Our host Jeff Ignacio sits down with Stephen Diorio, author of ‘Revenue Operations: A New Way to Align Sales & Marketing, Monetize Data’ and Steven Busby, Managing Director of Slate Point Partners. They discuss how to calculate and measure the financial impact of RevOps and how to create a business case for RevOps leaders to fund their growth programs, allocate growth resources and prioritise growth investments. They also talk about building cross-functional teams, funding growth capabilities and prioritising growth actions.
The RevOps Review
The RevOps Review - With Jeff Ignacio, Stephen Diorio and Steven Busby - Defining, Funding and Executing Revenue Operations
(upbeat 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 thermographics, technographics, intent data, verified business emails, and verified mobile numbers. - Today I'm joined by the Steves. Welcome to the show. Glad to be here. - Glad to be here. - So by way of introduction, I have Stephen DeOrio and Stephen Busby. To give you a little introduction to both of them, Stephen DeOrio is a leading authority on revenue operations, commercial transformation, and the impact of growth investment on firm value. Stephen Busby is the managing director and founder of SlatePoint Partners and developer of the Quality of Revenue Operations Benchmark. So again, appreciate it having you both if you want. - Thank you. - Great to be here. So one thing that we were talking about is really, how do we define and fund and execute revenue operations? Like what are some of the key pillars in your journeys working with clients to help unlock tremendous value through RevOps? - Steve, you wanna start? - You can take that, would. - Yeah, okay. It may sound non-traditional. And again, if we have a book, I have a revenue operating system, there are five pillars I can describe the job, we have maturity model, but let's get to the NUB. Revenue operations is about aligning revenue teams, marketing, sales, service, success. And the operations, systems, data sets, and processes that support them around the revenue cycle. That's a lot of moving parts, a lot of channels, a lot of organizations and functions. None of those things are gonna come together without a financial reason to do so. So to really succeed in RevOps, your leadership, marketing, sales, finance, product, the CEO and the board, have to agree on the math of growth. And the sad thing is, at the top of the house, very few organizations understand that equation. They want to think like a private equity person, $1 in, $5 out. And that's a nice picture on the board with the box, but it's a multi-step equation, and the math is pretty complicated. Further, people don't understand the things that drive growth, certainly advertising and sales drives growth, but more and more of the things that drive growth are assets, and by that I mean data. Data's one of the biggest assets in the business. The channel infrastructure, digital infrastructure, for example, that supports Amazon. Cost billions worth trillions. But people don't think about that because finance puts growth investment in one big ball, a hairball called SG&A. They can't separate what's cost, what's investment, what's CapEx, what's an operating budget. If you're running a factory or managing a building, I can tell you office supplies down to thousands of SKUs, but I cannot delineate between growth, OpEx and CapEx. And in a world where the growth assets in the business are worth most of the business, that's a problem. So I think my point of view is until you can figure out the financial aspect of RevOps, and what actions and investments and resources drive growth and make an equation that everyone agrees, I think it's gonna be a lot of random experimentation and common sense. - So one thing that struck me there is, knowing the math, right? Like I always think of finance teams, they have the three statements for their financial modeling and the revenue operations teams, at the end of the day, they have targets to hit and they have to really think through how do they allocate those resources? So building out a model that articulates how the business actually operates in the real world and then factorizing, what are the key variables in that model? Because those variables ultimately are decisions made for folks hired programs that we invest in. And I find that companies who execute extremely well already have that model in place. And oftentimes that model is not stress tested enough in real time to get to a point where it keeps up with where the business mustn't go in the next 12 months. I'm curious in your learnings with clients that you've worked with, what are the best show when they start to articulate that math with you? - Well, if you wanna get very tactical, I think you're making a great point. We're living in a very dynamic system where market variables change, the response curve of a customer change, opportunity changes, customers go from acquisition to expansion opportunities. So I think if you think about something as simple as territory and quota planning, which in your world, our world is really a allocation of resources and effort. There are 21 assumptions that go into it ranging from the productivity of a particular rep, a class of rep, the treatment model, the compensation, the products in the bag, the frequency in which they engage, the size and types of clients that they engage, the manner in which they engage them. And then the response function of how much effort does it take to get something. 