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Sales cycles are extending. Win rates are decreasing. How do you make decisions faster? With a simple framework.
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 Toni Hohlbein. You are listening to the Revenue Formula. Q1 has just ended for a bunch of you, and I think many have found out that their business just has changed fundamentally in the current environment. In today's episode, we are going to talk about how. Quickly and efficiently deal with that change.
[00:00:20] Enjoy.
[00:00:25] So daylight saving time.
[00:00:27] Mikkel: Ugh. Yes. I had to drag the kids out of bed, you know, like, you know, and because I have so many now, it's like you pull one by the leg and have the other one over here in the arm, trying to get them, it's like breakfast, come on.
[00:00:43] Toni: my, my kid felt that this was, Awesome.
[00:00:47] Mikkel: Oh, because,
[00:00:48] Toni: you know, usually he wakes up early and then I walk in and it's like, Hey, it's still dark outside. you have to sleep. And you know, this time he woke up at um, 6 45 or something. Which 5 45? No, go 6 45, close to seven. It's kind of, it's like, ah, okay.
[00:01:04] It's kind come over. You know,
[00:01:08] Mikkel: You can come, you can come.
[00:01:10] Oh, that's cool. Uh, so today we're gonna talk about other things that are changing that we can't really control that much.
[00:01:16] It's not daylight savings. We're gonna talk a bit about, I mean, we don't wanna be negative. That's, that's really important, but there are some unfortunate things happening at the moment.
[00:01:24] Well,
[00:01:24] Toni: you know, for some it's unfortunate. For some it's, it is fortunate, right? So I, I would just say, um, what we are looking at with all the macro going on and all of that stuff, we are just looking at, a bunch of businesses. Going through a massive change at the same time of multiple variables at the same time.
[00:01:42] And people are just like, oh, oh, right, that's, that doesn't feel good. I feel like I'm losing control. All the stuff that I could lean on from last year, not there anymore. and, you know, that might be connected to the economy, might be connected to, and all kinds of other things, but really kind of going through.
[00:02:01] Mikkel: basically,
[00:02:02] Toni: navigating through massive change that's going on right now. Right? I think, uh, you could say navigating through the asteroid field, how do you, how do you get through? Right. Um, and I think that's, that's what we wanna talk about today.
[00:02:16] Mikkel: Yeah. So it's uh, high rate, higher inflation environment, end of easy money causing a bunch of issues, and basically their whole conversation is efficient.
[00:02:26] Toni: And
[00:02:26] Mikkel: the end of growth at all costs, right? Yeah. So, so, and that's, that's enforcing a lot of change. And I think what, what I found is basically pointing to the fact that the revenue plan you made no longer fits. The roadmap you created, forget about it doesn't fit necessarily anymore. The hiring plan, it doesn't fit.
[00:02:45] And if you are unable to adapt those things, you're gonna miss.
[00:02:48] Toni: So I think, I think the letter to kind of the roadmap and the hiring plan, um, they might still be totally working out. The problem is you are always living in this triangle of top line plan,
[00:03:00] Mikkel: Mm-hmm.
[00:03:01] Toni: hiring plan, roadmap. and if one of those, if one of those pieces is out of, uh, out of sync, the other two have to follow. There's just, there's just no way around it. I mean, it's even, you know, you can't even do it the other way around. If a product is out of sync, um, that will in inevitably impact your top line growth. Yeah. Uh, and that then will have to impact your, your people planary hiring plan and so forth. Right. So these three things need to stay in sync.
[00:03:29] Right. And what we are kind of seeing right now is simply that, you know, while your hiring still might be on. Thumbs up while your product, uh, de development is still, you know, on plan. Great. probably your revenue isn't and this is now what, what you need to react to. Right?
[00:03:44] Mikkel: And so I think I found, so we are gonna provide, a way to obviously address this problem.
[00:03:48] We'll get to that. I found a pretty, uh, interesting survey just to tee it up. That sites that more than two thirds of, so this was a survey of BDB SaaS companies, by the way, but more than two thirds. They didn't hit their H two target in 2022. Right? So already then the problem started appearing and I think what you're starting to see is also, Uh, an extended sales cycle.
