While it’s a mistake to forget seasonality and assume a linear progression of revenue generation throughout the year, dividing planned activities by days, weeks, or months helps to generate a ballpark figure for resource allocation.
You can map your targets against your current resources to better understand how far current team sizes and budget will get you towards your revenue goal.
Mapping ACME’s Resource Allocation
As seen in the chart above, to hit its $25 million goal, ACME must book 3,333 BDR meetings. The team mapped this against approximately 260 business days in a year (in the U.S.) to reveal a target of almost 13 meetings a day.
ACME then examined past BDR performance and workload to assess whether its current headcount of two full-time BDRs could handle the volume, or if it was time to grow the team. ACME applied the same logic across its revenue team to estimate headcount. Could three AEs cover five initial calls a day, plus many follow-up conversations with buyers?
Increasing the revenue target by 66% was always going to require investment. But by breaking down the numbers and understanding how quickly engaged prospects convert into qualified sales opportunities, ACME could start to map out how much of an investment it needed to make in people, and where to make it.
Calculating Required Marketing Budget
Alongside headcount, your marketing team should look at how much budget you used to reach your previous goals. You can then divide your budget by a key measurement metric, e.g. a 6QA or SQL, to understand your marketing spend to reach this goal.
This is an important step to tie marketing back to revenue and helps you project future outputs in light of targets or budgetary changes. Here’s how it looked for ACME.
ACME’s Marketing Performance
With last year’s budget of $1 million, Acme’s marketing team generated 2,700 6QAs (or alternately, SQLs). To get the cost per 6QA, they divided the budget by the number of 6QAs generated, equalling $370. (6QA could be replaced by another metric of choice, using the same formula.)
So what would happen as ACME attempted to ramp up its revenue? To plan for this year’s budget, ACME multiplied the cost per 6QA by the new target of 4,432, giving a proposed budget of close to $1,640,000.
By also examining the cost per channel from last year, ACME’s CMO then mapped out the budget by channel to assess whether they had the resources to hit the new targets.
The resource allocation exercise unsurprisingly showed ACME would need more investment to hit its higher targets, so the revenue team set about building a ramp-up plan to reach its new goals.