Everyone who touches revenue dreads it: the end-of-quarter blame game.
Revenue in a downturn can feel like sand in a sieve, and the last thing CFOs need are surprises leading to missed targets.
Those surprises are often the result of revenue leak, or revenue you should be booking but aren't due to breakdowns across your revenue process. Leaks can put pressure on already-tight margins in a down economy when new business is less likely to compensate. The average company leaks nearly 15% of revenue every year—a make-or-break margin in a downturn economy.
"You end up playing this silly game of Clue trying to figure out whodunnit when something goes wrong," says Adam Meister, Clari's CFO as of April 2022.
A funny thing happened, though, when Meister started using Clari as CFO at his last company in February 2020: the blame game stopped.
"[Clari] helped us plug leaks before they showed up unexpectedly," he says, "So we went from debating the particular details of what went wrong to focusing on the constructive work of anticipating and addressing issues proactively—not just for this quarter, but for the go-forward, which is ultimately the most important piece in my mind."
Now at the helm of Clari's finance team, Meister plays a key role in saving finance teams everywhere from missed forecasts, poor pipeline visibility, and other maladies that lead to tense boardroom sessions. He joined Clari after three years as CFO at Talend. Before that, he honed his craft on Wall Street as a managing director at Goldman Sachs and as a vice president at J.P. Morgan.
According to Meister, here's how CFOs can use Clari to improve the way they run revenue during the downturn.
Not His First Go-Around with Clari
What caught Meister's attention at Talend was not only that Clari made the revenue process easier to govern but that it did so within weeks of implementation.
"Suddenly, you have this amazing way to understand revenue in a way that most organizations struggle with," he says. "When you have tight control over all key aspects of your revenue process, your exec and board meetings turn into much more strategic conversations versus performance reviews."
He also detected a noticeable shift in the way he was collaborating with his counterpart on the revenue side of the org.
"There's naturally tension between sales and finance. And it's actually a positive thing if done well at most organizations," he says. Revenue wants to bring in as much revenue as possible. Finance wants to make sure it's achieved efficiently and sustainably. "Clari provides a consistent baseline of understanding that improves trust and communication so you can have an honest conversation around those revenue risks and tradeoffs."
Ultimately, Meister says, the change from pre- to post-Clari was like going from peering through a magnifying glass to see small isolated details to having a telescope that helps you put all those details together to see a long way off. "Because now you're not debating whether one deal is good or bad, you have a much more holistic view on everything that's rolling up into the number," he says.
That new, broader view also illuminated critical sight lines into trends, customer behavior, and weak/strong spots—the variables that help you achieve the kind of revenue precision that stops leaks and hits core objectives like growth or profitability.
Revenue Precision in a Downturn
Meister comes to Clari in a murky macroeconomic environment. For many companies, demand is softening and uncertainty reigns. Revenue precision is more important than ever for a CFO.
"When there's less predictability in the macro environment, that doesn't mean that you can forgo predictability into your own business," he says. "In fact, it means that you need to pressure test assumptions and focus even more on driving precision. And you need to ensure the efficiency of every dollar you're investing."
When Meister thinks about the revenue equation for a company like Clari, he wants to understand the dynamics that will lead to new business and expansions and the areas that won't. Real-time access to metrics such as average selling prices (ASPs), conversion rates, stage progression, deal cycles, prospect engagement, and retention rates are just some of the inputs he uses to strike a balance between growth and efficiency. Both are achievable in a downturn, but efficiency is the prize.
"Ultimately, efficiency is what gives you flexibility," he says. "It's what ensures that you have control over your long-term growth and profitability as an organization. And I think investors are more focused on that now in a tough economic environment where they can't just rely on incremental top-line revenue growth at any cost."
Why Collaboration and Governance Matter More in the New, Hybrid Normal
Part of achieving maximum profitability comes down to the people on the ground activating your investment dollars. Revenue Collaboration & Governance—which is all about ensuring that every revenue-critical employee in every department collaborates intelligently and transparently at scale—is key to seeing max ROI. The "new normal" of remote/hybrid work, paired with budget constraints spurred by the economic downturn, has made profitability more important than ever.
"In an environment with wage inflation and a more distributed employee base, being able to ramp up new talent quickly and consistently to make them as successful as possible is a key recipe for success," Meister says.
That may mean improving your governance over key people-centric factors like onboarding processes, meeting cadences, and training programs to make sure that they're optimized for remote/hybrid work. It may also mean making sure that distributed teams are still taking on big challenges and, for lack of a better word, hustling.
That's especially true in the software businesses where people are often the biggest expense.
"RevCG is so much about helping individual contributors and leaders and teams get to success faster and with more certainty," he says. "And if I can increase the probability of success for any given hire in my business, that's probably the highest ROI investment I can make as a CFO."
Run Revenue Like a Pro with Clari
In tough economic times, every dollar counts. That's why finance leaders need Clari's Revenue Platform to help navigate external factors and focus on precision and profitability.
Book a demo today to see how Clari helps you run revenue better during a downturn.