[00:00:00] Warren Zenna: Hi and welcome to the CRO Spotlight podcast. I'm Warren Zenna from the CRO collective and I'm here with my co-host Lupe Feld. Hey Lupe.
[00:00:15] Lupe Feld: Hey Warren. This is Lupe Feld, and I'm glad to be here with you.
[00:00:19] Warren Zenna: So this podcast is really for aspiring CROs and CEOs and current CROs whom are interested in learning from not only us, but the great guests that we're going to have.
[00:00:28] Lupe Feld: We're here to tell you that there is other areas of the business that can drive revenue and we're going to look and inspect and come up with some great ideas for us to bring in as much revenue as we can, and drive some meaningful change for the business.
[00:00:41] Warren Zenna: So tune in, we have some exciting opportunities coming up for a really amazing conversations and any B2B leaders I think you're really going to enjoy it. So thanks for tuning in and we look forward to seeing you.
Okay, and welcome to our next episode of the CRO Spotlight Podcast. Hi, Lupe. How you doing?
[00:01:03] Lupe Feld: Great. Great to see you, Warren.
[00:01:04] Warren Zenna: You too. You too. You know, I was just out in in Utah, not too far from, from you. and I was thinking like, God, how lucky you are to be living in a place. That's so beautiful. Cuz New York is weighing on me. You know, it is beautiful, but it's been as human as New York lately. So we've had a lot of,
[00:01:21] Lupe Feld: I can only imagine. I can only imagine, although this week is dry and hot.
[00:01:24] Warren Zenna: Yeah. You know, I want to just reference something before we get kicked off here. And that is that. The conversations that I've been having recently with my clients have been really focused around revenue maturity.
And we're seeing so many of these companies at these early stages between like the, you know, 10 and 30 million and revenues, starting to figure out how to make a lot of very difficult decisions to mature their revenue operations. And, you know, I think our guests today will be helpful in figuring that out.
But I just wanna mention that it's amazing how a lot of these companies at this stage are very reluctant to take on outside support. They all seem to kind of wanna figure it out on themselves. You know, they wanna make the same mistakes and test and learn, and it takes up so much time. And a lot of them end up hiring sometimes a CRO incorrectly and they end up spending a lot of money.
And I'm thinking I'm seeing a shift, I'm seeing a lot more people, more receptive to the idea of saying, you know what? This is not working. We gotta try and do things differently and maybe borrow some existing systems that make sense. I don't know if you're seeing the same thing, but I'm just seeing so much of that now.
[00:02:23] Lupe Feld: Well, I think it's really important. You know, we've had a lot of guests and everybody has kind of their own wheelhouse of expertise and the CRO position is such a broad or you know, responsibility that unless you have a really experienced team underneath you, it's gonna be challenging to. Get it all done without that structure.
So I think you're right. And I think a lot of smart CEOs are looking to, for ways to support their CROs and, and, you know, processes like before they bring 'em on, you know.
[00:02:58] Warren Zenna: Exactly. Totally. Exactly. Well, that's good segue. Heres I wanna talk to our guests. So I'm really excited today to have Ray Reich as our guest and Ray and I have worked together on a couple of projects and he's helping up on some of the course material we're doing for the CRO Collective.
Ray welcome. And thank you so much for being here.
[00:03:14] Ray Rike: Hey Warren, thank you for having me. Lupe's so nice to meet you too.
[00:03:18] Lupe Feld: Likewise.
[00:03:18] Warren Zenna: Yes. Yeah. Yeah. So Ray, Ray is the founder of, of RevOps Squared which is based upon a culmination of his experience in senior leadership positions across. You know, companies like fortune 500 hypergrowth VC back to early stage software companies.
You know, Ray has incredible depth of experience in developing benchmarking frameworks for measurement and metrics. All CROs need to know what to measure. And what not to measure and raise expertise in this area is unparalleled. So I'm really interested in talking about this, cuz it's something that we don't really get into a lot here is what do you measure and how do you measure it?