[00:04:10] They found, uh, 53% had seen a significant increase in the sales cycle and just that one piece in its own massive ramifications for our
[00:04:19] Toni: Well, people, people don't realize that, but we'll, we'll get to that later. but people think like, ah, sales cycle is one or two weeks, it doesn't matter.
[00:04:26] Yeah. Uh, well, well, it matters kind of a lot. Uh, but you know, later, more, more on that in a second.
[00:04:32] Mikkel: The, uh, the other area. Uh, where companies facing challenges is basically pipeline creation. Mm-hmm. So one thing is how long, how quickly can we close a deal? The other is how many more deals can we get potentially on the board. Right. And , it's kind of funny, we, we talked about it before we hit, hit record.
[00:04:49] It's basically every single pipeline source you can think
[00:04:52] Toni: Yeah. Let me just read it out loud. Outbound affected 63% organic and social. 51% partnerships, 49% paid ads, 40%. What's missing? I don't
[00:05:03] Mikkel: know. , I think I stopped writing at that point. I was like, okay, no,
[00:05:06] Toni: like everything, every, so basically everything on the, on the, top final side.
[00:05:11] Yeah. Everything went to shit. Yeah. Basically pretty, and, you know, keep in mind, Keep in mind all of those surveys, all of those benchmarks, all of that stuff usually are looking for this to be a lagging indicator of at least three to six months. Uh, so the, the current, first of all, you've probably lived in this reality now yourself for a while.
[00:05:33] And number two, uh, it might be even worse right now. Right? So because we had, when you think about it, we had. Recession going on in tech for a year now. It really started around Ukraine. That's when, that's when it, that's when it really happened. Um, and on the overall macro, not in this like little nichey tech bubble that we are living in, but on the overall stuff Main Street.
[00:05:58] Yeah. Um, now it's the time we're like, ah, you know, it could be maybe next month we're gonna slip into a recession. Right. So we've been living through this already for a year and then, The overall recession's gonna, you know, pound on top potentially with another two years or something like that. So it's like, again, we didn't want to be too sad about this, but the, the reality of what we are seeing here is actually a legging indicator of two or three months ago.
[00:06:21] Mikkel: Yeah. So we've talked in the past about, hey, everyone hits Q1 because predict predictability is high, and then the plan starts sliding. Right. Now, we're not saying that you potentially have all these challenges that we just mentioned, but chances are you're gonna have some challenges.
[00:06:37] If not, not today, then maybe later. Right? Yeah. So,
[00:06:40] Toni: how,
[00:06:42] Mikkel: How should a business approach this problem?
[00:06:45] Toni: Yeah, so I think, I think on the overall, and this is, this is what makes it so complicated. I think on the overall you need to, um, you need to be able to smartly with haste, but careful haste. React in, in, in the best way possible. Yeah. Um, and that sounds like, uh, not a big revelation.
[00:07:13] Mikkel: Yeah, great advice,
[00:07:14] Toni: Yeah. . Um, I, I think what it, what it, uh, what it is about though is when you operate a machine of 10 million euros, or 20 or 50 million euros, or even 200 million, it doesn't matter.
[00:07:27] Mikkel: what
[00:07:28] Toni: The, the reality is, is that the complexity from one year to the next and so forth, it, it is always, you know, somewhat measurable.
[00:07:35] Those, those manageable, those steps because it's, um, uh, you have a lot of stuff from the past that you know works. Yeah.
[00:07:44] Mikkel: And we all heard the, you know, what happened in the past predicts, you know, what's to
[00:07:49] Toni: to come it well, it's at least a good indicator. Yeah. Yeah. Um, so basically, and, and I kind of read this recently, Every single metric that someone is, might be looking at.
[00:08:00] You know, we are talking SQLs, we're talking opportunities, we're talking conversion rates, sales cycles, win rates, ACVs, everything is trending in the wrong direction and has been down for a while, right? And all of those metrics on a top level, they have massive indications, uh, impacts further down, right?
