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Why does RevOps exist, and how do they switch from busy work to business impact?
In this episode we cover the evolution of RevOps and why they’re critical for the GTM teams.
As a team, RevOps must focus on revenue by creating shared funnel metrics and running quarterly business reviews with the revenue driving teams.
At the same time we cover the questions RevOps needs to be able to answer.
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.
[1:53]
Toni: I think revenue operations is a evolution out of, sales, operations and sales. Operations is an evolution out of, you could almost say it or system admins or something like that, right. It really started with, the sales team, needing to use the CRM. At first, that was rooted with the very central function of it.
You might say, and maybe that's 10, 15 years ago. I don't know. I wasn't around back then, but more and more they realized, Hey, no, this needs to sit closer to sales.
And that's then when you had the, CRM system admin that, uh, made sure that the process that the sales team should be running and the knows that they should be taking all of that stuff. Has a home, the CRM and, the, the evolution of that then became that, Hey, what are the things we can do with that CRM. And those things are, Hey, we can pull a report.
Hey, we can see a dashboard. Hey, we can, uh, have an, have a conversation in a one-on-one with a sales rep on you're not doing your activities, or this deal is too long and in the pipeline.
And that, that next step then became sales operations. So basically including both, tooling and some reporting and analysis and. I think that that specific function, I don't know, since when that existed sales operations, but basically the, the right hand of the, the VP sales probably has existed for a while.
And the reason why that then jumps to revenue operations is really the emergence of SaaS. I think. And the reason for that is that, let's say 15, 20 years ago, SAP or SAP, they were still selling CD ROMs that they sent to their customers. And then there was installed. And then five years later, the account manager called 'em up again and said like, Hey, you need to basically pay the same fee again.
For basically the same thing. Just a little bit better, updated five years later,
Mikkel: little faster, a little bit more expensive.
Toni: it's a little faster, a little bit more expensive. Yes. And that was the customer life cycle, if you will. It was especially for something like SAP, probably a little bit more than just the CD rom, but basically that was the idea of customer success.
Right. And then you basically enter SaaS. the reason why SaaS exists is that those upfront cost of buying SAP for five to 10 years, really high, lots of trust needs to be developed between the buy and the seller before someone would do that.
Lots of upfront work needs to go into, you know, buying the mainframe and putting it on there. And you know, all of that, all of that jazz. And SaaS then was like, well, wait a minute. If we flip this instead of a one off cost into a, recurring fee, then we can make it much, much cheaper actually. And we align it with the value that's being delivered.
That really was the fundamental idea. And that's also why this, business model works so great right now. Right. Kind of the barrier to entry, much lower. And you feel you pay as you go as you have the value. But what then happened is that, it wasn't just the CD rom anymore that you sent suddenly it was a continuous relationship between the buyer and the seller and that relationship.
Then wasn't really managed through, customer support, which is usually the technical issues or taking care of things. but
that they needed customer success or something similar. I think customer success very much coined by Gainsight. So it's really a role that they literally invented.
but that, that concept of having a person that, helps you be successful with the tool, because if you don't have that, why would you keep, for the tool? Right. And so there was a long [00:06:00] way around the actual answer here, which is the realization that it's not only about sales anymore.
It's actually also about, what happens after that sale, which is equally important, right? And suddenly you are, not only sales, suddenly you have kind of CS, you kinda zoom out a little bit, you know, marketing pretty quickly appears on the picture. And then you realize for a customer in that SaaS environment to be really happy with the company, that they're buying from all of that journey actually needs to be aligned, and, and that, that alignment happens obviously on the process side.
And messaging and all of these other things, but it also happens on the tool and data side. Mm right. And suddenly, wait a minute, processes, tools, data, that seems like an operational function. Yeah. And then wait a minute. That is not just in sales, marketing or CS is actually across the board.
And if those operations people don't work closely with one another, then they're basically gonna build misaligned processes and tools and data. So let's bring them all together on the same team. Let's have all an understanding of how the end to end process should look like.
And there you go, revenue operations.
Yeah. And that is really the I feel that's the evolution to date of, revenue operations. Obviously have some ideas how that's gonna continue and so forth, but, uh, maybe back to you, Mikkel.
[7:16]
Mikkel: Yeah, I mean, so, so it sounds super interesting. This, this concept now emerging with the tool stack, getting more and more sophisticated, right. And, and owning end-to-end, the full funnel. basically one of the symptoms we've discussed a lot is sales and marketing being at odds with each other. Right.
And I'm guessing this is also a point where bringing in a centralized function pretty much that works across, they should ensure that there isn't that misalignment, that you're working towards the same goal.
Toni: I think revenue operations can play a role in this. They are playing a role in it. I think it's a little bit too far fetched to say you install RevOps or call someone that is really sales op RevOps, and then you solved it. I think that's, that's, that's probably the wrong way to go about it.
