Our host Jeff Ignacio sits down with Sarika Garg, Co-founder and CEO of Cacheflow. They discuss how to optimise your pricing strategies, the importance of usage metrics and how to craft proposals. They also discuss renewals, the handoff process and the relationships between sales and finance and forecasting.
The RevOps Review
The RevOps Review - With Jeff Ignacio and Sarika Garg - Pricing, Proposals and Usage
[MUSIC] >> This podcast is brought to you by Cognizant. Cognizant helps businesses connect with their dream prospects by providing premium contact, company, and event information, including from a technographics, technographics, intent data, verified business emails, and verified mobile numbers. >> I saw it. How's it going? >> Hey, Jeff. >> Great to see you again. >> Likewise. Today, I'm joined by Sareke Gart, the co-founder and CEO at Cashflow. For the folks who are unfamiliar with Cashflow, can you give us a little hint of what Cashflow does? >> I will start, but before that, I just want to say Jeff, you're the best rapper I've ever met, so it was awesome to hang out with you last week at the San Diego conference, and with that, let me tell you a little bit about Cashflow. The challenge that we're trying to solve is my co-founder and I, we started Cashflow three years ago, and we had both bought and sold millions of dollars worth of software, and the one thing that we realized was that software selling or buying was not a one-time event, so it wasn't like you exchange paper sign and you're done. It's actually a series of events, right? So it's like a coach sharing, multiple coach sharing. There's negotiations as it's back and forth as a signing. There might be a upsell, a billing renewal, and it goes on and on, and it's really like a lifecycle of events that happen, and most of these events are actually very frustrating for sellers, for RevOps people, for finance people, because they're doing most of this on paper by email, by text, and what we said is there has to be a better way, and we believe that taking a platform approach, where we put all these actions that happen online on a platform, we call it a deal closing platform, where you can actually close deals easily, you can upsell, you can renew, you can build, you can do all these interactions with your customers much more easily, so that's what Cashflow does. - Yeah, I've often argued, by the way, thanks for the shout out for the karaoke. Folks don't know, I grew up freestyle rapping, so I always like to do M&M and ludicrous when I go on to karaoke. So we have a chance to do karaoke at a RevOps event. You'll know that I will not choose any songs where I have to sing, I will always do some sort of rapping. (laughs) - It was a lot of fun. - So, you know, there's like two important deals, right? The first is the acquisition, is the closing the first deal, and then second is the fact that the customer chooses to stay with you afterwards, right? They retain with you, and not only do they retain to stay with you, they actually also expand with you. So I was saying that the most important deal is usually the first deal when you acquire them, but the most important deal is actually the renewal, because they get to choose whether they're gonna stay with you or not, and not only that, it's the expansion. So, you know, as an operator, I find that the experience is very frustrating across sales, finance, and operations. So yeah, it's super interesting that you guys have tackled that problem. - Yeah, you know, you mentioned renewals, and actually that's super interesting. I oftentimes get frustrated when CS people only talk to me about the renewal when the renewal comes up. You know, what I want is the renewal should be a non-event, and I wanna interact with CS people to actually help, you know, have them understand my business, help them, help me use the tool better. And so in some ways, you wanna shift the conversation of all the people that are dealing with customers into a more customer facing, a customer helping conversation, rather than how do you pay me, or how much do you need to pay me conversation. So that's something that I think a lot about, for sure. - So with the renewal, I often mentioned to folks that if you, you know, we deconstruct the renewal motion in my RevOps class. So as soon as you close the deal, the first thing you do is schedule the kickoff, and what you wanna do in that kickoff is set expectations, and then also show that there's continuity between the selling process and the customer process. So what do those handoffs look like? And it's this first couple of critical weeks where you get them instantiated, set up in your tool, and you ideally have mapped, you know, what are they trying to get out of, you know, it's ultimately not about the tool. It's ultimately about the impact and solving their needs. And if you can get time to, you can get time to, or realization of value and an expected amount of time, then they're off to the races, right? 'Cause at that point, you become, you know, a part of their workflow and the likelihood of them churning or leaving you is almost zero. So the renewal, again, you know, really starts like right after you close 'cause all those series of events should get you going. - Totally agree. - So, you know, as a business, you know, tell me a little bit about, you know, how you solve the product market fix. I always think, you know, in the early days, you may not, you're not really sure you have product market fit. And then I find that customers always whiplash at roadmap. So, you know, as a founder, how did you manage those early years? - Yeah, you know, it's a very, it's a paradox, right? So I think as a founder, you have to have an insight which is real and which you can stand behind because when things get rough, it's that insight or that belief that keeps you grounded. And at the same time, you actually have to listen to the market, listen to the people you're talking to because you're trying to solve their problem, right? So it's sort of this paradox of holding both. I think our team does that very well by basically saying, hey, this