Setting Primary Revenue Targets

by Robert Miller and Stephen E. Heiman with Tad Tuleja

We have often voiced our objections to traditional quantitative "goals" ("We're going to boost fall quarter revenues by 7.5%"), and have suggested they be replaced by more qualitative ones ("We're going to be seen by this account as delivering more than we promise"). We emphasize the qualitative dimension of goals because quality, not quantity, breeds success. Every successful company we've ever encountered got that way by respecting one fact: It's the sound management of quality relationships, over time, that ultimately leads to a healthy bottom line.

But "ultimately" can take a long time. In the meantime, the troops are hungry, the phone bill is due and the price of oil just went up again. While your company is improving its relationship with its customers, while you're defining and working toward your goals, you've got to continue meeting overhead costs and your payroll. You do that with revenue. And—in spite of what the leveraged buyout wizards might have you believe—the best source of revenue is still your accounts. Most of all, your critical large accounts.

Because we recognize that businesses run on revenue, we counsel our clients, when they're setting strategies, to define one particular goal that is quantifiable and that hooks up very directly to the revenue stream. We call this goal the Primary Revenue Target.

Most strategic goals might be described as "soft" in that they don't have a "hard data" component, such as, "We're going to be seen as providing cutting-edge research data to their engineering department." That's clear enough, and quite specific, but there are no numbers involved.

Your Primary Revenue Target, on the other hand, is defined expressly in terms of numbers. A uniquely "hard" goal, it states precisely how much of a given product or service you expect to place with your targeted account by a given date. Thus, whereas most goals are an indication of an intended position, your Primary Revenue Target is an indication of an intended volume.

For example, the following Primary Revenue Targets were established by accounts teams in some of our workshops:

• The account will buy 150,000 gallons of our Formula TLC by the end of the fiscal year.
• The Engineering Division will accept shipment of 50 gross units of the Favax transformer by July 1st of this year.
• This account will sign for $3.75 million worth of billings by the start of the fall quarter.

Notice that the measures of volume might vary from case to case—you might want to set a Primary Revenue Target for one account in terms of dollar revenue and for another in terms of tonnage shipped—but in every case it's expressed in figures. Your more conservative cipher-jugglers might wrinkle their noses at our concept of goals, but they'll feel right at home with Primary Revenue Targets.

Notice too that the Primary Revenue Target is not exceptional with regard to other major characteristics of your goals. As with other goals, the grammatical emphasis is on what the customer will buy rather than what your company can sell him or her. Even when you're forecasting the revenue stream, thinking with your customer's mind is in order.

Adapted from Successful Large Account Management
Robert Miller and Stephen E. Heiman with Tad Tuleja © 1991 by Miller Heiman, Inc., All rights reserved with permission of Warner Books. Inc.