RevOps Is the System Layer Most Teams Skip

Machine-generated transcript from the episode video, cleaned for punctuation and names. Speaker labels are not included.

[0:05] Welcome to the GTM Vault Podcast. I'm your host, Rick Koleta. Today we're diving into the world of revenue operations, or RevOps, with Zach, a leading expert in this field with extensive experience in private equity and venture capital. RevOps is crucial for aligning sales, marketing, and customer success teams to drive growth. Zach will share insights on its evolution, current trends, and future innovations. We'll discuss challenges for early stage SaaS companies, key metrics, and the impact of technology on RevOps. So without further ado, let's dive into our conversation with Zach on the future of RevOps. Welcome, Zach. Thank you, Rick. It's a pleasure to be here. Well, it's a pleasure to have you on the podcast. We'll dive right into it. Perfect. I want to start off by asking you about your perspective on RevOps and how it's

[1:08] become a crucial aspect of business operations today. What trends or needs have driven this shift? Yeah, so I think there have been evolutions in marketing operations and sales operations, along with it, and customer support. You see that smaller organizations need a role to complete some of these tasks before you can have five people do all of the roles that we just went through. So revenue operations is one of the fastest growing roles in go to market. If you just look at Google Trends, it will show you the tremendous growth, and it's because it touches on all the elements that you need when you get started. But the role also evolves over time as the company expands. How do you envision the evolution of the RevOps function? What are some of the key developments that you foresee over the next 5 to 10 years? Yeah, I think there are three specific areas. One is in systems, one is in analysis, and one is in

[2:13] management. So for systems, you can think of sort of the unit economics of business operations. Analysis is a little bit more of the understanding all of the data that's incoming to the organization from sales, marketing, customer success, IT, onboarding, offboarding employees. And then from management is also how are you organizing teams around this. So what I've even seen here in San Francisco is companies having RevOps roles in different departments, so it's not one for an entire company. If you have a specific product launch, you could have a RevOps role for that function, and it's sort of the go to market operations function that is in charge of the success of that product or category launch. So if you look over the next 12 months, I think there will be a further growth in the RevOps role specifically. But looking next five years, I think you will start to see RevOps,

[3:17] revenue operations, as a standard, right? This is going to be a boilerplate. You'll see these in all the dropdowns in LinkedIn and AngelList. This will be a commonplace function, not unlike product, sales, marketing, finance. Because really, if you're not tying all those together, then it can become a burden on the management team itself, which has other problems to deal with, right? No one wants to become a CEO to also be able to set up a CRM to scale to a thousand or 5,000 employees, right? There are different roles that do that. Understanding how you use metrics, tie in with MRR, and we're going to talk about that in a bit, that's not what a manager should be doing of a team. Owning the, again, the unit economics of how the business is operating from a customer facing role or a sales, even marketing

[4:22] facing role, that will not go away anytime soon, especially as everything is turned into a subscription offering. Lawn care to any flight rewards that you have going on, everything is becoming a SaaS product, and with that you have a mountain of data that is very different than a single or unit transaction. From your experience, what are some of the major RevOps challenges that early stage SaaS companies face, and how can they navigate these problems effectively? So most recently I was with an Andreessen Horowitz backed company, but I have a long tenure with Techstars, and one of the things in Techstars that they sort of inculcate in you is focus on the one metric that matters. I think when you're a young company, you're given a lot of information, and so you have to process and act on it extremely quickly. So I think the number one challenge is signal versus noise. This is true even for

[5:26] larger companies, but in younger companies especially, because you have a small group of stakeholders, a small group of prospects, a small group of customers who are giving you a constant amount of feedback. However, they are relying on you to know what to do next, right? They've chosen to believe in you for whatever reason, and your ability to make those decisions correctly in a way that they're comfortable with means that you have to basically sort of build a plane while you're flying, and that can definitely be a challenge, especially if you've never been in a leadership role or management role. I've seen some first-time founders, people can go to the hospital, get hospitalized, because they can sort of have a breakdown. It's extremely overwhelming being a founder, and even being on a founding team. Being able to know your true north and to find that one metric that matters, because once you find that, your prospects will buy more, your customers will be happy, your