21 assumptions, we've got them documented in chapter 11 in our book. Everybody has to agree on those things. Usually territory and quota assignments come from somebody at the top of the organization, dividing up territories, allocating it evenly across reps based on history. But the market's constantly changing. Think about 2020 when the whole dynamic of engaging clients and the costs and channels associated with that one from being face to face and very labor intensive and building travel oriented to something much more digital where the experience and the cadence and the quality of interaction matter. And that was just one example and that's in the last three years. So I think you've made a really good point. It's a moving target. We have to document these assumptions and continually turn and refine these dials. And I think that is probably a good example of what a good organization does is they're constantly revisiting testing and turning those dials to tune that engine. - For sure. And I think Jeff, another angle to this and our best clients, they're sort of an implicit ROI understanding for, you know, if this is going to, we believe it's going to improve the customer experience. We believe it's going to be good for our brand. We believe if our data is consolidated, cleaner, tagged and governed the right way that it's going to have a return as an asset not necessarily forcing a great, you know, give me a specific number for that. And I'm going to hold you accountable. We just take that on good faith. And, you know, everyone agrees with that. And then they can do the more complex math that Steven's talking about on top of that for return. So it's a little bit of a layered blend, but, you know, it comes from the top of the house and it's just a culture that they just, you know, they're instincts and their beliefs and their practices. They just know these things are important if they are truly a customer-centric organization. - Now, one thing I, you guys mentioned before we started recording was the concept of a gap analysis and referencing a maturity model. You know, why do you go through that gap analysis and maturity model and what does it ultimately yield for clients who want to move from, you know, their current state to some design feature state that they're working with you? - Yeah, it's, it's, think of it as a RevOps physical. So you, you show up, you want to, you know, you have goals aspirations and, you know, you're overarching business objectives, but it's the blunt, you know, get naked, so to speak. And you get graded on 46 of the, you know, refined proven, you know, market tested, you know, what is RevOps, individual levers, spanning culture, product, people, process, you know, data, customer-centricity, ability to change. So it's hard and soft things in there, but Jeff, the important thing to get those grades and look at that report card, that's the Rosetta Stone for starting to make decisions about where we're strong, where we're weak, how to prioritize initiatives, how to define things. It's, you know, in our view and our experience, it's, you know, the clear and obvious first step to do that inventory, get that physical, and then you can start making, you know, decisions on top of that. And we see so many, you know, cases of siloed initiatives, sort of symptom treating, and, you know, whether it's tweaking compensation, bringing in a CRO, besting in technology, but, you know, without understanding the chassis and the parts and how they interconnect in their, you know, degree of strength, which with their connected, you can fail more often than you succeed in some of those, you know, symptom treating, you know, boosting investments. - Yeah, Jeff, maturity matters. I mean, you're like the coach of the Spanish National Soccer Team, most sophisticated playbook in the world. And if Steve and I were a sales organization, we could be like fifth graders. We can barely kick the ball straight, much less pass, much less make two passes in a row, much less shift assignments. So I'm sure you've had this experience when you're walking in and trying to explain, these are the plays, these are the processes, this is what the best companies do. If you can't kick straight, if you can't make a pass, if you can't remember your assignment, because you're in third, fourth, or fifth grader, you just don't have those skills or muscles, you can't run those plays, you know, and so the best practices are out there, but can the team run the plays? And I think that mismatch is where a lot of people fall down. And that's why I think what Steve said was important in terms of you got to understand all those things. Can you run the play? Do you have the skills? Can you make the kicks? Do you know how to play work together? Much less, do you have the right equipment? - Yeah, it's a great point. And that's the things that the model uncovers is, let's talk about technology, let's talk about the process, which they work with the business to define requirements. Do they really understand the business? Do they understand the customer, you know, how does stuff get built? But if you conclude that there's dysfunctionality there, there's lack of trust, you know, there's great intentions, but you know, you need to know that before you give that team a play to go run and think they're gonna be successful. And a lot of companies are, you know, they don't, are a little bit blind, that they don't, and they need to