A revenue target is the amount of revenue a business commits to producing in a period. Working backward from it, through close rate, average deal size, and conversion rates, determines how much pipeline and marketing investment is actually required to hit it.

A revenue target set without working backward is a wish. If you need a specific number, that implies a required number of deals, which implies a required pipeline, which implies a required marketing spend. Founders who set the target and not the math discover the gap in month ten, when there is no time left to close it.

Example:

A target requiring a certain number of new customers, at a known close rate, dictates exactly how many opportunities and how much spend are needed. The target alone tells you nothing.

How do you translate a revenue target into a marketing plan?

Work backward. Divide the target by average deal size to get required deals, apply your close rate to get required opportunities, then apply cost per opportunity to get required spend.

Why do revenue targets fail?

Because they are set without the underlying math. Without knowing the pipeline and spend required, the target is a number with no plan behind it.