(As appeared in Inc.)
How to identify your MVR and quickly develop a team to target it.
Founders and VC or private equity (PE) investors have instincts about how to create revenue. But a dynamic occurs when companies scale, where a process mindset—or the process-minded members of your growing team—trim out priceless experimentation.
You throw around terms like ARR (annual recurring revenue) or MRR (monthly recurring revenue) because your team is focused on efficient scaling. You probably study things like the Startup Playbook published on Inc. by Vishal Sunak. Now that the team understands recurring revenue, do they know what makes up your most valuable revenue (MVR)?
Efficient scale requires process—but be careful
In the beginning, your MVR was simple. You wanted referenceable accounts that pay on time or customers whose needs (and revenue) recur.
As your company grew more complex, you and your leaders proceduralized sales and marketing. You now align marketing messages and assets, distribution channels, sales processes, and tools that move customers from consideration to purchase.
You know you have a funnel graphic with prospects at the top, some contacts moving through the middle, and a select few converting at the bottom. Unfortunately, it’s not that linear. And linear thinking with too much of a process mindset can stop the kind of experimentation and “divining” that turned you into a high-growth business.
What is your most valuable revenue?
Organizations like Gartner can help you define your ideal customer profile (ICP). But don’t confuse that exercise with designing a revenue plan. You need to understand your value to customers and then match that with a customer’s value to your organization.
Right now, in 2023, the most critical revenue for some businesses is:
- Time-bound revenue: Accounts that will close and book before fiscal year-end 2023.
- Risk-taking revenue: Early adopters that will try your new features, such as an AI option.
- Operational-minded revenue: Fewer, bigger sales that you can onboard/implement with a smaller team, particularly if you’re tight on resources.
- Fiscal-aligned revenue: If you’ve been over-reliant on large slow-paying companies, you may want faster-moving income.
It’s not the revenue itself that’s most important. What makes it valuable is what you know about your business needs and how that informs your revenue focus. You now need the team to know and work to prioritize, target, and convert that revenue.
Setting up your MVR dream team
In the beginning, you were the dream team. You envisioned things people needed, figured out how to get paid for them, and found more engagements and challenges to monetize. Now you need a team pulled from the key account group or your top-performing sellers for the dream team.
Choose wisely. Newer team members are just getting used to consistent scripts and methods for working opportunities. Some of your team can’t turn the car around fast enough to be excited by a new imperative, an MVR pilot for the third and fourth quarter. For this mission, you need the MVR Dream Team.
Together, you’ll brainstorm a hypothesis about how hard (or easy) it will be to target and convert a particularly valuable slice of business. What will the experiment be worth? Be ready to offer incentives for “X amount in sales” or “Y number of conversions.”
Strike fast and never stop
What tools (script, deck, banner ad, content on a landing page, email, etc.) can you have ready in two weeks? Who can start advertising, contacting, meeting, emailing, or calling within two weeks? There’s no time for a 3-month process. That puts you into the holiday season, and you’ve lost the attention of your targets.
Remember, you are not repositioning the company or stopping your other sales and marketing efforts. Everyone else keeps following their plan. Separate from them, your MVR team is working rapidly to activate based on your revenue and growth hunches.
Consider keeping a dream team alive when the economy returns from its slump. You may choose different players based on their performance, but having an MVR discipline and team is a smart way to keep the entrepreneur’s dream—and an upward-trending revenue curve—alive.
We’ll end with a challenge for you: How much MVR revenue can you add on top of your current sales projection before the end of the year?