[00:08:23] So if you're, if you're thinking. Uh, your opportunity creation, if that's low, how do you, how do you not only, you know, uh, try and hit the revenue target, but also how do you want to keep your ease fed? Yeah. How do you wanna make sure that they're hitting quota and so forth? Right. So there's, there's a, there's a massive.
[00:08:40] Mikkel: massive,
[00:08:41] Toni: There's a massive amount of work and cognitive overload that organizations need to go through right now in order to combine this new reality that they had, which, you know, previously was like, Hey, our business works like that. We do 15% on outbound. We sell 20 K tickets. You know, we have all those rules or some, all of this works out.
[00:09:00] Let's kind of roll it forward to next year and kind of, you know, tweak, tweak, tweak, kind of gonna work out. Well all of this is now off the chart and you basically kind of need to start from scratch with many of those different pieces. Right. And I think organizations that realize it the fastest. that they're in a completely different world right now.
[00:09:17] I think they will probably be able to manage through this the best. Right. And again, all of that starts with, um, you know, understanding what's going on, figuring out how to react to it, and then implement that. Right. What, what we did, um, a bit of, uh, research on actually, uh, is, and I, you know, maybe this is a plug.
[00:09:36] I, I just recently talked about it on my, uh, revenue letter that's going out biweekly. So if you wanna sign up for that to that, um, no, but it's basically, It's basically something that we found is very popular in uh, uh, actually in military strategy. Yeah. I'm not sure. It's from the sixties or something like that.
[00:09:56] Uh, and it's basically called an loop. O O d a and you know, what does it stand for? Uh, the first O is observe. Yeah. Uh, and again, think about this not in a business context. I think the, the most, uh, used example is a. kind of an
[00:10:15] Mikkel: airplane
[00:10:15] Toni: fight or something like that. Yeah, so, right. So don't, don't think it necessarily as an, as a, as a business piece, that translation will come in a second.
[00:10:22] But think about it as a, you are, you're apparently in an airplane fight. I don't know, I'm not sure if anyone can imagine that, but, uh, you're an airplane fight, right? And you observe something, right? You kind of need to say what it is. Uh, they need to orient yourself, you know, Hey, data gathering, basically.
[00:10:38] then you need to decide, okay, what I'm gonna do next. And then into react and do it. Yeah. Right. If you miss any of those steps, well, you're probably gonna come to the wrong reaction and you're probably gonna be dead. So that's, that's the idea here. And then, uh, the other idea here is, uh, and this is very much competitive thinking, not necessarily completely un applicable for, uh, companies, but the idea is, if you are u Lupe in, you know, in an air fight, , I dunno, it takes you 30 seconds.
[00:11:09] Mikkel: Yeah, they were
[00:11:10] Toni: fast. but, your, your opponent's ulo is, uh, 15 seconds, right? Goes through this observe, orient the side. Act goes faster than you do. in, in, in literal, and literature is referred to inside your opponents. You know, get inside your opponent's ulu. Um, what it basically means is, Your opponent goes through the loop faster, which then makes you stop in your own loop, right?
[00:11:40] Because you saw something, you gather information, you wanna react and so forth. But basically when you get to halfway point, yeah. You know, you're still gathering information, you're still deciding. There's already a new situation. Yeah. Um, which means then, ah, shit, I need to reboot my, uh, the loop now. Yeah.
[00:11:58] And basically you're gonna, you're gonna get stuck and you're gonna, uh, also die, apparently. So that's, that's the, that's the theory around it. Um, right. I'm gonna say it one more time. It's the UDA loop. You can look it up. Uh, it's spelled o o D a observe, orient the side act. Yeah. And what we wanted to do today is we wanted to go through, two U Loop.
[00:12:20] Maybe three together. Um, and, and see and see where it takes us. Yeah. It's probably gonna take longer than 30 seconds. I'm, I'm sure.
