Steve Busby, CEO of Revenue Operations Associates, answers four questions related to GTM strategy execution and the ROI of revenue operations when it’s done right way. The questions were posed by Matt Schwab of Axiss.io at a recent Rev Ops leadership event in Boston. These four questions are an excerpt of the broader interview session.
Matt Schwab: Where do companies struggle most when it comes to GTM strategy execution?
Steve Busby: Every company struggles with GTM execution to some degree. The execution challenges are extensive and all over the map, but if I had to boil it down, I think there are three areas I see most often. The first is any cross-functional workflow that does not have a clear accountable owner. To be specific it’s in the mid and back of the revenue cycle, things like the handoff from sales to CS, customer onboarding, customer experience, and commercializing the customer success function – where there’s oftentimes a lack of clarity about what sales owns and does not own when it comes to revenues.
The second area is data hygiene and data utilization. Superior GTM execution relies on using your best customer insights quickly, and oftentimes the best customer intelligence at a company is locked in the heads of sales or CS teams, or buried in databases or complicated reports and not served up at the optimal point of decision making. Addressing this data utilization gap is a huge opportunity for many companies, and is definitely an area where AI can have a material positive impact.
“Revenue operations done correctly as a strategic discipline is about change management applied in the right areas along the revenue cycle.”
And the third area is probably change management, which is a skill and operating capability that many companies are not very good at. Because change is hard and involves building a business case, emotions, competing priorities, lack of bandwidth, cross functional teamwork and other challenges that all must be addressed in order for positive, lasting change to happen. Revenue operations done correctly as a strategic discipline is about change management applied in the right areas along the revenue cycle.
Overall, GTM execution requires consistent and effective execution across functions. Employees at most companies know exactly what the problems and are good at complaining about them, but nothing ever happens because junior people typically don’t have the chops to make drive cross functional change and senior people are too busy or don’t want the headaches.
Matt Schwab: Why is revenue operations important to GTM strategy execution?
Steve Busby: Revenue operations is how companies execute their GTM strategy. Rev Ops is how companies operationalize the systems and process that generate revenues in a profitable, scalable, consistent way that maximizes customer experience. So at the end of the day, there’s nothing more important than revenue operations, but most companies are not doing rev ops right and are using it as a tactical support function embedded in marketing, sales or CS. Rev Ops should be one of the most important strategic functions at a company; where the Rev Ops leader is effectively your COO for revenue and CX.
“Most companies are not doing rev ops right and are using it as a tactical support function embedded in marketing, sales or CS.”
Revenue operations pros I see today have incredible tactical knowledge for things like enriching lead data, forecasting, quota planning and generating insights and analytics but there’s not a lot of common sense business thinking across the revenue cycle. There’s a huge opportunity for ambitious Rev Ops professionals to demonstrate the ability to look at a business across the entire revenue cycle and diagnose where changes will have the biggest impact, and then have the ability to make those changes happen. This critical thinking and management skill is a big opportunity for revenue operations professionals and the companies they work for.
“There’s a huge opportunity for ambitious Rev Ops professionals to demonstrate the ability to look at a business across the entire revenue cycle and diagnose where changes will have the biggest impact, and then have the ability to make those changes happen.”
Matt Schwab: What are some non-traditional ways companies have improved GTM strategy execution? Are there any less obvious levers you regularly encounter?
Steve Busby: When we do our GTM Accelerator assessments, they always generate a variety of levers companies can pull to improve GTM strategy execution. Many of these levers are not things that company management has been focusing on because they are related to core processes, culture and alignment. One of the non-traditional levers we see most often is commercializing the customer success function. Specifically getting the answers to root cause questions like what’s the level of commercial or sales DNA in CS? How good is CS at churn management, expansion revenue, and maximizing CLV? Customer success owns a huge part of the revenue equation and most companies have CS groups that are tasked with keeping customers happy, not monetizing this happiness.
Clarity of Ideal Customer Profiles (ICP) and reconciliation of the ICP for sales and the ICP for CS is another less obvious lever. It’s a very interesting exercise to compare the ICP’s from marketing, sales and CS to see if the customers you can acquire easily are the ones that stay with you, grow, and are cost effective to serve. I recently heard the quote “if your customer relationships are not growing you do not have your ICP defined right.” There’s a lot of truth to that. In most cases the ICP definitions at companies need some work, as they are generic, not specific enough and don’t include behavioral or preference data. The good news is that AI is very good at helping companies with ICP targeting, allowing them to go beyond demographics and identify pain points, stated preferences, and behavioral attributes that align the value proposition with specific, identifiable prospects.
“If your customer relationships are not growing you do not have your ICP defined right.”
Companies can also improve Go-to-Market strategy execution by simply having a better GTM strategy. Most companies we see don’t have a complete strategy or employees don’t have clarity on how the strategy will be executed or deep conviction that successful execution is possible. We recently worked with a company where the CEO gave the mandate to double revenues in 3 years. But nobody knew details of how the doubling was going to happen, and for certain areas they suspected would be part the plan they didn’t believe they could happen. The employees did not think things like price increases, revenue from new products, increasing retention, and hitting more aggressive sales quotas were feasible. So there was no way that company was going to be able to execute its GTM strategy goal with out some root cause issue resolution .
We talked about data utilization, which is definitely an area that holds companies back on the GTM strategy execution front. And perhaps related to data utilization, many companies are not set up to improve GTM execution because they only measure the output metrics and not inputs. In sports terms, that’s like looking at the scoreboard but not how well the team practiced during the week, the culture in the locker room, alignment with the playbook, sentiment towards the star players, and diet and sleep requirements. I’ve always found it interesting that leading sports coaches always talk about focusing on the process and results will take care of themselves, but company management does just the opposite – they look at the results and not the process. This is in part because you can’t get process metrics from finance, but you can get them from a savvy rev ops executive who understands their importance and how to measure them.
Matt Schwab: One last question. If you could only monitor three leading indicators to judge GTM execution health, what would they be?
Steve Busby: One would definitely be Customer Lifetime Value or CLV. I like CLV because it covers the entire revenue cycle and ties in marketing, sales, CS, product, IT Ops as well as finance. Every function is tied into one or more of the CLV input metrics, as there’s revenues, average revenue per customer, customer acquisition cost, cost to serve, retention, churn and expansion. Calculating CLV also puts healthy pressure on developing viable CAC and cost to serve numbers, which is a good learning exercise. CLV to me is the ultimate shared metric and great for rev ops.
Another would be pipeline health and to know pipeline quality and whether its expanding. I learned a long time ago that relying on sales to assess probabilities is not a good way to assess pipeline health, so I like to focus on whether the pipeline is converting and at what levels, specifically to see if marketing is providing enough of the right type of high quality leads that match the ICP and whether sales is converting them.
And the last would probably be Net Revenue Retention or NRR. Companies like to focus on delivering exceptional CX but there’s not as much focus on whether they are monetizing that CX. Focusing on NRR helps ensure companies are paying enough attention to and professionally managing retention, churn and expansion revenue which are core rev ops competencies. And related to NRR is calculating wallet potential for high value customers. I don’t find to many CS functions that truly understand wallet share and wallet potential and are able to allocate resources accordingly.
Matt Schwab: Thanks Steve, appreciate your time and perspectives.