Why Aaron Ross’ Predictable Revenue Model is not suitable for SMEs

Predictable Revenue is considered by many to be the Holy Grail for delivering sustainable business growth. In this article, we highlight why Aaron Ross’ model for Predictable Revenue is not suitable for SMEs.  

What is Predictable Revenue?

Predictable Revenue is the concept of generating consistent and reliable revenue year-on-year that delivers sustainable business growth.  

One of the leading minds on this topic is Aaron Ross, author of the book “Predictable Revenue”, first published in 2011. His book was ground-breaking in this space and introduced some innovative ideas. The book described a model that he developed and implemented whilst working at Salesforce.com, which helped the business to achieve $100 million worth of recurring revenue over a three-year period.

We first came across this book a few years ago, when a potential client of ours who was excited about its innovative approach, recommended it to us. So we decided to have a read, and our initial impression was that the model indeed had some clever elements built into it. For example, the idea of sending an email to a cold account in order to get a referral to your target prospect is a clever approach. However, our reservation based on our experience of working with SMEs was that the model was quite prescriptive and impractical for them to implement. predictable revenue

We shared our feedback with the potential client, including the reasons we’ll discuss in this article. It also made them realise the issues they would face in implementing Aaron Ross’ model. Encouraged by our practical approach, knowledge of the subject matter and the proposed alternative approach to Predictable Revenue generation, they decided to work with us and became a client.  

Why is Aaron Ross’ model not suitable for SMEs

Aaron Ross’ model focuses on; predictable lead generation, having a dedicated sales team and a consistent sales system in place. Although it is a useful approach to generating predictable revenue for some big businesses, in our experience, SMEs will have three distinctive challenges implementing this model.  

1. Time commitment
Aaron Ross’ model requires you to implement big systems and processes like Marketo, Salesforce or HubSpot. Implementing and then maintaining these ‘hungry’ systems can be very time-consuming. Once the model has been implemented with these systems, it could take up to a year before you realise that it’s not working for your business and isn’t delivering the results you expected. With the amount of time already invested in setting up and maintaining the systems, it could take you another few months to unwind and replace it with a workable system.

For example, you may set up a system like Marketo or HubSpot as prescribed by the model. After a year, if you decide to stop using it because it doesn’t work for your business, you can’t just simply abandon it. You need to plan and migrate the data, content and templates over to an alternative platform, which is again a time-consuming exercise.

2. Cost of implementation
From a financial standpoint, it won’t be feasible to implement Aaron Ross’ model. There’re two elements to it. Firstly, the model requires the use of expensive systems like Marketo or HubSpot, which some businesses may not be able to justify. Secondly, the model requires you to hire sales professionals who would then need to specialise in carrying out specific tasks.

For example, Aaron highlights that a member of your sales team needs to be dedicated to lead generation and another dedicated to sales, etc. For large businesses, this may not be an issue. However, SMEs typically don’t have the financial capacity or bandwidth to hire a variety of specialists across the sales and marketing function to implement and maintain such resource-heavy systems and processes.

3. Based on a successful application in a large business
There is an argument that Aaron Ross’ book and the model is solely based on its one successful application i.e. Salesforce.com, where the company operated in circumstances that were unique to the company/market at the time. The model may be successful for some large organisations focusing on a wider target market. In our experience of working with SMEs, Aaron Ross’ Predictable Revenue model is difficult to implement in their business environments.

This should not undermine the critical importance of generating predictable revenue for your business. In the next few articles, we will discuss why it’s crucial for SMEs to focus on predictable revenue and how to implement a scalable predictable revenue model in your business.