A Guide to Annual Go-to-Market Planning Done Right

Four Steps for Annual Planning

Annual planning is a notoriously taxing exercise on sales and revenue operations that requires significant preparation to ensure next year’s plan properly aligns with your firm’s business strategy and associated financial goals. Alexander Group has identified four key steps for annual go-to-market (GTM) planning. We previously highlighted the foundational framework for how companies should approach annual planning across four key critical success factors:

1. Set Your “North Star”
2. Start Early
3. Plan in Sequence
4. Communicate and Manage Change

While these factors may seem simple and obvious, the reality is that the planning process can be fraught with issues and unforeseen challenges. This article will highlight a few of these hurdles, and how one of Alexander Group’s key high-tech clients overcame these while implementing best practices.

Step 1: Set Your “North Star”

Key stakeholders of this client– including the CEO, CRO, CFO and private equity operating partners – defined the FY24 vision and tops down objectives. The north star was defined as achieving 40%+ year-over-year growth and maintaining <10% year-over-year churn. These goals were made visible and reiterated on an ongoing basis to the design team to ensure FY24 GTM changes allowed the organization to achieve these goals.

A best practice is to define the north star as a “what” versus a “how”; what is the overall outcome that needs to be achieved, not how is that outcome going to be achieved. The how comes into play in step three. Muddying the two can dilute the true objective of the various go-to-market initiatives.

Step 2: Start Early

The key to determining when to start planning is to create a plan that works backwards from the beginning of your fiscal year. Organizations contemplating major GTM transformation for their next fiscal year should ideally complete the market sizing process by the end of Q2 to allow for the second half of the year to develop the plan.

This high-tech client’s work plan was built based on working backwards on these key milestones:

• Fiscal year starts on January 1
• Compensation plans need to launch on January 1
• Board of Directors approval of operating plan December 1
• Headcount capacity sizing and pro-forma business case completed by November 1

Knowing these were non-negotiable deadlines, the client built a staggered work plan to ensure these key milestones were reached in the defined timeframe. However, a best practice is to always build in some reasonable buffer in the work plan. While all the ducks may be in a row, unexpected events – voluntary turnover, layoffs, leadership changes – can create an unforeseen blip in the sequencing of events thus impacting deadlines.

This company had internally completed market sizing at the end of Q2, which allowed for segmentation and coverage design to immediately start at the beginning of Q3. The market sizing data also served as a critical input for capacity sizing, territory design and quota allocation. Be sure to keep in mind “progress, not perfection.” No market sizing exercise is ever going to be bulletproof. There’s no perfect methodology and the use of proxy data and predictive algorithms can lead to directionally accurate market sizing output. In addition, making a “call” on what point in time the sizing data will be based is a crucial best practice. There’s often a sense of needing the most refreshed and up-to-date data to drive the best results, but that often burns a sizable amount of time and typically does not adjust the output significantly.

Step 3: Plan in Sequence

The sequencing of events for the latest round of annual planning for this client closely mirrored the desired approach:

• Size the Market
• Segment the Market
• Determine Coverage (Motions, Jobs, Capacity)
• Design Territories and Quotas
• Update Sales Compensation Plans

Alexander Group’s guidance on segmentation is to make the model only as sophisticated as it needs to be for your phase of growth and development. Segmentation for the client was updated to be based on simple and objective criteria – customer spend, Fortune rank and employee count. But don’t get too “cute” with the segmentation factors. For example, while data around a customer’s propensity to buy sounds like an ideal input for segmentation, if people question how the data was sourced, they’re going to question the segmentation output.

The client made sizable coverage changes to reduce direct rep involvement in small transactional renewals, increase CSM involvement in expansion motions and create a channel-led model in SMB. These coverage changes resulted in updates to the sales compensation plans to align measures, weights and mechanics against new job definitions.

Step 4: Communicate and Manage Change

Alexander Group and this high-tech company knew how important it was to effectively and purposefully message and launch the go-to-market changes. Just as much thought and planning that went into the design also went into implementation and roll-out. A detailed GANTT chart was developed, agreed upon and adopted to ensure that communication did not get left to the wayside. Build the communication and implementation plan backwards from the Sales kickoff and set expectations of what needs to be communicated and by whom for the best results.

This is a practical example of how go-to-market planning, when completed in an orderly, comprehensive fashion, is a powerful tool to orient organizations around a set of growth, profitability and other business objectives.