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With everything that's happening, we discuss if it's time for RevOps to move away from the CRO.
We get into
You can find the CAC:Payback template here.
***
We get into
- (00:00) - Introduction
- (02:29) - Is it time to move?
- (08:30) - If the CRO doesn't get it..
- (11:24) - Give CFO operational insights
- (16:54) - Commercial FP&A?
- (21:08) - The P&L of commercial
- (23:54) - Zero helpful advise
You can find the CAC:Payback template here.
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
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Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, 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 Toni Hohlbein from Growblocks. You are listening to the Revenue Formula with Mikkel and Toni.
[00:00:06] In today's episode, we are discussing whether or not it is time for revenue operations to move out of commercial. Yes, you heard it right. Enjoy.
[00:00:18] Everything is recording. You have a really good
[00:00:26] Mikkel: I'm just waiting for you and honestly,
[00:00:30] I need you as a CEO to be a little bit more efficient, a little bit more in control of your time.
[00:00:36] Toni: me, let me
[00:00:37] Mikkel: little bit More professional.
[00:00:39] Toni: Lemme sit down.
[00:00:41] Mikkel: So do we want to take the red pill or the blue pill today?
[00:00:45] Toni: We will take both, but which one are we going to take first is
[00:00:47] Mikkel: That is the question. So,
[00:00:49] Toni: Welcome. Let's start with the RevOps thing.
[00:00:51] Mikkel: The red pill.
[00:00:53] Toni: Yeah, exactly, the red pill.
[00:00:55] Mikkel: Let's do that.
[00:00:55] Toni: that. And it says, it says blue here though, so
[00:00:59] Mikkel: I mean, I guess it's also the perfect analogy because with all this AI stuff going on, I can't help but think about the Matrix when he's like, Do you want the red pill or the blue
[00:01:10] Toni: realize the Matrix has nothing to do with AI, right? It
[00:01:13] Mikkel: everything to
[00:01:13] do with AI. I guess you're right. That's why I'm
[00:01:22] the editor of this show.
[00:01:24] Toni: have a lot of, uh, I'm, I'm really, I'm really strong today. I have a lot of energy and
[00:01:28] Mikkel: You've been saying this entire week, I'm sleeping too much. I'm so tired. I really need a break.
[00:01:35] Toni: That's the first time I said it today that I need a
[00:01:37] Mikkel: Yeah, Yeah, yeah, yeah. So
[00:01:40] Toni: today, but it's you, when you, when you're in the spotlight all the time, like me, it's like, it's some, you just, you know, you just need to find your groove again and stuff, you know?
[00:01:48] Yeah. That's it.
[00:01:50] Mikkel: yeah, Enough of the self pity
[00:01:53] So here's the thing. Our co founder, Andrew, he just moved.
[00:01:59] And today we're going to talk about someone else who might need to move as well.
[00:02:03] Toni: Actually, it's our other co founder's, uh, 40th birthday.
[00:02:07] Mikkel: a, Yeah, congratulations, Olafur. for being old.
[00:02:10] Toni: He is moving into the old bucket
[00:02:13] Mikkel: one. Yeah. It's,
[00:02:15] He's being put out on greener pastures soon.
[00:02:18] Toni: Yeah, he's moving to farm.
[00:02:20] Mikkel: He's a run of the mill kind of guy. We can do an entire episode. just kind of beating him down. It's like the Olafur episode.
[00:02:29] Sorry, dear listener, we'll get back on track. But, it's time for someone else to move, or is it?
[00:02:34] That's what we're going to talk about today. So, I think one of the things we've discussed, as of late, and you probably by now think that Toni and I, we do nothing but discuss, and you might actually be right. We've discussed whether RevOps is kind of stuck at the moment. Yeah, They're stuck with tools, they're stuck with data.
[00:02:55] And meanwhile, the business has this daunting task of becoming more efficient, still needing to grow in spite of cost of growth is higher. And, uh, the thing is we've said this a couple of times, there's revenue in the title, RevOps is Perfectly positioned to influence and guide the business in the right direction.
[00:03:13] But what is going on?
