Annual Planning 2020-2021: Achieving Growth in Uncertain Times (Part 1)
Adapting to a new normal using emerging growth frameworks
The Alexander Group’s recent Life Sciences & Analytical Instruments Commercial Trends Research indicates that leaders should now consider four revenue management priorities:
- Create a profitable growth engine by correctly balancing field resources with channel and digital sales
- Align marketing, sales and service to high growth end markets and product categories
- Adopt Customer Success principles and models that drive account growth and build customer loyalty
- Invest in commercial operations resources to deliver scale and visibility to commercial education
In our recent Life Sciences and Analytical Instruments Annual Planning Virtual Roundtable, we focused on challenges in this sector. Commercial leaders from notable companies in the industry participated in the roundtable.
While these four areas are key components of their annual plan, our roundtable participants shared their thoughts on two additional areas that affect their 2020 and 2021 planning as they continue to deal with historically disruptive events: The return of “normal” and revenue modeling.
A New Time Frame for a New Normal
COVID-19 has put considerable pressure on commercial models to create nimble strategies that help revenue leaders quickly adapt to new realities.
In the roundtable, we asked participants how COVID-19 is affecting their annual planning process and asked when they anticipate returning to “normal.”
Our previous survey of roundtable participants in May 2020 indicated a “return to normal” during Q2 or Q3 of 2020 with a median revenue impact of about 10%. However, perceptions have markedly changed within three months, with some companies now predicting that they will never return to “normal.”
As the effects of the pandemic continue, roundtable participants are adjusting their expectations to a longer recovery time frame. Over half of our roundtable participants (53%) believe they will return to their pre-pandemic model during the first half of 2021. However, one quarter (27%), believe they will never recover to previous levels and that a new commercial model may be required.
“It’s a completely different playbook,” described one participant. High uncertainty, coupled with the desire to wait for better information, hampers leaders from deciding if their existing commercial model will still be viable. Those companies relying on historical growth to justify commercial model investments are significantly challenged. With 2020 looking like a year of decline for many, and 2021 filled with uncertainty, annual planning is complex.
The path forward will be based on analyzing multiple scenarios and time horizons that allow firms to adapt to changing market factors. As one leader said, “It’s almost two planning processes. First, we need to determine what will recover next year and when. Secondly, we need to understand what will excel – or not – for the long term.”
Remote work environments create additional challenges as leaders virtually connect with their workforce and industry peers for insights. In previous years, the planning process was influenced by informal, face-to-face networking with colleagues. Future models must rely on digital and informal data points for planning models.
Commercial Frameworks for Revenue Modeling
Even in uncertain times, revenue modeling requires a structured approach that uses a consistent strategy, structured operational approach, and clear management direction. The Alexander Group Revenue Growth Model™ provides a blueprint for organizations to guide their annual planning cycles:
- Strategy that identifies revenue segments, value propositions and clear revenue motions.
- Structure that includes channel coverage, organizational and job design, and sizing and deployment.
- Management that includes required talent, skills and supervision; productivity and quota metrics; and sales compensation design.
Revenue Leadership guides the planning process, but must be supported by operations, processes and digital technologies that enable and support the framework.
The virtual roundtable participants are using this Revenue Growth Model, as shown by nearly half (47%) who are investing in strategic revenue segments, followed by increased investment in Structure areas that include channel coverage and sizing and deployment.
We found that industry segments associated with COVID-19 are rapidly exploding and require additional capacity for the short term. Segments not associated with COVID-19 research, testing or manufacturing are being closely monitored for growth.
As one participant shared regarding sales deployment, “We are not planning for the worst when it comes to our selling organization. We are trying to optimize them and set them up for success when there is less face-to-face engagement.” These firms are monitoring high growth areas to remain agile and address evolving needs as they move into 2021. Pre-sales activities are up as companies wait for customers to “pull the trigger” on future sales. For example, some technical call centers are busy providing demos, answering questions and providing support for future buyers, a valuable investment for future sales.
Over 80% of participants are using complex hybrid commercial revenue growth models that capture growth across customer segments, product lines and geographies. Using these models in an uncertain environment is proving to be challenging as they require careful planning, piloting and scaling support. As one participant noted, “Developing these new models without creating even more disruption is the real trick.”
Participate in the Life Sciences and Analytical Instruments Commercial Trends Research Study
For more information on this topic or to participate in Alexander Group’s Life Sciences and Analytical Instruments Commercial Trends Research, please contact a program manager. All participants will receive a full, complimentary report. You can also sign up online on our website.