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We’ve been zinging finance a bit on the show. Today we decided to invite a SaaS CFO, Ben Murray.
We talked about how the two functions should create a solid revenue plan together - how to manage crazy ambitions and much more.
- (00:00) - Introduction: Finance + RevOps
- (03:52) - How the CFO sees RevOps
- (05:22) - The focus is on sales and marketing
- (07:09) - Getting operational
- (08:32) - CFOs
- (10:43) - What planning looks like
- (15:02) - Hidden improvements
- (24:22) - Driving the plan forward
- (26:16) - Creating flexibility in the plan
- (31:01) - Selling to the CFO
- (33:16) - Making the case
- (38:53) - Where should RevOps report to?
About Ben
Ben is a fractional CFO and founder of TheSaaSCFO.com and TheSaaSAcademy.com
Want more from Ben? Check out his newsletter here https://mailchi.mp/df1db6bf8bca/the-saas-cfo-sign-up-landing-page
Creators and Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: Hey everyone, this is Tony Holbein. You are listening to the Revenue Formula in today's special episode, and it's special because Ben Murray, the SaaS CFO's gonna be here. We are talking about revenue planning, both from the finance and the revenue operations side, and we are going to cover a bunch of other topics.
[00:00:18] Enjoy.
[00:00:23] ben is a pro, you know, unlike us. So, you know, well, Mikkel, isn't it a little bit late to have, uh, another, another recording here today? Oh yeah.
[00:00:34] Mikkel: For us it's, it's late, but it's definitely worth it because the thing is, we've, we've been singing finance quite
[00:00:40] Toni: a bit. Singing or singing, singing. You, you mean it with a Z,
[00:00:43] Mikkel: right?
[00:00:44] Yeah, yeah. There you go. Dinging or call what you will. Uh, I, I think we've been doing, you know, We've been kind of not great, and I think it's also because we've not had any representation. Yes. You've been in finance, uh, before. Exactly. I've been in finance before You had a dark period. Right. So I think, uh, what's really great is finally we have someone to represent finance.
[00:01:06] Yes. And uh, with us today, we have Ben Murray. Welcome Ben.
[00:01:10] Ben Murray: Great to be here.
[00:01:12] Mikkel: Wonderful. Hi Ben. So Ben, , fractional, cfo, , you're the founder of the SaaS cfo.com, and the SaaS academy.com. You have a newsletter with more than 46,000 subscribers. I believe it was a little bit done,
[00:01:24] mind blown, uh, called the SaaS cfo. What do you write about there, by the way?
[00:01:29] I haven't, I've just signed up. So I'm waiting, uh, you know,
[00:01:32] eagerly in my inbox.
[00:01:34] Ben Murray: Yeah, so I send a newsletter about two to three times a month and, and cover SaaS metrics, SaaS operations, SaaS finance, SaaS events that I'm holding that others are holding SaaS jobs. So really, uh, a lot about finance and metrics, but trying to expand a little bit beyond that. For example, I'm holding a webinar on how to create a CSAT program tomorrow.
[00:01:52] So,
[00:01:53] Toni: Oh wow.
[00:01:53] Ben Murray: to cover a lot of different things in SaaS. That's gonna, that's gonna help the, the finance, community, founder, community, and so on.
[00:01:59] Mikkel: Exciting and, uh, you're really here to talk us us about finance and planning and revenue operations. So super excited to get into that today. I think one of the things we've been covering is just one half really of the business. Yeah. There's this classic saying that there's two sides to SaaS. There's the financial.
[00:02:20] Side. And then there's the commercial side. Right. And uh, I think we've not really considered the financial side
[00:02:26] Toni: as all. Sorry. No, we have, we have. But it's like a, um, you know, obviously when you're kind of from a revenue operations perspective and then on trying to run the business, it's so easy to paint kind of the finance folks into this.
[00:02:37] Like, ah, I know these guys and the spreadsheet, and they're just coming up with those numbers and those plans. We need to be the ones executing. And I think this was sometimes, uh, what we are riffing off, right? But in reality, obviously kind of, creating some kind of a hostility or something like that between those teams.
[00:02:53] By the way, any kind of hostility with finance is always a bad idea. You know, they're, they're the ones signing your checks. They're the ones, you know, running your payroll. They're also the ones. Signing your deals if you wanna sell to them. So always be friendly to CFOs, uh, and the finance department as a whole.
[00:03:09] But obviously what I think where some of the fun overlap and, and then this is also maybe where the banter is coming from, that, uh, you know, from us with a very much revenue operations perspective. There is kind of an overlap in the types of folks that are working in those two organizations usually.
[00:03:24] Right? Kind of that's at least, you know, my experience, I would kind of love to hear you on this, but usually very analytical, usually very numbers driven and so forth. Usually very neutral, right? Finance, also very neutral towards the business in the sense of, what should we be doing on the revenue side and so forth.
[00:03:39] But would love to hear. Also from your perspective, the, the rise of rev ops. Right. And was it something like that before? And anyway, we'll, we'll get into some of those items. but maybe kind of to start you off with a good question here.
[00:03:52] So from, from your finance perspective, uh, you know, revenue or operations entering the scene maybe five to 10 years ago, I mean, how, how do you see that team?
