Championing the Evolution of RevOps

Matt Durazzani: Hello, everyone, and welcome again to our Revenue Maverick community program and a very special welcome to Anil Somaney. We're very excited to have you. 

Matt Durazzani: I'm Matt Durazani, I'm your host and I am a Revenue Maverick advisor, and for the audience today I will love to introduce you to Anil.

Matt Durazzani: He is a senior vice President of Revenue operations at Chargebee. Anil is the flywheel revenue executive  and those of you didn't know Anil. He has held many leadership operational roles across many companies in his career, and most recently coming from Plural Sight.

Matt Durazzani: He is very passionate about architecting the go-to-market engine and the flywheel. He is quite the fine tuner professional, that aims to optimize the outputs.

Matt Durazzani: He is also very passionate about growing and developing people, both internally and externally. So we're very excited to listen to what he has prepared for our community today. Anil in the program today, we'll love to hear from you on how you're thinking about the revenue engine or holistically, and then I know you're prepared the 3 metrics that have made a difference in your career that you wish to kind of talk about and share with the rest of the community. So, without any further ado, the floor is yours. We'll love to hear from you.

Anil Somaney: Excellent! Thank you. I appreciate the introduction. Let's just jump right into it. So I wanted to build a slide to start framing up revenue operations and some of the transition of revenue operations in the past couple of years, and what I personally believe is going to be the continued growth of revenue operations and the importance of rev ops just over the next few years.

Anil Somaney: And so on the left side of this you'll see some of the challenges that businesses face right now around not having a full stack revenue operation. So from my perspective I see Rev Ops carrying forward all the way from the front side of marketing to business development into sales and to customer success. And what a lot of companies have, and this just surprised me a little bit,

Anil Somaney: that are these siloed operations organizations where you've got marketing reporting a set of metrics, You've got sales and BD reporting a different set, and then CS reporting a different set. And many times those metrics are calculated differently, they're positioned differently.

Anil Somaney: and they cause these organizations to be at odds with each other. And so one of the things Rev Ops can actually do is to start bringing all of that together. What are the data sources? What are the calculations?
Anil Somaney: That comes across in strategies. A lot of companies have, you know, these large initiatives that they're trying to bring and execute across all the different groups. So, for example, a strategy of wanting to drive up market into enterprise and strategic segments.

Anil Somaney: That spans across every one of those marketing, BD, Sales and CS.

Anil Somaney: And it has to be coordinated. Rev Ops can be those coordinators. I think everyone's challenge with technology and where the tech landscape is going or has gone. I think everyone has seen that chart of a 1,000 different vendors and different buckets. It's tough to pick a tech tool today.

Anil Somaney: And then, you know, on top of all that, and probably the most important is the customer experience right. Thinking about putting a customer front and center. So if you look at the middle part of this this is how I think about any one large initiative coming into rev ops, right. So after all of those challenge, in comes rev ops. So the center of that, you know, If we think about what is working, you know what is the working relationship today, and how do we want it to work? So Rev ops is just crucial on that strategic piece, and then you keep wheeling around over to the right.

Anil Somaney: So once you determine the way you want it to work. Are the incentives aligned right behind that, right? Do we have the right comp plan? Is it a spiff? Do we need something short term to help drive that?

Anil Somaney: And then behind that the enablement do the sales team, the CS team, the BD team know the words to say. If we continue to use that same example of driving up market,

Anil Somaney: you know, from an enablement perspective. Does the business development team know what the trends are in the marketplace up market? Do they know what to say? Do they know how to engage with the CIO/ CTO of these large companies?

Anil Somaney: The fourth part of that is developing reports to adjust the performance, or to measure and adjust the performance. It's that famous saying - "You can't actually influence what you can't report and measure." So that's that fourth piece, and then you continuously optimize this, and from a rev ops perspective, It's a big loop. So really, you know, from a from a strategic perspective, Rev Ops role is is in the center of that right. They're the ones architecting all of those pieces, coordinating with the different functions and departments to kind of help drive that and optimize it.