[00:12:28] Mikkel: sure. . But I think it's also important because we cannot sit and predict how any given business's impact is gonna be entirely different. But providing the frame of mind for how do you approach it Yeah. Is really the kicker. And, and like we said in the past, we've talked about replanning.
[00:12:41] It is a critical component, but following this methodology is gonna be helpful.
[00:12:46] Toni: Yes. Okay, let's start with an easy one. Maybe
[00:12:51] Mikkel: SDRs.
[00:12:51] Toni: SDRs, I'm not sure. So the thing is, uh, we obviously kind of have a structure when we, you know, set this up.
[00:12:56] I think on, on those examples, we, we are like a little bit loose on the planning side. Let's, let's see how, let's see how it goes. Maybe to cut some stuff out. But basically, what you observe is that your SDR bookings are lower than you anticipated. Yeah. Yeah. and that apparently is a very much. Um, a common problem right now because 63% of outbound channels are having a hard time.
[00:13:21] Yeah. Right. So your, your, your SDR bookings might be, might be low.
[00:13:27] Mikkel: I mean, I, I even saw on LinkedIn someone posting a screenshot of their phone with like 60 unanswered calls, , you know, so, so there's a lot of pressure on, I I think it is getting more difficult to be in that spot.
[00:13:38] Toni: Yes. So, and again, right, so we can riff on is it just the recession, is it overall, blah, blah, blah.
[00:13:42] Probably has an impact. Um, but so this is, this is the observation. Mm-hmm. , and uh, um, and now the orient stage begins so, Gathering information. So what's really going on? Uh, you might be talking to your SDRs and they're telling you, Hey, no one is picking up the phone. To your point, um, you might be, uh, you might still have some opportunities that are being generated, right?
[00:14:05] The problem might not be in the, uh, no one is reacting. It might just be that everyone is a window shopper, so you might have, you maybe still. The opportunity booking, so to speak, but you know, the revenue booking, so it then go to the AEs and you know, what's up and everyone's like, they don't wanna buy and so forth.
[00:14:21] but basically, you know, the, the, the orient phases, you what, whatever the root cause will be. The reality will be that if you can't fix it, , and I think in this scenario we're basically saying you can't just fix it. Right? You're kind of in a new reality. That stuff is not easily changeable. We sometimes have this adjust, adapt, and kind of, and so forth.
[00:14:42] In this case, you're basically saying, okay, so whatever the SDRs are being, uh, uh, able to book. It's kind of your new
[00:14:49] Mikkel: baseline. Yeah. It's not just a work harder
[00:14:52] Toni: Yeah.
[00:14:53] Mikkel: it's not gonna happen.
[00:14:54] Toni: Um, and again, right? Finding efficiencies, you can probably do that. It's in any, any kind of situation, but this is a new baseline.
[00:15:00] That's how I need to kind of think about it and come to terms with it. So then, you have your orient, uh, stage done and understand, um, what, what's going on. Uh, you maybe also understand how this is now impacting your CAC Payback for that channel. Yeah. And um, Obviously your CAC Payback period is gonna go up.
[00:15:19] So it's, you are still obviously paying the same salaries, you're still doing all of the same stuff. You're probably gonna pay fewer commissions. But you know, that's not really the, the big thing here. So basically the CAC Payback off your SDR channel is going up. Now you can enter, decide
[00:15:37] Mikkel: Mm-hmm.
[00:15:38] Toni: So what are you going to do about it? And I think, This is very, very freaking difficult actually now, right? Because you basically kind of need to balance out. So, for how long is that going to be a problem? Yeah. If this is going to remain a problem, uh, for the next six month, then maybe you can decide, ah, let's just squeeze through. It will cost us more to lay off half the SDR team.
[00:16:12] with, you know, some of the, uh, you know, notice period payments and so forth that you have in Europe, less so in, in the us. and, uh, then, you know, hire some people back, you know, onboard them and so forth. Right. For six months you might eat the cost, but what if this is going on for a 12 month?
[00:16:30] Mikkel: Yeah.
