#99 Annual Planning – Common Pitfalls & How to Fix Them

[MUSIC] Welcome to the RevNU App Slap, a podcast exploring the art and science of revenue operations. To find more episodes and resources on scaling your revenue engine, visit get weflow.com/weathops. [MUSIC] Hey, this is Philip from Weflow. Before we dive into today's episode of the RevNU App Slap podcast, let's do a quick real talk. We talk to RevNU leaders every week, I mean, actually every single day. And we keep hearing the same things. Our Salesforce data is a mess. Reps won't update Salesforce. They don't follow methodology. Everything is inefficient. The adoption is poor. And all of this is exactly why we build Reflow's revenue AI platform. Because we flow automate Salesforce hygiene by capturing every customer interaction automatically. It locks your emails and meetings as activities and Salesforce and creates missing contacts automatically. Weflow also records and transcribes your meetings and uses AI to update Salesforce fields, create summaries, and to sync everything back to Salesforce. Let's say you have some key fields like medic or next steps. Weflow can auto update them right after your meeting. Reps just review what we suggest to them and then make changes if they want to and confirm everything with one click. That way you get clean day Salesforce data while your reps save time on data entry. If you want to see where hundreds of your RevApps peers trust Weflow, just go to Weflow.com to get your free trial today. [MUSIC] Hello and welcome to another episode of the ReffApps Lab podcast. I'm here with Philip and today's guest is nobody because we have a episode, the two of us. We want to talk about one big topic, which is annual planning. I know most of you are probably in the process right now. And so we wanted to take 20, 25 minutes, just talk about our experiences and the good, bad, and ugly of annual planning, which I'm sure most of you have lived through it many times. And yeah, let's kick off with what are common pitfalls? What have you seen Philip? >> Yeah, let's start with actually, you know, your beginning here saying many of you will probably be in the process already. I think like the most common pitfall I've seen is a late start to the actual annual planning. I've seen annual plannings begin in January, February for the current year. [LAUGH] So the sentence I think more often than one would hope for or imagine. So I think the late start for sure, for me is like the biggest issue. And then the other issue is the siloed approach to planning. Where basically you have different teams starting to do planning without talking to each other. Then coming together and then basically spending the whole time of the actual planning sessions. Just to align the plans that they created separately and siloed from each other instead of just like trying to find an approach right from the beginning. Where you don't do that, like you don't plan by department or team. But you actually have like a shared calendar, a shared process, you have cross functional workshops and stuff like this. So yeah, those I would say about that, for me at least the ones I've seen most often. And most impactful in terms of like really slowing everything down. >> Yeah, I think very related to that is obviously just relying on top down only targets. Basically, I mean the C of all typically owns annual planning. Refops obviously plays a key role for the bottom up planning and collaborating with the FPIN A team. But the C of all basically discussing the annual plan with the CEO, maybe the CRO and the board, and then coming out and saying, hey, look here, this is the plan. Obviously big no, no. Not just from how realistic is it. But also how much buy in you actually create through that process. And then I think related to that is then kind of a more naive capacity math. So like not taking into consideration ram time, fluctuation, tenure. So I think the key things that have big impact on your plan. And I think those are also some, I think typical challenges we've seen. With that said, I mean, I'm sure you've all lived through this as well. Let's maybe kick off with like, obviously this is podcast that is mostly listened by revenue operations, right? Like an ops folks. So I think maybe like from your perspective, like why should refops play a key role in annual planning from your perspective? >> Yeah, for sure. I mean, because we talked about this many times before. And there is also a podcast, actually two podcast episodes on annual planning. If you want to do like a deep dive with somebody, that's not us. Episode 57 and episode 85. But I think like the key point from our perspective is that revops has this unique position where they sit at the intersection of different departments that all evolve around like the different data, the processes, and execution of it around the GTM strategy. So what I mean with this is marketing and sales specifically. And so it makes sense for them to play a key role in driving alignment, helping organize these processes, coming up with different models and collecting sort of like the input metrics to calculate these models. They are really in a unique position to manage both like the sales side, but also the marketing side, bringing them together and doing that under the overall leadership of, in most cases, like we said, a CFO could also be the CRO, depending on the organization and the structure. But yeah, so I think they have a lot of credibility. They know the right people. They have a lot of internal exposure. And all of this ends like the analytical capacity. So I think with all of this, yeah, revops is the team to help drive annual planning. But they can't do it alone. Yeah, typically together with FP&A, right? I think that's like the dream team in the ideal state as kind of the project manager and owners. And then obviously you have various different stakeholders like the CRO, if you have the CMO or CSCCO, right? Like obviously the CFO, which is fundamentally then ending in the budget and no plan to the board. And this, like, you know, I mean, I think I'm going to forget, right? Like this is a deal about like continuous planning, but there's a former process here