is what we believe and hey, customer, tell us what your problem is and let's actually figure out and shape our roadmap taking both into account. And I think we've done this very successfully. So initially, when we started off, we had this idea that product, you know, software selling and buying was a broken process and needed fixing. But how do we actually fix this is something that we've learned by talking to enough people, by our customers using the product and giving us feedback. And so it's been an interesting journey. We absolutely like most good startups do. We said, let's really work with the small companies first because they have this whole end-to-end problem. They want things fixed very turnkey. So you end up actually building a very good product when you work with smaller companies, which is sort of what we did. And we built an entire platform end-to-end, like we do everything, right? Because these companies needed everything. And now we're layering on the depth of what a larger company, like a mid-market company might need, right? - So when I, you know, when I'm challenged, you know, there's this concept of, well, why don't you go up market, right? The dollar sizes are larger. Your yield per day worked on deals can just gonna be much higher. But it's easier said and done because you're essentially recreating your messaging. You also have the profile, the sellers that you have in place because you're fundamentally dealing with much larger buying committees. I'm curious how you and the team transformed your go-to market to be able to move, you know, quote unquote, up market. - Right. It's been interesting. I think it wasn't only dollars that made us move. It was definitely, there was a huge need that we found. And we were actually surprised by it. We were very willing to stay in the deal closing platform for smaller companies place. But we saw this huge demand for a newer kind of CPQ, which is what mid-market companies were looking for. And so it seemed like we looked at our product roadmap and we said, I think we can accelerate some of the things that a mid-market company might need. And so there was a number of things we did. One of them was around product, second was around how we market and message ourselves. And the third one was around sales, about how do we actually run the sales process? And maybe there's a fourth one, which is a post sales process that you alluded to. But those are the things that we actually sort of like looked at and actually made shifts and changes in, right? So I'm happy to go through each one or whichever way you want to, whatever you're curious to learn about. - Yeah, I'd love a breakdown of each one actually. - Yeah. Well, the first one, as a CEO, I worry about the product the most because we're a product company. And if you don't have product, you don't have anything else. And the first thing that we realized of a mid-market company is it becomes bigger so the departments get more siloed, right? So the sales department is separated from the finance department. And our product was this integrated one monolith product. So the first thing we had to do was actually break the product down into modular pieces. And so we converted our product into a sales flow and finance flow. So sales is basically quotation, contract signing, upsells, renewals. And then the finance flow is everything that happens afterwards, like the billing and collections and payments and so on. So we did it in a manner that somebody could actually start with the sales flow and then two months down the line, six months down the line, switch on the rest. Or maybe they choose never to do that. That's their call. But we give them the power to be able to consume cash flow as the need and when they need it. This was probably the most important shift we did because it opened up the market. Because oftentimes we would hear sales leaders or rev up leaders say, hey, we would love to use your solution, but we don't think our finance team is ready yet because it's a huge effort for them to make this shift. So that was probably one of the biggest shifts we did in product. The second shift was all around deeper compliance, controls, integrations. So I mean, as you can imagine, approvals get more complicated, rules bundling, advanced filtering, deeper integration with Salesforce HubSpot line items, SOC 2 report, SOC 2 compliance or GDPR compliance. These are all around putting in more controls or giving more depth. And so that was the other things that we've built into our product roadmap and have delivered and are continuing to do more and more as we go more up market. So that's been an interesting fun piece of it. Yeah, sure, please ask. - So as you're working with companies and your product is more modular, there's a space for both the P&A and the finance team. And then side by side, working with the operations team, are you finding a difference in maturity levels at earlier stage companies between ops and finance? Do you find like finances more mature than ops or the other way around? - We actually find ops is actually quite mature nowadays, which is super amazing and fun to see because I think like 10 years ago, there was no ops. So there was like somewhat of an ops team or it was called sales ops. So we find ops is pretty mature. And when we talk to ops, if I ask any ops person, I'll say, hey, what's your job? Like what are you trying to do? And the first thing they'll say is we're trying to actually make the salesperson as efficient as possible so that they can do their job. So they really sort of hone into being the ones who curate the processes, the systems to enable things to move. So we very much aligned with ops. The finance side can be, can change and shift, oftentimes they may still have some level of outsourced financing. They may not have a CFO yet. So there are some differences in maturity over there. - So I came from an AP&A background before going into revenue operations. So the fact that I had that background, I think helps quite a bit when I work with my finance partners. I think they're super appreciative of what it takes to