[00:04:02] Is it a team that should be reporting to you? Is it a team that you know has some other purposes? How do you, how do you see revenue operations.
[00:04:09] Ben Murray: Yeah. Thanks. Yeah. I mean, what you guys just discussed, we could talk for hours about all those points you
[00:04:14] just mentioned. Yeah.
[00:04:15] Uh, but. Yeah, rev ops, right? Really commonplace now. Now you're kind of hearing the rise of finops and
[00:04:20] Toni: Mm-hmm.
[00:04:20] Ben Murray: does that mean? But Rev ops been around and I think where a SAS CFO spends most of his or her time, at least in my experience, is with sales and marketing, of course.
[00:04:31] And like you said, we are help. We're trying to be neutral, trying to facilitate decision making, make better decisions with the in the business, help those department leaders. But a lot of our time as a CFO was spent with sales marketing because there's so much spend there, we've
[00:04:45] gotta figure it out, that roi.
[00:04:47] So I think Rev Ops. In smaller organizations, I think that tight relationship with the CRO or VP of sales and, and especially the sales ops manager who may be kind of the defacto rev ops person controlling the closed one opportunities, the, the, the CRM data integrity that really there's just that tight relationship.
[00:05:06] So we under have to understand who's doing what in bigger orgs. You may have financial analysts on your team who are just focused on sales analysis. Because it just, there's so much data there, but typically you have a relationship, but it doesn't report to the
[00:05:22] cfo.
[00:05:22] Toni: Yeah,
[00:05:23] I think it's, so also when we talked on your show kind of, you mentioned the same thing that you as a CFO actually spend a ton of time on the sales and marketing side. Uh, I would love you to expand a little bit more on that. Obviously there's tons of data, lots of spend is there, but, but you know, from a CFO perspective, spending time there, uh, at least sounds to some of us Europeans a little bit counterintuitive.
[00:05:42] That's why I would love to have you expand on this a bit.
[00:05:45] Ben Murray: Yeah, because you think of all the traditional departments within SaaS company. You say you've got tech support, professional services, customer success, you know, r and d, sales, marketing, G&A. But just out of those. Again, there's so much happening within sales each month and marketing and, and I think the big thing of this, there's so much data trap there that we're trying to make use of, and you think about that handoff, right on the commercial side and, and CFOs kind of think that quote cash, right?
[00:06:10] We send out that initial quote, quote and then eventually we're collecting cash, which means there's a signed contract that hands, you know, the. Commercial, hands it off to CFO to then invoice rev rec, all that
[00:06:20] great stuff. And maybe the commercial side is like, Hey, accounting team, just go deal, go handle it, whatever.
[00:06:26] But there is, we have to understand that flow from lead to collecting cash and all those conversion points in between. And I think today's CFO has to understand that lead process, the pipeline process. How is the sales and marketing team managing that? What are, what conversion points are important?
[00:06:44] Because like you said, we wanna stay neutral, but we wanna facilitate. In order for us to facilitate better decision making investments in the business, we really have to understand the operations of what's going on in each department within a SaaS company. And I think it becomes complex in sales marketing because again, there's so much data, there's so much spend there.
[00:07:03] There can be so much headcount there that there's just a lot going
[00:07:06] on and we have to help in that process.
[00:07:09] Toni: What do you would, do you say that, you know, some of that would sound to me almost like a c o o, uh, and not in many organizations, you have both of those C levels kind of sitting around. , would you say that, when you talk about some of those topics, that this is a quote unquote operational CFO that maybe kind of has that lens versus a more financial one that thinks about.
[00:07:30] And, and I'm sure you do this as well, I don't wanna take this away from that, but thinks more about Yes, the accounting and the budget and maybe the M&A and the VCs and so forth. Do, do you think there's a divide or is it, is it just, you know, CFOs just need to have this completely well-rounded, you know, everything kind of skill.
[00:07:45] Ben Murray: great point because today's CFO, I think has to be very operational. I came initially from the airline industry, so I worked in airline, then software, and then of course software transitioned into SaaS and of course airlines. You think a lot of CapEx, a lot of people, a lot of operations going on. So you have to understand to be effective in finance and for
[00:08:05] all those. FP&A teams out there, the CFOs, to be effective in finance, we have to understand the operations. Without understanding the operations, I can do not do my job as effectively. So I think today's CFO has to be operational, and I kind of call it operational finance.
[00:08:21] In, in in finance account. We're not doing calculus, right?
[00:08:25] We're
[00:08:25] doing very basic math, but you could say complex math based on the operations. So we have to understand what's happening.
[00:08:32] Toni: And, and as you're moving closer to the GTM roles, right? Uh, you know, when I listen to this, that's what I'm hearing. What would be the, three metrics, three things you would love commercial leaders to think about a little bit more to understand.
[00:08:47] To move them a bit closer to the finance department. So at the end of the day, it's all an alignment and comms issue. And if people don't have the same understanding or, you know, understanding of priorities of some of those metrics, the alignment is just harder. Right. So you, as a cfo, what would you love?
