Bottoms-Up vs. Top-Down: The Forecast Fight No One Wants to Have

I think a lot of people just go into like, "I want more top of funnel." It's like, great, you want more top of funnel, but to get more top of funnel, go hire more STRs, for example. That's their mindset.

Okay, but to go get more STRs, now you got to think: Do I have the right job description? Do I have the right onboarding process? Do they understand what the value proposition is? There's a lot of other things than just hiring people.

All right, dude. Here's the question: You're just hired. You're the CRO. It's a $25 million company. You uncover that there's three years of CRM data. You have the board down your throat saying, "We got to have a forecast in a week. We have our quarterly board meeting. Got to have a forecast. And it's got to be right because your job depends on it." Where the hell do you start, dude? Because I know you've been there.

I think there's two things. One is I need to really figure out from the CEO or the founder, whoever it is, what number they actually presented to the board and how they presented it and what those caveats would be. And then what I would do is I would look through the data to get a level set on kind of where we stand today. And then I would say to the CEO, we would have to build out a plan together to say, I know you presented this to the board. This is not really what we need to do. We probably need to recast this number. And then what I would do is probably use some kind of AI technology like a Claud to go through the CRM, find out where some of the real data is. And while I could give a draft pipeline a number, I would put it with a caveat like, "I've only been here for a week. We need to figure out exactly what that number is. We probably haven't done a bottoms-up model like what is the actual number," and try to find out from the board why that number is so important to them.

So at that conversation with the CEO, there must be some reason why we've given this unrealistic number to the sales organization. Once having that conversation with the CEO, I would actually put the board on notice a little bit and say, "Why did you guys..."

Whoa, whoa, whoa, whoa. Let me get this straight. You're there for a week and you're going to put the board on notice?

There's a reason why they hired me as a CRO because they know that they know what they're doing is not realistic. So we all need to get on the same page. Like, if I just take their number and say, "Okay, that's realistic," I have no clue or understanding of what that is if it's really realistic. So what I would do is I wouldn't push on though because every board, you've been there, I've been there. This is the number we have to hit to get that. And you talk about a lot, you know, you don't want to be the first, you don't want to be the second. Arguably, you want to be the third. But I think this is part of why. So I like where you're going where it's they hired you for a reason, but how do you push back without making your 18-month tenure 18 days?

Well, I think you just got to understand the why. Like, why are we doing this? And then if that number is really that important to them and they've cast it to somebody else or they need to sell the company within 24 months, like there's a reason why we have this number, and if they can't come up with a good reason, that's a telling sign.

Why didn't they come up with the reason in your interview process?

Probably because I didn't have enough data points. I probably, like, you need to get through the data. Like, it could be like, fine, you want that number. Well, we have to go hire four or more enterprise reps and we have to ramp them and we have to go through an entire process with them. Like, there's reasons why they want the number, and I've done this to many boards as well. Like, we just go in and we have a conversation and I say, look, we will get as close as you can to the number, but here's the realistic number. Like, here's the pipeline, here's the analysis and capacity. Like, you're coming down from a top-down perspective. Let me give you a bottoms-up perspective and let's come to a middle.

Are they afraid of bottoms-up though? Other than the fact that it makes their whole model go to crap because they realize that they can't achieve what they want with the people that they have?

Yeah, I don't think they're afraid of it. I think they don't understand it. I think they haven't truly digested it. It's just the way they've always done work. So it's like, let's just do a bottom-up. Like, we need to grow 20%. So put 20% on top of the number and that's the number without making any differences. So there's broken things. It could be ideal customer profiles. It could be buying personas. Like, all these things need to be evaluated because you brought me in for a reason. What was happening wasn't working. So why are we just going to take what's not working? That's called insanity. Trying to do the same thing over and over again and expecting a different result.

