2024 has been a super challenging year for acquiring net new revenue.

Consequently, many Sales and Marketing teams are experiencing exceptionally slow revenue growth 1H of year, and missed revenue numbers on revised quotas, Consequently, a number of Sales team members being forced on Performance Improvement Plans (PIPs) because of a crappy economy.

There has been some chatter on LinkedIn that CEOs struggle to pinpoint why revenue is soft in their company.

Based on our experience over hundreds of conversations with Sales, Marketing, and Finance leaders, we’ve identified 5 primary reasons why companies miss their revenue targets, based on the conversations, 3 of which are due to a lack of alignment:

1. Misalignment between marketing and sales strategies. If the sales motion hasn’t evolved along with marketing’s account-based strategies, there will be a disconnect that prevents realizing the full revenue potential. Both teams need to be aligned on objectives, behaviors, and metrics.   We have countless YouTube episodes as well as surveys in this area.
2. Misalignment on the ideal customer profile (ICP). If marketing and sales aren’t aligned on the characteristics of the ideal target customer, efforts will be misguided, leading to a mismatch between strategies and revenue opportunities.  Recently there have been statistics published that 18% of all pipeline accounts are ICP worthy (Matt Harney, Cloud Ratings July 2024 newsletter) – meaning a staggering 82% are not!  This is where having Account Based discipline pays off or investments in tools like 6sense where ICPs can be more cleanly identified helps.
3. Failure to evolve strategies for changing buyer behaviors. As buyer preferences and channels evolve, sticking to outdated sales and marketing tactics that no longer resonate can severely hamper revenue performance.  This is particularly true with changing Go To Market strategies and often times disguised as misalignment between the Sales/Marketing function with the buyer.
4. Ineffective quota-setting process. Quotas are often set based on historical performance rather than total available market opportunity. This leaves potential revenue untapped if sales reps are incentivized to just hit their quotas rather than maximize revenue from accounts.
5. Lack of a data-driven investment model. Without a model to guide investment allocation between sales and marketing based on market potential, companies underinvest in the functions needed to capture maximum revenue.

There is one implicit assumption that in our conversations we admittedly don’t invest alot of time on – that there is product market fit.  That could lead to significant missed revenue opportunities.

In summary, the core reasons boil down to strategic misalignment across revenue teams, lack of data-driven planning, and an inability to adapt strategies to changing market conditions and buyer needs. Addressing these disconnects is crucial for hitting revenue targets.