that the board needs to approve a budget, right? And then obviously HR is involved, right? Because you're basically making hiring decisions not just for the go-to-market organization, but the entire company. And then obviously, you know, a neighborhood often also involved the leaders of the team. So it is a bigger group. And I think it starts with like a, okay, who owns the project management and then who are basically the stakeholders and having a clear map of those, right? And then having also clear timeline. And we had John McMayhem here on the show, right? And I think he very much like said, like one of the key challenges is this late start and why is that a key challenge? Because when you start late, then you start working on your capacity model and then you basically started hiring too late, which always has lead time. So, right? I think this is always in context of size of company, right? So I'd say probably public companies, larger companies, you know, fortune 50 companies. They probably start animal planning in Q2 already. I think what most typical we see is probably like August September, right? Like doing pre-planning. Then the modeling execution prep is like October November and then go live is pretty much like, like finalized hand in this obviously December. And then like, you know, kick off in early Jan or December assuming that like your fiscal year is calendar year. And then if you break that down, right? I think the, you know, the objective of the pre-planning is actually to, I mean, outside of, you know, the organizational task right who owns it and who are the stakeholders, really becoming very clear on your like, go to market strategy, right? Like actually knowing what you want to do and agreeing on that, you know, on a higher level and then going in and in the modeling and execution phase, having the bottom up and the top down plans, you know, starting to align ideally, right? Again, you know, often the thing that's not so easy to do, but if you have this powerplay of FBA and refops, that's a lot easier. And in that process, there's typically, I mean, I would say like the capacity planning should be clear already earlier because you shouldn't, you need to start hiring, but, um, yeah, I mean, we'll get to that in a second. So you really, like you arrive at basically like specific metrics that you agree on. And then obviously the like December, January period is like you get the approval from the board, you know, and then you also derive execution from the annual plan where we also had a bunch of period like podcasts episode about like, how do you take the strategy and then execute against the strategy, operate it operationalize it against your operating cadences, set goals, whether that's OKRs or, you know, managing like objectives, whatever you use, basically. And then also kickoffs and check-ins and metrics that you work against as well. Yeah, I mean, I think a simple way to think about it is when do you want to run your sales kickoff and then kind of like go back six months and then start planning? Like if your sales kickoff is like in a second week of January, then start six months before that date because you'll need it like at least like a month to prepare the sales kickoff properly. Right? If you want to do it really well and really want to engage everyone and make sure that people don't leave that with like more questions and answers and really are enabled as a sales force to execute against a plan. So yeah, I mean just at least plan for six months here, I think. Yeah, this is like you do it once a year and then everybody's enabled and know what you do. Sure. That's just joking. I mean, I think we all know that like that's obviously an ongoing effort. But yeah, I think that's actually a great way to think about it. And then why is that in plan? I mean, I think you really start with your capacity model and kind of your call metrics of like where do you sit in the capacity model? Like what are your specific roles? What is your current RAM time? And I think there I really love this like John Mayn, Cam, a comment who said that you need at least four quarters of historical data. That where nothing has changed to get a feeling for okay, how is the future looking? Right, so if you think about that, right, like the capacity model is very much centered around. You need to have strong data quality and metrics that you like you can trust. So obviously that is an ongoing effort and that should have happened a long, long time ago. And then you look at basically, I mean, you can break it into what are your 10 year drab. And what are your ramp wraps and what is your nutrition? And then you basically start mapping out okay, what's a realistic, you know, hiring plan. And then that is something you actually have to start executing already in, you know, in this year, if you want to do it for 2026, because if you don't do that, then you'll basically, you're just, you're not late with planning. You actually late with hiring and the ramp time will hit you, which happens very, very often. And you run behind and then two people might leave and then another person leaves and then you're suddenly on the back foot. And obviously that's that's a bad situation to be in. No, 100%. Yeah. And also something like if you have a historic data, you know, okay, on average, how many, like what's the average tenure, like how many of the people I hire, you know, leave within like X months after I hired them again, all this stuff, right, that all plays a huge role. So it's not just like, you know, having the input from the marketing team, the CS team, the CRO, FBNA, as you mentioned, there's also like HR. Right, you need to kind of like get like input from the field from the different operations teams, enablements and so on. And really, you know, get all the metrics in there in order to calculate these models. How much time does enablement need to prepare something to develop the training material? And how long does it take to prepare like this new marketing motion that you want to run, how much time do you want to give it? What's your plan B? If that marketing motion doesn't work out, it's like how do you shift and the team? How long does it take