I think we would have that conversation whether they would like it or not. Like, I would think I would have enough clout with the board on the first meeting after a week to be like, this is where we're going, and I wouldn't take the job, by the way, if the CEO didn't have my back. Like, if the CEO didn't have my back and was like, "I trust in you and I believe in you," like, why am I there?

Agreed. All right, let's shift gears. One of the things I love about you most is one of the things I hate about you most, and it is your background in coding. Prior to entering the sales world, prior to entering the SE world, little fun fact that most people don't know, you actually coded. You developed, and I think I'm grateful for it because of all the stuff we're building out, you know, with everything that's happening to AI. But I think it makes you much more analytical. One of the things that you've really taught me is the answer of, "I need to sleep on it. I need to think about it." And I think that's very much the coder in you.

But what if coding taught you about go-to-market that most go-to-market leaders, even myself, do just likely will never learn?

I think it's understanding that you need to build the proper spec and the information you want to actually deliver. So there's a plan that you need to build out. In that plan are a series of steps. Underneath those series of steps are like really tactical things that you have to do. And I think a lot of people just go into like, "I want more top of funnel," and it's like, great, you want more top of funnel. But to get more top of funnel, and that's a great example, so to get more top of funnel, go hire more STRs, for example. That's their mindset. Okay, but to go get more STRs, now you got to think, do I have the right job description? Do I have the right onboarding process? Do they understand what the value proposition is? Like, there's a lot of other things and just hiring new people. So it's like that domino effect is what you need to do.

I remember the first time I was coding and I was in a lab and I was typing it out and like "Hello World" came up on the screen. I'm like, that is the coolest thing. And I feel that same giddiness now with AI. But in the AI world and in this whole code world, you as a business person actually have way more control over what you really mean because you get instant feedback in the development space or even in the go-to-market space.

Let's talk about that for a second. If you're like, "We should change up our value proposition," and like, so you start changing your value proposition, then you're changing your email content and your outreach and your website. Like, you don't get feedback for like three months, and people don't want to wait 90 days to get feedback. Like, they want feedback in like 90 seconds. And so that's what actually the new AI world gives business people is the ability to have that instant feedback to understand, like, "Oh, I know I said that, but I didn't mean that."

So coding is very black and white, is ones and zeros. Everything else becomes shades of gray. And we need to get away from shades of gray and get very specific on how we're doing things. It's not like the ones and zeros, but it's also not these shades of gray where you just say, "I want more top of funnel." You have to get very specific on the goals you're trying to accomplish.

I find that people don't set goals very well. It's like, what do you want to accomplish? And we do this all the time in our go-to-market sprints. It's like, what are we accomplishing in the next 30 days? How many times did we set a goal in a sprint in the beginning of the month and at the end of the month we're in a different world on the sprint? Like, we're deviating. We're going to other places. You find different problems. But in those different problems, you have to identify the root cause of those problems. Because if you don't get to the root cause, you're solving for something.

That won't solve your problem. Let's talk a little bit about root cause and data and solving the problems. So we have so much data at our fingertips, you know, more than we've ever had, right? You have your CRM data, your RevOps data, your AI tools data. What are people getting fundamentally wrong about how the data should actually work that allows you to make the decisions you really need to make that are going to drive the business forward?

Yeah, that's a really interesting question because we always wanted more data. The problem is the data is not digestible. And we don't really believe all the time in the data, right? So until you get trust in the data, just like you would have trust in a person, you need to have trust in the data. Then what you need to do is be able to get it to a place that's digestible. So the way we're going to present to the board data is completely different than the way I'm going to present to my team, which is completely different than how I'm going to present it to the marketing group, because everyone just has a different way. So it could be the same data, but you have to make it digestible for the organizations that you're building it for.

How do you do that though? How does a go-to market leader who is not a data expert—and maybe that's the problem, that they're not the data expert—but how does that go-to-market leader make the data digestible? Can you yourself, or do you need an AI tool?