be told the stark truth that listen, your IT guys are brilliant technicians and they know great technology and they can, you know, do great vendor selection, but when it comes to innovating for the customer, we've got plaque and, you know, teamwork issues there. And, you know, you need to know that. So getting that, quote, health check, and even if you've never happened, but someone gets all green, you know, all perfect scores, you know, great to know you'd be best in class and in a unicorn, there's value in that, but it's usually just the opposite that there's so many things that are a little bit deficient to being best in class that, okay, how do I sort of triage this and start to prioritize and fix some of the structural things before I start, you know, doing projects on top of that. - So a couple of things there, when I think about someone going in for a checkup, they come in 'cause they do it because it's an annual thing, they have to do it because last year I did it, this year I need to do it. Then there are the folks who are more proactive, they have, you know, personal goals and they're designing their life and the way they live in order to achieve those goals. And then there are other folks who are just more reactive, right, they don't know what they don't know until they get a nasty surprise when they go in for the health checkup. I can imagine that the businesses go through the same thing when they meet with you and they're going through, you know, their maturity model, they realize they're a little further behind the curve than where they ought to be. I'm curious what the next step is, right? 'Cause then it then needs to invest in revenue operations, however they define it, that they could have different names internally. But what are those next steps that go build that business case to go invest in a proper revenue operations function? - Yeah, it's a lot of it's just the cold hard truth. But, you know, we always start with, you know, what's your objective, right? What is your main driving long-term North Star? And we are going to do this assessment in the context of you achieving that. And, you know, where, hey, this is working, keep it up, and where you've got, you know, issues. But, you know, we don't dance around it, but typically you're correct that you do get some, oh my gosh, moments when you say there's bureaucracy or dysfunctionality or trust issues or things that are in the works that, you know, like we say, how can you invest on top of that? You need to fix it. So, you know, quickly you get into the questions of, well, gee, have other people had this problem? Yes, they have, how did they fix it? Okay, and then you start to blueprint out, you know, what that playbook looks like. But, the interesting thing, Jeff, is that through that process, which can take many months, and in some cases, years, it helps build consensus and people sort of feel the sense of relief because this is the stuff they've talked about around the water cooler forever, and now it's sort of finally getting dealt with in a master plan that management's committed to. So, we get a lot of, you know, thank you, you know, we've been saying this for years, but, you know, the C-suite just wasn't listening that, you know, that team over there was not really, you know, executing the playbook we need to win as a team. And, you know, there's all kinds of reasons for why that doesn't happen, but that's another, I think, you know, unintended benefit of sort of dealing with what you bring out, which is a, you know, a level setting, which can be a little awkward. But, you know, we typically run into two cases, the denial cases, you know, they know something's wrong, but they never could admit it 'cause it could be self-incriminating and not good for their employment. Those are the people who need this most, but they're not clients, and those that are comfortable, you know, knowing, hey, I'm gonna get a physical, and I know I got some stuff wrong with me, but it's the right thing for me and my family to get that physical and deal with it. Those are the clients that we love. - Could I add to that? - Yeah, let's go for it. - Yeah, so that is 100% correct. Perhaps a little theoretical for some of our audience. I wanna build on something important you said. Most people don't know what they know. There are 16 building blocks, the DNA of growth, that are causal of future growth and cash flow. Most people don't understand that, just like they don't know what a good diet looks like or a good exercise program or the things, forces of life. We evaluate all of them and realize, you've got a dehydration problem. You've got a sleep problem. You've got a gut health problem. You don't even know those things were impacting your performance. Some of those are easy to fix, obviously dehydration. You know, maybe there's a stress or another problem is harder to fix. Once you do that, there are hundreds of things that can improve growth. Dozens of them are small, quick wins. We call that continuous process improvement. I've never met a business that didn't have three, four, or five big low hanging fruit. Plug a leakage, fix your pricing discipline, stop your attrition problem. Those are the big movers. And then obviously, every business could build roads and bridges that create multiplier effects. For example, I always joke in rev-ops. If people ask me, well, what are the top three things I should do? The business case for clean the data, clean the data, clean the