Because really to, to create that alignment, you really need to have a powerful revenue operations function that can speak on eye level with the VP marketing and the VP sales, thus can't report into either. and, uh, and call out each other's BS, um, which is important, but also can understand and see both sides, because that's usually what I see is lacking from a VP of sales that is like, Hey, I want those leads.
And the VP marketing, Hey, you're not treating my leads properly. And obviously the problem is way more complicated than just that. But that's usually. That's usually something that needs fixing right. And many people now go the CRO route, chief revenue officer, and whenever there's a marketing person that is unhappy about, the CRO idea, it's usually because it was a previous VP sales that continues to be a VP sales.
But just as more senior title now owns marketing, and that doesn't work out. Right. But in that context, having a revenue operations function that is strong enough, sitting either, just below the COO or, you know, if you don't have that sitting with the CEO or the COO so forth, that can actually help and, uh, mitigate some of the friction that exists between those two departments.
And I think step number one, in order to solve it is. Let's, let's align on those numbers. And also, Hey, can't just be more MQLs. There's a little bit more to it. So let's discuss that and figure this out. And then on the other side, on the sales side also very, you know, clearly, also an understanding that it's not about, Hey, just add more dollars and then there will be more.
And why isn't there more, there just seems needs to be an understanding on both sides. And I think. If you have a great VP, revenue operations, or director revenue operations, or something like that, they can actually help mitigate some of those issues. If, if there isn't a CRO that can do that for them or with them .
[10:00]
Mikkel: Let’s ake a little step back and dig into the problem. Because there are lots of B2B SaaS companies out there. They have RevOps, but what we're seeing across slack communities and, those, those interviews and just the network we have within RevOps something is, is a bit off.
So to your view, what are they usually spending most of their time on, in a, in a regular B2B SaaS today?
Toni: I think their day to day exists very much of fixing processes, installing tools, creating ad hoc reports, calculating commissions. These kind of things,
Mikkel: the fun stuff
Toni: well, it's, it's not fun, but it obviously kind of comes with the, I mean, it is part of the job description. Yeah. And, and they should be doing it.
Don't get me wrong. Right. This is not a, oh wow. Everyone is getting revenue ops wrong. They shouldn't be doing any of these things. That's not about that. What, and maybe I'm kind of jumping ahead here,
Mikkel: I mean, it's, it's funny, right? Because in marketing you have the same conundrum
There's a lot of things that you just need to do and it, and it makes up a lot of time and I heard. Olafur, our co-founder here at Growblocks. Talk about revenue, operations. They need to be ahead of the business and you don't get there by just doing the commissions and, you know, ad hoc reporting. You need to spend your time on other things, right?
And that's, I think then the next layer, if, if you have a RevOps function, that's spending a lot of time on these things that needs to happen. Let's talk a bit about what are the things that also should happen from that team that should come from, from rev ops, right? Yes.
[12:00]
Toni: I think what, what is a little bit sad? And this is the reason why we're kind of talking about let's put the revenue back into revenue operations. What has happened was still ongoing is that. There is an acknowledgement that revenue operations is a need to have for organizations. In many cases, it's been a title that's been slapped on, on a sales operations person and or team or mindset that is then not evolving to be fully end to end, but also because your day is filled with some of these more basic tasks. I think what happens is that, a lot of folks simply get lost there. They get
Mikkel: They get eaten.
Toni: I think it's, you know, what's, I think it's probably both ends of the spectrum. I think some, basically wanna do something else, but don't get to, because they kind of are stuck there. And revenue operations is, again, one of those teams that is always understaffed and underfunded.
Right. But at the same time, if you really. In this motion all the time. It's also [00:13:00] very easy to feel comfortable there and not start thinking about the other side. Right. And the other side for, for Olafur, and I, and, and grow blocks in general is how can you use those super powers that revenue operations possesses?
How can you use them for things that value generating revenue generating for the organization and these thoughts usually don't just happen by themselves with some of the revenue operations professionals that we're talking to, it's very much my day to day, but what you can actually do with all of that extremely rich commercial or funnel or whatever data, you can project it forward.
You can connect it to cost and see how your funnel suddenly breaks down. You can, install very strong and clear habits in the organization, what does that really mean? That's like monthly business reviews, quarterly business reviews, biweekly check-ins with the revenue leaders, taking a large part of the budget planning on the annual level, right?
Not only, Hey, how much money do we have available, which is usually a finance conversation. But also, how do we get to the revenue target that's been pointed out . And finance would love to do some of these things. And I think, uh, we are seeing more and more finance teams that are starting to add some of the rev ops skills and they call it rev ops, actually within the organizations.