[00:16:31] Toni: What if this is going on for, you know, 18 months? Yeah. Um, what do you then wanna do about this and. I think a decision that might come out of this, and this is again, this is, we are just taking the outbound as an example. It might be many other things as well. It might be that you decide to, uh, scale down that channel.
[00:16:52] Uh, you know, I don't think you will probably completely. You know, kill it in that sense. But you will probably reduce the, uh, the resource that you're pouring into this channel right now, because you're simply not seeing what comes out of aka. Meaning, hey, this is not a channel that's driving efficient growth.
[00:17:09] Right. Which is very much the, the moniker these days. Right. again, there might be different flavors to it. Maybe it's specifically in one region than another, and one segment than another. That, that's all the stuff you would've found out on the orient phase. Yeah. Of this U loop, but now we need to get to decision stage and say like, okay, with all the information we have at hand, we actually gonna reduce the, EMEA outbound team by 50%.
[00:17:34] Yeah. Whatever. Yeah. and now comes act, implement. Okay. first of all, we need buy-in from all the different decision makers. Then we need to kind of, you know, have the plan laid out to, To, to execute the whole thing and then you need to do it. I think maybe what I even forgot here is, okay, if we take it down 50 or 75%, what does it mean?
[00:17:57] Mikkel: Yeah. What happens to the ease?
[00:17:59] Toni: I mean, so that's
[00:18:01] Mikkel: not to get ahead of ourselves.
[00:18:03] Toni: exactly. But okay, so what does. If you now have to give up on that channel, and I think this is kind of the meta conversation on top of this whole thing. It's not, oh, you know, what do we do with this isolated thing? But no. Okay, now there we are slashing, uh, and in many organizations, outbound US 50% of your growth.
[00:18:20] Yeah. If we're slashing that by half or even more. so what's the consequence of that now? Right? So where are we gonna land revenue wise by the end of the. Uh, do we need all of those AEs? Yeah. Uh, et cetera, et cetera, et cetera. Right. and maybe I think what I would probably advise is, probably air on the side of caution. Um, that's, that's what I would, would probably advise here. Uh, not saying that, mm. There's anything specific about outbound? I, I think I'm probably one of the biggest lovers
[00:18:55] of Abound,
[00:18:56] So, you know, it's, it's just an example, but, but air, air on the side, air on the side of caution and, and rather assume that this thing isn't gonna repair itself Yeah.
[00:19:05] Anytime soon. and rather be proactive on, uh, eating the hit on the revenue side. Yeah. For the end of the year. Because you know what, it's probably gonna, you're probably gonna land there anyway. , that's kind of, that's the realization, right? And, you know, working through this is pretty difficult. And now the fun, you know, it's not fun.
[00:19:22] But the interesting piece is now we talked about those utter loops and the, the, the, the, you know, the uh, the speed you can go through. the longer you, let's just say, The observation will be real quick. I think the data gathering will be kind of quick as well. Yeah. Maybe it takes a week or two or three or something like that.
[00:19:40] The decide piece usually is what drags it out. Yeah. Um, and I think here, this is, this is where losing very valuable money basically, you know, every single month that you delay, there's another chunk of salaries going out the door. Um, and as longer as you need to wait, you know? , the more you need to react to have the same runway and so forth.
[00:20:01] Right? And then the act is really how, how strong are you on the execution arm? Can you pull this off in a week without, looking like complete buffoons on LinkedIn. Yeah. Or, you know, do you need more time to make it a, a proper, a proper process? Right. But that would be, you know, one er loop. Yeah. from observation to orientation to decision to action.
[00:20:20] Yeah.
[00:20:21] Mikkel: So it's a, a pretty straightforward, actually framework to conduct replanning a facts change. And I think you're gonna get multiple changes. Throughout the next couple of quarters until we are clear of this situation. So, so hopefully this is helpful. I mean, we discussed another loop. Yeah. So this was just one case.
[00:20:40] I think we should do another just to try and, and reaffirm it again. And, uh, this was basically the case where quota attainment is down for the AEs.