to hire people and so on, and so on, and so on. It's huge. It's huge, right? Yeah. It's a huge effort. So maybe, maybe, you know, actually take nine months, take nine months to plan for all of this. So, hey, Philip here. Are you enjoying this episode? Well, good news because you can find more free red ops and go to market resources on get reflow.com/redops. Access over 20 cheat sheets, reports and guides that will help you become a better revenue operator or join over 2000 subscribers who already get the latest resources right into the inboxes. And so, I think one of the things that I find often most challenging to plan for is actually part nine generation. I feel like, you know, this is really, really tough, right? Like you have your historicals and you know, you know, like what is inbound outbound and and partners driving. But at the same time, I feel like this is changing so much. And so it's really, really hard to plan for. And obviously your capacity, right? Like you want to have a balance between pipe gen and, you know, who you hire. So, so I think the advantage of doing this early is you can hire against it. But then at the same time, the disadvantages, you actually like you have, you don't have the latest resources. You have, you don't have the latest data, right? Like, and sometimes. So I think one good way to think about this is, right? Like you should look at basically your entire funnel and you should look at that by month and by quarter and then look at, okay, what's the stage conversion rate? One, two, three, what's your win rate? You know, how many people do you hire? How many people do you onboard? And is there large fluctuation in those? And then if you go further up the funnel, right? Like how many leads are driven by inbound? Let's say that, you know, and you have a clear conversion rate from like marketing qualified leading to sales qualified lead and qualified opportunities, you know, outbound and partner. And then look at, you know, the last four quarters and see if you have major jumps and fluctuations. If you have those, right, then obviously you want to make sure that, you know, you basically start hiring. But you benchmark against your balance on the pipe genocide, right? And I think that is, that is really a continuous effort. Obviously, right, like you hand in the budget and the investors expect you to hit your revenues. But what if your revenues, like your short of your revenues, right? And you continuously hire, then, you know, your investors are really upset. Because you basically go and you basically burn through a lot of cash. So I think, you know, I'd say, you know, you basically put your best foot forward on the revenue side, you know, you bottom up and top down it and all the assumptions make sense. But it really goes back to the fundamentals of revenue operations to look at the entire bow tie, right? And this is not just the top of funnel, this includes expansion opportunities, renewals, right? And so like that is essentially the balancing act of a bottom up plan. And it's really, really hard to do well in my mind because there's a lot of complexity and a philope you love the complexity refus complexity. And it's really a very short from Hillary, right? Like, which I think applies here very much. Yeah, I mean, I also want to say, right, I think it's totally fair to do an annual planning where they basically have like a North star that is centered around new logos. It's better to do no annual planning than to, you know, just maybe do like a very focused and like clear one that is maybe lower in complexity. I think, you know, sometimes you have organizations and also people with an organization that always dream of the most complex sort of like, you know, setups that are like they can imagine. And this is they think it's desired. We have like a streamed, you complicated system because that's like somehow cool. I don't know. Definitely seen it in the past. But it can also be good just to do annual planning, you know, where you basically say, okay, we do an annual planning on new logo. And, you know, that's sort of like the key focus. And because this is the key that I've seen something that's something I've seen quite a few times, basically company says like, okay, this is our key focus like this year is new logo acquired acquisition. Because that's something we can focus on and we can really streamline our efforts on this effort. Obviously doesn't mean like existing customers get like fully neglected. But that maybe like you think your best bet at the moment is to focus on new logo acquisition and less so on expansion. It could also be the other way around. I mean, I think I think that's always a question like of maturity right like where you sit in the like product lifecycle and that might be also different by products. But I think that like at least in my experience, the existing businesses often measure by GRR and NRA. So NRA taking into consideration the expansions, GRR minus the expansions. And what I think you often see is that there's a lot less uncertainty than on the new logo acquisition. And the new logo acquisition is so uncertain because it is a combination of the quality of the sales people that often fluctuate a lot. So you have a lot of like kind of execution risk, I would call. And then the challenge on pipeline generation being changing so quickly, right? AEO, like AEO or G or Hive, you will call it on the top, top of funnel, right? Like optimizing for chat-based systems to find you. That wasn't around two years ago. LinkedIn didn't play a role five years ago. Like, you know, it basically, I think, and then, you know, like, outbound is completely changing, right? All these things still work, but they're just changing a lot and drastically. And so for an existing organization that does like 50, 500 million revenue, right? And you have an existing large team that knows, you know, SEO, but doesn't know the other piece, right? Like, they suddenly need to shift. And then you don't have the historical data to like conclude what would be good things because you're almost like, it's almost like a new channel. So I think, yeah, I think that's a great point for the like, you know, like, becoming