[00:09:02] A, let's just say the, the proverbial counterpart is cro o who care the most about, you know,
[00:09:08] Ben Murray: Yeah, I think, you know, as from a CFO perspective, right? I'm not gonna dictate how the CRO is, is managing their business, but I have to understand it and maybe I have to influence it a little bit, you know? So I think from, you know, I think of the lead funnel. Right. So what's happening in Lead funnel before we even get to say the opportunity Pipeline.
[00:09:25] So thinking just at a high level, let's just nail those fundamentals, you know, from the CRO side, what I'd want that data I'd want to help invest more or help with decision making you think, you know, top funnel, where are we getting our leads? Who's
[00:09:36] tasked with it getting those leads? Is it sales, is it marketing?
[00:09:40] And then the channels. What are our major sources of, customer acquisition and lead acquisition? So thinking about the lead
[00:09:46] funnel, top of funnel, what are those basic conversion points in between that give us either good MQL or SQLs that then we hand over to the sales team? So just some of that basic tracking at first, and then next would be, okay, which acquisition channel acquisition channels really pay off there and our most effective?
[00:10:04] And then we get to the opportunity pipeline. Then qualifying those opportunities. Uh, and of course, you know, so much going on in the pipeline, you know, and making sure those opportunities are true opportunities. Make sure from the start,
[00:10:16] you know, they are real opportunities. So that doesn't affect our data because that's also a big thing that I'm looking at within the opportunity pipeline is good data hygiene.
[00:10:26] That if we're just creating a bunch of stuff in there and then we're closing 'em out, maybe we're close, you know, close loss or whatever, and, but that affects all those, the data analytics that your CFO is gonna run.
[00:10:36] You know, so looking at, you know, so just it, it's looking at that then at stages and all that stuff.
[00:10:41] So just, you know, that's, that's what I wanna understand.
[00:10:43] Toni: Yeah, it's, it's pretty funny. So, um, I had the chance to be on, on Ben's show. I don't think it's been. Published it. But anyway, so I was explaining something, uh, I don't know about SDRs and Demand Gen, and, and after I was done explaining it, I just saw it on Ben's face and his reaction to like, oh, thanks for explaining the obvious Tony.
[00:11:02] And it's like, uh, you know, now that I'm, you know, hearing you talk and you then listening to some of that stuff, it's like, okay, no, actually I think you talk about some of this more sophisticated than some of the CROs that, you know, I have seen, uh, and maybe this is a. West coast, east coast versus Europe kind of thing.
[00:11:19] But I just wanted to, to point that out real quick here. So sorry for the obvious, uh, thing there that I, that I mentioned on your, on your show. Um, but moving a little bit along here. One, one interesting piece where I feel rev ops and and finance does overlap, and or maybe not. So this is kind of a, maybe a good conversation, is in this quote unquote boring phase of planning.
[00:11:41] Right. So, planning Season Up on us right now, kind of the, the bigger orgs will do planning right now. The smaller orgs will do it in December or, or January or something like that. but the, process usually seems to be very similar. There's a, an understanding on the board or maybe around the investors where we should be going as an organization in terms of, you know, revenue.
[00:12:00] Then there's a financial model created around that, and then there is. Um, you know, rev op support maybe coming in and, and helping out on how would the funnel actually look like. Is this, is this the process that you're also seeing? Is that kind of, hey, this is, um, this is something that I've seen, uh, across multiple organizations, that, that's kind of the sequence or what's your, what's your experience around this financial planning plus the, you know, some people call it revenue planning or demand gen planning, or, or however, uh, how, how do you, how do you usually kind of see that?
[00:12:31] Ben Murray: Yeah, and I've seen all sorts, uh, as far as planning goes there and really, yeah, that it's so important to start with that revenue planning or the bookings planning, say for the next fiscal year because that really, we have to take that, and that was almost like, almost the same as the airline industry.
[00:12:45] What's our revenue plan, fleet plan, and then giving that to everyone to plan their departments and their business units. So same thing within SaaS is what, what are our targets for next year? And that translates into revenue. And then giving that to the department leaders so they can figure out how do I support our, our bookings and ARR targets for the next fiscal year.
[00:13:04] And then from there, really it does start, you know, if you think about kicking off the planning process for the fiscal year, it does start within sales and marketing for the most part first, or it should.
[00:13:15] We need that data. You know, services needs that data, everyone else to figure out, okay, our revenue is going here, our customer account is going here, all that activity.
[00:13:22] And then these other departments need that in order to plan their departments to support that revenue plan. So starting with sales and marketing and you also sh you know, there it's like it could be our quota carriers times capacity, blah, blah, and here's our ARR target. The most basic level, like if you have nothing to start with, that's not great, but you'll start there.
[00:13:40] But really what I wanna see is, Where is, where does our pipeline set?
[00:13:45] If we're going for an ARR target, does our current pipeline hit that? If not, what's that gap in between pipeline and targets and that, that black box that we have to fill in with resources, people spend conferences, whatever it is to fill in that gap.
[00:14:00] And I think that's where a lot of people go wrong is our pipeline only takes us so far to, to hit next year's ARR target. And then we've gotta fill that gap and invest in that gap to support that revenue plan for next year.
[00:14:14] Toni: Hmm. And do you see, do you see revenue operations actually play a role in this process? Because obviously kind of sales marketing numbers and so forth, it smells like that's a rev ops, I mean, sales ops, marketing ops, whatever you
[00:14:26] wanna call it, topic. is, is that, is that how you see it?