Anil Somaney: If you think about you know how that influences and the impact of all of that, we talked about it right, the single source of true real time visibility. And one of the keys with real time visibility is giving you the ability then to make rapid adjustments, right. So if you're reviewing any one of these things on a weekly basis, you then can go to a CFO and say, okay, look, let's go A/B test this. Let's go try this and stop this and see if that works.

Anil Somaney: Clarity across hand-offs right, the SLA's. It's always a it's a notorious one between marketing and BD and AE's. What are the SLA's? How many times do they call? How quickly do they call? And then, you know, just the refined feedback loops. And I think people think about feedback loops into marketing and into sales,

Anil Somaney: But there's also a feedback loop into product, right. Like if all of this is architected properly, what is Products way of hearing about the interactions from a field perspective. So I think you're seeing this trend really emerge, and I actually think there's the importance placed on Rev Ops is going to be highlighted here over the next few years.

Matt Durazzani: Thank you for sharing this one. I think it's a very good point that you brought up in in kind of trying to set the stage up - What is the purpose of a revenue operation team? I think there's a lot of misconception today still in the market that people think is revenue operations is Sales ops when they don't understand actually sales ops is just one of the pieces of the full revenue engine, right. And so maybe one question for you is, since you've seen this many times,

Matt Durazzani: Can you help us recognize some of the side effects or the pains that organizations may have or going to experience if they don't follow the revenue-centric operational mindset that you just talked about. If you don't do this, you should experience the following, so maybe they can realize maybe I have those pains today.

Anil Somaney: It is a bit surprising to me how many companies still operate in that siloed framework, and the pain just becomes extremely evident because you're not following the customer journey, so I think your CFO will probably feel the first amount of pain right in that he or she is going to start asking for when I put a penny in the marketing machine, what is the output I get? And you know, if it's a fragmented organization, the marketing team will tell you hey I get 10 leads. Well, that's great. CFO is gonna ask you, how much in bookings do I get? How much in retention do I get?

Anil Somaney: what does it mean to the number of meetings? So I think it's the overarching discussion and the lack of visibility and transparency on that is what you'll be missing. And not to mention the lack of strategic direction. I think the departments will be in conflict. You'll see them fighting a little bit around metrics and things like that.

Matt Durazzani: Yeah, totally. I think there's a lot of people that probably experienced those pains. Okay, thank you for this. We're ready to see your first Metric. Let's talk about that.

Anil Somaney: Let's do it, let's do it. So this first one is actually a metric the battery ventures just recently put together, and it's called the Mojo metric. And for me this is a bellwether metric on on the pipeline health. And if you think about this metric, it's essentially positive pipeline, new pipeline on a week in - week out basis minus negative pipeline. And positive pipeline is new and existing pipeline plus any pull forward that you've had for the week. Minus negative pipeline, which is anything that's been pushed, deals that have shrunk or have been lost.

Anil Somaney: In this chart, you can see they've had a couple of rough weeks of pipeline right. They're below that $0, because the red bucket of lost pipeline or negative pipeline is larger than green. But what you'll start to see in any one business is really generally the trend that pipeline is on. And we all know, based upon, you know, historical close rates and ASP's and cycle times, you know how this translates out into then bookings right. 

Anil Somaney: Pipeline is really the energy of most companies, and this gives you a really good sniff Test on how that's going. And and behind this I would say, driving it down to a segment level, driving it down to a Geo level, driving it down to a source level is extremely important, right. Because then you can start driving into what's working and what's not by each one of those functions. It really gives you a good a good test of how healthy the pipeline is.

Anil Somaney: The other thing is you as you start looking at this I mean, this is only 5 weeks in the chart that we've shown here, but it starts giving you a good feel as to the trending right and what you can expect. Imagine, if you have this, you know, for 13 weeks of a Q1 and 13 weeks of the previous Q1, then you can start comparing of okay, hey this trend first 2 weeks is always slow, you got the sellers coming back from holidays, the BDR’s aren't quite clicking, maybe the customers aren't back yet, and you see that in the previous years, and you can start kind of trending it out for this year as well.

Anil Somaney: It also will start talking to you a little bit around the pipeline hygiene, and where you need to squeeze and press on the different organizations, and where you need to look a little bit deeper in terms of inspecting the hygiene portions of it.