What's the right way to look at your business. And at what stages do you look at those measurements? So given that. Ray. Welcome. We'd love to hear a little bit more about your, your position, your, your business, your background, and how you got started doing this. Great.
[00:04:04] Ray Rike: Well, I think Warren, thank you for asking that because my background is exactly why I founded RevOps Squared.
So by way of background, and I've been in the subscription software business for almost 30 years, and it started at a division of GE where we were the world's largest provider of multi-tenant hosted applications on main. We called it time sharing. It was gen one or V one of SAS. And I ran about a 500 million P and L there at the end.
And then I went out to Silicon valley where I started at Netscape and I led the e-commerce group. And then I've had a series of six different software subscription businesses with five exits and one burndown. But ever since 1996, I've ran at least sales and market. Our sales services, success and marketing.
So I have the scars and I mean, a lot of scars and mistakes that I made, cuz I did grow. I'm an engineer by schooling. I then went into sales cuz I heard salespeople made a lot of money, but I also realized very quickly that your positioning, your value proposition and messaging was as critical as selling was.
So marketing was kind of like something I really embrace. So by running sales, marketing, and services for 25 years, I realized there was a lack of integration. So RevOps Squared, I actually found it at first in 2009 was I wanted to use operations as a way to integrate marketing sales and success across the customer life cycle.
That's acquisi. Retention and expansion. Let's just say in 2009, when I was talking about software to integrate those three operational organizations, no one was ready for that. They're like, well, we have sales ops. We just formed this new thing called marketing ops to take care of our marketing automation and the data and customer six op ops.
We'll just try to figure out when in the hell a customer success manager. In 2000,
[00:06:01] Warren Zenna: It was like account management, basically you,
[00:06:03] Ray Rike: So, so without taking up too much, too much time, cuz I wanna make this an interactive dialogue. I said, what's the anchor. What's going to get organizations and CEOs to say, we might want to integrate and align these three functions.
And I said, It's metrics if ahead of marketing and ahead of sales and ahead of customer success, share those key performance indicators and the form of metrics such as what is our total ARR growth between new and existing. What is our customer acquisition efficiency, cuz that's marketing investment and that's sales investment, right?
Or what is our gross or net dollar retention rate? Well, you. Get the right prospects into pipeline marketing, right? That fits your ICP and your buyer persona sales needs to close the right customers. Not just anybody who's interested in saying I'll buy. And then customer success needs to do a great job of nurturing, caring, and making sure that their satisfaction and value they receive is so high.
That they'll be expansion opportunities there. So that's why I started a firm that is benchmarking all the performance metrics that a CRO needs to understand across the entire customer of life cycle from acquisition efficacy, to retention, efficacy, to expansion efficacy.
[00:07:22] Lupe Feld: That is so important. So often every. Even under a CRO, every organization runs their own metrics and it's almost like, you know, three parallel highways that don't ever merge. And that is you know, really a challenge because everybody can be doing a great job, but together they're not going after the same metric. That's awesome. I love.
[00:07:49] Ray Rike: Yep. Let me give you an example of that. And Warren, please weigh in on this, but think about a sales leader, a VP of sales, not a CRO, they have a win rate goal, right? So win rates. One of the key metrics, of course, they look at sales cycle length. They may look at opportunity, final dropoff rates, et cetera, but it's win rate.
But now if I could turn around to my marketing colleague and say, okay, let's look at this source. If every one of these leads, it becomes a qualified. What's the Ren win rate for someone who comes in from a webinar versus a LinkedIn paid ad or a organic search on Google, cuz they're in an active buying process.
You can then that's one very simple example of where two different departmental metrics should come together to see what the holistic value is and then take it one step further. Oh, so the person who found us on Google search market. That was sold by ourselves organization sells and retained at a higher rate because they were in that core ICP customer success.
