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Having run more than 200 quarterly business reviews (QBRs), we know a thing or two about the power of QBRs.

There’s a reason we hit 12 quarters in a row at Falcon.io (Brandwatch today) – we used QBRs.

But there’s a problem with QBRs: They’re really good at identifying problems that happened 90 days ago. And since you can’t go back in time, congrats, you’ve lost 90 days to fix the problem.

As technology has evolved, it’s time for QBRs to evolve. And boy do they need to.

After all, Ford is making cars of any color today, as opposed to their old adage “you can have any color you want, as long as it’s black”.

That’s why we’re introducing a framework for Quarterly Business Reviews 2.0.

But before we get ahead of ourselves, let’s establish what a QBR is today.

QBRs as we know them today

A QBR is a quarterly performance review. In the review you identify areas of success, failure and improvement. These translate into goals and action plans for the next quarter. During a QBR, stakeholders share their insights and review KPIs. 

The purpose of a QBR is to create a shared understanding of performance, goals and priorities. In simpler terms, QBRs lets you respond to changes in the market, identify challenges, and define solutions.

There are usually two reviews happening, a monthly and a quarterly – and there’s a reason for that.

• Monthly review: Focused on tactics and volume metrics (opportunity to target, forecast etc)
• Quarterly review: A deeper look at performance including processing metrics (ACV, CVRs)

In the case of QBRs, you can include more important metrics such as ACVs and CVRs. The reason is simple, these metrics don’t move as fast as leads and opportunities. But they’re critical to performance and efficiency.

A 5% change in ACV creates a 5% impact on your gap to target next quarter.

Why everyone should run quarterly business reviews

It’s not a secret, here at Growblocks we admire product folks. They’ve figured a lot of things out already.

And when it comes to reviewing performance and work, they’ve simply built a great process called “cycle reviews” (albeit within a shorter time frame).

Much like cycle reviews, running quarterly business reviews provide a structured approach to continuously manage and improve performance. In the case of QBRs, the focus is on revenue.

If there’s one reason to run QBRs that I want you to remember, it’s this:

If you improve just one thing every quarter, it has a compounding effect. As you continuously improve, you’ll see outsized performance across your revenue engine.

And with compounding interest, you’re on the path to see exponential growth.

But there are other reasons you should run QBRs:

• Systematically improve revenue performance
• Creates accountability within the organization
• Establishes a shared focus of what’s important
• Identify continuous improvement areas

The most important thing you need to do to establish a QBR is getting everyone to believe this is important to run the business. 

They need to believe that the numbers are of importance, and that the actions defined from the findings are carried out.

To get there, determine the key metrics around your GTM that you’ll measure, and put them into the QBR format.

The main focus will be on revenue, acquisition cost, churn, upsell – but there’s more to dig into. You want to start with the top to understand how it affects your business – and that’s what the CEO & CFO care about. ARR, NRR and CAC are important because ultimately that’s how the business will be evaluated by investors. 

But the problem is that these metrics aren’t actionable, they’re a part of the scorecard. Can you really find any actionable insights from “ARR was missed by 5%”? No. They don’t help you arbitrate.

To unlock actions and make the right decisions, you’ll need to dig deeper. And one step is realizing that your business will consist of multiple funnels.

You’ll have different: 

• Motions (PLG, outbound, inbound etc) 
• Sizes (mid market, enterprise)
• Segments (agencies, retail)
• Markets (DACH, US, etc)

And within all those, behavior will be different. ACVs, CVRs, volume, you name it.

This is where you’ll move from fx. a blended CAC to a CAC for outbound in DACH vs US. You’ll slice your data in multiple ways to surface insight.

And ultimately, it is your job in the QBR to…

Find 1 thing to improve

To find actionable insight that’ll make an impact on revenue, you need to:

1. Identify the most important issues
2. Identify root-causes
3. Identify the revenue gap it’ll cause

From here, a conversation ensues to discuss next steps.

While the data is very unemotional – it doesn’t tell the full story, so the conversation is critical. Data will give you clues, but more often than not the reasons behind a problem sits outside of what data can tell you.

Sure, there’ll be external factors that can influence performance. Today we’re seeing extended sales cycles, lower win-rates and lower ACVs. But the QBR will focus on what is in your control.

There’s usually two causes of a problem, either it’s a result of volume (did we generate enough opportunities?) or quality (are we processing leads fast enough?).

Here’s an example:

We didn’t hit our revenue target in DACH (issue), because we didn’t produce enough marketing opportunities.

At this point you understand the issue is, but not the root cause.

There can be a lot of reasons why this is happening, your job is to consider whether it’s a problem that resides in marketing, sales or both.

The clearer you are on the root-cause the better you can make decisions around solving that problem.

If the problem is the time it takes for sales to process an inbound, the solution is not going to be fixed by marketing sending more leads.

Conversely, if the issue is with the quality of the MQLs being passed, a faster processing time by sales will only give you more disqualified leads – not more opportunities.

Once you know the most important issue and understand the root-cause, you can calculate the revenue gap it’s creating. 

As you present these findings, it’ll help create buy-in and establish a sense of urgency. At the same time, this will be something that can clearly be taken action on.

But there’s a reason why we said that QBRs need to evolve.

QBRs are broken, here’s how to fix them

From the example, you can imagine that someone is about to get hit with some bad news.

While QBRs are intended to be actionable, provide direction and create a shared sense of purpose to influence revenue – this is what happens:

• People know they missed target
• They get told 3 months later why they missed
• With no chance to implement a solution proactively

Already now people aren’t very happy about the unique insight.