Matt Durazzani: Okay, that makes a lot of sense. I like the fact that you know that you can see you know both the good and the and, so to speak, maybe the negative that occurs when I look at this scenario, at least in this hypothetical data scenario, you can tell like this first month we were maybe trying to get our ducks in a row, figure out, maybe a new process, Maybe we launch something new that is still trying to to engage, and then it starts taking form and start picking, picking up momentum.

Matt Durazzani: In scenarios, maybe like this one, what types of conversation, maybe if you want to give us an example or 2, have you been able to see, and maybe something that you would say, these are the type of conversation that you could expect if you share this type of metric.

Anil Somaney: Yeah, I mean, I think this is like, if you think about a calendar year, and and this is a January. A lot of companies pipeline probably look like this right? The sellers are coming back, a lot of times there's a you know, RKO/SKO going on there's a lot of enablement

Anil Somaney: There's there's just a ton going on in those first couple of weeks, so that I don't think this is unusual for a January. one of the things I really like to have is a weekly pipeline cadence.

Anil Somaney: And in that meeting you've got the individual pipeline sources coming in. So you know BD, Channel, sales and marketing coming in and having a discussion of their weekly targets, and really simply asking 3 questions or answering 3 questions.
Anil Somaney: What happened? And this is on a weekly basis. What happened? Why did it happen? And what are you gonna go do about it?

Anil Somaney: once you understand the what and the why, then you can start going to what is the action plan? And for each source, and each Geo, it's going to be a little bit different. But at least you start framing to action rather than Oh my gosh! It's red, and we don't know what to do.

Matt Durazzani: I think you just called out something very important sometimes when you see charts, maybe have read, or something that indicates the negative. Maybe there is the the human side of us, or from a leadership perspective we start panicking. We start focusing immediately. We're doing bad. Everything is negative. I like what you're saying that we actually focus on actions that look the data is unemotional in a sense, is simply telling us that something can be corrected. And so it's more valuable for us to focus on what can we do about it? And how can we make the change in momentum to head in the right direction, because as long as we can move that pivot, then we can actually get some good results. So I think that's a very good point to to kind of focus on what are you going to do versus freaking out or being very negative about the current scenario

Anil Somaney: Yeah, a non-emotional data-driven discussion is absolutely where you want to go, and and an action plan behind that, right. So I'm less interested in the what and the why that it happened, and more about what you're going to do about it during those discussions. So

Matt Durazzani: that’s awesome! Maybe we flip over to the next one!

Anil Somaney: So this is snap the line, and this is a forecasting accuracy metric. So essentially what this measures is end of quarter variance against the week 6 call. So if your end of quarter number is a million dollars, or let's call it 1.3 million dollars and your week 6 call was a million dollars, right, then you are 300k over. Then there'd be a positive percent to variance there, right, of 30% and vice versa. So you'd be in the green in that first scenario, and vice versa. You ended up at 700k. You'd have that same 300k variance, and it would be negative, and you'd have a red variance in here.

Anil Somaney: So really what I'm looking for here is a couple of things. A salesperson, or a sales leader's ability to call their number within an accurate fashion at week 6, right. So weeks one and two we're always pipeline cleaning, and you'll see a ton of pipe movement from the previous quarter. You'll see Deals shaking a little bit. It's just early in the quarter, right, but then about week 6 is halfway through the quarter, we should have a pretty good handle on what's going to happen along with a little bit of judgment. there's a certain amount of range that you allow, I think some companies are pretty tight on this range. I like to see a minus 5 to plus 10 variance.

Anil Somaney: So you can be 95% of your call, or 110% of your call, and that's within the tolerance level. I do think it's important to look at this again, those same cuts right, by Geo,
Anil Somaney: by segment, and you can start then understanding the you know, the forecast accuracy of each one of our leaders. So if you take the Geo example here, North America was it 95 kind of right within that tolerance where EMEA was a positive one or 2, so both of those were in a pretty good tolerance level, whereas the APAC region in here missed pretty badly, missed by 14% to 14 points, and we're well below their call. And so then, you know, sitting down and understanding what happened. the same thing, right. Why did it happen? And what are you gonna do about it? It is a really important thing in this scenario.

