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    Is Your Sales Dashboard Showing you the Right Metrics?

    Is Your Sales Dashboard Showing you the Right Metrics?

    Why do I need a Compensation Plan Designer?

    Why do I need a Compensation Plan Designer?

    Variable Compensation and the Gig Economy

    Variable Compensation and the Gig Economy

    7 Step Guide to Building a Profitable Sales Territory Plan (with Examples)

    7 Step Guide to Building a Profitable Sales Territory Plan (with Examples)

    “Look At Our Dashboards”

    “Look At Our Dashboards”

    Introduction to Sales Operations

    US Tech Market Forecast Shows a Best-Case 5% Drop in 2020

    Forecasting in a Time of Uncertainty: Tech Markets

    It’s Time to Re-prioritize Accounts and Re-balance Routes to Market

    It’s Time to Re-prioritize Accounts and Re-balance Routes to Market

    Deal Optimization – Key to Survival

    Deal Optimization – Key to Survival

  • Sales Compensation
    • All
    • ICM Tools
    • Incentive Travel
    • Plan Design

    Sales VP Compensation – Sales Plan or Executive Plan?

    Does the size of our company determine which SPM platforms we should evaluate?

    Does the size of our company determine which SPM platforms we should evaluate?

    What is the Difference Between a Commission and a Bonus?

    What is the Difference Between a Commission and a Bonus?

    How much of our sales team should we include in our President’s Club?

    How much of our sales team should we include in our President’s Club?

    Sales Compensation Plan Templates

    Sales Compensation Plan Templates

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    The 21 Buying Methodologies

    The 21 Buying Methodologies

    New Sales Leader? Avoid these 3 Common Mistakes

    New Sales Leader? Avoid these 3 Common Mistakes

    What’s Your Ideal Customer Profile

    What’s Your Ideal Customer Profile

    A Guide to OKRs for the Sales Ops Leader

    A Guide to OKRs for the Sales Ops Leader

    4 Keys to Successful Sales Management Meetings

    4 Keys to Successful Sales Management Meetings

    Sales Math: The Impact of Discounting

    Sales Math: The Impact of Discounting

    Revenue Operations Holds the Key to Unlocking Growth in 2022

    Revenue Operations Holds the Key to Unlocking Growth in 2022

    Sales Math – Pipeline Principles

    Sales Math – Pipeline Principles

    What’s The Purpose Of A Pipeline Review?

    What’s The Purpose Of A Pipeline Review?

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    The 21 Buying Methodologies

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    What’s The Difference Between Sales Enablement And School?

    Training Reinforcement: Is it Back to Business as Usual?

    Training Reinforcement: Is it Back to Business as Usual?

    Give your Sales People what they need!

    Give your Sales People what they need!

    Which Sales Methodology?

    Which Sales Methodology?

    The Rise of Virtual Selling and the Implications for Sales Enablement

    The Rise of Virtual Selling and the Implications for Sales Enablement

    A Sales Enablement Conundrum: Who’s Coaching the Coach?

    A Sales Enablement Conundrum: Who’s Coaching the Coach?

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    Data Science and Sales Operations: Driving Greater Predictability Together in Uncertain Times

    Data Science and Sales Operations: Driving Greater Predictability Together in Uncertain Times

    Building a B2B SalesTech Stack for Growth

    Building a B2B SalesTech Stack for Growth

    Does the size of our company determine which SPM platforms we should evaluate?

    Does the size of our company determine which SPM platforms we should evaluate?

    The Boom In Sales Technology

    The Boom In Sales Technology

    Setting your 2021 CRM Enhancement Priorities

    Setting your 2021 CRM Enhancement Priorities

    Do You Really Need Sales Automation?

    Do You Really Need Sales Automation?

    How the New AI – Authentic Intelligence – Can Improve Sales Productivity

    Use Tableau to Track the Virus Through Actionable Data

    Use Tableau to Track the Virus Through Actionable Data

    “You Are Doing Everything Wrong!”

    “You Are Doing Everything Wrong!”

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    What to Measure in Sales?

    What to Measure in Sales?

    The Pipeline and Forecast are Different

    The Pipeline and Forecast are Different

    Ignite Your Sales Performance at the Intersection of Purpose and Passion

    Ignite Your Sales Performance at the Intersection of Purpose and Passion

    How Sales Reps Are Hitting Quotas Without Hitting the Streets

    How Sales Reps Are Hitting Quotas Without Hitting the Streets

    Buying Is About People, Why Isn’t Selling?