data, clean the data. And the ROI pops off the truck. Now, is there the willingness and the investment in head fatality to do that versus go after the quick hits? But those are some of the decisions we're talking about. And to make it real, one of the things that people don't know is that most of the things that crack growth or interdisciplinary, marketing creates value with a brand. Salespeople realize the value of that brand because people choose them more and they're willing to pay more. Though it's happened in two different parts of the organization, marketing gets insight that tells you the 5% of people who are actually gonna buy this quarter. Getting that information over to sales reps is really, really, really hard. Training, ramping, and retaining reps is a team sport. It spans organizations. There's no one throat to choke. And no one's even adding up the fact that for every point of attrition, you're missing your revenue plan by two. So I think, you know, the whole lead to cash cycle is rife with just obvious places where revenue and margin are leaking out. So this is a rocket science we're talking about. And when we do the MRI or the checkup that Steve is talking about, there's gonna be tons of quick hits, some smart investments and some long-term multiplier effects. The challenge is, there's probably gonna be 200 of them and the organization only has the bandwidth to do five. And I've, in my experience, picking that five is blowing people's minds up. And quite frankly, you can pick any five. The challenge is getting five or six different organizations to pick the five. And that's another aspect of why what Steve is talking about is so powerful. Just getting people to the top five is a big home run. - You answered my next question. I was honestly gonna ask you, well, if there's so many quick low-hanging fruit to go tackle, like why haven't they been tackled before? In my experience, I've came into one org where I received a backlog of 300 tactical things that would instantly fix the business. My instant reaction was, take that list. Let's group it together. Let's synthesize what's gonna yield the biggest bang for the buck for the least amount of effort, right? But where can we produce them? Where can we have high productivity for the least amount of calories? So I do wanna pivot a little bit. So I've been in SAS or BC back startups for the last 10 years and revenue operations is a title that's existed in that space for quite a while now. But I'm starting to see more folks adopt the term revenue operations across different industries. Do you see like different waves of industries moving in from early adopters to middle adopters, you know, bringing in and incorporating some of these revenue operations philosophies? - I like the way you think about it. By the way, you've got an impressive background in the track record. And the SAS world really led this conversation because they had investors looking for net recurring revenue. So you had to balance the acquisition and expansion phase, you couldn't let leak out. We're seeing it move to bigger organizations, information based businesses, manufacturing businesses, financial services business, obviously larger tech and equipment types of businesses. But it's exciting, some of the most exciting projects we have going on right now are in industrial businesses who are dealing with complex, long-term client relationships where usage, expansion, cross-sell and upsell are the key to success. And the number of solutions, services firms like the Big Four, they have 500 things to sell you, 40 personas to sell to. No one's even walking down the hall and shaking hands and introducing people. So I think those are some of the big areas we're seeing it. But I definitely think it was born in hypergrowth companies. SAS businesses get this. I'm not saying they do it well. Perhaps your clients do. But I see it spreading. And again, RevOps, you said the operative word. It's like a fingerprint or a snowflake. It's peculiar to every organization because every organization, the math of growth is slightly different. And they've got a personality and an appetite for change that's different. So I think that's a good question. Yeah, I just add to that. I mean, it's definitely spreading. But I think in potentially a bad way because for some reason, everyone's CRO, great. Let's hire the best person with a sales background to put in that role. Versus thinking about it that, gee, we need someone that's an engineer, someone that knows operations because the change they need to affect isn't just with the sales team. It's all these interdisciplinary things. So if you read a job spec, most of them are cringeworthy in my view because based on the problem that needs to get solved, particularly for a mature company, you're talking about change management, collaboration, teamwork. Yes, there's elements of that in sales, but typically a brilliant salesperson is not the right tool for that, the job that needs to get done in a lot of cases. If you're growing, yes, and it can be very, very different, but when you get a company that says, gee, this sounds great. Let's try it 'cause nothing else works and let's consolidate sales product and our sales service and marketing and put them under a single leader and good luck. But when we see a VP that gets put in charge of this and then what reports to you and what's your mandate, you just say, this is not gonna work. So what we wanna do is arm that person with