[00:14:29] Ben Murray: Yeah, definitely. I think that's because really we want it to be supported by data, you know, and I think that is part of that rev ops function is to understand the lead flow, the pipeline flow. Where does it sit? Where are conversion points? Where does it need to go? You know, should everything be status quo or do we have to improve certain conversion points as well in addition to investment in that org to hit our targets for next year?
[00:14:52] You know, so I do feel that is a, a rev ops function because there's so much data. They're, again, led maybe then by the VP of marketing and VP of sales influencing that that.
[00:15:02] Toni: and so. Maybe, maybe a controversial follow up here. Um, so you, you kind of over went in this direction, kind of, there's a, there's a revenue target, and then we need to figure out how we get to this pipeline, you know, the, the spend we need to achieve in those different pipeline, uh, channels, if you will. Um, and, um, and then sometimes, um, that's not enough, right?
[00:15:25] You ha you have, well, this is my customer acquisition cost budget. I don't have more. I need you to hit this number. Uh, those are now two immovable objects. and then sometimes, and I've been guilty and exposed to it myself many times. you start like, ooh, you know, that conversion rate, maybe we just take it up a notch.
[00:15:45] and maybe that ACV over there. Maybe if we have like a, a k or two more per year per a cv, maybe we're gonna. What's your, what's your, um, uh, how do you deal with that? Right. Because I think all of us intellectually know, and we are kind of smiling about and laughing about it, but we've, we've all been guilty of this ourselves.
[00:16:01] I'm, I'm
[00:16:02] you know, I'm saying, I'm saying that,
[00:16:04] I don't know for your case, but, but, um, how, how, how's it best to deal with that actually, because it's so easy to fall in this trap.
[00:16:12] Ben Murray: It happens so often where we can't quite hit those targets. And then you're right, we, okay, let's maybe the ACV will go up, maybe we'll improve on, you know, sql, to, opportunity creation. And we're all, I'd say along the way, we're all guilty of that.
[00:16:27] Uh, I think if we have to go that route where it's this swipe.
[00:16:31] We just can't get there. We're gonna play with some, some assumptions. Just be transparent. Like if we're presenting this to the board, to our investors, just be transparent. This is where we're stretching a bit, and this is the only way to get there. But I like to do more bottoms up where, all right, we have our targets, you all our departments plan.
[00:16:49] They get back to me with all their investments in their request. I compile that into a plan, into a budget, and then. Lastly, I, calculate SAS metrics. So I don't just say, here's the static, say CAC number, and we're driving our budget based on this CAC that's been developed.
[00:17:04] I like to, then, back then, that's my final step is first revenue, the targets, everyone gets their investments back to me.
[00:17:11] I create a draft of that forecast, that budget, that plan, and then once that looks somewhat, like it's reality, you know? Cause the first draft is always a throwaway,
[00:17:21] you know, it's always heavy. You know, we've, then we've gotta filter that a bit. And then finally, once I have a good plan, then I look at the metrics.
[00:17:30] Then I go into detail and what's my CAC, what's my CAC, Payback, cost of arr, LTV to CAC to see if that's trending in a direction that makes sense, that's acceptable, that's expected. And if it goes off the rails or it's just too heavy, uh, then going back to the department, say, Hey, we've, we've got some structural misalignment here.
[00:17:51] Toni: Very cool. I think. I think a lot of folks do it the other way around. I was just thinking and, uh, and maybe, uh, you know, your, your opinion is also obviously kind of very much welcomed here, but I think for CAC Payback you can actually use it. I, I think that's to a degree, even for the cro, kind of a really nice way to sense check, uh, you know, the cards that have been dealt, um, to understand, okay, we had the cash Payback of, I don't know, 15 months last year.
[00:18:17] You know, the new budget is suggesting 10, uh, or something like that, right? So then there immediately is a bit of a yellow flag or red flag going up. but, but you're right on all the other metrics, it's, it's usually an outcome of that plan. It's not an input to that plan. Right. and, uh, and if you do it the other way around, it's really this.
[00:18:36] Cart in from the horse kind of situation. and uh, really, really cool for you to kind of call this out and say like, this is absolutely not how you should be doing it. You should be going bottom up and then use those metrics to sense, check whether or not this is, in your words, kind of too heavy and it's maybe, uh, not the right way to go and maybe also isn't sellable to the board, right?
[00:18:55] Yeah. At the end of the day, that's basically what you will need to achieve.
[00:18:58] Ben Murray: Right. At the end of the day, it's gotta be sellable both operationally that like you said, Say CAC Payback, uh, has been running at 15 months and all of a sudden in the, in the planning process, it falls to 10. It's like, boy, that's kind of, that's a big jump.
[00:19:13] You know? And then what I ask is, what fundamental changes are we making in our business to make such a dramatic change in our metrics?
[00:19:20] Otherwise, I don't think it's believable. So one operation and then, yeah. Two, it's gotta be sellable to the board. Believable to the board that we're not saying our Payback was at 20 and then it dropped to six months. Okay. Forget it's not happening.
[00:19:33] There's gotta be a trend there, uh, and any of those disconnects.