While they might not know the exact root-cause, it often leads to people dreading QBRs, thinking “how will I get fucked now?”.

Quickly everyone gets defensive – making any progress impossible. Classic objections are:

• Where did you get that number from?
• That’s not the number I have!

In effect, the meeting is over at this stage.

All you’ve done up until this point is perform an autopsy telling your team how the patient died.

And this is exactly why QBRs must change. And I’m telling you, there’s a better way.

Introducing QBR 2.0: The next generation of quarterly business reviews

Imagine a QBR where people look forward to the next business review.

They already knew how the quarter went.

If there was a problem, they had already identified the root-cause and taken action before the QBR.

The conversation changes completely and is focused on next quarter, and what you as a team must do in order to reach your goal.

In a simple view, this is how we see it:

I believe technology has evolved to a point where we can change how we operate our revenue engine, and as part of that QBRs.

If you tell the team what is happening now, why and here’s what you can do, you’ll build trust. A VP of Sales hates hearing “you missed, here’s why”, they are much more focused on what they can do to hit their target now.

Very quickly the conversation is focused on what actions should be taken. 

How big is the gap to target, and what can be done to impact revenue. What if we hire more?

And this is where it gets incredibly difficult. 

The most advanced teams today have a stack that will give them a snapshot of current performance, they’ll have a revenue model in a spreadsheet and BI with a solid data science team.

The problem with this setup: Identifying the root-cause, defining the revenue impact and modeling scenarios.. That takes forever, and the reason is quite simple 👇

It’ll require a series of custom drills in a BI tool, extracting data, modeling & manipulating it in a sheet – followed by iterations upon iterations to prescribe the best solution.

To make matters worse, the team becomes dependent on a variety of resources within revenue operations.

Building this instrumentation of proactive alerts, root-cause analysis, defining revenue impact and modeling what-if scenarios is incredibly complex.

It’s the equivalent of building your own CRM.

Imagine if there was a solution that sent you proactive pings when something went wrong.

A solution that lets you identify root causes and determine the revenue impact in minutes.

A solution where anyone on your team could test different “what-if” scenarios against how your revenue engine is actually performing.

Well, such a solution exists. We call it a Revenue Planning & Execution Platform (RP&E), and that’s exactly what we’ve built here at Growblocks.

And if you’d like to learn more, we’d be happy to show you how we can help.

Before we recorded this episode of our podcast The Revenue Formula, I discovered something.

It’s called Bravado, and it’s an anonymous sales community. 

As you can imagine, the conversation is very… direct.

The first thing I looked at was marketing (that was a mistake), but then I stumbled upon a post about sales enablement:

“the title is basically, sales enablement sucks and they’re a bunch of fake teachers. 

First paragraph is something like: I feel like sales enablement doesn’t know what they’re talking about 95% of the time.

They either have never sold, have little to no experience in sales, or they sold for six months, five years ago. (…)

What annoys me is that on top of offering zero value, they’re the ones annoyed when I am the one doing all the busy work, instead of focusing on what really matters. Lastly, they don’t do anything but talk about adding decks and saying hi to new hires. 

They’re even worse than marketing.” (02:32)

Wow! That was kinda crazy considering sales enablement is there to help. 

To top it off, it was followed up by this poll

So our aim with the episode we recorded (and this article) is to help make sales enablement useful.

What is sales enablement

But first, are we actually clear about what sales enablement really is?

Sales enablement is the process of equipping sales teams with the necessary resources, tools, and information to engage with customers and close deals. The goal of sales enablement is to streamline the sales process, improve sales productivity and effectiveness, and ultimately increase revenue.

And as Toni puts it:

“Generally speaking, you start thinking about sales enablement once you listen to your sales reps and are like, why is she pitching that? What is going on in my sales team?” (04:17)

But what’s the goal?: “it’s about sales efficiency, right? So you wanna basically make sure that people are trained on the best practices for your company in terms of how to pitch. Obviously, which deck to use is also in there.”

“Which questions to ask, which objections to be prepared for, and what competitors to have in mind and so forth. There’s a lot of stuff that needs to happen and needs to land in someone’s brain. 

And the problem is when you have 10 AEs and a sales manager, you’re basically gonna run into this issue of the sales manager being really busy, closing all the deals, versus onboarding and teaching and doing all of that stuff with your sales reps. And you know, if you don’t do that, then you end up in this [bravado situation].” (04:30)

What next level sales enablement looks like

In spite of what anyone over at Bravado says, sales enablement is important for a couple of reasons.

You want to a) ramp reps, b) train reps, c) retain reps – all to impact revenue. This involves ongoing training, coaching, improving sales performance and much more.

“Instead of just making this a sales enablement piece, it should be a revenue piece.” (09:14)

And that’s exactly the mindset we tried to carry as we discussed what elements are key to ultimately impact revenue.

Ongoing training

As the market and product evolve, it’s essential to keep training your sales team and supplying them with not only material, but an approach.

“Then you have an ongoing flavour to it around the training, ongoing, product training, ongoing competitor training, which is simply necessary due to the fact that your product is evolving, the market is evolving.” (09:55)

And if you have an ongoing approach, what will happen next is this: “I’ve heard a lot of reps basically say this makes me a little bit happier in my role” (10:19)

Maybe that’s a small step to start patching the relationship. But think back to the revenue impact. If you’re unable to articulate the value of new features, or tackle new objections, you’ll be less efficient in your sales approach.