[00:03:15] Toni: Yeah. So let's kind of take a couple of steps back here. And this is actually also a conversation we had with Jacco, which was off
[00:03:21] Mikkel: Of the charts?
[00:03:23] Toni: the, no, well, off the, off the episode. We didn't, it was kind of either before or after, I don't know. It felt like it was a one and a half hour recording or something like this.
[00:03:31] And we kind of simmered it down to one. But, um, one of the things that, uh, we discussed was like, well, how is the, role of the CRO shifting. and as it is shifting, what other role might be, shifting towards it. Right. And in, you know, nicer words, basically, you know, some of the conclusions that the three of us came to was, if those, you know, those quote unquote, and, you know, I count myself as one of them, CROs aren't able to realize that growth at all costs is over.
[00:04:05] Because right now it's kind of a LinkedIn topic. I don't, you know, it has sunk in and some parts are going to be wrong. There's lots of layoffs, cuts, and, you know, growth is down, all of that jazz. but has it really landed with those, uh, predominantly sales driven CROs? yet has it really landed. Right. and, uh, Jacco's opinion is, is like, I'm not sure, you know, and, uh, he mentioned a couple of folks that he knows in his network that, um, maybe are now without a job suddenly, even like heavy hitters that probably everyone here listening has seen on LinkedIn already, suddenly kind of not actually having, uh, having another kind of job to move towards despite being an accomplished CRO VP sales kind of person.
[00:04:45] Right. and then the, the conversation went towards, well, if that concept is under threat because they're not moving towards profitable, efficient growth or just efficient growth or whatever you want to do, well, is it, is it potentially the, you know, usually there's no COO anymore. The operations thing hangs under the CFO and you will always have a CFO because of, you know, money
[00:05:10] Mikkel: Yeah.
[00:05:13] Toni: and, and, you know, investor relations and all that jazz, you will always have an F sitting there.
[00:05:18] and then it's like, well, you know, the CFO can do some of the operational stuff as well. Right?. So then they have a VP of operations or something like this. So the, the, the conversation went towards, so maybe the CFO is gonna, as ridiculous and weird as it sounds it's going to move a little bit closer to revenue.
[00:05:35] And the reason for that is, and I think we discussed this in a different episode, is sales and marketing, as a sales and marketing leader, you need to look at, you need to understand that the CFO looks at you like you look at product. What do I mean with that? You're the CRO, you look at the product and engineering team, and you see them as a resource that keeps on building cool new features on top of a pile of already good products.
[00:06:01] Right. And then there's maintenance and some things need to be deprecated and like all kinds of stuff. Right. but you basically kind of see that engine of product producing people to enhance the product that you're selling. So, you know, your job is getting easier. Well, the CFO looks at you in the same way, but basically just saying, wow, we have a really expensive go to market team here.
[00:06:19] Um, and their job is to increase this asset of customers and dollar signs to If that, if that expensive piece. is producing, customers inefficiently is number one, but even worse is producing customers that end up being shit customers. Then the whole engine is like being called into question actually.
[00:06:41] Yeah. Right. And, and that, that way of thinking about that didn't exist five years ago because it was always, it's one more customer. High five.
[00:06:47] Mikkel: Yeah.
[00:06:49] Toni: How much did you pay for that? Doesn't matter. When are they churning? Doesn't matter. High five. Still
[00:06:52] Mikkel: We can still raise a round. Yes.
[00:06:54] Toni: Um, but that has now changed, right? And, uh, basically kind of the fear is that, uh, CROs aren't really catching onto that thing, so they might get fired.
[00:07:04] Um, and then who's gonna take over some of the, you know, directing of the sales and marketing stuff? not in the day-to-day, don't get me wrong. But more strategically, it might be the CFO because the CFO basically, I don't care about this. You know, we made so much fun of this even, I don't know who, who it was, but, uh, Uh, someone, someone was kind of referring to like, well, You know, we just had a 2 million renewal sign and people were like, good job, Mikkel.
[00:07:31] Mikkel: Yeah.