Anil Somaney: I also think It helps you calibrate forecasting methodology with your leaders. Now, if your APAC leader comes back, and and this is the third quarter that they've had something like this and you probably don't want to wait till the third quarter right. You probably want to ask yourself what happened, and you know, do you have your deals staged properly. here is what it means to be in a commit stage for me, what does it mean for you? And are you enforcing it? Starting to ask that next level down with the questions. And and then finally, I'd tell you you know, as you start seeing these trends, you can start, you know, looking at it, and start giving confidence to your CFO and into you know your CEO of the bookings forecast.

Matt Durazzani: You're calling now something very interesting here, you know, talking about the scenario of maybe don't want to wait till quarter number 3 for the same storyline in a sense. What type of cadence weekly activity do you expect the reps or the leaders to do in order to position them to make a call within the accuracy you're talking about.

Anil Somaney: Yeah, I think it's different for each business, right. I mean depending on the sales cycle and depending on the product, and you know a lot of companies have this really fast transaction velocity business that they create pipe, and they close it very quickly in quarter. But I would say generally a weekly cadence by segment is what I look for, and that weekly cadence is sales manager with their sales rep and depending on the levels right sales manager with their director, and director with their VP, And then VP with us, sitting down and being able to make those calls, but also digging into the large deals right. There should be a large deal component reviewed in here, where they're sitting and poking it where they're at in the cycle, and where the executive team can help, and those types of things

Matt Durazzani: With this type of metric of snap the line, if this cadence is established, how often do you see that they start establishing that culture of being within that frame? Or is this more of a hit and miss throughout the year?

Anil Somaney: No, I think the goal is to start bringing everybody within that tolerance level. So I would go back, and I would look historically to start developing that tolerance level right. This minus 5 to plus 10 is also a little different by company. But I would look at some of those historical trends and look at where traditionally leaders have been, and then drive and deliver your tolerance level or establish your tolerance level. And then the goal would be, you know, over a period of 6 to 12 months, to start bringing and set the expectation that leaders should be within that range. And you know the range insinuates that it's equally bad to call a higher number versus a lower number, right. So we want you to be able to forecast accurately or sales stages and forecasting methodology are there to help you with that. But we need you in this tolerance to be able to deliver predictability on the business.

Matt Durazzani: That makes sense. Last question on this one, because I think a lot of both operators, and as well as maybe RVP's or these middle top management in the sales side of things will probably ask themselves these questions.

Matt Durazzani: Are there very specific things that drive that accuracy? Is it maybe a forecasting methodologies like MEDDIC and MEDDPICC or other things besides just hygiene in the CRM that they can help with that accuracy, that you recommend start looking into, or maybe embracing?

Anil Somaney: I think it's it's also big deals, right. So if you're a strategic segment leader where you only have 5 deals a quarter. If one of them moves, and all of a sudden, you know, your number is gonna look a little bit differently, right. But I think it's also sitting down, and maybe even skip level right if you're a VP going all the way down to the IC and reviewing the top 20 deals across your business and understanding where they're at in the motion? Where you can help? Do you need additional help? Where you're getting hung up? Are they pacing well? Are they coming to the next event?

Anil Somaney: I think this opens up just a whole host of questions and inspection's the wrong word, but getting into the middle of the deal, and being able to help kind of facilitate the flow of that deal.

Matt Durazzani: I guess we could say if they're not inspecting, they should be at least unpacking the deal.

Anil Somaney : There you go! There is a better word. There is a better word!

Matt Durazzani : Okay. Alright, we are ready for metric number 3, Lets jump into it.

Anil Somaney : Let's do it! This trend is a very, very optimistic, as we as we did the sample chart, it's a very optimistic one, right. But I wanted to kind of show the trend over a period of time and show the impact of it right. So LTV to CAC is just the lifetime value of a customer divided out by the customer acquisition cost.