[00:19:36] Then I ask, what has fundamentally changed in our business?
[00:19:40] What thesis has changed that tells us we can actually impact the metrics to that degree?
[00:19:46] Toni: Hmm. I think this is a fantastic question to ask, honestly. You know, explain to me what has changed so fundamentally that we could achieve something like that. Right. I think that's a good way to go about it. Um, and, uh, and a good way to, um, you know, challenge whoever has been coming up with whatever, whatever those numbers are.
[00:20:03] In the end, the. The kind of one step on top is actually almost, you know, we talked a little bit about, you know, the, the finance team and the rev ops team, how they work together, how they create this top-down, bottom-up plan, so to speak. One thing that I've been, you know, that I am now guilty of myself, but previously I've been running into, is kind of this hyper ambitious CEO.
[00:20:26] Uh, who's, who's sometimes driving some of the magic that happens in the plant, right? So let's just say he or she had a conversation with the board. The board says, well, if you wanna stay on this unicorn track, you know, you need to triple, obviously your ARR, you need to look like this, like this, and like that.
[00:20:41] And then, obviously in the beginning, a lot of stuff is just magic and ambition. And that's why, that's why it does make sense as you grow older as an organization, some of that. Craziness goes away. Some of that magic goes away and becomes a little bit more, you know, I don't wanna say business as usual, but a bit more kind of constrained, if you will.
[00:20:59] How do you deal with the, for, for better and for worse? Uh, by the way, the, the overly ambitious CEO and how do you, and then sometimes that, that lady or that guy is probably completely backed by the board as well, right? Because they wanna, they want to see the unicorn path. How do you deal with that issue actually?
[00:21:19] Ben Murray: It's a de delicate balance. I'd say in the private SaaS world there, right? There is a cha chain of command that I have to respect and if, if the board believes in the ceo, that's where I do think that the. You know, often the CEO's word sometimes is that final word, and the CFO doesn't want to conflict with a CEO in a board meeting, which would be a huge disaster.
[00:21:41] Right. And also maybe I, I was told this, you know, years ago by a boss, a career limiting move, a c
[00:21:46] Toni: Yeah.
[00:21:47] Ben Murray: and. You know, but I am surprised that my advice to boards investors is to talk to the cfo, maybe individually, independently, or in a board meeting, call out the CFO and have them tell his or her opinion, because I don't think that happens enough where they're just relying on the CEO.
[00:22:07] To tell the story to, you know, and sometimes the CFO's sitting there, boy, that's like, that's a super rosy story. And if they would ask the CFO or pull them aside, you'd probably get a different story and you wanna be on the same page. And that's why it's delicate. But I really believe sometimes the board misses out on.
[00:22:25] Full transparency in the company by not talking to the CFO enough. And then when I've worked in public companies and in business units with 30, 40, 50, 60, 70 million in revenue, what you see there is that almost like the airlines where you have creeping delays, your air airline, your flights delayed 15 minutes, then it's delayed 30, then it's 60, then it's
[00:22:43] 90.
[00:22:44] And I've had that within public companies where. The CEO just doesn't, or the GM doesn't wanna pull down the forecast. All right.
[00:22:50] We pull it down a little in March, then a little bit in April, and then we hit July and it's like, well, now we really have to pull it down, and we have this huge correction. So it's like these slow, because they don't wanna pull the forecast down.
[00:23:02] So it, it's a balance. A lot of communication needed there.
[00:23:06] Mikkel: So I'm actually curious, Ben, so the, the same question we could kind of ask if you're. In revenue operations or, or similar function, and you see the CFO CEO work towards a plan that's really hard for them to attain or even close, you know, you talked about the black box and actually bring a plan forward that can help close that gap.
[00:23:24] How, how do you interface and work with the CFO to actually end up with, you know, establishing some common ground and, and figuring out the best path forward for the business.
[00:23:33] Ben Murray: So I think when we have that gap and you say the CEO says, Hey, we have to, or sometimes it's top down and the CEO and the board is, Hey, we've gotta hit 10 million of bookings next year. We just have to do it. And then we, then really, it's, it's collaboration between the CFO and the CRO to figure that out.
[00:23:48] It makes sure we're. Taking those steps and building out those steps that bridge that gap and at least have an operational plan. And maybe it's a bit unrealistic, but if we can lay out those assumption and, and what's needed, even if it is unrealistic. So we can com explain it clearly so people aren't caught off guard the fir in the first quarter of the fiscal year and all of a sudden we're missing plan. Like, Hey Ben, what's going on?
[00:24:16] Well, we ex explained that this, this is a stretch goal and these are the things that we need to do.
[00:24:22] Toni: Yeah. And so, you know, we talked a little bit about the planning side actually already, right? and then you went into, hey, you're on March, you're in April. You're in May, you're in June. You're gonna take the, either the guidance or the forecast down, um, really kind of when the year flips around and you're now in, in the, the planning period.
[00:24:40] So in the, the plan period rather. And you're executing. How do you. How do you make sure that you keep the organization on track and not, not financially speaking, uh, but really on, uh, some of the other pieces that you mentioned. Right? Kind of really being deep on the sales and marketing side Then also means you understand the lead flow, the conversion rates and so forth.