[00:07:32] Toni: And then the new SDR or someone closed a 12, 000 deal and you know, champagne bottles
[00:07:37] Mikkel: Yeah. It was actually Mark Kosoglow on a YouTube video
[00:07:41] Toni: Yeah. Um, and, and that's kind of, that's the thing where the CFO is like, uh, no champagne bottles for the 2 million thing. And who gives a shit about this new, you know, we probably going to lose money on that
[00:07:52] Mikkel: Yeah. It's a churn and burn,
[00:07:53] Toni: So, and this is, this is, this is the mindset that, might be more appropriate for the new world. Right. and that's why either, uh, CROs listening here, uh, you know, changing their minds real, real quick, please, or the CFO might be entrenching slowly, uh, after you're gone.
[00:08:12] Mikkel: Yeah.
[00:08:13] Toni: So what does that have to do with the revenue operations?
[00:08:18] sorry for the long, uh, for the long introduction here. And this is me, I guess on LinkedIn, you would call it me throwing out a hot take.
[00:08:28] Mikkel: Yet another.
[00:08:30] Toni: Um, so I've been always been a very big proponent of, uh, revenue operations should report to the CRO, but if the CRO isn't getting it in terms of what needs to happen for the business, then it might be a better place for revenue operations to report to the CFO. Yeah. And, um, that's how the CFO can see, into the go to market area.
[00:08:57] and then usually revenue operations also being used in many cases, a little bit more strategically, meaning yes, involved in some of the planning stuff, prediction, C, you know, all of those things. Uh, having more of a less newbies focused approach and more of an holistic approach. Um, and maybe a pause here
[00:09:17] Mikkel: Do you also think, So we had, uh, Ben Murray, one of the first, first guests back in the day on the show, and he talked about the CFOs needing to be operational and really understanding the commercial side because quote unquote, there was so much money slushing around in that department. And when you look at revenue operations, they have a hand in every tool.
[00:09:36] That is a cost line at the end of the day. If you're a fairly sizable, you have a big ticket item there, obviously salary is going to be bigger than anything else. But then understanding, well, where do we potentially trim some of the salaries? Revenue operations can definitely help with those types of analyses. Yeah.
[00:09:52] Toni: Yep. So one thing, and this is a side, side comment almost, um, I was on a couple of calls now where, where RevOps was basically, uh, extremely busy, like busy for a quarter.
[00:10:06] To, uh, move away from sales loft. Oh, any, you know, any of those, like, I don't want to call Salesforce, they're great, uh, outreach and all of them great companies, um, to go to, let's say Gong because they already had the video recording from Gong, Gong, and then they could do the sequencing also on Gong. I don't know.
[00:10:26] And all of this, they're doing all of this to, yes, have, you know, a couple of fewer clicks, get that, cool. But then in total to save 20, 000 or something
[00:10:36] Mikkel: that. Yeah, yeah,
[00:10:36] Toni: And then I'm like, then I'm like, you know what? I kind of, I kind of get it. I kind of get it. 20, 000 is not nothing. Let's just also be real about that.
[00:10:44] Um, but at the same time, if you don't have anything real to do for, for revenue operations, then to do that move in order to save 20, 000. Then why don't you just save the whole headcount? It's gonna be more than 20, 000 anyway, right? So, um, this is kind of almost like a little bit of a petty thing, petty project kind of to And again, 20, 000 is a, is a bunch of money, don't get me wrong.
[00:11:11] But still, right. So I wanted to kind of challenge this a little bit. And then what was the thing that I actually wanted to say before I digressed
[00:11:18] Mikkel: Yeah, it didn't tell me,
[00:11:19] but I basically talked about Ben Murray and the operational,
[00:11:22] uh, CFO. And then.
[00:11:24] Toni: yes. And the, um, I think what, what RevOps can help, especially with the reconfiguration of the go to market engine is, giving the CFO some of those insights and understanding that he or she simply doesn't need to.
[00:11:37] doesn't have. And this is not a, oh, CFOs are stupid, uh, comment. No, they have a different area of expertise and that's okay. Um, they want to be more operational and so forth, but as everyone that's experienced here listening knows, it kind of takes a while before you get the whole thing right. And yes, you can use, uh, the bow tie model and a couple of other concepts for you to uh, you know, get it fast and have a, have a faster way there.
