Improving Sales Alignment and Accountability for Consulting Revenues
Situation
The consulting practice of an information services provider was tasked with returning to growth in the new fiscal year. A series of recent restructurings had shaken morale, reduced headcount, and led to new sales leadership and turnover of almost half the sales force. The new annual revenue target set by Finance was aggressive, but achievable with a fast start to the year.
Sales metrics and incentives focused on annual signings. As a result, sellers concentrated on larger TCV (total contract value) opportunities which were expected to close later in the year as clients needed to spend their budgets. This approach led to heavy discounting and giveaway bundles. In addition to prolonged sales cycles and margin compression, these engagements involved multiple delivery milestones over the contract term. This could significantly reduce in-period revenue recognition. A $1M contract signed in December might contribute less in-year revenue than a $25K contract signed in June.
To de-risk annual target attainment, and also to maintain credibility with an already skeptical Finance team, consulting leadership needed a way to drive earlier sales with more pricing discipline.
Project
To drive alignment between Sales and the business, JCY Advisors developed a scenario-based full-year monthly forecast model showing expected revenue, as well as identifying the minimum sales pipeline needed at each period to support downstream revenue.
Analyzed historical sales and delivery metrics to establish model conversion rates and cycle times for both sales funnel and project delivery.
Established a full-year revenue target based on upon Finance guidance and including a buffer.
Estimated project backlog and carryover sales pipeline.
Evaluated historical productivity metrics—win/loss, pipeline conversion and signings for sellers, and project delivery by revenue for delivery managers—to confirm that the model was achievable.
Results
As a direct result of the forecast model, the consulting team was able to hold the sales team accountable for generating and closing sufficient pipeline to drive overall revenue target attainment on a monthly basis. This led to identification and quantification of a significant pipeline gap early in the first quarter. Using the model, it was possible to initiate sector-specific campaigns and promotions to accelerate pipeline formation that returned the business to its ‘glidepath’ early in the fiscal year.
An additional benefit was the quantitative ability to identify over- and underperforming sellers and products, which could be used to mine best practices, provide additional coaching and support, and prioritize offers with the greatest chance of converting into sales. This was valuable to multiple functions, including Sales, Consulting, Marketing, and Product.