[00:25:01] Is that, uh, um, and maybe, you know, we could even skip over the ownership. Should it be with funds, should it be with revenue operations? But what in your experience, is kind of the best way to actually drive that plan then after it's been established?
[00:25:15] Ben Murray: Yeah, and it's funny, you know, there are a lot of haters of the budget of the planning process, but I really believe a budget test operational knowledge of all the department leaders in our business, because that's where, once we're in the operating year, if we have documented a good budget, all the details, all the assumptions, that's where the art of FP&A kicks in to say, we're closing out April and we're missing, well, why then FP&A has to dig in.
[00:25:40] Is it the Volume of leads of what we thought. Then we've gotta go back to the assumptions in the budget and see where are we missing, where are we making, what's driving that variance so we can understand it and not just understand it and say, oh, you know, too bad we're behind budget, but what can we do?
[00:25:57] You know, it's still like, Hey, let's catch up. What can we do to get back on plan? And that's where FP&A kicks in, understand all those variances, what's driving those variances so we can communicate to that, to the leadership team. So then we can be a little bit more proactive to try to catch catch up and not just say, oh well we're behind plan and we're gonna miss for the year.
[00:26:16] Toni: Yeah. And the uh, and I think that sometimes also becomes a bit of a conversation then between the fp and a folks and then the different department leaders, right? Kind of giving this intelligence through to the organization. And, uh, and helping with some of that root cause analysis. You know, why are we off, right?
[00:26:32] Mm-hmm. Uh, and trying and form some of the operational decisions then, then being made around this. And, and let just say there's a gap evolving, right? So you had a, you had a plan, maybe it was a stretch plan, uh, you knew there was a black box that needed to be closed, and, you know, that's the gap. And now you walk into the year and you're in, you know, uh, the middle of it and you're seeing that this, The gap is persistent.
[00:26:55] It's there, you know, you try to plan your way out of it, but it's there. what would be actually the best way, uh, for you when the cro o the, the rev ops leader, whoever kind of approaches you, in order to attempt and, and fix the problem? Right. And. I want to take the easiest thing off the table, which would be, oh, you know, we magically found 2 million over there that closes the gap and no, no cost impact.
[00:27:21] You know, the, the more difficult one is actually, either creating more budget, which has an impact, or moving budget around. How, how would you have at best that someone is approaching you almost with this business case you could say, in order to get here? Like, yep, that's, that's Ben approved.
[00:27:37] Ben Murray: Yeah, that's where the capital allocation decision making process comes into play. If, if we're making here missing here, do we need to reallocate capital into other areas?
[00:27:47] But also if we constructed the budget correctly, say we're shooting for some really high revenue target. Hopefully we've invested enough in sales and marketing to support that revenue target, and that's where you get in big trouble is if we had this great revenue target, this high revenue target, but we had minimal sales and marketing investment revenue's coming back.
[00:28:09] But we can't pull back sales and marketing to make up for that, and then we're in big trouble. But if we constructed it correctly, where revenue moves, sales and marketing moves with that, we're missing on revenue. Not sure why our metrics aren't looking good. All right, let's pause on sales and marketing spend.
[00:28:24] So we bring, you know, revenue's coming down, but then sales and marketing expense comes down so it moves in unison.
[00:28:31] And that's where you can get in trouble if you didn't do enough in sales and marketing. So then we can see, all right, what's working? What's not working? What are our metrics looking like?
[00:28:38] Let's pause. Do we need to reallocate or just pause in general until we can get the the go to market machine working as expected.
[00:28:45] Toni: Mm-hmm. Very interesting. Yeah. So actually, kind of this, I just wanna recap this. So really a, instead of n navigating yourself into a position where, You're basically locked in to a degree. Yeah. Right. You hand off half your sales and marketing expenses. They are, you see, there's trouble on the revenue side, uh, but you can't really do anything about it anymore because, uh, they're, they're disconnected to a degree.
[00:29:07] You're basically saying, well, what you really want to do is you want to keep those two things as closely aligned as possible. So when you see that one of them is veering, of course, uh, you can basically course Correct by, also pulling back some of the sales and marketing expenses.
[00:29:21] Ben Murray: Yeah, because then that trickles down through the org, say professional services, if we implement, configure our customers, and then, all right, they're not getting the pipeline flow to hire on their team and all, you know, so it trickles to other departments.
[00:29:32] But you're right, the CFO's worst nightmare is in a forecast if we have to pull back revenue.
[00:29:37] But we can't pull back the corresponding expense or the sales and marketing expense is our worst nightmare because then you, you present to the board the next month that latest forecast and EBITDA has gone down, profitability's gone down, and they'll, you know, the flags are the, the alarms are going off.
[00:29:54] Mikkel: but I think that's also an ideal scenario if you have, let's just say a marketing leader who's actually monitoring the budget and the performance of their department and can see. Oh, if we keep, you know, pacing the spend on our paid channels like this, this is not gonna be an attractive investment. So let's already now kind of dial it back and communicated.
[00:30:13] But I think it's such an interesting component to consider when you, when you run the planning, it can't just all be headcount, which is, you know, fairly permanent. It's, it's, you know, you can move it Sure. But it's, it's a pretty fixed cost, uh, versus some of the other elements. And I think that's where, you know, just one point where I think it's super important for.