[00:12:03] When I talk to CFOs, usually they don't actually know about the bowtie model. They've never heard of this actually. Um, so maybe there's a, a go to market MBA for CFOs somewhere
[00:12:12] Mikkel: here. Probably, probably
[00:12:13] Toni: Mikkel, put it, put down a note. Wonderful. and RevOps can be that person that bridges that, right? And when I'm,
[00:12:20] I think one way we have clearly seen that CFOs lack some of that commercial acumen is, how, how have all those companies been reacting to Uh, increasing CAC Payback numbers, right?
[00:12:34] So first of all, where did it come from? It came from same cost, but conversion rates down, ACVs down, uh, sales cycles up, uh, demand down, right? So you kind of have the same cost base, but actually the, the revenue piece is just breaking away. Um, so, uh oh. CAC Payback is up. We need to do something about it.
[00:12:55] What did they do? They started slashing CAC.
[00:12:57] Mikkel: Yeah. Yeah.
[00:12:57] Toni: Makes total sense.
[00:12:58] What they did do wrong though, is that they slashed CAC across. Basically saying, okay, in order for us to get back to a somewhat healthy CAC Payback ratio, we need to, you know, decrease the go to market engine by 20%, 30%, 40%. And, and the way, I mean, if you have been part of this, uh, the way people do layoffs is, okay.
[00:13:24] The overall number is 40 and then they go to every VP and say, I need 40%. I need 40%.
[00:13:30] Mikkel: Yeah. Yeah.
[00:13:31] Toni: I need that. That's how it, that's how it works. Right. Because if you do it differently, it's like, well. But why does Jack only need to lay off 20%? Yeah. Uh, and why do I need to do 50%? so you kind of go around this by saying, well, all of us need to give 40%.
[00:13:44] Yeah. Um, but while this is easy on the change management, if you will, it's kind of pretty stupid in terms of, you know, recon. You're not reconfiguring your go to market engine, just decreasing back to the size where it was five years ago or two years ago, whatever. And the obvious result of this is that, You know, the engine will basically reduce in size and will probably produce less to a degree. There are ways where you can obviously, you know, bounce that off a little bit and, you know, probably you're not going to have the same reduction of 40 percent as, you know, an output as you have in input, uh, but still there's a collection there, right?
[00:14:22] If you had revenue operations, be closer to the CFO and this is not even a reporting thing. It's more like a trusted circle kind of thing. then revenue operations could say, first of all, you know, do a CAC Payback fucking analysis. I mean, just do it, right? Uh, and not do it for the whole number because the CFO has that.
[00:14:41] But do it in a, in a, um, two by two or in a, in a. in a, you know, breakdown way. Um, you have different regions, you have different motions, figure out what the CAC Payback is for these different regions and motions. By the way, we have, uh, on our website, like a CAC Payback spreadsheet template. Download it, go do it.
[00:15:00] It's pretty straightforward. and that will tell you where you maybe want to shift resources around, right? So typical number one, typical number two, Oh, wow. I'm RevOps and I just checked out five of our 15 AEs calendars and they're all empty.
[00:15:18] Mikkel: Yeah.
[00:15:20] Toni: All of them are empty. Well, I think we could reduce the size of the AE team and it wouldn't hurt at all what we outputted.
[00:15:28] And this is not even this super sophisticated, you know, what AE is really the best and, you know, if we raise quotas a little bit, what would happen? No, it's, you just look at their calendars and if they don't have two or three, depending on your motion, external meetings per day, and I'm not even saying it needs to be two or three new meetings.
[00:15:51] I'm just saying two or three external meetings per day. If they don't have that, then likely. You have capacity left, and that means you can, reduce capacity by reducing your AE team, right? And then there are a couple of other things, and, and only someone, uh, like Revenue Operations, Revenue Architecture, maybe, uh, some CROs thinking about this like this as well, and those are the ones that I think are not going to get fired.