“So let’s just say either you are rolling out MEDDIC or MEDPICK, or you know, some of those concepts. So to reinforce that it’s being lived and breathed.

So, and this is actually where we’re starting to get into like, but wait a minute, isn’t that like a sales manager, sales director kind of responsibility – and it is. But you know, this is one of the areas that I would say it’s shared” (10:49)

Listen to calls, obviously?

We can read the deal history in any CRM, we can see the conversations and listen to the calls. But you need to go a step further.

“if their main medium of receiving information is Gong or other versions of that (…) try and make one little tweak, try and make them jump on actual sales calls, live. Introduce them. And have them participate in that pitch and not necessarily lead it.” (28:09)

The pressure will instantly shift. When going from passive to active participation, things change. If you need to use the deck you created, or tackle the objection you’re training a team on – things are just very different.

“when you’re in it versus you’re just listening to the radio, a lot of more things will pop up in their brain like: this is broken, this is broken.” (28:44)

And the beautiful part, the reps will trust you more:

“They got the same reality check I got. Now I can trust your output a little bit more because I know now we are a little bit closer aligned than you sitting in theory land” (29:17)

And last but not least, you’ll be much more in tune with the reality the sales team face on every call.

Onboarding and training:

If you can ramp a rep faster, that’s a major efficiency gain in your performance. However, it can also be a drain if it takes longer to get new team members successfully out of ramp.

“If someone has been in Salesforce once and then in Salesforce again, sure. That’s doable. But think about Salesloft and Outreach for the SDRs, that’s very complicated and having lots of new folks joining who haven’t dealt with those tools before, think about all of those data tools that you might have, Zoom, Cognism and so forth.

There’s a lot of that stuff that needs to be taught and understood.” (12:27)

There’s a lot to cover in onboarding, and everyone will be at different stages in their experience. That’s why sales enablement has to have a clear plan to successfully onboard new team members fast.

And as Toni points out: “if you have the luxury to specialize your sales enablement team (…) then the way to go about it is for the onboarding and ongoing training on product and on the sales methodology” to be carried by one person (13:15).

Coaching

Another area where many struggle, simply because  “who earned the right to do the coaching?” (15:45).

And the problem really is a result of not hiring the caliber needed to successfully coach the team. While the sales manager should definitely be coaching, there’s just a limit to how much coaching that person can do while managing a team and closing deals.

So why aren’t you getting the right people?

Well simply put, “you don’t have a competitive package at all, usually a terrible package. Usually it doesn’t carry any prestige.” (17:32)

“which then leads to something that I call negative selection. So who goes for that role? Yeah. It’s reps that aren’t successful in the first place.”

Who would wan’t sales coaching from someone who wasn’t successful in selling? You’ve guessed it. No one.

So how do you create a scenario where there’s a good coach that reps actually seek out for advice?

“What Gartner’s actually doing, they are offering their best sales reps to become a coach for a year. And they’re basically paying them, the OTE that they hit, last year.” (18:15)

What’s great about this scenario is that reps will actually want help from that person. And think about this:

“because of the competitive setup of those plans, because of this clear deal ownership thing, because (…) there can only be $1 paid for $1 earned, so to speak. Not multiple times. It’s like, well, if someone wants to help you on your deal, you usually need to, depending on the help, you need to kind of give some percentage up.

So what happens? It doesn’t happen, and the only person helping you is your manager.

And that manager probably is busy with all the other stuff going on. So now you introduce that sales enablement person, suddenly it becomes like an awesome free resource. Do I need to share my deal with that person? No. I’ll take it.” (20:29)

And as Toni puts it, in this scenario you have “a sales enablement function on steroids” (21:50)

There’s just one caveat, “you will have someone running around doing that stuff that’s being paid $250,000 a year (…) And you need to be prepared for that number.” (21:57)

Performance improvement plans

Being put on a performance improvement plan (PIP) is in many companies the mark of death.

“It’s kind of common practice that after some underperformance of a rep, you put them on a pip, you know, performance improvement plan. And in many cases, this is just the heads up, we’re gonna fire you in two months” (29:58)

But in an ideal scenario, you consider investing resources in actually improving performance (provided that’s the issue). The simple reason being: You’ll have a very concrete gap in your team. If it’s an SDR, you’ll get fewer opportunities and in effect create a gap. If it’s an account executive, you’ll distribute more deals – but your closing capacity doesn’t change. Meaning: Sales efficiency will drop.

“I think with good sales enablement, you can actually create a bit of a stronger case for improvement. You put someone on a PIP, and then you’re paired with resources.” (30:26)

“if you don’t give them any help, neither from the manager, because the manager in many cases is like, yeah, this is kind of wasted time. Now I’m gonna spend my time with my high performing reps instead. Then you’re creating the self-fulfilling prophecy.” (31:11)

Want more of this?: Check out our podcast here.

I recently had a call with a RevOps Leader at a +$200m ARR company, and when we got to the topic of ongoing business, he mentioned something interesting.

He said that they’ve been experiencing some measure of normalcy again.

Enough that it made me wonder if the B2B Tech world is starting to emerge out of this recession tunnel.

And from what I have discovered so far, they are not alone. 

I’ve spoken with a few VCs and SaaS founders who, while being more cautious about their investments and advising companies to stay efficient, believe that SaaS companies might just walk away from this recession with a mere black eye.

