Sam Kuehnle (VP of Marketing at Loxo) shares how to craft a marketing plan that aligns with, and contributes to, your company’s annual revenue target.
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Years ago, Sam Kuehnle was sitting in a quarterly all-hands where every team had gathered to share updates. Each team took turns going around, giving updates on that quarter’s performance.
The marketing team was excited to share their update. The energy in the room was high as they happily reported the great quarter they had. They exceeded their MQL goal by 20%.
Next, it was the sales team’s turn. Their report wasn’t as good. They shared they had missed pipeline targets by 15%.
At that moment, Sam realized something was off. How could one team be celebrating for hitting their goals, while the company missed overall revenue targets?
“Things start in a good way in that company has a [revenue target they want to hit this year]. And [that target] gets passed down to each department to try to figure out, ‘Hey, how do you pick up your piece of the pie with this?’ But what happens is the goals get so diluted and broken down. You try to make goals within goals of sub goals, and all of that. And it loses sight of the overarching aim that we’re trying to go for: driving revenue [and] pipeline for the company.”
“Things start in a good way in that company has a [revenue target they want to hit this year]. And [that target] gets passed down to each department to try to figure out, ‘Hey, how do you pick up your piece of the pie with this?’
But what happens is the goals get so diluted and broken down. You try to make goals within goals of sub goals, and all of that. And it loses sight of the overarching aim that we’re trying to go for: driving revenue [and] pipeline for the company.”
As a marketing leader, Sam is relentlessly focused on making sure marketing is contributing directly to the company’s revenue target every year.
That’s what today’s issue is about.
In my latest interview, I asked Sam (VP of Marketing at Loxo) to learn how marketing can avoid this misalignment, and create an annual plan that aligns with and contributes to overall company revenue goals.
Here are the takeaways…
Start by picking a company-level goal revenue goal. For a simple example, let’s say your company wants to go from $2m to $3m ARR, adding $1m in ARR next year.
Next, you need to determine what % of that goal each team should be responsible for. To do that, Sam looks at what % of revenue each team historically generated in the past.
If you’re a relatively young company, you may only have 1-2 years of reliable historical data. And if you’re more mature, you might look as far as 5 years back to come up with an accurate average.
For a point of reference, Sam generally looks at the past 2 years of historical data.
Let’s say Marketing has historically contributed to 30% of total revenue, while Sales/BDRs have contributed 50%, and Partnerships have contributed to 20%.
If things stayed this way, Marketing would be responsible for $300,000, Sales/BDRs for $500,000, and Partnerships would be responsible for $200,000.
Once you’ve done this, use it as a starting point for the conversation with your team’s leaders. You may decide to adjust these percentages for a variety of reasons. Maybe Sales is adding a few BDRs or AEs, so you decide to increase their share a little.
For our example, we’ll decide that marketing is responsible for 40% of the $1m revenue goal, driving $400,000 in new ARR next year.
Now that your company has set a revenue goal, and determined how much of it marketing is responsible for, it’s time to map out how you’ll get there.
To do this, Sam recommends using a combination of bottom-up and top-down planning. I’ll try to explain his method here, but I highly recommend watching the episode, where he shares his screen and shows the exact formulas and spreadsheet he uses to do all of this.
Sam uses a simple spreadsheet, with 3 columns:
Put differently, Sam first looks at marketing’s performance last year. Then he plays with each stage’s performance, to see how it would impact the overall revenue goal. He uses benchmark data to understand what industry averages are, so he can make sure his goals are realistic.
Like Adam Goyette, Sam is a fan of starting with down-funnel stages that often get overlooked. His favorite areas to focus on are:
Sam noted that many of these areas over overlooked by marketing, but can often make a much bigger impact, much faster, than other channels. And almost all can be improved by better targeting, messaging, win/loss analysis, and just sourcing overall higher quality leads.
If you’ve estimated the impact of improving stages further down the funnel, but still need to pull traditional demand generation levers, Sam recommends only including channels with historical data in your plan.
What if you want to test new channels, like YouTube or LinkedIn ads? If there’s no historical data for them, Sam recommends either not including them in your plan, or at least not committing to any firm numbers.
If Sam ever does include them in the plan, he’ll put very conservative numbers he can rely on. He’ll also set clear “stop/continue” expectations. For example, if Sam wants to explore organic YouTube content, he’ll set a goal for a leading indicator like “10,000 views by the end of Q2”. If they hit that, they’ll continue investing in the channel while they wait to see more bottom-of-funnel results. If they don’t hit the goal, Sam will investigate if it was a result of poor execution, or that it’s simply not a viable channel for their efforts.
As a side note, he noted that missing the “continue” goals for a new channel is often a strategy issue. In other words, your YouTube strategy is terrible but you think “YouTube doesn’t work”, so you give up prematurely rather than adjusting your strategy.
We recently surveyed B2B marketing leaders to learn the strategies they use to align more closely with sales. Get access to the results here.
Track your marketing, sales, and financial performance in one place. Build custom dashboards to visualize sales and marketing metrics side by side. Set revenue goals for each team, and get automated updates to make sure you’re on track.
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