that ROI map to say, guys, I've got a plan. We've got 38 issues. We've got it down to these six. Here's why we should invest in these six. Here's what we need to do. And just to get that process going, we found getting that audit, normalizing all the moving parts is a useful first step. And then it helps people see that, gee, this isn't just a problem in sales and marketing, getting the alignment there and collapsing those functions, which will happen. It's HR, it's ops, it's IT, it's finance. And it's a long, hard slog to get all those constituents are harmonized. - Could I add or do wanna jump to another question? - No, I'd let you hear more. - Yeah, so I had the privilege of publishing a well-timed book, conveniently titled revenue operations. It's boring, but it's a blueprint. It gets into detail. Twice a week, McKinsey'll go in, move the boxes around, just like Steve says, jam all this stuff together, take Bill or Mary and put 'em in charge and walk away. The boxes and arrows part, I may be in the software part, it's relatively easy. These people quickly Google, buy my book, read it, call me up and say I'm screwed. And they're not talking about management, they're talking about culture change, skill development, incentives, career paths, prioritization and persuading other people to play nice together. And these are all the things that pop out. In fact, we got a survey from a lot of these folks. Number one thing is cultural and business change. Number two is fostering teammate across people who don't work for each other. Tech complexity, prioritizing opportunity overload, balancing impact and capability. They know they need to build infrastructure, but they gotta throw some red meat to the CFO. This is the conversation we have over and over and over again. And when you think about the first question you asked me, without a consensus on the financial model, I always say, what should I do? Should I buy software X or Y? I say, do the thing that creates the most value and growth. And without the math, you can't determine what that is. I'm not gonna say any software works, connecting the new one to the five on the work, which one you do first and whether you even do it is what matters. So I think that's why we kind of came back to the numbers. If there's not a higher authority, a financial incentive that's saying, this is what grows the business and I can prove it, you really can't make any decision. You can make good decisions. People can listen to you. I'm sure you're giving them a great advice, but they wanna execute it unless there's a financial force to get the money and the willpower to do it. So I think all roads lead back to this math of growth and convincing the CFO and the leadership team. - So I find that a lot of CROs come from a sales background. And so when they get to the position of chief revenue officer, they're not just in charge of sales. They're in charge of generating pipeline, building brand, making it easier to win, also servicing customers on the post sales side of the house. Same thing with the revenue operations team. Many of them come from, it might including myself, came from sales operations. So you get to a point where your career necessitates adding the line to crown the T, but you've had an eye-shaped career until that point. When you're working with your clients, a curious, how do you arm them with the ability to get comfortable really executing those other parts of the T? - Steve, you wanna leave? - Sure, I mean, we typically deal with the okay, great, we understand your mandate and you seem to be making some good progress, but what if this is a product issue? What if it's a speed of innovation issue, which is tech related? Do those report to you? No, well, what's your relationship with those groups? And you deconstruct it, but we always, 'cause we do this for a living, if you think of revenue as a broadly defined and what drives revenue, it's not typically the mandate that that executive has doesn't cover all of the problem and where you need to affect change. So you can use this process to sort of understand how it fits in and then educate, as Steven said a couple of times, one, two levels up to sort of say, hey guys, this is a team sport and here's the playbook we're gonna run and to win the game, we got offense, defense, special teams, if I'm just running offense, also need to have a great relationship with the defense and special teams and we have to strategize together and dealing with a lot of stuff, but typically when you ask them, just practical questions about, okay, great, you're doing that, but was a product in that meeting? Well, no, well, should they have been? Yeah, well, we've never done it that way. Well, changing behavior in that culture can be hard, but that executive to your question sort of has to think that that wide and broad and kind of level set, but you've got to, again, go, we find you have to just deal with it head on, go to the top of the house and say, guys and girls, this is a team sport and either I need to have control or when I tell you, you need to be able to go in effect control so we get everybody marching in the same direction, 'cause that doesn't fully fix the problem when you get good change and momentum in let's say sales and service and marketing, but you've got some functions that are laggard, maybe it's HR and the talent's not keeping up. It's all interconnected. Could I come at it from a little different angle, Jeff? Yeah, absolutely. So I