Now, I think we’re still a while away until we can truly say that we’re out of the worst of it. But the market is going to bounce back eventually. And when it does, we should be ready.

So that got me thinking, how do we know we’re starting to leave this recession?

Like the first signs of spring, there are bound to be indicators out there.

One item we should look at first is one metric that, to a degree, caused the situation we are in: Inflation.

And see there, inflation is starting to come down again. Which has some significant knock-on effects on interest rates. Which is currently being used to put breaks on the economy. 

If inflation drops, some of these “breaks” can be removed. 

Next, let’s look into another indicator of health: layoffs in our industry. 

According to this chart, we are clearly over the peak:

The reason why I think this is significant is that if you are in cost-cutting mode you are very unlikely to buy new stuff. 

Seeing this trend end also means the strength of the CFO in companies to say “No” will also decline.

Ok, we are over the worst of it, but when can we expect to go “back” to normal times?

“Normal” times would be driven by VC investments, so let’s look at that.

Tom Tunguz just published this here: 

The reason why I think this is significant is that if you are in cost-cutting mode you are very unlikely to buy new stuff. 

Seeing this trend end also means the strength of the CFO in companies to say “No” will also decline.

Ok, we are over the worst of it, but when can we expect to go “back” to normal times?

“Normal” times would be driven by VC investments, so let’s look at that.

Tom Tunguz just published this here: 

And wow! 44% are seeing positive signs. 

It’s certainly not everyone. But almost half is much bigger than at least I expected. 

Sooooo, what exactly are you telling me here, Mister Toni?

Well, I think that:

1. There are clear signs that we are over the worst of it (pending the next global disaster).
2. We won’t return to 2021 levels of funding for a while still, maybe never.
3. So adjust to that.But people are buying software again, and this will continue to improve, so let’s stop using this as an excuse.

And then there is one overall thought:

What we are seeing here is an overall correction. This means this is the new baseline. Sure, some metrics will tick up over the coming months, but the expectation to see efficient growth is here to stay. I have no doubt about that.

You might think that this is a Growblocks plug – and sure. But I honestly believe that teams who spend like it’s 2021 will fail going forward.

This revenue letter was sent 20th of April 2023. Want it in your inbox? Sign up here.

We’re wired to ask for discounts. 

I once read a book encouraging the reader to ask for a discount on the next Starbucks coffee. If asked why, they suggested replying “just because”.

Chances are, you’ll get a discount. Maybe not the first time, but eventually.

And that’s a problem for the seller, and in some cases also the buyer.

When talking about SaaS, quite rarely is budget the problem. And if budget is the problem, most likely, no one will end up being happy.

Ultimately, the customer wants to get the best price. But what if you can give everyone comfort knowing that they got the best price?

Well you can, and you’ll grow faster for it. To do it, you need to stop discounting your subscriptions.

I get that removing discounts is controversial, it’s an established practice. We feel that it helps us push a deal over the line.

But bear with me for a second. 

In this article I’ll run you through the problems and benefits of removing discounts. I’ll also share how to remove discounts – or rather, how you can limit them to reap the benefits.

The article is based on a recent podcast episode of the revenue formula, so if you prefer you can listen right here.

The problem with discounts

Most articles you’ll read cover how to use discounts. How you’ll get more revenue.

But very few talk about the power of removing discounts, let alone the problems they create.

There are three areas we’ll jump into: 

1. How it attracts the wrong customers

2. How it lowers LTV while increasing churn  

3. How it breaks when having a sales incentive structure

1. Not your loyal customers

I’ve seen it before. When pulling a cohort of discounted customers, guess what they all had in common? A lower ACV and higher churn. Ugh.

They’re less loyal and more price sensitive. Needless to say, this will have an impact on your growth.

Now surely, if they want to buy it and we’re okay supplying it at a lower cost – what is really the downside?

But there’s a much bigger problem. 

2. Lower LTV and higher churn

Because of discounts, you’ll lower your LTV. You’ll start to see an increasing CAC:PB, which leads to having fewer $ to acquire a customer.

Think of it this way:

“Imagine the impact of 20% churn on your business… well if you give a 20% discount you just churned 20%!.”

Jacco Van Der Kooij

So it’s basically the same thing as churn. But if it’s like churn, then…

“It has the same impact on your CAC payback. It has the same impact on your lifetime value. It has the same impact on your growth. All of these things are the exact same thing, but you know, for many reasons.

And some of that is obviously investor sided, 20% churn feels so much more hurtful than giving a 20% discount.” (08:21)

To make matters worse, discounting impacts your LTV directly.

“And this is actually another thing from Patrick Campbell at Price Intelligently. So basically they’re saying, discounting lowers the LTV of a customer by more than 30%.

And now you think like well, wow, isn’t more than 30% kind of a large discount to have on average? Well, the problem is actually twofold, it compounds. It’s not only that you give maybe 20-25% discount, it’s also that the customer by itself will be more likely to churn.

So if you kind of combine both of these effects, you basically get to a larger than 30-35% reduction of lifetime value.” (10:49)

And just another point not to ignore, what happens when a customer is up for renewal? Well… 

“On the renewal side of things, once you open the door for a negotiation on the new biz side, you kind of implicitly also open the door on that negotiation on the renewal side”. (10:57)

When incentives go wrong and urgency reverse

Potential customers will plan the negotiation. And just like a sales rep can use urgency – so can the buyer.