I think, depending on where you are in your cycle of revenue, you really need a RevOps person that can find where all this data is. The problem isn't the data. The problem is: are you getting the right data in the right place that could be put into a world where you can digest it as a revenue leader to then articulate it out to the board, to the team, to your colleagues and peers?

So if you're getting to $5 million in ARR, if you don't have a RevOps person, you're failing. Like, the first $5 million, it doesn't really matter. You're trying to get revenue, you're trying to get top of funnel. You probably have the wrong ICP. You're just throwing things against the wall and seeing what sticks, right? But once you hit like $5 million, now you should be having your systems in place. You should have your data in place. There should be layers of things that you're building the foundation on because prior to that, if we go back to the go-to-market gap, it's complete chaos. So you got to stabilize it, and then you got to build the foundations. And in that foundation building is the world of revenue operations. If I'm running a company, $5 million is the right place to consider, like four or five, because now you got to build the structure and the foundation pieces.

What does a broken revenue org actually feel like from the inside? So you've been there, I've been there. We have worked at companies that we got sold to, or we're investors. We walk in and we're like, "Holy crap, we got a problem." What's going through your head other than "How the hell do I get out of here?"

I think if the CEO understands that and is okay with all of the modifications and changes that need to happen, I think it's like a level-set conversation on like, "Okay, we talked about this during the interview process, but here's the reality of what's happening." And it happens to us as well. Like we come in there, we've been told, "Oh, there's tons of pipeline. There's tons of opportunity." And then we go do a pipeline analysis. We do a pipeline analysis and it's like, "Okay, that deal—no one's touched that deal in six months." You talk to the rep and the rep's like, "That's not happening." And it's like, "Why is it in the pipeline?" So you go through that entire piece and there's so much. What about companies who count revenue from customers that have churned but churned mid-contract and we're still counting their ARR? And especially when they're three months out.

I've seen that happen. There's some interesting stuff that people are doing. But it goes back to the question of like getting the organization. It feels sticky. It feels like you're in mud. Like you can't make any movements and it feels like everyone's got a political landmine that they're trying to lay for you, and it's very hard to make any trajectory or movement. If you're in that and marketing isn't aligned to you, or marketing has a different revenue goal or perspective than you do, then that is a completely different perspective. And then you're battling with them, and then you're battling potentially now with the CEO, and like everyone's trying to get everyone fired. It's toxic. That's it.

I think in every broken revenue org I've been in, what it feels like—you touched on it with a few words—chaos, silos, infighting, everyone's out for themselves. No one has each other's back. You know, I have worked with marketing leaders where regardless of whose fault it is, it's like, "Listen, we collectively messed up and we collectively need to fix it. It's a go-to-market unit." In these broken orgs, it's like, "Listen, Dale's marketing. This is a lead problem. My sales team is doing everything they need to do." But when these orgs are broken, I find we're seeing certain stages of the customer journey that are being underestimated where it's typically breaking at certain areas. Where do you see that most? And are you able to attribute a cost to that? And a cost doesn't have to be like, "Oh, it cost them $1.2 million," but like even if it's a soft cost so to speak.

I think the biggest cost, especially if we're talking about revenue orgs $5 million and above—if we stick in that motion, it's really fixing the customer success side of the world because that cost is your customer acquisition cost is so high in a lot of these places. Because it's hard to get people in the door, that if you're trying to patch the boat on the backside of it, that will just cost you time, money, reputation. So you're talking about cost. Like all of a sudden you become non-relevant. And then the other thing that I'm feeling, especially right now, is this whole world of the SaaS apocalypse that people are talking about and getting away from seat-based pricing and all of these things that are happening on the SaaS side of the world. I heard a podcast the other day that basically said people are buying SaaS companies at one and a half times revenue because they're going to then convert them into AI-native applications. So like this whole world of seat price is like going out the door. So what is the real cost of not knowing your market, not understanding your ICP, not understanding your GRR? Like these are all things that people are looking at, and there's sharks in the water that are looking for blood.

