Strategic Annual Planning: Getting Started

Purpose and Importance of Annual Planning

Annual planning extends beyond a routine fiscal exercise; it is the foundation upon which your company’s strategic direction for the upcoming year is built. At its core, annual planning is a structured process for setting financial targets and identifying the key initiatives—referred to as "strategic programs"—that will propel the business forward. Traditionally, this process is a collaboration between finance (top-down) and key business units (bottom-up).

In this context, Revenue Operations (RevOps) plays a pivotal role, particularly in driving the bottom-up perspective. While the top-down approach from finance provides the essential guideposts—leveraging models and financial forecasts—the bottom-up approach, championed by RevOps, injects practical insights and actionable plans from the ground level. Strategic programs, as identified by RevOps and the respective business units, are the initiatives that empower teams to execute these bottom-up insights, ensuring alignment with the financial levers set out in the plan.

Without a robust bottom-up approach, the annual planning process risks becoming a detached exercise—disconnected from the operational realities of what teams can realistically achieve. Identifying strategic programs is critical as these initiatives provide the concrete steps needed to drive meaningful change in the business. These programs act as the operational blueprint that ensures the organization meets its financial goals.

For instance, if your company is shifting to an upmarket strategy, you will encounter longer sales cycles and extended ramp times to see results. Without clearly defined and resourced strategic programs to support this transition, you risk falling behind your plan. Strategic programs are essential to mitigate the risk of leaving your success to chance.

Implementing Strategic Annual Planning at CaptivateIQ

Establishing a Framework

The success of annual planning at CaptivateIQ hinges on how well strategic programs are integrated into the planning cycle. This requires a framework that not only defines these programs but also aligns them with broader company objectives. Central to this approach is data-driven decision-making. By analyzing data, we can discern what is working in our customer journey and internal processes and identify areas needing improvement. There are two core steps to get started, (1) Establishing your bottom-up framework and (2) aligning your bottom-up with the finance driven top-down. 

1. Establishing your bottom-up framework: A critical aspect of this process is mapping the bottom-up approach. We view planning areas as inputs and outputs, with each output having defined expectations (exit criteria). The bottom-up approach has five key steps with the final output being ARR.

However, teams often fixate on GTM changes without considering how they will impact GTM assumptions—the levers in the finance plan. Identifying the resources and time needed to drive these changes forward is critical, and these elements are defined as your strategic programs. This approach bridges the bottom-up perspective with the key levers in the finance plan, enabling a partnership with finance to assess the feasibility of the top-down plan.

2. Align the bottom-up framework with the top-down framework: The final step in mapping your bottom-up planning process is aligning it with the finance timeline. Understanding key milestones for the finance team is crucial so that the GTM team can develop a well-informed perspective on the business for the coming year. Finance teams typically work around the timeline of the fiscal year-end and a board meeting to finalize the finance plan.

At a minimum, GTM teams should consider their longest sales cycle as a benchmark for bottom-up planning. For example, if an Enterprise sales cycle is approximately six months, bottom-up planning needs to start in August, with some identified changes put in motion before the fiscal year ends. This timeline allows the GTM team to conduct thorough research and develop a focused business strategy. Additionally, it is critical to understand the GTM Assumptions that the finance team uses in their planning models (ie Average Contract Value, Cycle Time, Win Rate). Knowing these levers is critical to understanding, and mapping, what impact your strategic programs will have on the finance plan. 

Starting with What is Working and What is Not

Once your overarching framework is established, it is time to initiate the planning process. Assuming that your corporate North Star is well defined, you must identify the areas of your business that are performing well.

The goals are threefold:

1. Double down on success: Amplify efforts in areas that are already driving success.
2. Consciously step Away from what’s not working: Discontinue initiatives that do not contribute to the company's North Star.
3. Fix the essentials: Address and improve critical areas that are currently underperforming but align with strategic objectives.

It is essential to use a data-informed approach. Whether you have an existing set of metrics or are starting from scratch, it is important to contextualize your metrics across the customer journey. Data is often used to provide a perspective on internal processes. Ensuring that your data and metrics are mapped against the customer journey will reveal insights into what is working or not, relative to the customer’s perspective. If you have not mapped your data and metrics across the customer journey, or are starting from scratch, Winning by Design’s The SaaS Data Model is an excellent starting point for investigation.

Summary

Strategic annual planning is a crucial process that sets the stage for the upcoming fiscal year. It combines top-down financial guidance with bottom-up practical insights to create a comprehensive roadmap for success. RevOps plays a key role in this process by identifying and driving the strategic programs that underpin the company’s financial plan. The integration of these programs into the annual plan is what transforms strategic goals from mere targets into actionable realities.

In summary, the success of your annual plan hinges on how well you define, execute, and measure your strategic programs. Defining your planning processes is critical to partnering with finance and clearly defined metrics across your customer journey is critical to identifying the areas of your business to focus on. Leveraging the two, you can ensure that your organization is not merely aiming to hit its targets but is strategically positioned to achieve them.