Have your reps ever been asked “when is your quarter ending?” Take this example as a cautionary tale:

“When I bought Salesforce a couple of years ago, what I did there on purpose was basically… I started the conversation in the first week of January.

And what maybe some listeners don’t know is that Salesforce year end is on January 31st, so basically the sales rep that I was reaching out to was incredibly lucky.

It ended up being a three year deal, more than $300,000, you know, it was a big thing even for the size that we were at that point, still it was a big thing for the rep.

He didn’t have time to go through all of those negotiation steps. He needed to get this deal closed in a month from now or less than that.

So basically, his only choice was skipping some discounting steps, going further down, much quicker. And basically we were capitalizing on this exact problem where the counterpart, they have a deadline. (…)

And again, does it really matter for the business whether or not that deal closes on the 31st of January or the 1st of February?. It doesn’t really matter all that much, but it matters for that salesperson. So therefore that salesperson will be incredibly incentivized to give you this discount, Right?” (21:02)

What’s happening is two things:
1) The incentive (on target earnings) has a negative impact on behavior. Rather than closing the deal next quarter at a high ACV, the incentive gets the rep to close the deal fast.

2) They will use all their negotiating power internally to push for a discount. The incentive creates urgency for the rep to close the deal and use discounts to do so.

So discounts are not really helping.

Wait.. Won’t discounts increase overall win rates?

Case in point:

There is no research to support that revenue will increase, we have at least yet to find it. While it might help individual sales reps in some cases, it will be at the sacrifice of long term revenue growth as we illustrated with the Salesforce example.

The benefits of removing discounts

Everyone wants to decrease churn, increase LTV and maximize the organization’s revenue potential. 

If discounts are a way to do that, what are the benefits? Let’s dive in.

You’ll get a faster sales cycle

Don’t underestimate the importance of velocity, ie. the amount of deals one account executive can turn over. If it takes a year to turn over one deal, that’s one deal per year. If it takes a month? 12. 

In other words, velocity is a major efficiency driver you need to pay attention to, and removing discounts actually decreases the sales cycle by sometimes 2-3 weeks.

“So why is that? Well, if you think about whatever you’re selling, there is even a stage in your Salesforce or a HubSpot pipeline that’s called negotiation” (15:10)

Take this real example Toni shared:

“We already decided that we were gonna buy Chili Piper because we needed it. And it was not like, ooh, you know, this $1-$2,000 more, that’s gonna break the deal. That was honestly not what this was about. And, I talked to my RevOps guy and he was like, Toni, they don’t give any discount.

First reaction, I laugh. First reaction. Yeah. Yeah. Sure. They don’t give any discount. 

And by the way, this was not a junior RevOps guy. And he was looking at me with dead, honesty and certainty, and he’s like, Toni, they do not give any discounts.

And then I stopped laughing, and I paused, and then I was like, well, um, well then let’s just sign the deal now.

And the thing is what are you gonna do? Are you gonna waste another two, three weeks and push something that you won’t get anything for?

The effect that it has, instead of you playing this game for two or three weeks longer, basically the other side is like, okay, we don’t need to, we can’t play that game, so let’s close it right now. And there you go. You have like saved two, three weeks of your sales cycle, right?” (16:55)

To make it even more interesting, Chili Piper wrote about their no discount approach right here.

Growing faster

It’s kinda obvious. If you don’t do the average 15% discount, you’ll have that cash and can reinvest it. It’ll give you some clear advantages:

“That translates both into the ads you can run on Google and Facebook, but also on the quality of sales reps you can hire, the support you can give and all of these, all of these other things around it, which basically gives you a competitive edge.

So really, the more CAC I can afford because the price is higher because of more funding in the bank account, the more competitive and aggressive I can go.” (09:49)

Think of it this way, if you’re in a competitive market, being able to afford a higher CAC means you can hire better reps and buy more customers through marketing than they can.

So.. we just.. Remove discounts?

This will be very difficult. If there’s already an established practice, getting rid of discounts requires the CEO to get involved.

But, there are alternatives – we shared two alternatives in the episode: Pricing tiers & vanishing discounts.

Pricing tiers

A major factor here is your pricing and packaging. Using different tiers can help you change the conversation when it comes to the price.

“If you want a 20% discount, it’s no issue. You just then buy this other level, this other tier here.

I think that conversation, sometimes it’s really painful for the buyer. Because then they’re like, Ah, no, but I want this other thing. And it’s like, well, if you want the other thing, you need to pay for that. So this is sometimes a good conversation”. (24:39)

Nailing pricing is not easy, and there’s a reason that companies who review pricing yearly has a more solid foundation for growth. 

While increasing price 1% is more effective than increasing retention or win rates 1% (see previous link), reviewing price can help you change the conversation into what solution the customer needs rather than how cheap it can be sold for.

Vanishing discounts

Another option is providing non-recurring discounts. And when it’s time for renewal? They’re gone.

There are a couple of reasons this makes sense as an option

“When you buy a new tool, you always have this, oh, damn, I need to roll this out now, I won’t be able to use it for two, three months. And then there will be some bug and some things won’t work.” (25:29)

Buying a tool requires not only a monetary investment for the customer. They need to spend time implementing, training and refining. That brings with it a lot of risk.

A one-off discount can help alleviate some of that pain. Companies like HubSpot have historically charged for training, onboarding and implementation – separate from the subscription.

Doing so makes it by default a one-off discount if they waive those fees.

“Arguably your value for the first year probably is less than the following years, and you can almost think like you add that amount of rollout work on top of the price” (25:44)

Interested in more? Check out the full episode on Spotify, iTunes or Youtube (video).