You just touched on something. You touched on CS, and I think I do agree that CS is where I see a lot of broken things, but I think that starts with the sales to CS handoff. And I think that's where revenue goes to die in a lot of companies. People are calling a handoff isn't a handoff. How can we fix that? Because I would say consistently, certainly across the majority of companies we've worked with and worked for, that's been a problem. What has to be true on both sides to fix that problem?

I think the first thing is we got to get away from this word "handoff" and get to the word "handshake." And in that handshake world, what ends up happening is CS is part of the end of the sales process. So there's overlap that happens, and it's not like "I have a customer now, I'm handing it off to you." The customer doesn't like that. It feels bad for the customer as well. Like, who wants to be handed off? I would much rather, if I was a customer, like my sales rep or not. Well, and even better, like if I didn't like my sales rep, am I not going to like my CS rep? So if you have the CS person—let's call it at the proposal stage—so you're going over a proposal with your client, and you're in the sales world, and you bring in the CS person that would be potentially assigned, like we have to be careful about some of that, but to listen to the proposal and listen to the questions the customer has and understand the problems that the customer is dealing with. Now you start having the handshake of like, "Okay, I was in the meeting. I understand what the proposal is about. I understand the questions that are being asked." And when we close a deal, they've already seen me. They know my name.

I can start talking their language just like we would do at top of the funnel. We try to figure out all the ways we can interact with somebody and understand them and do all the research.

Top of the funnel handoff is broken in most orgs too, right? There's no—I don't ever want to talk to a BDR to have to go through discovery to get approved to then talk to an AE. Like that is the most frustrating experience on the planet.

Sure, I totally agree with you. So I think that, yeah, that's a whole different world. And I believe actually where that handoff is dying is actually potentially start with marketing as well. Like if we're not bringing in the right leads or they're not the right value proposition or we don't have the right impact. So we do a lot of spice interactions and training understanding that impact, and that's the other part on this handshake. The customer success people need to understand what that impact is that we're selling. So if we're selling software at 100 grand, what's the impact that they're going to buy it for at the 100 grand?

So yes, and most customer success people are measured on NPS or renewal rates. I'm a big believer, and I believe you are too, but your views change frequently, so maybe not. But I'm a big believer that CS teams are a revenue function. So if we call our CS team a revenue team and we're doing a handshake and a handoff, what does that scorecard actually look like? What are they measured on that most aren't today? That's not sitting on the founder who's listening to this on their HubSpot dashboard for CS.

I think the biggest one—there's two of them that they should be measured on. One is NRR, which is the expansion revenue that we're running off the baseline, and GRR. So that's the renewal rate. So we talked about that a little bit, but the interesting part about GRR is like you can't ever get over 100. NRR you can get way over 100. So we've had clients that like NRR is at 150, 60, 70%, which is great. So you have this land and expand motion. And now that you know that it's a land expand motion, you can bring that back to sales. Sales can start like putting in a motion of like, "Hey, we don't need to sell $100,000 widgets. We can sell $10,000 widgets and they'll grow to $100,000." So you have that knowledge. So if they have $150,000 NRR, but their GRR is at like 85%, there's a juxtaposition there of like we have a lot of clients that we're expanding, but we have a lot of clients that we're losing as well. So we're not renewing them. And that could be once again a bunch of different things. Could be the product isn't what we described it as. They could be like they weren't the right ICP, sales oversold, customer success isn't doing their job. Like there's so many different interactions in that go to market strategy all the way from marketing to CS. Like you have to weave that strategy all the way across, or like there's got to be a common thread across that whole line. If we're losing people or that we're not renewing them, that information needs to go back to the product team, back to the marketing team, back to the sales team. And I don't think that loop is being closed at all.