[6:27] investors will be happy, and you won't deal with challenges in talent management, recruiting, staffing, because people like to work there because you're all focused on one goal. What key metrics and KPIs should SaaS companies focus on within their RevOps function, outside of that one goal, or including that North Star metric? Yeah, I think that there's one that everyone would guess, and then there's a secondary one that I'm not sure people would implicitly go for. The first one, of course, is MRR, recurring subscription revenue, has been and will continue to be, I think, one of the, if not the penultimate metric. Other metric that I've seen Intercom really lean into as of recent is usage. HubSpot as well. And as you've noticed, both of these companies have grown by leaps and bounds in the last 9 to 12 months, and for

[7:31] four or five years, and they understand the unit economics of every piece of consumption. So what they'll do is they'll build a product and then they'll start tracking for where there's a maximal return from the customer, and all that comes down to is usage metrics. So then you can productize what would just be a recurring fee, and now you can band up and band down. I know that both Intercom and HubSpot have that functionality, and they are able to increase costs for the customer, but also they have the ability to discount heavy. But what that takes is having a lot of products that a lot of customers can use, and then once you take all that data, then you can correlate it to likelihood to upgrade if this were turned into a consumption based product versus recurring revenue. And so tying both of those in together, you can use the usage metrics to increase your MRR versus having to sell an entirely new product.

[8:33] Can you talk to us about how technology has increased the effectiveness of RevOps, and are there any specific tools in particular, platforms, that you recommend? Yeah, depending on the size of the organization, I think that there are a few that are fairly commonplace. So every business has a CRM, if not multiple. That's standard. Google Analytics. When you get into some of the ano tools, like a Segment or a Google Search Console, Segment is if you need to scale your data operations, and Search Console is if you need to understand a little bit more of your go to market function. So specifically for our conversation now, I would say Google Search Console, because that's what will give you all of the leading indicators of what your customers are looking for. So just in 15 seconds, I found that many marketers don't have Search

[9:36] Console set up, and why revenue operations can use that is to tie it to product launches, and then they can look at the search demand. Even if someone doesn't click from Google, you can see all of the keywords that were ranked on, even just for you showing up in Google. So in knowing product direction, in order to, of course, increase, you need to know what your customers want before they can verbalize it to you, right? I think that's a critical component of some of the best products of all time, is that no one really anticipated them, but they wanted them. They just didn't know how to describe it. So I would say Search Console is sort of the diamond in the rough in terms of how a small nimble team can easily understand what they should be building in the market without having to do, I met a founder last week who had done 70

[10:39] customer interviews. She's very early stage, but everyone should be doing 7 interviews, but you don't always have the time to. Google Search Console allows you to get to that level of data and that level of insight, with saving you weeks if not months of doing these interviews. How does RevOps facilitate better alignment between sales, marketing, and customer success teams? Can you share some examples from your experience? Yeah, so in the role in the company where I moved from marketing into revenue operations, it was clear that just having the title of revenue operations made it easy to align better. So really, the way that I described it is, I don't, you are a champion of the sales and marketing teams with a seat at the finance table as well. But not only that, just because of the type of data that

[11:42] you're able to pull, because of the departments that you're coordinating with, I had access to every CXO role, and this is not common at all. I'm sure if you're just very ambitious and wanted to go after that without being in revenue operations, you could. But a company that can create a role for revenue operations has already made the decision that there needs to be the alignment there. So I'd say having the role sort of implies that there's a need for a coordination of data and decision making that, having worked with startups for over a decade, just isn't there unless you have someone with that title. What advice would you give to professionals looking to build or improve their RevOps function? Are there common pitfalls to avoid? I don't know if there are pitfalls to avoid. I think that I'm a big fan of build it before you need it. The best way to