[00:16:15] They are kind of using this lens in order to try and figure out how they could, Reconstruct the go to market, and then, you know, improve their CAC Payback and have a better plan for laying off people and, or whatever they're going to to do.
[00:16:28] Mikkel: Yeah, so two thoughts I have actually on
[00:16:31] The the exercise a lot of companies do with, when it comes to reducing costs, it's always reactive.
[00:16:38] If you're as a CRO sitting with four AEs with nothing in the calendar, honestly, I think there's a case to be made that some VP of sales or the CRO should get fired. because why would you have that cost sitting there and not yielding anything for you? So that's reflection number one.
[00:16:54] The other thing it makes me wonder is we're talking about revenue operations moving to the CFO, but you actually have another, let's say, a counterpart in finance called FP& A.
[00:17:05] Could there be an argument to be made if, so let's say you're the CRO that has this revenue architecture mindset.
[00:17:10] A key Part of it now is really understanding the cost you encounter things like accruals Hey, we paid for this trade show in January and it's not until August and there's all these dynamics to the cost side You need to be aware of.
[00:17:23] Is there a case we made that instead of revenue operations moving? It's FP& A
[00:17:28] Toni: So what I have seen plenty of times is that you have a commercial FP& A function, but we're talking 250, 500 people plus organizations, right? Kind of, you don't usually don't break out your, your, so FP& A is for financial planning and analysis.
[00:17:42] Usually it's, in some organizations, a VP role under the CFO. It's really the right hand person of the CFO. But, um, you know, someone dedicated for the commercial side that happens fairly late. Um, so this is number one. Number two, if you go to them and say, Hey, I would like to have a CAC Payback segmented out inbound, outbound, different regions, I think they can figure this out.
[00:18:03] By the way, that's, you know, they can totally do that. In many cases, they have done it potentially for you. what they won't be able to do is really understand, you know, okay, what are we going to do about this now? Right. Because the spreadsheet is going to tell you, uh, this. thing over there. This motion, this region is more expensive than this other motion or
[00:18:22] Mikkel: Yeah Yeah,
[00:18:23] Toni: Um, and then the spreadsheet, you know, what they're then reading is like, well, you need to take money away from here, put it over there. Totally legit. But, can you actually do that? You know, so number one, you can always take away money. That's not the problem, but can you invest it over there? That's a different thing.
[00:18:38] But also, not only playing the, you know, moving resources around game, but also. Well, why overall maybe, why is the CAC Payback as it is, and maybe I need to look at the funnel and how it's, you know, it's deconstructed and then see that, oh, these AEs are not having anything to do, right? And that, I think, that is some commercial, uh, insight that I think some fantastic FP& A folks probably maybe have.
[00:19:05] Um, but I think more likely the rebels folks will have that because there's so much more on the ground. They see this stuff there. That's what I think. Um, then the other thing, who should get fired when the AEs don't have meetings in their calendars? I mean, you know, there
[00:19:20] Mikkel: You're going to say marketing now.
[00:19:21] Toni: there may be, there may be two people that could get fired here Mikkel.
[00:19:25] Um, and, and, and the reason is I think many times, and this is growth at all cost times where basically people were sitting there in December, uh, seeing their Q4 targets and we're like, Oh, in order to cover even the target, we need to hire six more AEs. And they need to hire it in, uh, March because they're ramping for six to nine months.
[00:19:48] So let's go. Um, but in March, you don't actually know if you're going to be able to create the pipeline that they need. And that then sometimes leads to, you know, eh, not, not working out. and yes, I think you should be using, you know, some predictive tooling, um, to help you figure out, well, how is my pipeline going to move?
[00:20:06] Where is it going to be? When? And how much capacity will I have at that point in time? I think those are some things that, um, in this new era, I just don't think you can, uh, skip over those things anymore. It's like, I think we're done running our businesses with like a rule of thumb kind of approach. and I think we need to move simply to a new maturity level of, of SaaS.
[00:20:30] Which then also requires additional tooling in order to manage the whole thing. Right. Um, and yes, I think there could be a case to be made that the VP of sales needs to be let go because, Hey, why did you build up all of this capacity? but then there's also, well, if that capacity matches what the marketing guy was supposed to bring in, in terms of pipeline.
