The Ultimate Guide to Revenue Mix Planning
Forecasting the "make up" of future revenue, with PLGeek's Ben Williams
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Today I’m excited to collab with former colleague and always friend, Ben Williams. Ben made seismic contributions to category defining Product Led Growth (PLG) organizations, like Snyk and Cloudbees, and now runs his own advisory practice (and incredible newsletter), PLGeek.
Ben is a vocal proponent of revenue mix shift planning. The implications of how you serve your customer (e.g., Product Led vs Field Sales) and the customer’s relative ARR band (e.g., $5,000 vs $500,000) impact the entire organization - not just the sales team.
Take it away, Ben.
I’m always surprised when I meet a founder who can roughly tell me what their revenue mix looks like today, but is unable - or hasn’t yet considered - what they think it should be in 12, 18, 24 or 36 months from now.
I’ve found that incorporating the detail of revenue mix shift into the planning cadence - and as an overall gauge on the business - to be a very effective way to increase alignment across the company around the things we need to change to achieve the overall business goals we've set.
Of course, the right way to do it is to incorporate this as an integral part of how you set your overall business goals.
Different types of revenue mix
I like to apply two types of revenue mix shifts in planning, but your business may benefit from others (for example if a significant portion of your revenue is services based and you aim to reduce that over time in favour of more efficient recurring software subscription revenue, then you’d want to include that perspective).
For B2B SaaS companies I find the below two perspectives most valuable:
Sales motion
Product-Led, Self-serve
Product-Led, Sales-assist
Sales-Led
ARR band
$0-100
$101-1,000
$1,001-5,000
$5,001-20,000
$20,001-50,000
$50,001-100,000
$100,001-500,000
$500,001-1,000,000
$1M+
For ARR band, so long as they’re appropriate* for your business and market, the specific numbers are less important.
What matters is creating the bands and using them to track revenue over time and to plan how you want that to change.
Note: *When I say appropriate here, I mean relative to your market, different types of customers, and their willingness to pay, but also the cost to serve them.
A simplistic planned mix shift focuses on change over time to the sales motion, with an assumed ACV for each motion.
A more detailed model brings in revenue bands for a more granular perspective.
Here’s a simple example from a PLG-native company with an initial 100% reliance on low-ACV self-serve revenue, shifting over time to a hybrid go-to-market model, increasingly capturing larger opportunities with an enterprise sales motion.
You’ll need to look at percentages (for a macro perspective) as well as actuals as you more explore the implications.
Implications of planned revenue mix shift
There are many potential implications of a planned revenue mix shift.
Need to support new use cases in product
Need to add enterprise specific governance capabilities
Need to evolve your ICP
Need to target different personas within your ICP
Need to introduce a self-serve motion
Need to introduce product-led sales
Need to introduce outbound sales and marketing
Need to change GTM hiring velocity
Need to adjust sales floor (typically via some of the other things in this list)
Need to introduce new marketing channels
Need to retire features and/or products
Need to invest in greater support efficiency
Need to drive more top-of-funnel new user acquisition
Need to increase month X account-level retention
Need to reduce ramp time for new reps
…
Considering that all these changes imply some varying degree of implementation lead time, as well as further ramp time to take effect, you can see the importance of having greater clarity in your target.
It’s important to note that you don’t do this in isolation, or even to lead your strategic planning, but rather to augment and support it.
It should provide an additional level of fidelity in your product and go-to-market planning.
Use it to more confidently answer questions like
HOW will we reach revenue growth of X within Y years?
and, given some assumptions on S&M spend across different ARR bands,
HOW would a given revenue plan impact margins?
It will never go exactly to plan, but this analysis and asking and answering the right questions will lead you to create better plans that the team can understand and rally behind.
If we look again at our scaling PLG company, our plan might look something like this:
Q4 2024: First Sales Hire and Launch Product-Led Sales to begin to drive adoption in mid-tier+ segments.
Q1 2025: Add support for key adjacent use case in product to open expansion revenue opportunities, attract a wider range of customers and increase product stickiness.
Q2 2025: Add Product Growth Team to drive top-of-funnel new user acquisition and improve activation and engagement to fuel PLS expansion revenue.
Q4 2025: Introduce Outbound Sales and ABM to target high-value accounts proactively.
Q2 2026: Launch single-tenant SaaS offer to target F500 enterprise customers and unlock $500K+ opportunities
Q3 2026: Launch Partner Program to further accelerate enterprise adoption.
Q4 2026: Introduce New Brand Marketing Channels to drive demand gen amongst F200.
It’s not set and forget
You need to monitor progress and consciously adjust your execution accordingly.
How are we tracking against our plan at any given point?
Is the plan still valid?
Have our assumptions changed?
Or, more specifically, ask questions like:
Did the change in our ABM strategy lead to the revenue impact and mix shift that we expected?
Is our new self-serve motion driving the coverage we wanted it to at the lower end of the market?
Did our new product offering lead to the attach rates and ACV change that we planned?
You’ll also want to look back at your historical mix shift.
Doing so will help you identify trends that you may need to act upon.
For example, unexpected and unplanned relative increase in growth in a lower revenue band at the expense of a higher band could indicate issues such as:
Incorrectly defined ICP
Poor positioning
Misaligned targeting
Sales skills gaps
Product gaps and deficiencies
…
So the data here can be a signal that alerts you to potential issues needing further diagnosis.
Summary
None of this is rocket science, and plans inevitably change, but whenever I’ve seen this done as part of a regular planning cadence it’s generated incredibly useful discussions that forced assumptions to be stated, tested and challenged, and ultimately led to better informed and aligned plans. The bottom-up input also helps to create goals that are better considered, with increased buy-in across the org.
Give it a try!
Run the Numbers
Apple | Spotify | YouTube
I spoke with Bill Zerella, the current CFO of publicly traded auto marketplace ACV Auctions, and former CFO of Fitbit (yes, you’ve worn one…)
He’s a pro in hypergrowth. We covered:
How a CFO thinks about tech debt
Managing expectations with the current team when you bring in new leaders
How Fitbit was still running QuickBooks at $300 million when he arrived
Managing investor and employee expectations at $12B vs $2B in market cap
The story of going up against the Apple Watch
Being a specialist (business model, sector) vs generalist CFO
Quote I’ve Been Pondering
“The temperature kept dropping until the rains hardened into sleet and snow.
Cables became encrusted with ice and some of the men succumbed to frostbite.
“Below forty degrees latitude, there is no law,” a sailors’ adage went.
“Below fifty degrees, there is no God.”
-The Wager, by David Grann
Simple yet so good