Lately, we’ve been getting a lot of questions on sales calls about pipeline and pipeline coverage and how we deal with that.

Each concept has some flaws which is why we kept avoiding the topic as of late. But at the same time, it also was clear to us that they can be super useful. So here are our thoughts.

But first, what do we mean by Pipeline and Pipeline Coverage (PLC)?

Pipeline is measured by #deals * expected deal value with closing date this year or this Q (depending on what timeframe you look at)

PLC puts that number in relation to the target you have. E.g. 5M in Pipeline with 1M in target gives you a “coverage” of 5 to 1. So this is a 5x PLC. 

So, what are the issues?

More and more top-funnel teams are being measured by “pipeline created”. That’s, generally speaking, a good thing. But in a data-driven world, this comes with a few issues.

1. Large chunks of the pipeline target can be hit by 1 big (outlier) inbound. Think about Coca-Cola inbounding. Marketing then is done with the Q.
2. Larger inbounds tend to take longer to close and might have worse conversion rates than your “bread & butter” deals. While larger deals account for more pipeline.

And then, once pipeline is created, AEs are being asked to maintain a “5x PLC”. Meaning their quarterly target needs to be “covered” by a 5x of Pipeline. Issues with this: 

1. Many people are just blindly copying the 5x here. If you have a pipeline conversion rate of 20% then 5x might be the right number. If you have a 10% pipeline CVR then you need 10x.
2. Pipeline per Q tends to fluctuate in funny ways. (a) it suddenly increases as the previous Q ends (push-overs), (b) it increases with each deal closed, and (c) it sharply drops with the new Q approaching (pushing into new Q).
3. This can easily be gamed by the reps, basically keeping the expected closing date in this quarter to pretend to have a sufficient PLC. Once that fails, all pipeline moves over to next Q – again leading to a great PLC.

So how do we look at this in a data-driven way?

Above we plotted how pipeline for each Q usually looks like. Each curve is measured by [#deals * expected deal value with expected closing date in that Q]. 

You can see how pipeline for a specific quarter builds up and then drops off. You can luckily see that in this example the curves are increasing, corresponding with higher targets. 

Looking at this, when exactly are you supposed to measure that “5x PLC”? At the peak? At Q-start? 45 days into the Q? Again, a hard-to-use metric. 

Instead of just summing up the pipeline and creating some PLC number, we think about solving it a bit differently.

1. We project your revenue based on your revenue engine and your future additions (hires, projects, campaigns etc.)
2. We take your last few quarters and create an average pipeline curve plot – corresponding to the revenue target you then actually hit
3. Then we plot that curve going forward scaling it up & down with the projected revenue
4. You can now track your actual pipeline to the actual daily/weekly pipeline goal according to your revenue target. If you are below: alarm bells – you can take action asap. 
   

This is currently in early testing with SQL and spreadsheets on our side. Let me know if you think this is valuable. Early feedback would be great and will accelerate this onto the roadmap.

Over the last few weeks, I have talked to a dozen RevOps leaders in companies that are well beyond the $100M ARR mark and are still growing 20-50%.

I know for certain that you know every single logo and have probably bought / used at least half of them.

Since all of them are either public already or are about to be – I can’t disclose the actual logos.

What I wanted to figure out is what these companies do differently. If anything.

Of course, they have fantastic products, brands, and people. But that insight alone is just not that helpful.

So I discussed with them how they are managing to hit their revenue targets again and again and again.

And to be clear, growing 40% at 300M ARR means you are minting a unicorn every year. So this is not a “business as usual” kind of scenario. This is break-neck stuff.

The conversion quickly gravitated towards the ability to “execute like clockwork”.

Okay, cool. Heard that before though. What does this really mean?

“Well, you need to compare all your metrics to the plan you set out to do.”

So is this the budget?

“No, the budget is really not that useful day-to-day, instead we also create a:

• Revenue plan
• Data model
• Plan of record
• Operating model
• etc.“

To execute like clockwork, they argued, you need a thing – and everyone called it something different.

Here are now 2 Learnings of how they use it to hit targets

Learning 1: Speed matters A LOT.

Instead of a monthly or quarterly cadence. These folks discuss actuals vs plan weekly.

Rolling it all up to weekly reports to the C-Level (again, we are talking Public Co C-Level here)

Each metric has a traffic light. Each issue is sorted by potential Revenue impact. Nothing that is red or yellow gets put forward without a clear action plan to either investigate or fix.

Again: WEEKLY.

At first I thought, sure, BigCo-Overkill. But then it kind of hit me.

What “we” see in the ad-hoc analysis of the post-mortem in the QBR.

“They” see that “post-mortem” happening live every Monday morning.

This gives them 52 opportunities to identify and fix issues, instead of 4.

Learning 2: They look everywhere to fix revenue impact.

When they do screw up and a gap is widening beyond a “fix”.

They assess the damage. Quantify it with a revenue impact.

And then. They look at every part of the business to find that dollar amount as a sum.

E.g. Sales is behind on hiring and is creating a 10M gap. They admit they can realistically only close 4M of that gap.

The other 6M is crowd-sourced in the organization. This also means budgets and costs are fluid. Flowing to the teams that can pick up some of that gap.

The only thing that isn’t fluid is the revenue target.

In the end, it’s not like these teams don’t make mistakes or screw up. They are just so much better & faster in identifying them and getting creative about finding a solution.