[00:20:48] Toni: Yeah. Surprise, surprise. AEs aren't hitting the target.
[00:20:51] Mikkel: Yeah.
[00:20:53] Toni: So that's the observation. That's very much surface level stuff. You. Immediately see it. I mean, we are coming up on,
[00:21:02] Mikkel: you will hear it.
[00:21:02] They will slack you,
[00:21:03] Toni: I mean, when this is being aired, it's basically the week after Q1 end.
[00:21:07] Mikkel: Yeah. Oh, the timing. We didn't even plan
[00:21:11] Toni: this. No, but you will, you will, you will totally, you will totally observe it. Yeah. Really quickly. That, uh, a quarter, 10 minutes down, then, uh, the orient phase is why, you know, what's going on.
[00:21:23] And, and the good answer isn't, well, recession, that's not a good answer. Uh, and let's just kind of steer away from, outbound doesn't work or whatever. Uh, and in this case, maybe what you'll find out is that, uh, your sales cycles are pushing up. Yeah. Which is very much a thing we're seeing across the board.
[00:21:41] Uh, lots of people basically see, what is it, 53%? Yeah. Have seen a significant increase in sales cycles across the board. Um, by the way, also winning by design published something where they show, um, wind rates go down from 25% to 17.
[00:21:56] Mikkel: Ooh. Oh, that's tough.
[00:21:59] Toni: It's, no, no, it's, it's, it's, you know, it's, it's difficult out there.
[00:22:03] Uh, but you know, your orient basically would say like, Hey, sales cycles are pushing out. Yeah. So let's unpack what it actually means. If your sales cycles are pushing out, it means that number one, your quota attainment, uh, for any kind of period will decrease. Let's just say your sales cycles are pushing out 20% and might be doing the math a little bit wrong now.
[00:22:25] Mikkel: but
[00:22:26] Toni: Let's just say that means your, quarter attainment then will drop by 20%. Yeah. Right? Because, um, the stuff that you're working on will not hit in this quarter, will hit afterwards and so forth. Right. Is it kind of normalizing itself? No, because you still have the year, you know, it's, it's still pushes out.
[00:22:43] You still then are 20% below on the, on the year in general. Right. so then the, the other thing is, when you really think about. When you're really honest about capacity with your account, What sales cycle's pushing out. What that translates to, um, is to a degree an increase of steps that your sales rep needs to take in order to get the deal done.
[00:23:05] Mikkel: Yeah. It's more work.
[00:23:07] Toni: It's, it basically translates to more work. It's not that. Sales rep sits there, and now it takes a month longer before the email comes back and says like, yes, we're gonna do it.
[00:23:16] It's not like that. It takes more time. You know, not only will come up more often in your forecasting calls, but also your manager will be, what's the next step?
[00:23:23] Hey, email them, pull them on a phone, you know, talk, talk, talk, talk, talk. Um, usually we'll be then suddenly the CFO entering the scene. That's kind of one of the really big reasons that basic kind of is either trying to, you know, the, the soft way for a cfo. to, um, save cash without saying, no, you can't do it.
[00:23:43] You can't have that high, you can't have this tool. It's just by kicking it down the road. Yeah. It's like, ah, let's do it next month.
[00:23:50] Mikkel: It's a future me problem. Yeah.
[00:23:52] Toni: no, not now. Come, let's give it some time. Do we really need it today? Um, so that's basically the, the, the tactic also that kind of sits behind us.
[00:23:59] Right. Um, and, um, Uh, and, and basically what that means with more meetings that you need to take and like, you know, here's Anri calculator and this is how we manage risk and all of that stuff. What it basically means now is that your AEs that previously, and that's the assumption, have been busy already.
[00:24:17] Um, now basically have to do 10 to 20% more work. Yeah. For the same opportunities that they're running. Yeah. And let's just say we assume that the reps have been busy already. What a basic means is that, um, they cannot get the same, uh, throughput done for the amount of opportunities. So basically you will have to assume that they can only work on fewer opportunities.
