Product Leaders: Influence the Revenue Planning Process to Showcase Your Value

It’s a late June morning and your shoes stick to the hot, gooey parking lot asphalt as you head toward your building. Despite the inferno underfoot, a chill progressively takes hold as you enter. When the elevator announces your arrival on the executive floor, the chill becomes a full-on wave of dread. Q2 close conjures a familiar refrain: unmet expectations followed by the blame-game.

A gaping chasm separates the sales team from their number. The sales leader points squarely at you: no sales team could possibly sell your complex, buggy products.

Marketing generates a trickle of leads and fails to keep the pipeline full. Sensing blood in the water, the CMO blames undifferentiated, stale products to which even the most innovate campaign couldn’t drive demand.

Things come full-circle a few quarters later. The sales team crushes the number and hits their comp escalators. Unsurprisingly, the sales leader credits his cadre of A-players who can sell anything –  the very same crew from Q2.

Marketing sources more leads than they can qualify and tops their annual revenue contribution number. Brand and field marketing teams mesh perfectly and attract inbound demand from long-dormant customer segments. Or so goes the story.

The board mandates you develop new, “innovative” products to expand into nascent markets. And complete an on-prem to SaaS architecture conversion over the next two quarters. All on a shrunken budget.

As a product leader, you can be an organizational punching bag. Your colleagues constantly question the value of your products and use them as a get-out-of-jail-free card for their missed objectives yet fail to give you credit during rosier times.

How can you get ahead of the constant battering and escalating demands? How do you articulate the value your team brings to the organization?

The answer: influence the annual revenue plan.

Clearly articulate where each of your products drive value. And critically, define the roles sales and marketing teams must fulfill to hit the number.

To highlight your portfolio’s contribution, lay out how each product attracts new customers, facilitates upsell / cross-sell to existing customers, and reduces customer churn.

Each product in your stable drives revenue in a different way. You should evaluate your portfolio across maturity levels and buying process dimensions to formulate your plan.

Download the associated Revenue Plan Matrix Tool to map each of your products and contribute to the revenue planning process. With it, you have a clear, concise plan of which products contribute where. It also identifies how your sales and marketing teams must provide support at each stage to drive product adoption.

Step One: Where Are Your Products?

For starters, you must understand where each product is in its lifecycle.

1. Launch (new)

    

   Your launch products represent the shiny new objects of your portfolio. They promise, and are expected to deliver, a steep ramp up that transitions to sustained, long-term growth.

    

2. Growth

    

   As the name implies, growth products deliver strong year-over-year sales increases and progressively build on their foothold in the marketplace.

3. Harvest 

    

   Harvest products have little to no growth yet still deliver significant bookings.

    

4. Maintenance

    

   Maintenance products are exactly that – no longer under development and only candidates for bugfixes; they still contribute to bookings but are on the downswing.

    

My colleague Chad Wittenborn, Engagement Manager at SBI, wrote an insight piece on Product rationalization here.

This is a perfect opportunity for you to retire those products that no longer contribute net positive value. Since product retirement is a long, drawn-out process fraught with risk, start now, transition customers to your other portfolio products, and reduce your churn risk.

Assess your portfolio assessment ruthlessly; misclassifications here miscast your products and jeopardize your revenue plan contribution strategy.

Take-away: understand where each product in your portfolio sits on the maturity curve.

Step Two: How Do You Generate Revenue?

After you fully understand the current state of your product portfolio, consider how your products generate revenue.

At the risk of oversimplification, your products produce revenue through new customers, upsell / cross-sell to existing customers, and retaining customers otherwise lost to churn.

Depending on the overall maturity of your product portfolio and primary go-to-market motions (perpetual, SaaS, OEM, etc.), you might not generate sales from all these avenues. However, ensure you fully understand the revenue pathways unique to your organization.

Take-away: catalog of sources of revenue driven by your product portfolio.

Step Three: Create Your Plan

Now you’re armed with a thorough product-by-product evaluation of your portfolio and full understanding of how your products generate revenue. Put the two together to generate your revenue plan and clearly articulate the value of your portfolio.

Start with your new products: with which customers will they generate revenue? How is that revenue generated? What do you require of your sales and marketing colleagues?

Pair each product category with each revenue path to create segments:

• New Products / New Customers 

   

  • To attract new customers with your new products, you must understand who they are, how much they will buy, how they prefer to buy, and how rapidly they will drive take-up. Marketing must get an early start and stimulate demand ahead of the launch. Likewise, the sales team requires training, segmentation, and enablement aids to close deals quickly. Without this understanding, your new product may fizzle.

     

• New Products / Existing Customers 

   

• • Consider how to position your new product to sell into your existing customer install base. Evaluate affinities between current and new products to identify likely cross-sell candidates. Ensure marketing can prime the pump and create awareness of the new product.

     

• New Products / Churning Customers

   

  • Don’t overlook the customers on the way or already out the door. Of course, customers churn for a wide variety of reasons. However, your new product, properly positioned to the correct segment of churning customer, provides them a powerful retention incentive and you a renewed, long-term revenue stream.

     

For more insights on how to successfully launch a new product, listen to a five minute podcast hosted by SBI’s CEO, Matt Sharers.

Next up are your growth products:

• Growth Products / New Customers: 

   

• • Growth products produce platform expansions, new use cases, point releases, UX improvements, and more. Each update spurs a compelling event that marketing needs to leverage. Map your updates to the needs of potential target segments and prioritize accordingly; not all segments are equally valuable, and not all updates are straightforward.

     

• Growth Products / Existing Customers: 

   

• • Your existing growth products provide you an ideal platform from which to cross or upsell existing customers. As above, incremental revenue requires you and your sales teams to thoroughly understand product affinities. Market must also have in-depth knowledge of the product roadmap and current customer segments.

     

• Growth Products / Churning Customers:

   

  • If you allow your products to stagnate, your customers will churn. Customers expect constant bugfixes and feature updates. Identify any customer segments prone to churn significant value and incorporate updates targeted at their specific needs. Again, your sales and marketing teams are instrumental. If they fail to understand your products and their roadmaps, you won’t succeed.

     

Finally, put together your revenue generation plan for your maintenance products. Your maintenance products and new customers aren’t the most likely fit; you want your sales and marketing teams to direct them to newer product lines. Similarly, existing customers are unlikely cross and upsell targets. Instead, focus on ways to alleviate churn. Implement product management to create and merchandise use cases, ease the renewal process, and generate non-monetary inducements. Focus on ways to protect the annuity and preserve the revenue stream you worked so hard to establish.

For a more in-depth look at product planning considerations, visit SBI’s Revenue Growth Methodology.

Download the associated Revenue Plan Matrix Tool to map each of your products and contribute to the revenue planning process. With it, you have a clear, concise plan of which products contribute where. It also identifies how your sales and marketing teams must provide support at each stage to drive product adoption.

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