Podcast
October 21, 2024
Episode 12 : Why customer success is central to your revenue org
Hear how customer success is central to your revenue org, and holds more revenue than you realize, in this episode with RevOps expert Shantanu Shekhar.
In this episode of the RevOpsAF podcast, host Matt Volm sits down with Cliff Simon, CRO at Carabiner Group, to explore the nuances of revenue operations in different company environments—whether venture capital (VC) backed, private equity (PE) funded, or bootstrapped. With over two decades of experience in the mid-market and enterprise space, Cliff has seen all of the challenges and opportunities that come with RevOps.
This conversation covers everything: team structure, strategic growth goals, the role RevOps plays during acquisitions, and the importance of key metrics. Listen in to learn about how operational strategies shift across different types of businesses.
The way RevOps is set up has more to do with the company size and go-to-market strategy than whether the business is VC-backed, PE-funded, or bootstrapped. Ultimately, the customer journey decides the direction and molding of the systems and processes.
Super transactional sales happen quickly with simple processes. When deal sizes grow, then finance and procurement become more involved. Finally, when you have 6-month to 18-month sales cycles, you need really good processes, plus the ability to monitor and see what’s working.
“The problems that I see at the lower end of the market are the exact same problems we're dealing with upmarket. Change management is ultimately the biggest difference.” - Cliff Simon
Jump to the clip to hear Cliff talk about the similarities and differences between VC-backed, PE-funded, and bootstrapped companies.
Most folks lean on a departmental model (sales ops, marketing ops, customer success ops, finance ops) rather than a functional model (processes, systems, insights, and enablement). When you’re bootstrapped, you run as lean as possible, focus on growth, and try to be profitable or at least break even.
VC-backed organizations spend a lot more money and have a longer time horizon of 8 to 10 years as their payback period. PE-backed companies operate on a 3 to 5-year execution schedule. They’re more likely to smartly deploy capital and will experiment more with their team structure.
Jump to the clip to learn how company funding influences RevOps team structures.
The rule of 40 says that a company’s revenue growth rate plus profit margin should be equal to or more than 40%. That’s the magic number. To find out your financial performance, add your year-over-year growth percentage and your EBITDA (earnings before interest, taxes, depreciation, and amortization). Companies that see 60%, 70%, and even 80% are worth more money. VC-backed companies heavily chase the rule of 40.
NRR measures your ability to retain customers and increase revenue from existing accounts. GRR measures your ability to retain customer revenue over time, excluding upsells or expansions. The higher your NRR and GRR, the better your company is doing. PE-backed firms often have a goal to run 95% NRR. It’s always more expensive to acquire new customers than it is to retain existing customers.
“Bootstrap companies definitely run lean. They don't have money to burn. VC-backed companies tend to be the ones that are willing to throw the most dollars at a problem.” - Cliff Simon
Jump to the clip to hear how different companies approach the Rule of 40, NRR, and GRR
Cliff explains that RevOps is the "keeper of truth" when it comes to company acquisitions. RevOps teams ensure that all departments are working with clean, reliable data—a vital element for accurate valuations and decision-making. “You can trust the data and that’s why RevOps is so valuable during mergers and acquisitions,” says Cliff. It’s the confidence of having all of your ducks in a row that makes it much easier to merge systems together.
Jump to the clip to find out why RevOps poised to be the hero during acquisitions and mergers.
Common pitfalls during mergers include ego clashes around changes in processes and systems. Leaders often struggle to let go of their way of doing things, even when it may no longer serve the new organization.
There can be big hurdles when companies have different systems that must be merged or discarded in an acquisition. Decisions have to be made between CRM and CPQ tools. You may switch from being a Google house and a Microsoft house. When you’re a huge fan of a particular sales engagement platform, having to learn another is a challenge.
Jump to the clip to hear about how mergers affect hearts and minds in the RevOps org.
Revops has historically been seen as a cost center when in reality it’s a revenue multiplier. Investing in RevOps can lead to a 30% increase in ARR (annual recurring revenue) because it optimizes processes and systems across the entire customer journey. When you have a team that isn’t overworked all the time, and you allow them to have the resources to execute rather than just put out fires, RevOps can make effective long-term changes.
“I think the beauty of having a strong RevOps team is that you can trust the data. You don't have to second guess the information that you're presenting.” - Cliff Simon
Jump to the clip to find out why Cliff believes that RevOps is mathematically proven to increase revenue.
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