[00:24:42] And if your win rates, let's just say they stay the same. What it really means though is, um, They can only hit a certain, you know, less amount of revenue by the end of the, uh, quarter and or a year. And what that means, you actually have to lower quotas for them.
[00:24:59] Mikkel: Yeah. I mean, otherwise they're gonna pretty, pretty demoralized.
[00:25:02] They work more
[00:25:03] Toni: so number one,
[00:25:04] Mikkel: hit target.
[00:25:05] Toni: number
[00:25:05] Mikkel: no quota.
[00:25:06] Toni: Fuck that. Yeah, yeah. You know, everyone is demoralized right now, but the, the problem still remains that if you. Honest with yourself on the how can I increase someone's quota while let's speed up the sales cycle, let's, you know, increase the conversion rates.
[00:25:20] Let's have, you know, whatever higher ACVs. , that's how we should be. You know, this is our way of, hey, well that's, that's what you need to do in order to increase your quotas. Well, if it's going the other way, you kind of need to do the same thing here. Yeah. Right. Um, and that's, that's what that is. Well, that also means productivity per app is gonna go down.
[00:25:40] CAC, Payback in general is gonna go up, et cetera, et cetera, et cetera, et cetera. Right. You're basically now for the same revenue target need to have 10 to 50% more AEs. And so forth. Um,
[00:25:52] Mikkel: so
[00:25:53] Toni: that's your orient. That
[00:25:55] Mikkel: was a Yeah. That was a,
[00:25:57] Toni: um, then on the decide side, um, what you're gonna do about it. Yeah. Um, yeah, I think this is, again, this is a tricky one.
[00:26:08] I th I think when it, when it, when it's kind of funny, I kind of lay out what the orient the data gathering is. Yeah. And if it's then laid on me, okay. Now make a decision. Toni, my first question would, Okay. Are there differences in, uh, in the different regions and the segments? Say, say any, anything I can find?
[00:26:25] Um, so that would kind of kick it back to the data gathering side, I guess. Yeah. Um, . That's funny. That's how my decision making actually works. I
[00:26:33] Mikkel: guess you kick it down the road.
[00:26:34] Toni: Yeah. Yeah. Um, so that's not good, um, in, in that sense, but, you obviously wanna find some cheap solutions in terms of, ah, it's actually, it's, you know, the APAC enterprise team Yeah.
[00:26:45] That, that is causing all the trouble. And, you know, once we get that down, everything is fine. It's probably not gonna be that simple. so you need to make a decision here. Yeah. Uh, which probably is not gonna be fun decision. No. Uh, because it's gonna either increase your CAC, Payback, uh, which means. You're going in the wrong direction of efficient growth, or you're lowering your target for the end of the year while still maintain the same, uh, you know, AE cost. So also not great, right? and then act is you need to kind of execute this whole thing, implement this into reality, and, and make sure that in that sense, morale says high and so forth, right?
[00:27:21] so this is again, concluding one loop of aqua 10 minutes low. due to sales cycles predominantly. Yeah. What are you gonna do about it? Lower quotas, change the team, increase bonuses, whatever. Yeah. And then implement. Yeah. and I think to complicate the whole picture, which I think is what everyone is being faced with right now, is you just don't have
[00:27:53] one
[00:27:53] of those issues.
[00:27:55] Mikkel: No,
[00:27:57] Toni: you have all of them at the same
[00:27:58] Mikkel: time. Yeah,
[00:27:59] Toni: Yeah. All of them. Yeah. And I think this is what, what makes this, uh, extremely heavy on the cognitive load of, of the management team. Mm-hmm. and, um, I think. I think one of the, the issues coming with that is also because the cognitive load is so high and it's really an uncomfortable topic, and maybe even the execs in their seats because they haven't been going through something like product market fit, where you're, you know, you're faced with everything is a question mark all the
[00:28:30] Mikkel: time. Yeah, yeah.