But it's really this rich understanding of the commercial data and using it to support the revenue assumptions and the revenue targets that they're putting out there. And, once you explain that to a rev op person, the understanding very quickly, oh geez. I, I can, yeah, you're right. I can actually do all of these things, but very few actually get to the point where they really proactively leverage their superpowers of, data tools and processes and, project it forward and, or use it really to generate revenue impact for the organization, and just kind of to finish off my rent on this how's that how's Toni, how's that generating revenue. I can promise you if you run for 12 months. Really strong MBRs, QBRs check-ins whatever. With your revenue leaders, I can promise you that you will grow faster than you otherwise would.
And that in my book is an achievement of the revenue operations function that adds to revenue. And by the way, those are things that, you know, C level is really interested in C level is not interested in, oh, I just rolled out this new validation rule, or, you know, this ongoing, Hey, the, the sales guys are not updating this CRM.
This is, you know, important and stuff. Don't get me wrong. But those, those won't be the tasks that get you promoted. Let's just say that.
Mikkel: And we all want that promotion. That's what it's all about. Right.
No, but I think, you know, it's, it's interesting, right? Because it's almost very universal. What you said it doesn't have to apply just to revenue op operations. There are certain things that your stakeholder is gonna care about and things that they just don't.
And the fact that you have a partner, if, so I'm speaking with the marketing head on, obviously, right? So if you have a partner that really is focused on revenue and understands the full funnel from marketing sales CS, that's definitely someone you wanna spend time with. and collaborate with, in terms of the plans you're making and whether you're actually driving either fast enough or the right projects forward
[17:00]
Toni: And you know, to this point, I think revenue, operations, leaders, or professionals should be able to answer some of the following questions. Let's just say not easily, but they should be able to, if the CFO or the CEOs say we have an additional headcount spent, where, where should we do. Right. And if those folks ask the VP sales, guess what the answer's gonna be. If those folks, uh, answer the, the, the CMO, the VP marketing, guess what he, or she's gonna say, and, and the list goes on, right? It's always very subjective. It's always, Hey, you know, my team, my team, my team, and the obvious team and or person to us is actually revenue, operat. They sit across the whole funnel.
Obviously, you know, I'm really only zooming in on the commercial or the revenue, uh, part of the organization here, but revenue operations could basically say, I think, we have too much quota already. We don't need more sales reps. We actually need more pipeline. And therefore, instead of, adding another head count, maybe, maybe it could be more, but I think some of those more detailed questions maybe then left up to the VP marketing.
Yeah. But basically doing a, An analysis on, on where we weakened. Why? Yeah. So this, you know, one question, another one could be, where should we cut an additional head budget. Right. And again, if you ask the different heads of the different departments, well, not me, this other team
Mikkel: right.
Toni: So, you know, and understand that. But who else then revenue, operation's gonna make that, make that decision or help make that decision.
Mikkel: So we want to get to the point where, if, if you're listening out there and you're in revenue operations, we want to spend time impacting the revenue at the end of the day.
And. How do you do that? How do you make sure that revenue operations is not just treated like a ops team, doing tech tooling data and servicing the business purely, but actually driving forward an agenda and, and making sure that, we set the right goals and we reach those goals. Mm-hmm
Toni: So there are two ways to it.
Obviously you could say, maybe the CEO wakes up one day and just asks you to do it right. Easy organizational change, achievement done.
[20:00]
Mikkel: so you're saying send an email to a CEO.
Toni: so that's my point, right? It can actually obviously happen like that. I think the way it can happen more organically is by, starting to have, and organize monthly and quarterly business reviews. I think that's probably the start that that agenda might look different from organization to organization. I think revenue, operation professionals can probably figure out Who are the right stakeholders to have on those sessions. And maybe you start out small and maybe maybe not in the first session, but maybe in the next one you start asking about, Hey, what should we do about this issue over here?
Mikkel: Yeah. So if you're gonna do a, a quarterly business review, let's just actually, you know, double click on that one and talk about what should it contain because you can do a lot of things. And I think if you look at marketing, You can deep dive into spend performance on just, the demand capture part.
So from a revs point of view, if we're saying you should go and start this cadence with the revenue carrying leaders, how should they approach that
Toni: I think it should
It probably start, let's just say department by department. That's probably how I would start it, or I have started it.
Actually, you do a specific, either monthly or quality business view depends on the cadence of a company, for the VP of sales. And in that overview, you basically kind of, show two things. You show, the funnel and how it's progressing. And that can be a bunch of different overview pieces here.
And in the beginning you won't have targets. So all of this will be just be numbers. Right. And ideally, you try and kind of build something in there. That's already forward looking. It's already trying to achieve, Hey, if we continue with this pace,
[00:21:00]
The target next quarters can be difficult.