[00:30:30] You know, the go-to market side to really work with the cfo, to have that understanding of how much flexibility we need.
[00:30:37] Ben Murray: Yeah, because there's, there's a lot of discretionary spend in marketing, not just headcount, but really you think about a SaaS p and l, most of the investment is in people benefits, uh, et cetera. And so that's where we get in trouble because really if we get into trouble, I. It's hard to make material expense reductions without either pulling back headcount in the forecast, which is not laying people off.
[00:30:57] Or if we're in real trouble, where then you actually have to make, uh, headcount reductions.
[00:31:01] Toni: I have a left field question. Wow. Let's, let's see, let's see how that lands. So we obviously know you're like the expert and you know, SaaS CFO and, and so forth. And, and we talked about this a ton, but as a SaaS cfo, you're also the buyer of a lot of SaaS. and there's a lot of folks listening here that are selling to probably, you know, organizations that you've been working at and or represent or, you know, similar to.
[00:31:26] And there's been a lot of talk, talk over the last year of, uh, especially CFOs clamping down on, on SaaS spend and tooling spend and being careful about it and. Basically being in every single deal, uh, and being the showstopper in most of them. What's your advice, on how to build a good case with a cfo?
[00:31:45] Is there, do you have like a, I'm not sure if this is a piece of content you push out already, so that's why it's a left field question. But do you have, uh, uh, hey, those are the three things that, that, all of you are forgetting all the time, which is why I'm saying nope. To all of those proposals.
[00:31:59] Ben Murray: Right. And the it that there was so much talk around that and selling to the, it's the year of selling to the cfo,
[00:32:05] uh, early in the year and convincing the cfo. So I think I. You think about a SaaS p and l, of course you have people, but yes, the internal tools, internal use software, that is a number that just grows, grows, grows.
[00:32:17] And you spend 500, you're spending a million dollars on
[00:32:19] just SaaS spend in general. And it's hard as a cfo, right? We wanna push our own SaaS, tool out there. But then we're also consuming a lot of SaaS software. So I think the big thing for me, if, if you're talking to CFO, is I wanna see. More immediate impact, more immediate roi.
[00:32:37] If you tell me it's gonna take 12 months to implement the software, uh, we can, you know, and, and the realization of the benefits are way down the road. That's, it's, we probably can't take that on this year.
[00:32:48] So I think it's gotta be more. Impactful within the current fiscal year and more of a cl, you know, and it's hard, like software roi.
[00:32:56] ROI is, can be a fuzzy one. Lots of calculators that you know, that sales like to use, but I think it's like, does it have immediate impact this year on efficiency, leveraging our existing headcount? Does it delay headcount investment that we can become more efficient with with these tools within our business?
[00:33:16] Toni: And kind of maybe kind of just to follow up on this one, and this is me guessing, so, you know, tell me, so, CFOs are also only part of the management team. obviously they have a very specific role to play and a very specific perspective that they take. and in and in years, like, uh, like last one, or the, the current one, honestly.
[00:33:35] lots of focus on cash, You know, venture capital market has dried up and so forth, right? Lots of people trying to get to abit positive or cashflow positive rather. when do you think, when do you think CFOs run out of, let's say, those kind of coins, every time you need to say no, it's kind of a relationship coin that you kind of lose, right? Uh, don't, and don't get me wrong, it's a li I mean, at the end of the day, that's what I'm saying, you also. CFOs are also just, you know, people and they're working within this team of, of the management group.
[00:34:09] And, it's only so many times you can say no, right? It's not like it's a machine. It's like, oh no, we're still behind. That's why it's still, no. how, how do you deal with this, number one and number two, how, how much longer do you think can this be going on? Right? Um, and, uh, maybe there's some wisdom here.
[00:34:24] Ben Murray: Yeah, I think just like your department leaders have to bring forward a business case to justify new headcount, to justify new SaaS tools, whatever it is. If the CFO is gonna say no, we have to justify that as well.
[00:34:36] And I think the bar is higher. Now as those requests come to the cfo for people, for spend, for conferences, whatever it is to say, you know, what is this doing for this?
[00:34:47] What is it doing for the org? What's the roi? Is it efficiency? Is it increased pipeline, uh, increased revenue, whatever it is. So I think we need to see more data driven decisions. So that's where I say the bar is higher if they come and I, Hey, I just need these people.
[00:35:02] Well, why? And they can't really tell you why or the payoff.
[00:35:04] I think now that that's a no.
[00:35:07] Whereas before, it's like, okay, I'll give you a free pass maybe, and then
[00:35:10] later when you come back, you know, tell me why you need to
[00:35:12] justify this. But now I think if there's no clear reason, if it's financially justified, if it's efficiency, if it's revenue, whatever it is, if we can't justify it, I think it, then it's, then it's a, it's a no because Yeah, and we will hurt our reputation as a C F O if we're, if we're just saying, no, no, no, no, no.
[00:35:30] You know, which some CFOs are no known for. But again, that's where CFOs, operationally, we have to facilitate. We want to invest in the business, but we need compelling reasons why.
