is the Predictable Revenue Model?

Originally released in 2011, the Predictable Revenue model was originally coined by Aaron Ross and Marylou Tyler in their book "Predictable Revenue" as a revenue methodology that would change the world of B2B sales.


Whilst systematic "factory line" approaches to sales had been used before 2011 in some larger enterprises, it was the first time that a methodology had been scoped out and shared for the businesses world to use.


Understanding the Predictable Revenue Model

The predictable revenue model is all about consistent business growth based on a systematic process, not guesswork or last-minute hustles​​. It's about knowing how much revenue your business generates consistently, including recurring revenue streams like subscription fees and memberships, making it crucial for business stability and growth​​.


The Three Pillars: Engage, Execute, Expand


The model revolves around three phases: Engage, Execute, and Expand​​.


Engage

In the Engage phase, it's all about generating awareness and demand. Your top-of-funnel teams, like growth marketing and SDRs, focus on creating a qualified pipeline. The key is to align all inputs, processes, metrics, and tech to drive a pipeline that can turn into revenue​​.


Execute

Execute is where your field sales teams take the reins. They're responsible for driving deal inspection and closure. This phase requires operational cadences and a focus on the right segments and deals​​.


Expand

Finally, in the Expand phase, it's about customer retention and growth within your existing base. This phase, led by customer success and account management teams, is just as critical as the first two phases​​.


The Framework

To successfully implement the predictable revenue model, businesses need well-defined marketing and sales processes, effective lead generation strategies, and a focus on technology to automate and streamline operations​​​​.


It's more than just a sales process or methodology applied to a team, it's a structure for the roles, tasks and responsibilities for your sales teams that shapes the way you hire, and the way that work is carried out.


Achieving predictable revenue requires understanding your sales funnel, determining average deal size, and defining time frames​​. It's not just about doing these things; it's about doing them systematically.


The Role of Sales Development

In the predictable revenue model, Sales Development Representatives (SDRs) are essential for initiating the sales process. They lay the groundwork for sustainable revenue growth by focusing on the early stages of the sales funnel.


Key Responsibilities:


Lead Generation and Qualification

SDRs are the spearhead of lead generation. Their primary task is to identify and qualify potential leads that fit the company's ideal customer profile. This involves a mix of outbound strategies, including cold outreach and leveraging marketing-generated leads.


Nurturing Top-of-Funnel Leads

SDRs nurture these top-of-funnel leads by engaging them through various channels, such as email, social media, or phone calls. Their goal is to warm up these prospects, making them ready for deeper engagement with Account Executives.


Bridging the Gap Between Marketing and Sales

SDRs act as a bridge between the marketing and sales teams. They ensure that the leads generated by marketing campaigns are effectively handed over to the sales team. This requires a deep understanding of both marketing strategies and sales tactics.


Skills and Traits of Successful SDRs:


Effective Communication

Effective communication is key for SDRs. They need to be able to craft compelling messages that capture the interest of potential leads and encourage them to engage further.


Resilience and Persistence

SDRs must be resilient and persistent. Dealing with rejection is a part of their daily routine, and they need the tenacity to keep pushing forward despite setbacks.


Strong Research Skills

Research skills are essential. SDRs should be adept at researching potential leads to personalize their outreach and increase their chances of creating a connection.


Collaborative Nature

SDRs must be collaborative. They need to work closely with both the marketing team to understand campaign objectives and the sales team to ensure a smooth handover of qualified leads.


The Impact of SDRs on Revenue

The impact of SDRs in the predictable revenue model is profound. They are the first touchpoint in the customer's journey, setting the stage for the entire sales process. Their effectiveness in lead generation and qualification directly influences the efficiency and success of the sales pipeline, making them indispensable in achieving predictable revenue growth.


The Role of Account Executives (AEs)

Account Executives (AEs) are critical players in the predictable revenue model. They're not just salespeople; they're strategic partners in your revenue generation machine. In this model, AEs are central to the Execute phase, where the real action happens.


Key Responsibilities:


Driving Deals from Qualified Leads to Closure

AEs take over from where your SDRs (Sales Development Representatives) leave off. They work with the qualified leads generated in the Engage phase and drive them towards closure. This process involves deep customer engagement, understanding their needs, and presenting tailored solutions.


Strategic Deal Inspection

AEs are also responsible for strategic deal inspection. They assess the health and progress of each deal, ensuring that the pipeline remains strong and viable. This involves evaluating potential risks, understanding customer motivations, and making strategic decisions to keep the deal moving forward.


Maintaining Customer Relationships

In the predictable revenue model, AEs play a crucial role in maintaining and nurturing customer relationships. They ensure that customers are satisfied with their purchases and are primed for upselling or cross-selling opportunities in the Expand phase.


Skills and Traits of Successful AEs:


Strategic Thinking

AEs need to think strategically. They should be able to assess the broader picture, understanding how each deal fits into the company's overall revenue goals.


Customer-Centric Approach

They must have a customer-centric approach. Understanding customer needs, challenges, and goals is crucial for tailoring solutions that resonate with them.


Excellent Communication

Communication is key. AEs must articulate value propositions clearly and effectively, ensuring that the customer's journey from prospect to closed deal is seamless and engaging.


Collaborative Mindset

Finally, AEs must be collaborative. They work closely with marketing, SDRs, and customer success teams. This collaboration ensures a unified approach towards achieving the company's revenue goals.


The Impact of AEs on Revenue

The role of AEs in the predictable revenue model cannot be overstated. They are the bridge between a promising lead and a successful sale. Their ability to close deals effectively and maintain strong customer relationships directly impacts the company's ability to achieve predictable, sustainable revenue growth.



Conclusion

The predictable revenue model isn't just a buzzword; it's a systematic approach to achieving stable and sustainable growth. It requires a deep understanding of your sales process, a commitment to systematic execution, and the smart use of technology. It's about setting the right goals, structuring your sales and marketing effectively, and continually refining your approach based on real-world data.


Remember, predictable revenue is about building a system that supports sustainable growth, no matter the market conditions. So, don't just chase numbers; build a system that delivers them consistently.

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