maybe more garenal on the thing that is more challenging and then looking at the historicals more for the things that are more known. Yeah, maybe, maybe last comment on that and then also talking, like, I think a lot of companies have seen this as well as like, they like, the GR and NRA have been very stable. And then suddenly, the last couple of years, there's a lot of companies falling out of product market fit because also the products are fundamentally changing. And I mean, that's the other challenges, I think, on the existing customer side that what used to be great is maybe not good enough anymore or your market has become more crowded or, you know, you somehow lost the ability to innovate. And so suddenly, you know, there's a change happening in your market. And I think you, like, most markets have become a lot more competitive because of either consolidation on new entrance. So it's interesting, right? I think these are factors that influence your longer term planning that is like one year or two year, three year. And like, I think, you know, so it's a long way of saying, like, there is certain things in terms of decisions you're making on the go to market side and on the product side that actually influence your annual plan that you don't think about when you do annual planning. So I find quite fascinating actually. Yeah. Yeah. I mean, yeah. I mean, all the time, right? I think which is also why we have an episode on continuous planning instead of like going with annual planning. So again, give that a listen. I think it's also a really good episode. And also, I think, makes a lot of sense as a model. But like generally, or like as an approach, but generally, right, like if you don't do any planning at all, I mean, like, like start with like a very focused, I don't know, new logo, annual planning, even if it's just initially between sales and marketing. Yeah. And then step-by-step, you can increase like the people that you include and make it more complicated and so on. But it's best to start with something. And if you don't do it at all, right now, because this is like forecasting, it takes time, it's training a muscle, it's like getting people on board, it's creating a culture around planning and so on. Right? So it's like the bigger the ship, the longer it takes. You know how it goes. Yeah. So I think, so basically, right? So you've taken care of the foundations. You have alignment on the goals, you have a timeline, you have the stakeholders defined, you know, like the models that you need to plan for, so capacity, pipeline generation, hiring, enablements and so on. You set targets based on this, right? And like the, and ideally, you set targets that are, you know, best case, worst case, like, you know, sort of like the maybe like, you know, base case or I don't know how to call it. It's like, yeah, basically. And, you know, so you create these different cases. Don't just do like a minus 10 plus 20 percent calculation. Maybe I'll think about what could impact it. Right? So why would it be better? Why would it be worse? What are the ripple effects of this? You don't need to plan, you don't need to calculate everything up, but like, I think just having that list is probably like a good thing because those are things you can look out for. Like what could turn this now into like, you know, like sort of like downside case, what could turn us into upside case? What are the factors that you think have the biggest impact here? And then, yeah, I mean, basically, you want to create like as much alignment as possible within these different planning groups before you actually have the planning meeting, right? So the meeting itself is basically like a board meeting. It's more like a sign off based on everything that was discussed beforehand. You don't want to create like a huge discussion. You don't want to create like tension or anything. You want to clear all of this up beforehand. So you have these different workshop formats that you can go through, right? And obviously when it's about compensation, right? So that should be aligned before FPNA should be aligned before enablement should have a clear plan and so on. So that in the end, it's really just about bringing it all together, talking it through one more time. And then, you know, just, you know, kind of like putting your signature below it and signing it off, well, letting the board do that. So, yeah, I think, you know, what I want to say here, basically, is don't create a lot of plans and then do a like annual planning session for three days. And then you think after those three days, you know, everything is done and dusted. All of this happens. All of this needs to happen beforehand. People need to come very well prepared. We actually have a cheat sheet on this where we outline a lot of different sort of like workshop formats that you can try out. So give that a go under at reflow.com/resources. I think that would be extremely useful to take a look at after this, after this episode. And then, I think you should be good to go to make this a success. Yeah. I mean, I think right like the outcome, as you alluded, is obviously the board approval, but then the real work starts in terms of apprising the plan. I think one thing that always comes up also within that plan is the territory design, right, like doing a review and maybe it's some adjustments to your existing territory grouping. We had Jeremy, Donovan, on the show to talk about that episode. 42 highly recommended and won't go deep into it now because I think it's a bigger topic. These are small time. But yeah, I mean, look, I think check out the cheat sheet. And thanks for listening. I hope this has helped for all the best for, you know, wrapping up your plan, wrapping up Q4 and then all the best for starting next year. We'll be back with some guests soon. And again, thanks for listening. Yeah. Thank you so much. Thank you for listening to the Revhub's lab podcast. If you enjoyed this episode and would like to support us, share it with a Revhub's friend or truppos of five-star rating right now. And if you have feedback, questions or guest ideas, just send a message to Janis or me on LinkedIn. Thank you and see you next time.