That customer lifetime value is much higher. Right. And your customer acquisition cost is lower. So that's just one example of how three departmental metrics should be combined into one. To have more alignment and more integration across the customer life cycle.
[00:09:09] Warren Zenna: That's great. I love it. So I'm curious to know in your, your experience cuz what you're saying, I don't know if there's anybody that listens to what you're saying right now and thinks it's come crazy. I mean everyone's nodding their heads and it's just very logical. Right? So if that's the case, if something is so. Acceptably logical. Why is it that companies stress and don't do it? What, what do you think is in the way of companies just naturally building out these sort of integrations
[00:09:33] Ray Rike: History, tradition, experience and bias.
Let me tell you what I mean by that. Sure. Who becomes a CRO? Well, in our latest research, right? About 80% of the time, it's a former VP of sales. Yep. So, and she's probably only done sales leadership. then mm-hmm the next level of research we did was what functions do you have responsibility for as a CRO?
Do you know that only 24% of the time do CROs have sales and marketing only 18% of the time? Do they have sales and customer success, but 50, I think it's 54, maybe 58% of the time they have sales or sales and partner channels, right? It's like, well, inherently we're setting them up to fail because we'll give them a CRO title.
But we're asking 'em to do sales job. So they're using sales metrics, close weight, ACV, et cetera. So I think it starts with how we bring people into the CRO role and what functional responsibility we give. 'em that's number one, number two, the CEOs and the CFO is not doing a very good job of when they bring a CRO.
And they do allow them to have marketing and sales or sales, marketing, customer success, sitting down and saying, these are the performance metrics we're gonna be presenting to the board that you have responsibility for. And it's not win rate or lead conversion rate. It's how efficiently do we bring a dollar of ARR in.
So your customer acquisition cost ratio, where it's, how efficiently do we retain and grow the ARR you do bring in. So that's gross dollar retention and net dollar retention. So CEOs and CFOs, aren't telling their CROs, here's how we're being majored as a company here's, what's driving enterprise value.
That's your stock value. So these are the company level metrics we want you to start with. So I think it starts with poor CEO and
[00:11:26] Warren Zenna: It's so true. So you're like preaching to the choir here. So here's the question I'd ask you then, right? From your experience observing companies, what's the issue like you're right.
Everything you said is correct. So what is it, if you were speaking, let's say to a CEO who's now in the process of considering hiring a chief revenue officer, what would your guidance. As they approach that role, whether it be promoting somebody internally or looking out into the marketplace to bring someone and maybe even address that issue.
Is, is that the right? What's the better option, you know? What, what would a CEO walk away with from this next question that might have that person maybe take a different perspective on the way that they're already thinking about it?
[00:12:09] Ray Rike: So it, it takes a bold, confident CEO. who's going to smooth the way for a share to have cross-functional responsibility.
So what I would do if I was, and when I talked to CEOs and say, you gotta believe in your soul, that there's benefit to integrating sales, marketing, and customer success. So, first of all, are you willing, even if you stay with three different leaders, are you willing to have each one of them? Co-owned the same company metrics.
are you willing to say, we're gonna measure you on CIR growth, contracted annual recurring revenue growth, maybe cash payback, period growth and net dollar retention. Are you gonna make sure that's the way they're measured? Okay. So if you're willing to do that now, why wouldn't you have one person who could manage that across three organizations instead of you having to do it and align departmental metrics?
That have high correlation to those company level metrics. I just talked about that a CRO owns, but if you don't have a CEO and CFO, who's willing to say we're gonna force our executive leadership team to share these enterprise value, creating metrics. How in the hell are you ever going to force an organization structure that allows you to focus on those company level metrics? Did I answer your question okay, Warren?
[00:13:32] Warren Zenna: Yeah, very much so.
[00:13:33] Ray Rike: Yeah, but it takes, I, I was talking to Howard Brown, the CEO of Revenue.io, formerly Ring DNA, talking to Nick Matta, the CEO of Gainsight. And they're like, it takes a lot of intestinal fortitude and true fundamental belief that an integrated go-to-market team is going to improve our performance, our efficiency and our effectiveness, and if you don't believe it yourself, how in the heck are you going to organizationally support it?