I think there's a fundamental CS problem. And that takes me to this week's tip, the Monday morning move, which is fairly simple in my mind. Tell me if you agree or disagree. You're unsure about the aspects in what your CS team is doing and what they're measured on. Look at their calendar. Count how many hours are admin, how many hours are notes, how many hours are check-ins, CRM updates, QBR prep. If it's more than 50%, I don't think you have a CS team. You have a scheduling team. And it's time to fix the systems, the processes, and more important the job description of what the CS team does.

Yes, I 100% agree. And I would add one little other thing. I'm a big believer of having an initial meeting in the beginning of the week and a quick end of meeting at the end of the week. So setting up your week on Monday, having a quick conversation or a Slack message or whatever, and just have them like outline real quickly who they worked on, what client they worked on, what challenges they potentially have, how I can help them make it better. So you can actually get the information from them without having to look at their calendar. You can actually just be like, "What are the things you're working on?" And then you go, "Well, it feels like 20 hours worth of work. Like what happened to their 20 hours of work?" And then like they start spouting off all this other stuff. And like if that becomes a way they are doing their work, either we have a broken process or we have a broken individual. Like we have to fix whatever the problems are.

I like it. All right, I want to get a little spicy. A little spicy.

As always, you're always. I want you to tell me, and not a story you've told me before—tell me about a very specific time where you had to tell a founder something they really didn't want to hear. What was it? And more importantly, what happened?

Yeah, actually it was before I was getting hired, and I basically told this founder like you can't afford what you're trying to get into. Like they only had a couple of million dollars in revenue. They were going like, and I told the person like—

That's your salary.

I said you should have a fractional leader in this space. I don't want to come on full-time. It doesn't make a lot of sense. Like it's not going to work out well.

Is this the company that hired you full-time?

No. No, it was a couple before that. But I said to the founder like, "You have a great product, like all this stuff, but let's get some of the pieces set up properly, then let's go through it." So like, no, my board wants you full-time. I heard the story and I'm like, "Okay." So I end up going in full-time, but the same story three months later—like the pipeline's not there. We're starting to build. We're and I'm putting in all the foundational pieces but like the writing was on the wall. Like they didn't have enough runway to do the job.

Yeah. But because I believed in the product, and when I was talking to the CEO, it's like I had this product, I had this prospect, I have this prospect and we went through, like even in their CRM, I started going through the data. I was like, "Okay, you have it." But then when I went and talked to the sales rep later on, like nothing was happening. They get back to the person like—

Lessons learned on questions to ask in interviews. I mean, you know my story. I fell for a product that was a big giant Figma demo, which is a whole separate conversation.

It was a great Figma demo, though.

It was an amazing Figma demo. That is a whole other story. We could do a whole episode on that alone.

All right, let's get into our uncensored questions. Revenue Reimagined is literally the company name. So talk to me about what's broken about the way revenue actually needs to be reimagined. What are most companies that you see just doing fundamentally wrong?

I'm going to always go back to foundational, foundational, foundational. You got to build the foundational pieces because we're building things on top of shaky foundations and they're wondering why things are not working. And so the—

My whole inspection that just failed.

Exactly. That like you need to have it laid out. And I'm not saying like go into analysis paralysis or like go through—like you have to have quick iterations. The problem is people think like they're solving a problem and they put it on a shelf. It's like you're solving a problem then you reiterate. You're solving a problem then you iterate. Like you got to keep doing it very quickly. So that's the first thing. And then I think the second thing is just tear down all the silos. Like forget about everything you ever known about go to market. It changes every three months. Maybe every month. Maybe every 30 days. Maybe over 20 days. Like things are changing so rapidly. Forget everything you know. Bring in someone that's been in the foxhole and has the bruises and the scars to get it done. But someone that will iterate. Someone that's not going to pull out their old playbook like, "Oh, I ran that when I was at Oracle 10 years ago and this was what worked." It's—

Um, you did work for Oracle, didn't you?

That's why I don't bring out that playbook.