[12:46] get that experience is to just start taking on those roles and responsibilities. So if someone is looking, go look for some of the roles at companies that you like to work for, take on ownership within the company that you're at, and start being able to check off a lot of the boxes for what these companies require. What I'm finding, Rick, and I'm curious your insights on this as well, is that often it's not, some companies will have a RevOps function that operates a little bit more in marketing, a little bit more in sales, a little bit more in customer success, a little bit more in data operations. So if you can cover what that 25 to 30% isolated focus is, 70% of the role is the same no matter what the specialty is across those. So once you get that base layer, it's very easy, because now you have sort of a foot in the door for how the role operates in general, and a lot of it will come down to systems, analysis, and management. But depending on whatever that specialty

[13:50] is, that'll be where you want to go a little bit deeper. Earlier stage companies are a little bit more flexible, so you don't need to be a specialist in segments in order to get a revenue operations role, but you will need to be able to speak to how all of those elements combine and how it's important. But again, I think sort of moving more towards signals to remove the noise, or reduce the noise as much as it can, I'd say in a small to medium-sized company, that's going to be the primary component that you want to be able to communicate. Now, how does the role of RevOps evolve as a company scales from startup to more mature stages? What should companies keep in mind during this transition? Yeah, that's a great question. So what I've seen is that RevOps will be one of the first customer success, sales, and marketing goals to be onboarded, and what, at least here in San Francisco, is a very typically engineering heavy team, so will take on those roles, and then you will

[14:55] hire into those functions. Or depending on the type of communication you have with your customers, you may be able to entirely automate things like customer success, the early parts of the SDR outreach, and then move into more of the data operations and begin to automate that a little bit. However, as the company grows, you will need to bring people who can do that day to day. So what that means is, for data operations, you will need a data analyst. For customer success operations, you may need an account manager. There are different paths you can take depending on your business model, but I would say that RevOps is the first hire that then builds the team to upscale based on the systems that have already been created. Can you share any success stories where an effective RevOps strategy significantly impacted a company's growth and performance? Yeah, I'd say those who work in revenue operations get that moment of success every four months. So when you're preparing a board deck, a quarterly

[16:00] board deck, that is the number one, that is where you're pulled in, because you are most often the owner of all of the data that's used in all of the investor report. So whether you're working venture capital or private equity, there's a tremendous amount of information that needs to be in these quarterly, often monthly, investor presentations, and pulling all that together can take weeks, right? You may spend three weeks working on a monthly investor presentation, and what happens is everyone will come to you with questions, because they'll need to know specifics on all of the data points. They will likely challenge you on the ones that they may think are irregular, and that's where you get the shine by saying, here's all the data that we looked at. And if you're highly proficient, what you'll be able to do is give two, three, four layers deep of the rationale and the metrics that are leading into why those charts are the way they are. I don't think your goal in

[17:03] revenue operations is ever to convince someone else that your numbers are right. It's to convince whoever you're sharing with that the data is accurate, right? There's not a, I think exposing the right data to come to the right conclusions is the number one function. So whenever you're able to do that, it can be weekly. I know in a lot of functions, being able to do a biweekly or monthly meeting with every CXO to walk through those, whatever metrics or dashboards that they have that they're looking at to analyze the performance of their team, that's critical. But then, like I said, quarterly or monthly, as you're pulling all that together, that's when it's clear to really understand how the business is operating from a 50,000 foot view, because you're tying in all of these roles to a granular degree. That frankly, even if you don't have investors, you should be acting like you are preparing the support, because it will at least get you in a cadence of understanding and doing a retrospective of how the

[18:06] business is running on a recurring basis. That's a wrap for this episode of the GTM Vault Podcast. A huge thank you to Zach for sharing his invaluable insights on the future of RevOps and its critical role in business growth. It's been enlightening to learn about the current trends, challenges, and innovations in the RevOps space. Please subscribe to the GTM Vault Podcast and leave us a review. Your feedback helps us bring you more great content. For more insights and updates, visit our website at WR gtm.com and follow us on social media. Thank you for tuning in, and we'll see you next time. Thanks, Zach.