[00:20:48] And he or she didn't, well, then it's, you know, let's just say it's a go to market problem.
[00:20:52] Mikkel: Yeah, and I think the thing, the reflection was purely if you have a team where there's four people who technically aren't doing anything, and it's not their fault in this case, obviously, then why do you keep them on payroll? That was actually more of the
[00:21:03] Toni: reflection.
[00:21:03] Oh yeah, you totally shouldn't.
[00:21:04] Mikkel: versus The reactive nature of firing, there is a proactive nature. to it.
[00:21:08] And I think the funny thing is, as of late, with this shift, when you start, let's say splitting your motions or whatever, and really analyzing performance, you Probably GRR is also going to appear on that table as a column.
[00:21:22] right? There's going to be a couple of new items in there, and the question is how far we we kind of take it. But I think it's just, it kind of baffles me that we've not even in the previous age, spent any time considering, well, profits. like, And I and I get it. like that was the age,
[00:21:36] Toni: we have, I think we have, and I think it's a really cool talking point on LinkedIn and whatever social media you're on, uh, to say like, oh, you know, we have never thought about profit.
[00:21:46] I think we have thought about profit in a different way. We haven't thought about it. in this profit and loss sense of like this year, I made this much money and I lost that much money. And you know, what's the, what's the sum coming out, which with the nature of SaaS and especially the early stages of, of this business, it will always be minus.
[00:22:07] If you're running it the right way, it will always be minus. And now a lot of like bootstrappers are like, Oh, Tony, you're totally wrong. No, but that's how this thing works. If you don't want to, If you want to grow super slow, unless you have like a magic acquisition channel, that's basically for free, which, you know, if you have that congratulations, uh, but that's not something you can just copy across.
[00:22:26] Then you could maybe grow aggressively with, you know, while being actually profitable, but, uh, the way SaaS works is that you don't get, you know, profit from a customer when you assign them, you get it over the next, uh, 2, 3, 4 years. And I'm not talking CAC Payback in the sense of like, ah, it should be 12 months.
[00:22:47] And no, this is not profit. When, when, when you're thinking CAC Payback, You haven't yet paid for, in many cases, depending on how you calculate, you haven't paid for, uh, you know, the CS team, you haven't paid for hosting, you haven't paid for product and engineering, you haven't paid for general admin, for the CFO salary, you haven't paid for any of these things in CAC Payback.
[00:23:09] Um, so really, um, The better way to look at this is through, you know, the lens of LTV, like lifetime value of that customer. And we have been looking at this for a long time, right? And once you are three or four acts above what you paid to acquire that customer, then that stuff is basically covering the rest.
[00:23:29] And then obviously you can overlay rule of 40 or whatever. Um, but you know, looking at LTV to CAC or CAC to LTV, That was actually our measure of profitability, to be honest. And I, and that doesn't happen in a year. It happens over years time and standard accounting doesn't work like this actually. Right.
[00:23:48] So that's why I do think we have been thinking about profitability already kind of also in the old times.
[00:23:52] Mikkel: Yeah.
[00:23:54] So is it time then
[00:23:55] for like, let's maybe
[00:23:57] bring it back to the, call here. in what cases should RevOps actually move?
[00:24:02] pack their things? go to a,
[00:24:04] Toni: this is going to be, this is going to be a zero helpful advice.
[00:24:07] Mikkel: Yeah. but we're going to give it anyway.
[00:24:11] Toni: Um, in the cases where the CRO doesn't get it, that's actually, that's actually where RevOps needs to move.
[00:24:18] If, and, and I know a couple of folks, um, even in my like colleague and friend circle, that are maybe saying that they're CROs, but they're really, really a VP of sales. Right. And I hear it from them, you know, over a beer, it's like, you know what, Toni, honestly, um I bring in those shitty customers and I don't give a shit.
[00:24:37] Um, you know, first of all, I'm paid on newbiz commission, period, because that's just how it works. And second of all, I mean, what, what do you want to do? I mean, you know, you can't, you can't, you know, figure out, you know, who's going to be a good customer.