Embarking on the journey of understanding and implementing a Revenue Operations Framework can feel like navigating through uncharted waters. The goal of this article is to serve as your compass, guiding you through the complexities of Revenue Operations (RevOps) and how it can transform your business strategy. By the end of this article, you’ll not only grasp the essence of RevOps but also learn how to apply it effectively, ensuring your organization’s growth and success.

What is Revenue Operations?

Before we dive deep into the mechanics of building a Revenue Operations Framework, let’s first unpack what Revenue Operations truly means. At its core, RevOps is not just a buzzword; it’s a strategic alignment of sales, marketing, and customer service operations to drive growth through operational efficiency and revenue generation.

The Pillars of Revenue Operations

Understanding the pillars of Revenue Operations is crucial for laying a solid foundation. These pillars are not just parts of your business; they are the gears that, when working in harmony, propel your business forward.

Sales Operations: This pillar focuses on optimizing sales processes, implementing effective sales strategies, and ensuring that the sales team has the tools and resources needed to succeed.

Marketing Operations: Here, the emphasis is on aligning marketing efforts with sales goals, measuring marketing performance, and leveraging data to inform marketing strategies.

Customer Service Operations: This aspect of RevOps is all about enhancing customer experience, streamlining service delivery, and fostering customer loyalty, which in turn, contributes to revenue growth.

Why Revenue Operations?

Now, you might wonder, why the shift towards Revenue Operations? The answer lies in the interconnectedness of sales, marketing, and customer service. In the traditional model, these functions often operate in silos, leading to inefficiencies and missed opportunities. RevOps bridges these gaps, creating a unified strategy that drives growth and improves operational efficiency.

Building Your Revenue Operations Framework

Constructing a Revenue Operations Framework is akin to building a bridge. It requires careful planning, the right materials, and a skilled team to bring it to life. Let’s break down the steps to create a robust RevOps framework for your organization.

Step 1: Align Your Teams

Alignment is the cornerstone of a successful RevOps framework. It involves ensuring that your sales, marketing, and customer service teams are not only aware of each other’s goals and strategies but are also working towards a common objective: revenue growth.

Start by hosting cross-functional meetings to discuss goals, share insights, and identify areas of collaboration. The more your teams communicate, the better they can work together towards achieving shared objectives.

Step 2: Implement the Right Tools

Technology plays a pivotal role in enabling RevOps. From Customer Relationship Management (CRM) systems to marketing automation and customer service platforms, the right tools can streamline operations, provide valuable insights, and enhance team collaboration.

Conduct a thorough assessment of your current tech stack. Identify gaps and invest in tools that facilitate integration across sales, marketing, and customer service. Remember, the goal is to create a seamless flow of information and processes across all teams.

Step 3: Leverage Data and Analytics

Data is the lifeblood of Revenue Operations. It informs decisions, measures performance, and provides insights into customer behavior. However, data alone is not enough; it’s the analysis and application of this data that truly drives growth.

Invest in analytics platforms that offer a holistic view of your operations. Use data to identify trends, measure the effectiveness of your strategies, and make informed decisions. Regularly review your data to ensure your RevOps framework is on track and adjust your strategies as needed.

Challenges and Solutions in Revenue Operations

Like any strategic initiative, implementing a Revenue Operations Framework comes with its set of challenges. However, with the right approach, these challenges can be transformed into opportunities for growth.

Challenge 1: Resistance to Change

Change is often met with resistance. The shift towards a RevOps model may be viewed with skepticism by teams accustomed to working in silos.

Solution: Communication is key. Clearly articulate the benefits of RevOps to all stakeholders. Share success stories and case studies to demonstrate the positive impact of RevOps on other organizations. Foster a culture of collaboration and continuous improvement.

Challenge 2: Data Silos

Data silos are a common obstacle in many organizations. When data is not shared or accessible across teams, it hampers the effectiveness of your RevOps framework.

Solution: Implement integrated technology solutions that enable data sharing and visibility across all teams. Establish clear data governance policies to ensure data quality and consistency.

Enhancing Customer Experience in Revenue Operations

One critical aspect of Revenue Operations is enhancing customer experience. In today’s competitive landscape, providing exceptional customer service is paramount to retaining customers and driving revenue growth.

Personalization is key in delivering a superior customer experience. By leveraging data insights from your RevOps framework, you can tailor your interactions with customers, anticipate their needs, and provide solutions that resonate with them.

Moreover, investing in omnichannel communication ensures that customers can engage with your business seamlessly across various touchpoints. Whether it’s through social media, email, or phone, consistency in customer interactions builds trust and loyalty.

Utilizing Feedback Loops

Feedback loops are invaluable in understanding customer sentiment and improving your products or services. Implement mechanisms to gather feedback at different stages of the customer journey, analyze this feedback, and take actionable steps to address any pain points or areas of improvement.

By actively listening to your customers and incorporating their feedback into your RevOps strategy, you demonstrate a customer-centric approach that sets you apart from competitors.

Measuring Success in Revenue Operations

Measuring the success of your Revenue Operations Framework is essential to track performance, identify areas for optimization, and demonstrate the impact of RevOps on your organization’s bottom line.

Key performance indicators (KPIs) play a crucial role in quantifying the effectiveness of your RevOps strategy. These KPIs can range from customer acquisition cost and customer lifetime value to sales conversion rates and customer satisfaction scores.

