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How Revenue Targets Really Work

May 10, 2024
How Revenue Targets Really Work

How do sales and revenue targets actually get set? 

Most SaaS companies aim to follow the T2D3 growth plan which is the industry benchmark for success and how they increase valuation each round. 

The moment they fall off track from T2D3 the company becomes less attractive to investors, so having a plan that achieves T2D3 growth multiples is almost always the objective-- the planning is really just fine tuning the details on how we're going to make that happen. 

T2D3 (Triple 2 Double 3):

Year 1 = Triple Revenue
Year 2 = Triple Revenue
Year 3 = Double Revenue
Year 4 = Double Revenue
Year 5 = Double Revenue

Folks commonly think that setting plan, quota, and targets is based on historical performance or trying to find a number that's achievable but it's almost always about trying to hit T2D3 growth multiples and it's more a matter of figuring out if they have the right people in place to do it. 

It's not a great system for the salespeople, but it's how the investor side of the industry works so the best thing we can do as leaders is always aim for finding a way to hit those numbers because that's the narrative the board needs and if we can't give it to them they find someone who can.

The bigger problem is that it's probably the first time most salespeople and SaaS/tech employees are hearing this.

It should give you perspective and make a lot of things start to make sense.

If you need help with your revenue planning, schedule a consultation and I'll be happy to assist.

Happy Selling,

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