think Steve laid out what the czar or the chief commercial officer or, you know, I've seen dozens of organizations for sales, marketing, and servers at the C-suite level reported to the CEO. He's 100% right, but I think you're kind of a poster child for what really happens. We think, in my experience, there are three types of web ops organizations. The czar or the top-down, well-organized model where it is coming from the top and you've got a professional executive. Steve just described that. The other is a coalition. Just people who get along and work as a team. And as an example of that, smart technology, they do budget allocations. They have a casino board. Looks like a crap table. And all the executives get around and just start pushing chips around their budget to the places where it'll do the most good. There are no organizational budget boundaries on there. So that's what I think the big team is. But I think the real life form that's exciting to me is what we call the RevOps superstar. And if you ever watched that old show "Mash", it was a corporal right or a rightly who actually ran the whole thing. 'Cause he knew where the data was. He knew how all the processes worked. And he basically made it happen from the bottom up. And I think if you think about your own personal experience, if you get somebody wrong, there are five food groups, essential to success. You gotta be comfortable with data and technology. You gotta learn finance. Everyone gets trained in marketing. You gotta know how to sell and know the basics. But if you understand data and can explain to a finance person what that data means and what it tells you about wasting growth faster, that's a ticket to the C-suite and that's a ticket to the boardroom. And I can't tell you how many people have said, one, I'm not gonna tell you the name of my RevOps superstar. And two, if they can do that, they're in the boardroom within a week and they stay there. So I think the good news here is a lot of people are just figuring this out. People are calling RevOps the farm system for the next generation of group leaders and it's a great career path. And so a lot of times, people who didn't have a 30 year recruiters in sales, but just have been mucking around in Marketo, understand the data, my nephew. He's a serial administrator. He's gotten promoted five times 'cause he's sitting on the data and he's smart and he knows how to sell. And he's skyrocketing through the organization. So if you think about it from the bottom up, I am super excited about these next generation of growth leaders. So looking at your own career path, Jeff, I'd say, you know, looking at your job history and the things you've done across sales ops, go to market, you're one of them. Now you've got some gray hair, of course, but look at where you are. - Yeah, let me just interject a current client right now, but I think it's a good example and answers the question, but it's a $40 billion company with multiple divisions, but the RevOps person who I thought is brilliant, but basically went to the finance department and said, "Hey guys, let's do a RevOps, you know, learning day. "We're gonna learn about it, learn about CLV, "lead the cash, all the stuff that you've probably heard, "but to train." So we did a benchmark. We're getting all the finance people to fill out, you know, some, you know, what their thoughts are of practices and capabilities, but it's gonna end with sort of this great, we're getting consensus in aligned and I, you know, to the point that it's spreading, but to be a seed spreader like that, I think is proactive and very smart and gets, you know, RevOps aligned with the right stakeholders who ultimately, you know, will write the checks and, you know, the finance guys are excited. They're getting out of the, you know, out of the office and learning some new things and getting away from the numbers and, you know, asking great questions and, you know, it's, it's, it's very exciting to see. - You know, and to quote you, Jeff, there have been so many, I didn't know what I didn't know moments. I mean, there are 16 billion blocks of growth, financial reporting only shows three of them. So people are essentially flying ball when it comes to managing growth. I mean, I think that's the big piece here and I think that's, you know, the one problem I think we can solve because until you can see those numbers and really see the math of growth, then it's just, you know, to do it up by brake with a blindfold on. - Well, I've enjoyed my time with you. I hope the audience as well. If you can, before we hit the road, I'm curious how can folks learn about both of you as well as late point partners? - Yeah, you could check out our website, slatepointpartners.com and we do have a revenue operations self-assessment for Rosa. It is free, it's, you can at call us or email us. We can get you access to that, but it's basically a 20-minute self-administered physical. But it's a great tool. You'll learn a ton. We do give you a little value creation scorecard that says, hey, you're doing great here relative to potential, but over here, you've got opportunity and you can use that as a seed starter to go to other stakeholders and sort of say, hey, we've done a test and it looks like we've got interesting opportunities over here, would you like to learn more? But take Rosa, again, no cost, no obligation but you can get that via contacting us on our website. - Amazing. Well, again, thank you both. - Thanks, Jeff.