Let's put down the Magic 8 Ball and get real about the new business budget

firm operations sales Nov 27, 2018

Who produced 20% of your practice revenue this year? Do you have a high degree of confidence that they’ll repeat or was that “accidental” revenue? If production isn’t going to come from them, who will deliver? Benefits leadership is tough enough; let's get real about new business and remove some mystery from 2019. What resources will your new clients leverage? It varies widely based on size, industry and funding mechanisms, making those details in a pipeline invaluable.

In many firms, benefit leaders are responsible for practice investments without reliable insights into producer activity. I think we’ve outgrown leveraging historical production and a Magic 8 Ball to “guess-ti-budget” new business revenue and then holding our breath to see if it materializes. As I’ve written previously here, I'm empathetic to the challenges in our business. I'm concurrently optimistic and believe it's possible to tactically prioritize adjustments to our businesses to minimize stress and accelerate growth.

Most leaders have inherited legacy "approaches" to sales and there's often inconsistency within the firm. We can get real about meeting our new business budget, though - whether we crafted it with our magical Practice Unicorn or someone else developed it for us.

When someone tells you to get real, they want you to get a reality check and to stop behaving as though you're living in a fantasy world. 

We can't reverse engineer a plan to aggressively achieve our growth targets if we don't dissect them and get real about obstacles and competitive advantages. A sales strategy with measurement and accountability can then be developed.

Many firms use Reagan Consulting's Sales Velocity metric as a barometer of sales culture and Tom Doran does a great job in this recent article explaining their perspective and formula. I’m a fan of this as one of the metrics benefits leadership should have on the dashboard, but suggest further refinement to get to the truth in your planning process.  

Whether you’re calculating Sales Velocity for the practice, an office or an individual producer, identify new business outliers (much higher than average revenue or unlikely to ever repeat) for an adjusted Sales Velocity metric. With the long sales cycle and lag in booked EB revenue, I think it's critical to concurrently study the pipeline and activities that are leading indicators of a sales culture before prematurely declaring victory.

Booked revenue is a lagging performance indicator and in a dynamic environment, you might have some blind spots if you’re entering 2019 making assumptions and without an action plan. There’s a reason we all know this phrase -- “Past Performance Is Not An Indicator Of Future Results.” If this feels daunting based on the size and complexity of your firm, let's get started with a strategy for 20% of your producers or a few small offices that combined produce 20% of your EB revenue.

Pause and examine your 2019 New Business Budget and Sales Plan through this lens. You might be surprised by what you see (or don't see).

Let's get started. 

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