As someone who started out carrying a quota in sales, the rule of 78 has lived rent-free in my subconscious for most of my career. For a great year, you have to start strong.
The rule of 78 is a revenue formula for subscription-based companies. Put simply, if you close a deal in January, you earn that recurring revenue every month throughout the year (assuming you keep that customer for the full 12 months). When you close in December, you only realize one month of revenue. The sum of all numbers between one and 12 is 78, hence the name.
As a SaaS company, Sprout’s team keeps the rule of 78 stays top of mind as we plan for a new year. In a past life, I may have considered it a sales-specific principle. Now, as I reflect on the past 12 months and all that we have planned for 2022, I see its significance for broader marketing strategies across industries.
What you do at the start of a new year has the power to set the tone for the results that follow. The rule of 78 is more than an equation. For marketers, it’s a framework we can use to drive alignment with sales and inspire our teams to do their best work.
Kick off the year off strong
In SaaS, your ability to meet and exceed goals comes from delivering exceptional results early on, but the same logic can apply to all businesses regardless of revenue model. You reap more benefits from efforts launched at the start of a fiscal year than you would from those launched in the middle. These efforts widen your marketing funnel, alleviating the stress of the Q4 crunch.
That means that businesses have three months to push out their most impactful work—that’s 60 business days, give or take. Building out your Q1 marketing plan requires a clear understanding of what will move the needle for your business. New ideas, requests and projects will always come up. Strong prioritization at the leadership level gives teams the confidence needed to act quickly and with purpose.
When deciding what needs to be focused on, it helps to look at your marketing efforts through two lenses:
- Product priorities: Upcoming product launches or releases that will need marketing support for adoption.
- Revenue impact: The initiatives that will make the biggest impact on your business’ bottom line.
Identifying these major initiatives is not a one-person job. It’s an ongoing, data-informed collaboration between marketing, sales and products leaders that results in a unified vision for the year ahead.
Think in the long and short term
When you expand your understanding of the rule of 78 beyond its immediate ties to revenue, you can see its applications across all your efforts, from top of funnel initiatives to team development. While these activities may not immediately convert a prospect into a customer, they lay the groundwork for smoother conversions.
Say you’re launching a rebrand, for example. Rolling out a new visual identity in Q3 or Q4 can create a disjointed customer experience during the critical year-end season. On the other hand, getting to market early gives your prospects and customers more time to get acclimated to your new identity and positioning. Once year-end rolls around, your business will already be reaping the long-term benefits of your work.
What matters most here is fostering alignment between marketing and sales, regardless of whether your teams’ efforts translate into immediate revenue generation. If marketing is a megaphone, sales is a microphone. Marketers may be able to broadcast their message with a wide reach, but sales teams are integral to reinforcing that message at an individual level.
Making sure every rep is equipped to tell your brand story creates vital connections between what your audience sees in the market and what they experience with your business. When you work together, there’s more opportunity to drive more trust in your brand and products.
Set your team up for success
It’s no secret. Rallying a team today looks much different than it has in the past. Many of the usual in-person tactics like shared meals or live meetings have been phased out in favor of video chats and async discussions. It’s left me and many other CMOs wondering how to best amp up the energy after a lull, like holiday PTO.
The truth is, while we definitely miss the magic of shared in-person experiences, the same motivation can be roused with an increase in transparency. Sharing visibility into the opportunity your brand has ahead and your team’s unique role in the journey can be incredibly effective at boosting team spirits at the start of a new year. It just requires more intentional communication.
I myself have upped my team communication through as many channels as possible, whether it be email, video or messaging. It’s easier for marketers to amplify brand messages in the market when they’re working with a CMO who is amplifying the company vision internally. It keeps our shared vision for the future clear, setting everyone up to do their best work.
If you’re looking for ways to set the right tone in 2022, here are some Sprout norms that have been valuable for our team:
- Host a kickoff. Kickoffs aren’t corporate pep rallies. They’re an opportunity to reinforce your company’s vision and roadmap and everyone’s role in it. Whether it’s organization or department-wide, a kickoff meeting can set everyone on the right path for the upcoming year. It’s a chance to reestablish priorities, long-term goals and a culture of recognition within your team.
- Embrace casual check-ins. If your team is remote or distributed, be intentional about dedicating time to catching up. Routine check-ins can help managers, directors and members of your leadership team stay up to date on which team norms are working and which aren’t.
- Act quickly with roadblocks. Unresolved roadblocks are fast tracks to employee disengagement. Even if there’s nothing that can be done in the short term, lead with transparency by keeping your team updated on ongoing changes in process, strategy and goals.
Leaders can also boost morale by front-loading plans for team expansion early in your Q1 marketing plan. Hiring and training takes time. At Sprout, we try to front-load the year with net new headcount. The sooner we can get someone in a seat, the faster they can onboard and begin incorporating their talents across our team.
Start strong, finish strong
The rule of 78 may be a simple math equation, but it can also serve as a steady reminder to seize smart opportunities at the right time. The new year is already charged with energy and possibility. Use it to your team’s advantage and reap the benefits throughout the rest of the year.
At Sprout, we’re confident that social will be playing an even larger role in your brand’s big picture in 2022 and beyond. There will be an abundance of opportunities to navigate over the next 12 months, from shifting consumer expectations to new and innovative network capabilities. Download the social leadership toolkit and get clear on your next big win today.
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