Anil Somaney: I've had a couple of questions of, you know just traditionally what's the target? And traditionally this is operated as a 3 to one. Again, different businesses run a little bit differently and set internal targets a little bit differently. But for me this is one of the most important indicators of just a company's health and well being, and how well they're operating, how productive they're operating and efficient they're operating. But as well as you know, kind of their potential for growth. 
So in in this scenario that's highlighted here, you you can see they are doing a phenomenal job of growing the the lifetime value of a customer. They're either keeping them longer, they're selling them larger deals, all that good stuff, but they're keeping their cost bases the same, right. It's going up slightly but they are keeping their cost bases relatively the same.

Anil Somaney: So this is a company that you know. If a VC or PE firm was to look at, they definitely would take a second look at. But it also, you know, helps you understand kind of those leverage points between the value of the customer, the cost to require one, and how you can play with those different numbers right? Because there's 2 ways to get to that orange line. It's getting a higher lifetime value or driving cost out of the business.

Anil Somaney: And doing so let's you kind of make some of those faster decisions. I just feel like this is one of those good old fashioned SaaS metrics that I think everyone should be looking at.

Anil Somaney: And again at a segment level, at a Geo level right, driving this down. Geo becomes a little bit tough, but at a segment level to the extent you can allocate cost, and is also another just really good one.

Matt Durazzani: Yes, I think this is very important now. From the community, one of the things we noticed that a lot of them are not yet using the LTV or CAC ratio type of metric. I think especially in SaaS,  there's probably a little more of a presence of this metric, but a lot of people are learning about it. So for those of you that are listening another way that it's been often simplified is in order to calculate it right you just think about your cost versus margin. and so that's another way to think about it. This is definitely a beautiful unicorn that everybody wants to go in IPO and purchase out right. One question that we are often asked about this type of metric is

Matt Durazzani: what are the toughest pieces of the numbers that need to be put in place to get the right cost of a customer, right? That CAC piece? What have you found in your career that are some of the most difficult one to really pin down?

Anil Somaney: And when you say pin down you're talking about influence or actually in the calculation?

Matt Durazzani: Calculate. In the Calculation.

Anil Somaney: Yeah, I think there's you know there's a host of kind of G&A type stuff that everyone debates on, you know, should they be included in the number, should they not? Sometimes you you'll hear things like hey I've got a marketing person that does, you know, SEO, but does it across all segments. Do I evenly allocate his or her time across by segment. They work more on strategic, less on SMB.

Anil Somaney: we can debate all day what goes into the cost of a side of this equation, my perspective is as long as you do this in a consistent fashion. In this scenario as long as you're doing it, reporting it consistently 7 years, consistently, year over year over year, and you're improving the trend, then that's all I'm looking for. A thumbs up, right. So I worry a little bit a little bit less about what all's included in the math, and more about what is the trend over a period of time? And is that trend improving?

Matt Durazzani: Okay.

Matt Durazzani: A follow up question to that one often comes is which stakeholders in the business should you work closely to define it? Is it just the CFO. Is it the Chief Customer Officer for you know, implementation, and in retention or are there other leaders that should be part of that decision on what the cost of acquisition is.

Anil Somaney: Yeah, I think the CFO generally holds the deciding factor, holds the gavel on it, and and should be crucial in creating this formula, but I think socialization across the you know the CMO, the CRO, the CCO, kind of the head of Rev Ops, all those individuals,

Anil Somaney: They all have to be bought into the formula. And again for me, more importantly, is, once you get it, what are you doing with it? When you see this type of trend, you know what's the discussion? If you see a bottom right trend, what are you doing about it?

Matt Durazzani: Yeah. Makes sense, makes sense. Okay, is there anything else that based on what you wanted to share about these 3 metrics, that maybe you want to say before we kind of wrap our podcast today?

Anil Somaney: No, I would just say, you know, with one of the closing comments, you can get overwhelmed with the set of metrics right. I've seen businesses go in, and they calculate 150 different metrics, and then they sit down week over week, or then they just stop sitting down and stop looking at metrics.

Anil Somaney: I would really spend the time to discuss what are the key drivers? What are the key metrics that you want the executive team, or you want the team looking at on a week in week out basis, clearly define the calculations, the data sources, and then who should be looking at them? and that list can't be 150 right? You can't influence 150 and shift the discussion from the calculation and the the who reports on it, and all that to what are you going to go do about It, would be my feedback.