[00:35:41] Toni: Yes, I think, I think many, many folks get this wrong on the non CFO side, uh, which is your last point. , you actually want to invest in the business, right? You know, that growth is only coming from investment. It's not gonna come from, from nothing. You're not gonna save your way to be a unicorn or you're not gonna save your way to a hundred million, right?
[00:36:00] And, and CFOs very much have that, have that mindset. And, and I think again, because of the neutrality and because of the, The eminence that some CFOs carry in the, oh, and I've seen this before. And, and, and a bit more relaxed about some of these things. I think, they then become also, you know, the, the, the neutral bedrock that some of that stuff can be, should be built around.
[00:36:21] Right. I'm not trying to, you know, make this position, you know, greater than it is, but it's, um, I think this is what this carries actually, and, and I think this is a resource in the organization that, that needs to be utilized in the right way, right? And, and then kind of building this, uh, properly, I think is um, is extremely crucial.
[00:36:38] Mikkel: But you know what, I think it's also important that it's not just a yes man. Yes, woman. Yeah, yeah. Sitting in the CFO seat, just, you know, check, check, check to every, everything. I do believe it is critical to have some checks and balances in place and that's where I'm like, it makes complete sense that if, you know, you're getting asked by the cfo, what's the business case here?
[00:36:57] And you're a complete blank, well then you just found a cool tool that you really want it, you know, and it, and it happens to a bunch of people in an organization because there's so much new stuff. You know, getting out there every day. Um, so I think that's, that's a pretty critical component. I think it also forces us in this environment, if you're working on the commercial side, to really reflect over what is the business case here.
[00:37:16] Is this really the investment of, of a limited set that I want to make this year? And then maybe instead of asking permission, maybe you could consider working on that case with the C F O
[00:37:27] Toni: So, Ben, sorry,
[00:37:28] Ben Murray: Oh, that's, yeah, no, great point. That's where the coaching comes into play from the CFO is working with those department leaders. They bring that business case forward, the investment people, whatever it is, and say, Hey, this is what the CEO is gonna ask it. When I see this, I know these are the questions. Or if we present this, this to the board, here are the holes that you need to fill in.
[00:37:44] So there's a lot of coaching. That's where we have to sit on the fence as a CFO and we wanna push back in a constructive way. That helps the process. So I think that's where that coaching is, where they sit down and I, Hey Ben, I really need these investments. Well, here's what they're gonna ask. Here's what will improve the presentation of this investment to the CEO and the
[00:38:04] Toni: hmm And, and just, you know, just to kind of turn the corny and go a little bit back to revenue operations, I think, I think to a degree this kind of coaching, this kind of support, this kind of thinking about, okay, why would, you know, in this case maybe the CFO or the CO say yes to that. Those are also things where, you know, rev ops leaders, and I'm not talking about the, you know, CRM admin, rev ops, but you know, director Revs, VP of rev ops can actually also coach and support, uh, the go-to market leaders, at least in my experience, uh, to help them a little bit, kind of reason logic through the case, uh, in order to make it, you know, more appealing and or, you know, increase the chances of that actually landing with the cfo, which then in turn also, Can help those rev ops leaders to, um, you know, build a better relationship with, with their go-to-market leaders, with their counterparts, right.
[00:38:53] I think there, there are so many, there are so many overlaps, um, or so many similarities actually between the, the finance piece and the rev ops piece. When you look at it through a specific lens, they're clear, you know, non similarities as well. Don't get me wrong. Um, it's really, really interesting to kind of explore and discover this a little bit.
[00:39:10] Maybe last question from my side, rev ops, should it be reporting to the CFO or should it be reporting to the CRO?
[00:39:18] Ben Murray: I think the, the c r o, because I think then that keeps that the checks and balances as long as the CFO is involved, right? If it, if it's just c r o and Rev ops off doing their thing with the direct ear to the CEO and, and the CFO doesn't get involved, then you're gonna have problems. But I think the CFO, again, has to be involved in that process, influence the process, approve, you know, have, you know, approve headcount, investments, approve discretionary investment in the business, whether it's sales and marketing or not.
[00:39:48] Uh, and then you can keep that nice check and balance where again, you can push back, you can be constructive in that process. Um, so I think, I think split.
[00:39:58] Toni: Wonderful. I think we are coming up
[00:40:00] Mikkel: on time. Here we are. But man, this was, um, I think it was so interesting to get the perspective from the other side. Ben, thank you so much for that. Uh, I really appreciated it. I definitely believe, uh, that a few of our listeners, they learned a thing or two actually now.
[00:40:16] Toni: I think you'll have some more subscribers. You know,
[00:40:19] that's, that's, well you have two.
[00:40:20] Mikkel: That's also great. You have two, right?
[00:40:22] Toni: Uh, no, but, uh, Ben, this was fantastic. Thanks. Thanks a bunch for lending your brain here and, uh, and chat with you about these things. I think, uh, a lot of those topics are very present with our audience right now, and I think you, uh, you might have helped, uh, some of them quite a bunch.
[00:40:37] So thanks a bunch for that.
[00:40:39] Ben Murray: Yeah. Thanks for having me on. Really enjoyed the conversation.
[00:40:41] Toni: Wonderful. Thanks Ben. Take care. Bye. Bye.