All right, fair enough. All right, I want you to be a little bit vulnerable, Dale. What's the most expensive mistake that you've personally made inside a client's business? Don't give me some lesson. I want a mistake that actually cost someone cold hard cash.

So this is actually before sales. I was working at a company and we had a go live that had to be done. So I was writing some SQL code and I was in their production. It was like 2 o'clock in the morning. I was in their production database and I did a delete on their database and deleted some of their tables in prod.

Oops.

Almost shot myself. I was like what do I do? Thank god I had a really good architect. We had to back up. Like there were some things—

But on that motion, like it was, I was going to hit the enter key, and like as I hit it, I'm like, "Oh, that's not going to be good." And then I saw all the deletes happening on screen.

>> That cost.

>> What's the cost?

>> Can you attribute a cost other than time, effort, and a lot of heartache? And did you tell someone?

>> Yeah, it took us like another five hours. We had to tell somebody because they were selling PCs, and like old time, like so I think they lost a bunch of orders. Like it was in the hundreds of thousands, but it was like 20 years ago.

>> Did you get fired?

>> No.

>> No? Because I only—have you ever been fired?

>> Yep. Yep.

>> Another story for another time. All right, dude. You and I are totally different on camera. We have very different personalities. I often say, and I'm not in one today because it's Florida and it's hot, but I'm the laid-back hoodie guy, the loud, energetic, you know, want me leading a room sales guy. And you certainly can lead a room better than most people that I know. But you are definitely more reserved, more calm, more measured. How different would you say you are when a client is actually bleeding? Like how different are we and what version of you shows up?

>> Interesting question. I think I need to get an action plan together as soon as possible, but I've learned because I'm older that just freaking out doesn't work. And you need to keep your calm head because if you don't keep a calm head, the things that you make decisions on in that moment will be worse in the long run.

>> Would you say that I don't keep a calm head?

>> I think it depends on what it is.

>> Listen, I'll say it. It's my biggest strength and my biggest weakness. I tend to respond immediately and it's my Achilles heel. It's like problem—great, this is what we're going to do to fix it. And to your point, maybe it's right, maybe it's not. Whereas you're the first one who will message me on the side as the customer is telling us the problem saying, "Do not answer."

[laughter]

>> And you're right. Nine times out, I think the snap decisions most of the time get you in trouble. If you don't take a beat to be like, "What's the real question?" It comes back to one of the questions you asked earlier on. You know, how do you handle a certain situation? You kind of have to—like the whole revenue thing, like I'm going to give you a forecast, but why? Like why do you need this forecast so bad? Why do you want that number? Because if I understand the why and I can get on board with it, like we're going to do it. But if you tell me something that makes no sense and I can't do it, like I got to tell you that as well. So like if something's blowing up, like I got to understand what the root cause is of the problem. Then what I need to do is figure out what the action plan is for that problem, and then I'm articulating that back to the customer. But if I'm getting fire coming in and I'm firing back, like I just have learned over my 50 years that isn't the way I am most successful. I have to chew on it, even if it's a few minutes.

>> You got to sleep on it. And that—you can't always do that, by the way.

>> You can always sleep on it. I will say, as much as I tend to be more instant reaction, I've never had a founder, a CEO, a CFO, anyone we work with give us grief if the answer is, "Hey, I need to really think about this and we'll get back to you tomorrow." Because that's like where we should be living. Is like, do I truly understand the problem or am I giving you an answer that is placating you? This is where founders and CEOs and all these people, if they have a bunch of yes people around them—and we've worked with some of these CEOs—like you are destroying your company. You will go to zero faster. If no one can make a decision besides you, you're going to zero.

>> Yeah, making that prediction, I couldn't agree more. That's a wrap for this episode of GTM Uncensored. Founders, CEOs, revenue leaders—if you are accountable to a real number, this is the show for you. Hit the subscribe button. New episode every week on Wednesday. Newsletters drop every Sunday.