Matt Durazzani: I think that is very well said. We've heard other people say, you know you can get lost in the metric right, and so measure what matters. So I think it's very good point that you're bringing up. So thanks for sharing that one.

Matt Durazzani: Anil look, this is always always a pleasure connecting with you, and and learning from you. One of the things that I would love to kind of ask you, get your advice on, since you know, we have different type of audiences on on this community.

Matt Durazzani: One would be think about in terms of someone that is young in their careers that maybe are just starting. maybe they're an analyst. Maybe they're a manager in sales. Regardless of where they sit and and they're trying to become more more of a flywheel executive like yourself over time, right. What are some of the advice from a career journey perspective that you would give them to, maybe look into or consider in order to make themself more well rounded, like you described in the first slide.

Anil Somaney: it's it's a couple of things like the going back to you know any one analysis that comes out, most people nowadays have the ability to go and calculate the analysis to go and pull the data, calculate the analysis, and and put out a number spreadsheet or a report, right.

Anil Somaney: The the really valuable folks at an analyst level, right for me are the ones that can really go do that, and then come back and say, hey, Anil like this trend is, is going the wrong way, and I see it going wrong in EMEA and your mid-business.

You're a great addition to our revenue maverick program. So we appreciate you taking the time to contribute to this community.

Anil Somaney: Yeah, thank you. Excited to be here.Anil Somaney: And here is what I think you need to

do about it. Here are 3 ideas that I think you need to go do. And they're thinking about it holistically, right, they're thinking about the full journey. They're not looking at any one specific area. They're thinking about the full journey.

Anil Somaney: And I think those are the individuals that have that really inquisitive nature, but are also proactive, and, you know, establishing 3 recommendations are the ones that really start then elevating and accelerating their career, because then they get pulled into the solutioning right. Because then my next thing would be to push on it, to challenge a little bit and then say, okay, hey, look like, go present this to X Y. And Z. And now immediately they're getting all the exposure. They're getting all the you know

Anil Somaney: they're part of the solution. And I think that's just really valuable for them.

Matt Durazzani: I agree, yeah. Flip the mentality of just building reports to actually automate the reports and start spending more time and create the insight that can be generating conversations and actions, right.

Matt Durazzani: One more question on this one, and then we'll let you go. But the revenue operation role to your point in the next few months, if maybe a few years, it will start, become probably for some organization that never really emphasized it or invested into more of a predominant role, their organization today they already invested in it

Matt Durazzani: one of the critical things that I think, and leaders like yourself have to do is try to kind of brand and recognize the value that this organization is bringing.

Matt Durazzani: What advice do you have to other leaves to say this is how often, in the type of democratization you need to do, you know, to say, look we're making a difference on the bottom line. What would you advise people to consider and do?

Anil Somaney: I'd say, start now. I was a little surprised over the past 6 months, with different companies that I've spoken with that don't have a unbiased third party looking at the full customer journey and life cycle. I was really surprised they still had this very siloed kind of approach. So my advice and my feedback would be start now. Pull the person out and ask them to really start thinking about it across the life cycle and across the journey, because If you don't, I've seen companies grow from 200 million to a billion and I've seen the mistakes they made. And the siloed approach is one of those big things that I think causes a ton of friction, causes companies to move a little bit slower. I think companies that are 10 and 20 million dollars, my advice would be, Just go do it now, invest in the resource.

Matt Durazzani: That's a good advice, thank you. Well, Anil, thank you so much for all your insight today.

Matt Durazzani: Everybody, if you wish to connect with the Anil, and I'm sure he will be more than happy to connect with you via Linkedin and provide his expertise and advice to to you and and help you guys grow. So feel free to reach out to him via Linkedin. And thank you again for your time in preparation for today. We're we're excited to set this live and and and share this with the rest of the community. So thank you for joining us. Thank you for everybody that has been listening, and we wish you all wonderful day.

Anil Somaney: Thanks, Matt.

Matt Durazzani: Thank you.