    Buying Is About People, Why Isn’t Selling?

    The secret to High Performing Sales Teams – Analytics

    The secret to High Performing Sales Teams – Analytics

    Variable Compensation and the Gig Economy

    Variable Compensation and the Gig Economy

    On Measuring Sales Performance

    On Measuring Sales Performance

    “Look At Our Dashboards”

    “Look At Our Dashboards”

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Home Excellence

Good Revenue And Bad Revenue

David Brock by David Brock
in Excellence, Insights
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Good Revenue And Bad Revenue

No Sale Sign on Cash Register

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It might seem odd, particularly in these difficult economic times, to talk about the concept of “good and bad revenue.” Some of you may be thinking “revenue is revenue, all revenue is good!”

What’s the difference between good and bad revenue?

Good revenue has the following characteristics:

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  • It generates strong profitability because it is from deals that we know how to support well.
  • It is from deals where we know we can delight the customer, helping them achieve their goals, enabling us both to grow future business and creating accounts that are proud to share their delight in working with us.
  • It’s revenue we can build on–tactically and strategically. It is from deals that strengthen our experience and position within a customer, a market, an industry. It enables us to more easily find and pursue more deals/revenue.
  • It’s from deals that enable us to enrich our experience, dramatically improving our effectiveness and efficiency in both selling and supporting the customer. It enables us to significantly improve our win rates and average deal size. It enables us to help the customer more effectively navigate their buying cycle, reducing both the buying and selling cycles.
  • Related to the previous points, over time, we should see significant improvements in sales and marketing productivity, dramatically reducing CPOD.

By contrast, Bad revenue has the following characteristics:

  • It is either unprofitable or the margins are significantly less than those with good revenue.
  • It comes from deals outside our sweet spot or experience base. Because of this, it is more difficult to acquire these customers, sales cycles are significantly longer, win rates are significantly lower, average deal sizes are much lower. This drives our costs of acquiring the customer and the business much higher.
  • Because these deals are significantly outside our sweet spot, our ability to create a delighted customer is at high risk. We either have to invest more in serving and supporting the customer to keep them happy , reducing deal profitability. Also, because they are riskier deals, we might actually create unhappy customers, who are glad to share their dissatisfaction with others, adversely impacting our future potential and our brand image.
  • As a result of the previous points, we have great difficulty in building on that revenue, in acquiring new customers and building the business.

Sadly, too many sales people–directed by their management don’t pay attention to finding opportunities that create “good revenue.” They cast wider nets in their prospecting. They pursue any opportunity where the prospect “fogs a mirror.” As a result, performance and productivity plummet—and revenue plummets.

When I challenge organizations about creating good revenue, frustrated and struggling managers, respond, “But we need to produce revenue!” I respond, “Why don’t you focus on where you know you can create good revenue? Why don’t you focus on where you know you are most effective? Why don’t you focus on markets where you know customers are interested in buying from you?”

Ironically, focusing on our sweet spots, the customers that enable us to create good revenue is the easiest thing to do. Opportunities outside this, opportunities that create bad revenue are tough to win and tough to support, so why waste time–both the customers and ours?

Managers often continue to push back, “We need to find deals wherever we can!” I ask, “What share do you have in your sweet spots?” Most don’t know that answer, for those that do, most of the time it’s a low share—there is tremendous opportunity for growth within those markets.

Every once in a while, very seldom, managers say, “These customers are coming to us, should we just ignore them?” Quite possibly, the answer may be, “Yes!” We have to carefully assess the opportunity, is is something we can reasonably win—or are we just the “second bid.” If we win it, can we profitably support it? Can we create a delighted customer? Can we leverage this to grow and produce more revenue–both within the customer and in that customer’s market segment? What is the opportunity cost in trying to win this deal? Are we better off investing those resources and time in other areas?

Realistically, sometimes we have to pursue opportunities that produce “bad revenue.” But we need to do so by choice. We have to consciously assess the opportunity, the risks, the opportunity costs and make a business decision about whether this is the best investment of our time and resources, or whether there are better opportunities–those that produce good revenue, that we should pursue.

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David Brock

David Brock

Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments.

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