translate from bookings all the way down to revenue. And then when you think about bookings and translating that to payment terms and actual invoices. And nowadays you're finding a lot of comp plants focusing on collection of cash and invoicing because of the working capital constraints of some certain companies. So I think that's really interesting. I'm curious where you see the direction of the market is moving towards with some of these mid sales to post sales tools. Like I can imagine your tool is playing instrumental part in that. Where do you raise your organization to be showing to? - Yeah. So we definitely see what you just mentioned, right? That finance really wants to have a say in the sales process because that's where the payment terms get defined or whether what is actually sold, the margin levels. So this is the one reason why finance teams actually love us. And then actually they will actually recommend us to the ops person saying, hey, please look at this tool because it's actually considering the things that we care about as well. But in terms of like where we see the market moving, we're definitely the one shift that's unmistakable is the shift to hybrid models. And I feel like pretty much every company we come across is either moving or is assessing a move to some sort of usage model, right? So they may actually have a user plus platform and they wanna layer on something around usage. And when something like that happens, they immediately, the first thing they need is a tool because now how are you gonna measure the usage? How are you gonna bill for it? How are you gonna make sure that the sales person is putting in the right amount? So I think the complexity of these contracts is increasing as a result, you know, driving a need for tools like cashflow. - I've always found the switch from, you know, upfront to user-based to usage-based, that journey, you know, it needs a couple of things, right? Like with the usage base, you can plug in a number in your serum, it's totally fine. But with usage, you actually have to have a metering capability that tracks usage and you have to have a definition of what usage means. And that means that you're plugging into your product production database and then having it sink to your go-to-market systems or to your billing systems. And then all those alerts and notifications have to be then flashed up towards the organization to take the corrective action. And sometimes the corrective action is manual, you've been alerted that you're over, you're about to hit a new pricing tier, let's hit the growth team to have a conversation with a customer, you know, you know, obviously just trying to put a bill in front of them, but you're trying to have a transparent conversation around like, I see you're getting deep value out of the platform. You know, I wanna help you save money. So why don't we have a conversation around, you know, the forecast for usage and down the road. So I think it's really interesting. Also, that switch isn't easy for companies to wrap their heads around, right? 'Cause I could think on the back end, planning around comp, like how do you use space comp? And that's fundamentally a different exercise. - Right, absolutely. And we see, you know, most companies that do usage will do some sort of tier commit, right? So you basically get a commit so you can actually not only have predictability in your revenue, you can also take care of commissions that way. And if there are overages, we see two models of overages, either they will actually not charge for the overage but have that conversation at the end of the quarter with the customer saying, hey, you're going over the bill, don't you wanna move to the next tier, right? Or the second piece might be you charge for overage and then you have to obviously deal with the commissions after that. But we see both and you're absolutely right. This is not just a billing challenge. This is a challenge that you need to do things in your product to have that metering. And oftentimes customer will use this together with their product. So they will actually show usage and then they'll show the estimated bill coming from the cash flow APIs to their customers. So these combinations make it very valuable for them and to keep pricing out of the product and make the product more about measuring usage but keeping pricing outside makes it very flexible for them because they can change pricing anytime. If they hard-coded the pricing into their product, it will be impossible or very difficult to shift and change, right? So those are things. There's one more trend. I think that's kind of interesting, which I've been surprised by. Together with this usage trend, what we're seeing is even companies that charge for users. So if they actually estimated you're going to have 50 users and now you go to 52 users, they will gate it and they will actually make sure that you basically, I don't know, put in your credit card or get an invoice afterwards when you move to that too. So we've seen these sort of shifts to saying, I want to make sure I pay for value and I don't like forget the customer for the year. I actually have this interaction with the customer as they get more value with the product. - I think as someone that supports the customer success team, I think the alignment of usage is probably the clearest pricing model to get the win-win between the unlock for the customer and then commensurately matching that to the bookings for the company, obviously. One thing I think is interesting around a CPQ is, most folks may not think about this, but you can actually use it as a way to shrink your sales cycle, right? So if you were to break your sales process map down, you'd have stage one, say it's discovery all the way to stage five, six, negotiation, then close one. But it's that, you know, that scoping, that proposal, the contracting, and it's a stage four, five, where if you don't have like a good process in place, what ends up happening is you get the spin cycle, right? Sales reps will start pinging left and right within the org. The product is asking you why