15-Minute Summary of Predictable Revenue

Written by our co-founder Aaron Ross and Marylou Tyler, Predictable Revenue has been heralded as “The Sales Bible of Silicon Valley”. The book outlines a step-by-step process to create repeatable, scalable, and predictable revenue–without relying solely on cold calls.

If you haven’t had a chance to read it yet, or it’s been a while and you need a refresh, we’ve summarized the key principles below. This 15-minute summary will give you an overview of the methodology that helped Aaron generate $100 million in recurring revenue during his time at Salesforce.com.

The biggest myth in outbound sales

According to the book, the most common misunderstood belief in outbound sales is that to sell more, you need more salespeople. In reality, salespeople aren’t responsible for driving revenue. Lead generation is what drives growth; your salespeople are simply a conduit for that growth. Give them a better process for prospecting, and you’ll be well on your way to predictable revenue. 

The better your lead generation is, the more deals your salespeople have to close. But without a consistent flow of new leads, it’s impossible to generate predictable revenue.

The problem with traditional outbound sales development 

The first step to outbound sales success is creating a pipeline of highly qualified leads. The best way to do this is through what Aaron termed “Cold Calling 2.0”, an outbound sales process that focuses consistently on generating leads through different forms of prospecting. 

There are three key differences between this method and traditional sales development outreach:

• No cold calls

The reason why cold calls have a low conversion rate is that sales development reps are calling prospects who don’t know them and aren’t expecting their call. It’s rarely an enjoyable experience on either end of the conversation.

According to the Predictable Revenue methodology, one of the major problems with this technique is that sales reps waste valuable time searching for the right person to talk to instead of qualifying the prospect or closing a deal.

Instead, the book recommends sending cold emails with the goal of receiving a referral to the key decision-maker. If the prospect receives a referral from a trusted source and agrees to speak with you, they’ll be expecting your call and are more likely to be a qualified lead.

• Focus on results

Once you generate a referral through email outreach, the next step is to set up a “qualification call” with the prospect to see if there’s a mutual fit. This emphasis on lead qualification is fundamentally different from the traditional “always be closing” mentality. 

Tracking the number of qualification calls will also give you a more accurate picture of your outbound sales pipeline, as opposed to the number of cold calls made per day, which may or may not correspond to deals closed.

• Always have a process

Cold Calling 2.0 is systematic and process-driven. Your outbound sales team should follow a set framework for generating leads, qualifying them, and closing the deal. This consistency ensures sustainable and predictable revenue. 

A better outbound sales process

Cold Calling 2.0 is part of a five-step process for successful sales development:

1. Build your ideal customer profile (ICP): Define the key criteria of your ICP so you can focus your efforts on the most qualified prospects. Outbound targets with larger deal sizes provide a larger ROI for sales teams. 
2. Build your list: Target prospects who fit your ICP and can refer you to decision-makers.
3. Run outbound email campaigns: The goal here is to receive an internal referral. Start by sending 50-100 prospecting emails per day, aiming for a 10% response rate.
4. Sell the dream: On the call, you first need to ask questions to determine if the prospect is a good fit. If they are, then you can begin to paint a picture of how to solve their business problem. 
5. Pass the baton: Once you have an interested and qualified lead, they can be passed to an account executive (AE) to nurture the relationship and close the deal.

Building your outbound sales team

In the Predictable Revenue methodology, specialization is key to outbound sales success. Instead of having your sales development reps handle the entire process (prospecting, qualifying, and closing), split your team into three distinct categories: 

• Sales Development Reps (SDRs)

Your sales development team is responsible for cold outreach. The only goal of your SDRs should be to generate new leads from cold or inactive accounts, determine if the prospect is a good fit, then hand them off to an account executive.

• Market Response Reps (MRRs)

MRRs handle the qualification of inbound leads. Your organization may have leads coming from inbound marketing campaigns, your website, or word-of-mouth programs. Those prospects need to be qualified before they’re sent on to an AE.

• Account Executives (AEs)

AEs are the only quota-carrying salesperson. Their sole purpose is to close the pre-qualified opportunities that SDRs and MRRs pass to them. AEs focus on small targeted lists of accounts, develop referrals and work with your existing customer base.

Each of these roles requires different skill sets, and it’s unrealistic to expect your salespeople to constantly switch between these tasks. Instead, hire and train salespeople for one role only. Make sure none of your AEs are prospecting and none of your SDRs are closing.

How to be a better sales development leader

An effective sales development team requires strong leadership. Sales Managers, CEOs, and VPs all need to understand the lead generation process if they want their company to earn predictable revenue. 

Executives should educate themselves on best practices for hiring, training, and retaining salespeople, while Sales Managers need to play an active role in encouraging and supporting their team. Here are Predictable Revenue’s top tips for sales leaders:

1. Hire carefully: It’s always better to hire for talent and initiative than experience. Sales techniques can be taught, and fast-learning, hungry salespeople will often outperform their more experienced counterparts.
2. Emphasize results, but make the process flexible: Give your team advice and guidance, but let them find their own way.
3. Remove obstacles: Outline clear frameworks for your team to follow, and make sure everyone understands how the sales compensation and processes function.
4. Inspire your people: Get to know your team and help them maximize their full potential. Compliment a job well done and keep them on track to achieve their goals. The more you work for your team, the more they are willing to work for you.
5. Regular reflection: Return to these steps and principles over time to see how they’re working and where you can improve.

Generating predictable revenue long term

Predictable Revenue provides a new framework for outbound sales. The core principles of lead generation, Cold Calling 2.0, specialization, and leadership have helped many companies achieve scalable and repeatable revenue. 

You can learn more about how the Predictable Revenue Sales Development Methodology, which we’ve evolved from the original book. And if your company is looking to achieve sustainable growth, click here to learn about our Coaching and Consulting or Outsourced SDR Services.