Creating Success for 2023 Amid Uncertainty
2023 Revenue Planning Insights
Media firms are facing challenging market conditions, including rising inflation impacting consumer purchasing power, the war in Ukraine, supply chain pressures and global monetary restrictions. However, companies must start planning for the 2023 sales cycle. How can media firms change their tactics to drive revenue in a business environment experiencing widespread economic contraction?
Make Profitability the Priority
Companies keep a close eye on profitability, efficiently expanding sales while controlling costs. Alexander Group’s research shows that top-line revenue grew faster from 2018 to 2021 than in previous years, and firms spent less to grow revenue. In addition, and even more importantly, 60% of media firms anticipate increased focus on profitability for 2023.
Leading organizations are putting intense scrutiny on retaining revenue. 63% of media firms anticipate having a renewed focus on revenue retention, cross-selling, upselling and account management. According to Boostr’s Media Ad Sales Trends report, net revenue retention (NRR) and revenue growth go hand-in-hand. NRR calculates the percentage of revenue retained from existing customers over a specific time, which provides a measure of renewability and reoccurrence of revenue. NRR rate for media firms averages around 106%; however, leading firms see rates as high as 116%.
Efficiency is a crucial driver of profitability. Media companies are looking for more imaginative uses for their sales force, including horizontal integration of capacities, right-sizing and increased organizational efficiencies.
Establish Sales Productivity Metrics
Going into times of market uncertainty put an even greater emphasis on the productivity metrics that matter. Establishing a baseline of benchmarks can provide a foundation of positive or negative movement on these metrics. Cost of acquisition, NRR and revenue-to-expense ratios are all leading indicators.
Compensation can also be used as a driver of productivity. Make sure to review the guiding principles on your expected performance distribution (how many sellers are below, at and above goal). Ensure plan mechanics, policies and terms are prepared for a potentially volatile year. The most important part of the plan is to make sure the strategic components are aligned with areas of expected growth.
Upgrade Your Sales Processes
In times of uncertainty, all organizations must help sellers focus on the right buyers, employing a straightforward process that improves selling efficiency. Sellers can flounder if they don’t know accounts, targets, key buyers and levels of influence.
Media firms should embrace the fact that the buyer journey has changed, and sales motions must evolve to reflect new realities. People—not accounts, make media buying decisions. Individuals inside and outside the organization set, approve and influence media and advertising budgets. In addition, the number of buying entities (BE) involved in the decision are often more than expected.
Media firms must adapt the sales process to target the individuals who make media buying decisions. To achieve this, successful companies frequently use a roadmap for sellers that alleviates uncertainty and sets performance expectations. This roadmap includes:
- Account archetype: Describes at what level and how the account makes media strategy and buying decisions
- Identify buying entities: Lists all BEs, including white space entities and those currently penetrated
- Calculate TAM: Estimate the total addressable market (TAM) and share of wallet to discover the media spend potential, by BE
- Identify contacts: Map all points of contact within each BE and agency, classifying contacts by their level of buying influence
- Launch and iterate: Communicate the roadmap, enabling sales teams to compare and refresh account data every six months
For example, Alexander Group used this process with a recent client to define the actual number of BEs and contacts, which turned out to be over 3X more than expected. In addition, TAM was 238% larger than previously estimated. This process helped our client to completely rethink how they used AEs and CSMs to generate revenue from their existing accounts by optimizing existing resources.
People are your most valuable asset. Developing an inclusive approach with transparent compensation, stated performance opportunities, and career mobility will help firms attract, retain and grow their workforce, even in the most uncertain of times.
Media firms report a 20%-25% increase in account manager total pay (due primarily to industry poaching) and 10%-20% turnover (mostly in post-sales roles). These labor cost increases are hitting the bottom line hard. For 2023, media companies are making it a top priority to keep their sales teams happy.
One of the most successful and leading practices is designing and implementing a career management framework. Cutting-edge organizations are developing career programs that provide thoughtful and non-traditional pathways that are aligned to complimentary skill sets. These internal pathways can be used to retain high performers and provide a new trajectory for people that feel they have “stalled” in their current careers.
Recent Alexander Group research indicates that certain cultural elements are becoming more important for driving employee satisfaction and retention. Highly engaged employees are much more productive. For example, employees are increasingly attracted to firms that embody DEI principles. DEI requires leadership to honestly assess the current state of the comp program, identify gaps and take appropriate action to correct pay inequities.
Not surprisingly, leading media firms that have developed career mobility programs and pathways have seen a positive effect on profitability and productivity.
Do What Successful Companies Do
With current economic uncertainty, what will you do to grow revenue, increase profitability, improve processes and build a market-competitive workforce?
The answer lies in looking at what successful companies have done in the past to achieve consistent profitability, improve productivity, establish processes and support their people. These companies endure leadership.
The critical difference is that these organizations invested in their people and processes during times of uncertainty. They combined a long-term vision, sustained operational improvement and invested in their people to execute their organization’s tenets.
Economic hardship requires more significant focus, not less. Keeping your sights on 2023 and beyond is the key to overcoming uncertainty. Growth is not illusive, as successful companies show, but it will require commitment, planning and investing in the right resources to enable continued success.
Alexander Group can help you create a successful strategy to win in the new fiscal year. Contact an Alexander Group Media Sales practice lead today to learn more.