you're doing this deal, there are no gates or controls in place, and they could feel like the Wild West, and all of a sudden your sales cycle balloons to two to four weeks longer, because now you're introducing new chefs in the kitchen. So I'm curious if you've seen that use case as well. - Yeah, we've definitely, and you know, talk about your customers taking you to where they need. One of the things I was most surprised about was, so we were able to basically help the salesperson craft that proposal and send it to the customer early. And then we track when the customer looks at it, what happens, and one of the biggest things that we learned was that is actually very valuable information for forecasting, right? So we found stats that if a customer looks at a proposal like 10 times, eight to 10 times, they're likely to close, right? So that activity level that's happening on the customer side becomes an important part for forecasting and for basically being able to see is this a real deal or is it just like us kidding ourselves, right? So that's been interesting, and it's taken us down this path of where we actually want to send the proposal earlier and earlier in the lifecycle. So oftentimes a salesperson will get off a demo, it's a great demo, and the customer says, "Hey, and it's not stage five," right? But they'll say, "Hey, just send me a roundabout invoice," like not invoice, a coat, right? And usually the salesperson will email this, put it in a deck, I don't know, there's 50 ways they'll do this, but they won't do it as an online thing, right? And what we are enabling in cash flow is you can actually send this coat much earlier in the lifecycle because now you have tracking on it and now you can see when the customer starts engaging with it and doing more and more. So it's been an interesting learning that forecasting is such a, that last mile forecasting is so important to get right. - Yeah, to put my sales operations head on a little bit, you know, the first thing you want to do is set up your sales process. Some folks might use a framework within a framework, like Medic or MedBIC to qualify to deal and ensure where it is throughout the lifecycle. The second thing is looking at engagement metrics. I think tools like GONG or Chorus, you know, they're already tracking that, but what you're tracking something interesting is actually, you know, sending the pricing, the quoting, and I don't know if it's pixel or whatever, the back of technology is, but you can see the opens and the number of opens probably could indicate level of how serious they are at a level of intent, right? And so I've always instructed my sales reps and when you have pricing, start ballpark and then as you scope the deal and become, you know, really specific with them, get narrow, right? 'Cause the worst thing you can do is send a proposal blind with no context. They never look at it again. And when they do open it a week or two later, they've forgotten the conversation and what they experience is sticker shock, right? 'Cause they see this price and they're like, well, the value is almost zero in my mind 'cause all I see is a number and a proposal. But if you do it right, you've built up the value perception of your solution and then put the proposal in front of them and there's that gap between the two, right? So I always think that's what I'm saying. - 100%, agree. So I'm coming up to the end of the show. I have a question for you. You probably have a bunch of cool stories, but can you think of a moment of change or impact that someone's had on you or you've had on someone else that you can think of? - Yeah, I think it's a very good question. There's so many of these moments. I think the one that always stands out to me was, my dad is one of those people who doesn't talk. Like, he was with his newspaper when I was a kid and it was always working. But one day, about 10 years ago, I went for a walk with him and I was just trying to ask him questions and I'm like, so what made you succeed in your career? Like, what do you regret? And he said, I did so well in my career in the first 15 years of my career because I would just do what I wanted to. I took chances, right? So my dad actually moved from India to Africa and was running companies and turning them around and super successful. And then he said, after 15 years, I decided that I had four daughters, I needed to get them married. And he was, he's like, I got worried. So I stopped taking risks. And when I stopped taking risks, my career just sort of like flatlined. And I wish I hadn't done that. And he said, like, I hope you never do that. And that was such a moment for me because I'm like, okay, I gotta remember that. So that was a cool moment. - I love that. I love that. Also, like, how old were you when you asked a question? - You're trying to find out how old I am. - No. - I was actually in my 30s. So, yeah, I was in my 30s. So, you know, I was getting to a point where I was like, life is comfortable, you know? - Yeah. - Should I do more or should I just like, you know, just be comfortable? - Yeah. - The third thing for me was like a pivot, right? Like I gained a bunch of experience in my 20s, brute forced my career, right? And learned, made a lot of mistakes the hard way. And then the 30s was really translating a lot of that skill into a higher level order questions, right? Like I had a lot more business context. And I was able to put like the tactical skills in a more strategic context. And so like the reason I teach my courses is try to accelerate that timeframe for all the students, right? It's like you can get there a lot earlier than I did. I hope you do. So for those who want to connect with you on LinkedIn, do you have like your handle that you could share with everyone? - I do. So if you do LinkedIn, you know, the regular LinkedIn and then you type in S-A-R-I-K-A-G-A-R-G, my first and last name altogether, you will get to me. And I would love to hear from anyone of you. S-A-R-I-K-A, thanks for coming on. And I hope whoever's listening gets an opportunity to check out Cashflow. - Thank you for having me.