Regularly monitoring and analyzing these KPIs allows you to make data-driven decisions, refine your strategies, and ensure that your RevOps framework is aligned with your business objectives.

Implementing Continuous Improvement

Continuous improvement is at the heart of successful Revenue Operations. By fostering a culture of learning, experimentation, and adaptation, you can continuously refine your RevOps framework to meet evolving market dynamics and customer expectations.

Encourage your teams to share insights, test new strategies, and learn from both successes and failures. Embrace agility and flexibility in your approach to RevOps, allowing room for innovation and growth.

Remember, the journey of RevOps is a collaborative one. It requires the commitment and cooperation of your entire organization. But with the right framework in place, you’ll be well on your way to achieving sustainable growth and success.

It’s a big day for us at Growblocks after securing over €6M in seed funding from Project A Ventures and launching our beta out into the world.

By helping revenue operators manage their revenue engine, our revenue planning and execution platform (RP&E) is designed to help companies grow efficiently and predictably, even in our current economic climate.

While all of us are really happy reaching this new milestone. Hardly anyone on the team has not been part of a similar journey. And we all know that getting back to work asap is what is needed now.

But in light of this news, we wanted to explain why we created Growblocks, the belief system behind everything we do, and how we imagine modern companies will operate their revenue engine going forward.

Our beliefs

We believe that growing revenue is a science, not an art.

In other words, we believe that every revenue engine has a robust logic to it that is rooted in data. Everything can be explained. Which means everything can be improved by way of structured thinking and diligent execution.

We do not believe in the super-star AE. Or the magical marketing campaign. Sure, those things exist – and we won’t always know why these outliers are successful.

But the point is that we see them as outliers: hard or impossible to repeat at scale. And more than foolish to bank on for next year’s performance.

And we don’t mean “science” in comparison to definite sciences like math or physics. We see it much more similar to fields like economics and sociology. None of them can determine the behavior of one person exactly. But within reasonable parameters, they can explain the behavior of many people and then apply those to give predilection for events to come.

We think that revenue growth as a science achieves exactly that.

We know that using data and logic, we can explain why a revenue engine is behaving like it does. And we can use the same explanations to predict how the behavior of the engine will unfold in the future.

We think that companies that use this approach will have better visibility into not only this quarter, but several quarters to come. This enables them to make significantly better decisions now. This, in turn, results in building a revenue engine that is much less wasteful with its resources than otherwise.

We even believe that if more companies were to adopt this approach, we as a whole would live in a society that can achieve much more with the limited resources we have.

Instrumenting the science

While many of us at Growblocks are sporting fancy university degrees, no one feels fulfilled just having stumbled upon a new theory.

We were senior operators in scale-ups, and we applied this approach to running those revenue engines. While it clearly was not only up to us and the approach, the three companies we worked for reached two exits in the early nine digits, and the one that is pre-exit is currently valued at roughly half a billion.

The issue we came across, though, is that it is very difficult to apply this approach in the operational reality of companies.

This approach is data-intensive, computationally heavy, and needs to be simplified enough to be practical for revenue operators.

In other words, you need a tool. You need to instrument the science.

But … there is none.

People sometimes reflexively shout “BI” when you start a sentence with “data-driven.” But BI struggles to create logic between data points and has an even harder time projecting data into the future.

The other reflex hearing “future” or “planning” usually prompts financial planning tools. The problem with those is that they are focused on cost and use only very simple methods to project revenue.

In essence, neither of these solutions are built for purpose for modern revenue operators.

The Specter of Excel

This brings us to the only solution left for many operators out there that have come to share the same belief as we do: Excel.

In RevOps-circles, Excel is seen as the anti-tool. Or the wild-wild-west. No rules, no structure, and everything is possible. For RevOps, Excel is only a marginal step up from a pen & paper.

But without any other options available, what can you do?

While everyone but finance hates Excel for many different reasons, there are a few that stand out when trying to apply revenue growth as a science:

1. Lots of admin, lots of breaking. Lots of issues, sure. But survivable.
2. Data depth and flexibility is never enough. And let’s be honest, Excel was never built for this in the first place.

But what really stands out as the main issue is:

3. Accessibility.

Accessibility is not about access control or governance. It is about the “Excel-literacy” needed to actually go into a spreadsheet and extract meaningful value.

I sometimes compare it to real accessibility issues like: is your office accessible to disabled people? Or is your software accessible to visually impaired people? Or do you speak the language of the country you are living in?

Because of that giant Excel-hurdle, even if you have the perfect revenue engine built, you will fail to deploy it as a tool for 95% of revenue experts in your commercial engine. And if that is the case, this wonderful “breakthrough” idea is useless. It will not create any value beyond the theoretical.

Why we created Growblocks

Our core belief of understanding revenue growth as a science drives two main missions:

1. More people need to learn about this approach.
2. People need to be able to actually apply this approach in the operational reality.

While €6M is a lot of money. We can’t do it all.

So for the first mission, we are organizing in a Cohort of senior RevOps folks, CROs and COOs to help each of us to get better but also to educate more and more others on our belief. If you feel you fit in and want to contribute, feel free to join the waitlist.

For the second mission, this is where we will put the money we raised to work. In fact, we already now have made significant leaps forward by working with two handfuls of customers for the last year, leading to our beta release today. Check out our RevOps platform here if you’re curious.

But, a product like this is never done. And given the complexity of the field but also the breadth of the use case, we have lots of areas to build more and better product.

If you share our belief and want to join as a customer, I’d be thrilled to give you a deeper dive.