What is Predictable Revenue and How Can It Impact the AEC Industry?

In the early 2000s, Aaron Ross, now a critically acclaimed author, was reinventing what it meant to sell. He transformed a well-known sales team by coupling traditional sales efforts with new and improved models and scaled the business into a well-oiled sales machine.  

Ross went on to coin the term “Predictable Revenue”, writing an entire book around the concept of predictability being the key to success and scaling any organization. When this book came out, many industries took the knowledge and resources and started to employ these practices drastically. It makes sense for the organizations around the world that sell products – but what about those who sell projects?  

Is there any space for Predictable Revenue in the Architecture, Engineering, and Construction (AEC) space?  

Covering the Basics: What Predictable Revenue Really Means 

Let’s start by breaking down the concept of Predictable Revenue. What does this term really mean?  

At its core, Predictable Revenue is a framework that helps to establish consistency in your growth based on formulaic process – as opposed to the tried and true “hustle and guess” mentality sales teams have historically felt.  

To achieve this predictable revenue, the book notes that you must:  

  • Understand your sales funnel  
  • Determine the acceptable average deal size  
  • Define time frames  

The book also makes it clear that everything you do must become a system. Without it, you have no predictability.  

So, as someone who sells into the Construction-related space, can you accurately determine the three criteria pieces laid out to establish predictable revenue?  

Sounds Great…. but It Also Sounds Hard 

It’s no secret that selling into the AEC space is a different challenge to than those that more traditional B2B companies face. Your organization does, in fact, sell into other organizations, but the complexity between those relationships is grossly unique to the industry. The AEC sector wants to grow, like every other company out there, but most organizations almost exclusively rely on repeat business and occasional referrals to fuel that growth. With this concept in mind, it becomes incredibly difficult to compound the issue into a formalized outbound sales process 

A common tale that we hear at Cosential is centered around Business Development teams having no organized or documented system for pursuing new business. Many top performing Business Developers achieve their success through relying on tribal knowledge, relationship tenure, and gut-instinct that comes from being in the field for an extended period of time.  

With that being the case, achieving predictable revenue sounds out of the realm of possibility.  

How can we understand a sales funnel if we have no data to support the foundation of that funnel?  

How can we determine the average ideal deal size that works for us if we’ve never documented what projects give us the highest margins?  

How can we narrow in on time frames if our sales cycles are never documented and are heavily influenced by a number of outside factors? 

The Opportunity for the AEC Industry to Embrace Predictable Revenue 

The AEC industry has crawled by with the notion of “if it’s not broke, don’t fix it.”  

Many firms have fallen victim to the beliefs laid out above. “Predictable revenue won’t work for my industry because my industry is far from predictable.” 

While it might be true that relationship-based businesses are far less predictable than product-based businesses, it’s naïve to believe the industry stands no chance against proven systems because the challenge is slightly greater.  

The truth is, predictable revenue in the AEC industry will boil down to grasping these three components. Your firm needs to: 

  1. Establish a single source of truth for all your data 
  2. Understand that more does not equal better 
  3. Develop repeatable process that translate into consistency engrained in the day-to-day operations of your firm 

Once your firm has embraced these three ideas, you will start to see both operational efficiencies and margin increases that come from the ability to win the right business, and more of it.  

Predictable revenue in the AEC industry may not equate to the amount of daily sales activities performed each day. It will be encapsulated by measuring data, forecasting margins, and predicting growth based on historical knowledge that’s owned by the entire company, not the executive staff.  

To learn more about the steps your team can take, watch out for the next installment of this blog series where we will cover the dire importance of establishing a single source of truth.  

Want to jump ahead and get in on the action? Book a demo of Cosential today and we’ll walk you through what the power of predictable revenue can mean for your team.