[00:28:30] Toni: Uh, they, they are the playbook folks, which is the right thing, but they're not used to running, you know, 20 different question marks at the same time and see how they intersect. And so, and what might come out of that is, your execs just might for a little bit longer, close their eyes, push down the decision.
[00:28:50] Yes, I've observed. Yes, I know why. I don't know what the solution is because the thing is, uh, let's just say you make the decision to cut SDR bookings or outbound in our first AL loop. So what is that actually gonna have an impact of with the AEs?
[00:29:07] Mikkel: but a
[00:29:08] Toni: Challenge on the sales cycle side and maybe ACVs are up down and your churn is, you know, all over the place.
[00:29:14] How are all of those different, you know, decisions, you know, working together in the end? Yeah, right. That's the problem. It's, you know, when it's one of these things is outta whack. Probably the other things will as well. Right. And you end up with basically a, uh, you know, a pile of, broken glass to a degree, right.
[00:29:32] Trying to piece it back together.
[00:29:33] Mikkel: And I think also that's where some of the challenges we've talked about is cuz of how the tool stack is built. You have, you know, a perfect funnel within marketing. You have a perfect funnel within sales.
[00:29:42] There's only one team that looks at the full funnel. Yeah. And that's really revenue operations along with the cro. And we didn't even take the case of any of these down to the level of, okay, what does it mean for cs. Right. And, and you do need to look at that full cycle and someone has to potentially, you know, not just observe, but also orient and provide that information.
[00:30:05] Uh, I think that will potentially, you know, get you an invitation to, to take part in some part of the discussions and at least share the findings so the de a decision can be made. Right.
[00:30:15] Toni: No, I think for CROs and Revs listening, I think the.
[00:30:19] Mikkel: and
[00:30:19] Toni: and we talked about this never was a good crisis. This is, this is one of those, and I think the crisis is across the whole funnel end to end. And you as RevOps, uh, first of all are probably one of the only ones that sees the whole funnel. Mm-hmm.
[00:30:34] and your team would probably be very much frequented in the orient stage.
[00:30:38] Mikkel: Yeah.
[00:30:39] Toni: You know, let's do data gathering around this problem. Um, and I think there's an opportunity for you to, fit together all the pieces, tie the knots, connect the dots, whatever. Um, and, and help, help the whole funnel to heal and go in the right direction instead of what I think is gonna actually happen.
[00:30:59] And that's really interesting. To your point, uh, VP Marketing's gonna self optimize for his or her team. VP of sales is gonna do the same thing. And so, And you are gonna end up with an even bigger mess than, than you started the year with. Right? So this is, um, this is a, a very interesting crisis for, for revenue operations to, to jump in and help with,
[00:31:18] Mikkel: Mm.
[00:31:19] Toni: if, if you have the right tools to do it.
[00:31:21] Mikkel: Yeah, I mean, I think we also have a few episodes in the past we could easily have pulled some of that stuff in around, Hey, you need to understand your revenue engine. There's so many other pieces. Go back and listen to some of them. They're definitely gonna be helpful. For now, this is just a simple framework you can use to, to consider what is happening out there as change unfolds.
[00:31:41] And you can even use it when it's not a negative thing. You can use it later on. Also for positive things. Um, it's really about creating an advantage at the end of.
[00:31:49] Toni: That's it. Ulu, look it up, oh, oh d and, uh, start applying at their own business. I think it's a, it's, it's the right way to deal with this current super uncertain situation and the new baseline.
[00:32:01] It's being shoved in everyone's faces.
[00:32:03] Mikkel: Exactly.
[00:32:03] Toni: you.
[00:32:04] hey, so if you enjoyed this show, You're very much invited to join our GTM Lives happening every other Thursday and my revenue letter also going out on a biweekly basis. You can find all of this on growblocks.com.
[00:32:19] Mikkel: There are some helpful tools in there always being shared.
[00:32:22] Toni: Sorry, what?
[00:32:24] Mikkel: There are some helpful tools always being shared in there,
[00:32:28] Toni: Some helpful tools.
[00:32:30] Mikkel: come on.