[00:24:50] And those kind of, while they have a point, by the way, so there, there are reasons to kind of say yes to that.
[00:24:57] Um, I think that kind of, leader for revenue. I think that those are the ones I'm referring to where it's probably not going to work out for you in RevOps because you will not have the, you will not get the priorities, um, from that person that actually match with the overall business priorities. And that's, that's the problem, right?
[00:25:20] That's why you need to move. You need to then move to someone that has the right priorities for the business in mind, which is building up this customer set to be good. Right. Um, and, uh, once, once you're aligned strategically on, Hey, this is what we need to do, then Um, I think then finding ways in between to optimize that, that's, that's an easy, easy one.
[00:25:41] Mikkel: the rev up sub,
[00:25:43] Let's say stuck under this VP sales call, VP sales call the CRO. Should they just start forging the relationship with finance in this scenario and strengthen that? Or like, because you obviously don't go to someone else and say, hey, my boss, yeah, you should fire him because he's you know, doesn't fit into this well.
[00:25:58] Toni: And I think many Revos people do this anyway because you work closely with FP& A and finance in many different areas already overlapping, right? Sometimes even FinOps is under RevenueOps and so forth. I think the other thing is start choosing other metrics in your QBR. Like that's, that's a nice little gentle.
[00:26:20] Oh, where did this number come from? Um, you know, we're all really good at this, but basically, yeah,
[00:26:26] Mikkel: exactly.
[00:26:26] Toni: But, uh, um, we start looking at, um, CAC to LTV in a cohorted way. Uh, start looking at things that, uh, you, you wouldn't have looked at a year or two or three ago. And now you realize, well, maybe that's actually the thing that we need to look at.
[00:26:43] Right. And, um, you know, bring those things together, uh, deconstruct them afterwards and be like, well, you know, CAC to LTV is kind of cool, but it's kind of. Also very un, uh, uh, you know, unuseful operationally breaks down to maybe CAC Payback and GRR, Net Retention and all of these things. but start putting these things up and then, uh, use also, you know, bench for, for all of this super high level investor metric stuff, plenty of benchmarks out there, like plenty, right?
[00:27:12] Because why? Well, they sum up your, your whole organization in a number. And that's what investors love. It's like, Oh great. One number. And I know if you're good or not. Um, so they've built benchmarks around that. Right. And CAC to LTV. Really is a, you want to be around three or higher, right? Uh, you want to be in a place where, um, the money it costs to acquire this customer over time.
[00:27:36] And this 3x might be, might take you five or six years to get there, depending on, on your CAC Payback. basically kind of, you get three times as much back as you invested in order to get it, then, then it works out. Right. Um, and start having that stuff and maybe cohort it out and see like, Hey, you know, 12 months ago, that's, that was our, you know, uh, LTV to CAC and see how it's degrading and degrading and degrading.
[00:28:00] Mikkel: yeah, yeah.
[00:28:01] Toni: I think that's, that's like one way to do it. And by the way, your CFO will love you for it.
[00:28:07] Mikkel: We are, you know, talking more and more about finance these days.
[00:28:10] So by the way,
[00:28:12] One thing I wanted to point out is,
[00:28:15] I think not so long ago, we teased that we have a couple of pretty awesome guests joining. We have more, we have more that's coming. So if you want to hear more from, you know, folks of the caliber of, Manny Medina from Outreach, Mark Roberge and those kind of folks. Maybe it's time to just, you know, unlock your phone, if that's how you're listening right now, and hitting the subscribe button.
[00:28:35] Toni: button. Hit the subscribe. And, and you know, it's, it, you know, you're, you're furthering the cause here. So, so that's why I really want to do that.
[00:28:43] Mikkel: Finance doesn't care about those metrics though, but it's all good.
[00:28:46] It's all good.
[00:28:47] Toni: to Finance. You know, I, I would want to hear what they think about this
[00:28:50] Mikkel: Maybe they should subscribe. That's what it is.
[00:28:52] Toni, Mikkel. Thanks so much.
[00:28:55] Toni: everyone for listening and have a good one.
[00:28:56] Bye bye.