I don't think it will add much to the conversation to the VP sales pointing out that this target is difficult. I think VP sales get annoyed when you say that, because they know already and they can't sleep because of it. And they don't need someone else to tell them that as well. But really, if you can, for that person start, thinking about the future and you know how to fix those problems in that QBR session or monthly business for, or whatever, I think that's extremely helpful.
Yeah. I think you would then move on and probably do the same and, or similar for VP VP marketing. VPCs.
Really, the coolest thing that you can achieve is to have all of these leaders in one room and, and go through something that is a little bit more high level. Because you can't go into the details with all of them.
Toni: And usually what you wanna achieve is you create a overview of, Hey, this is what's going on in the business. And then let's deep dive into the areas that maybe aren't going great. And then let's discuss why they aren't going. and ideally let's discuss how we can fix those. And again, that was kind of, that is the, the next evolution step.
And sometimes you can get there, you know, in the first session, sometimes it takes a couple to basically have a conversation about how, how we going to address this. What is the solution to this? Who's gonna take action. What is the action gonna look like? And then ideally, also follow up on, did it actually happen?
Right. And pro tip, never have more than one action coming out of a QBR.
I had QBRs with like 20 actions coming out of it, all of them. Fantastic. And none of that happened and then we boiled it down to three. Still. None of it happened. It's one, one thing only. Yeah. And not per person, but you know, for that quarter to focus on and, that is, that is an approach to, organically grow those QBRs.
[23:00]
Right. And then really what you wanna achieve is that, this is becoming a habit for the organization, that this is a document that the CEOs looking forward to, because basically for the CEO, this could become the scorecard.
Of your revenue, function. And, and usually CEOs obviously kind of, you know, depends, very much involved with the business, but usually they really only see whether or not the revenue number hit in the end of a quarter or the year, everything before that is really difficult to keep track of.
And this QBR thing actually gives the CEO the, the opportunity to have a good conversation with the VP of sales, have a good conversation with the VP marketing and,
That is, that is how you as a revenue, operations, professional, provide value to, the commercial functions, but then actually eventually end up in a board meeting, explaining to maybe even the board, you know, why things are going good or not.
Mikkel: But I think it's also cool, because if you're running this cadence, A VP of sales. You're not going in there saying, oh, this is gonna be a tough quarter, but you're saying, Hey, here are some things you can do.
It instantly builds trust. It shows you are on the side of the same person rather than saying, okay, you need to get your shit together. Right. No one wants that. And that means you build trust with that person. And at the same time, the CEO is really gonna care about this because this is something that impacts revenue.
And so it sounded to me like. The slow start to something that needs to evolve over time. There's not a, yeah. Just, click this button in your project management tool and then you have revenue back in rev op that's. That's not the way to go about it. We're slowly running out of time here, but I'm hoping maybe there's one or two more things that you think could be helpful for RevOps to do in order to, continue that focus on revenue.
Toni: Yeah. I think the way to supercharge those QBRs and MBRs is to get to a point. Where you can define targets for all of those metrics. Yeah. What does that mean? It's not only, at the end of this quarter, we wanna be at X revenue, but the way we wanna get there is with so many opportunities with that conversion rate, with that sales cycle from those different channels and so forth. And once you have that. Then you actually can have MBS and QBRs where you now compare things. It's Hey, we said we wanted to hit, those numbers in the funnel. We didn't, now we know that there will be a problem in two, three month time. Now, you can translate that to marketing. You can translate that to hiring.
You can translate that to all kinds of different things, but once they have targets defined for all of those different areas of the funnel, suddenly it's not you doing an analysis and being like, oh, this number. No, it's like, Hey, we all agreed that, you know, actually that number should have increased in order to achieve all of these other things.
[26:00]
And now we're behind for whatever reason. And you know, now it's a much, much simpler conversation to have, with the commercial leaders. Right. and, then the next it'll be going all the way here, but then the next evolution step is BA yeah. Is basically, to do the same thing on an annual scale.
That's what we call a revenue model, where we then say, finance wants to get to X amount of, you know, new customers or revenue number. How we're gonna get there in actuality and actually doing it on the ground. Right? How are, how we gonna achieve this bottom up? and in our setting this out and creating that path, it will change.
It won't be a hundred percent correct. But it will, give you as a RevOps professional, the, you know, the superpower to be extremely impactful across the revenue engine, and help steer this whole thing actually towards that target. And you will very quickly see when something is going off and then you will have lots of time to course correct, and have really serious conversations with C-level and, and, and commercial leaders.
but that is probably not the final, but that's probably the next step on top of, just running the QBRs, but basically having very clear targets and goals to find for all kinds of different metrics across the funnel that make it super easy for you to pinpoint when and where something is going off without you needing to use your relationship capital and say like, I think this went off here.
You just need to say this. Number's not how we agreed that would. There's a Delta now, and that Delta will result in a revenue loss, and we need to address this right now.