[00:14:03] Lupe Feld: Yeah, you know, I think I've seen CROs get added to organizations as kind of the multiplier effect. You know, like the magic wand that's gonna be, you know, waved over kind of revenue to make it grow and.
Everything still remains siloed. Everybody's still kind of running their own thing and it's very difficult to be successful unless you have built that infrastructure, that communication and that like mindness. So I, I completely see why the CRO position has, you know, such a short life cycle and, you know, CEOs tend to hire, put some. With some, you know, short term expectations, but really not investing in the growth of the organization going forward, fully investing.
[00:15:02] Ray Rike: And Lupe, I would say also. So for the people out there listening who are either aspiring CROs, or maybe you're in your first CRO job, there's two or three, I guess, recommendations I would give you cuz we all have bias from our experience.
If we grew up in this sales world, We see everything through that opportunity funnel lens, right? And we always had problems with, well, the leads didn't convert very high, right. Or customer success. Wasn't able to onboard and implement and ensure success. So first of all, be a student of the other functions.
If you're a CRO who came from the sales world, get to know everything about your marketing team, what are their objectives? How are they being major? How are they being rewarded? Right. Cause a lot of bonus programs are based upon vanity metrics. Well, you gotta generate a thousand leads or your MQL to SQL conversion rate, right?
No, mm-hmm . So not only once you learn about how marketing is currently motivated, incentive and compensated, I ask two simple questions. How does that measurement result in higher ARR? Do you know, the linkage from a white paper download to ARR growth? Well, the answer is hell no, because they know a white paper download to possibly a lead, maybe a marketing qualified or sales qualified lead.
But if I ask how many of your white people download as resulted in a qualified opportunity that went to stage six closed and was retained two years later, the marketer would look at me and say, that's not my. but it is your job because at the end of the day, if your stock is being valued on how much you're growing, how much you're retaining and enterprise value, it is your job.
Same thing. I would say to a, somebody from marketing who goes to do CR role from marketing, understand the sales compensation, how they're indent, how they're measured, how in the hell they keep their jobs. Because then you're going to change your orientation to say, how do I ensure that sales has the ability to close the most business?
And that customer success has the most probability of upselling cross-selling and retaining. So that's one thing I would tell a CRO. Don't be biased by what you've done. Be interested in what you haven't done. Number two. Go out of your way to make sure that the metrics and measurements that you put in front of your head of marketing, your head of sales and your head of customer success are directly correlated to the metrics that you're presenting to the board of directors and investors and say, okay, I'm presenting C payback period.
Here's what K back payback period is. Here's why it's important to our investors. Here's how your marketing metric, maybe it's conversion rate to closed one, how that impacts our CAC payback period, or how efficient for every dollar of marketing investment made. How many dollars of ARRs that generate that affects C payback period.
Right? So show them that string or pull that string from marketing activity to marketing measurements, to company measure. But Warren and Luba, Lupe, I'm sorry. How many CEOs take the time to inform their head of marketing? Head of sales and head of customer success about that correlation and integration?
They don't. So that's why we don't have alignment. That's why we have friction. That's why we have dysfunction. So the CRO should try to create that common understanding and common vision of what we're trying to accomplish.
[00:18:52] Lupe Feld: Yeah. That's a great point. And you know, I, I grew up in sales and you know, like you, you migrated to sales from engineering because that's where the money was.
And throughout my career, I kind of progressed to the highest level that I could. In sales and then really wanted more. I wanted more of that kind of the sea level opportunity. And I kept, you know, having conversations that really highlighted some of the things that I didn't know. And so very purposefully and mindfully, I moved into different areas of the business that quite frankly paid less.
So I earned less because I didn't have that, that bonus component. But the result, the end result was phenomenally valuable because I, I learned so much through some of the operational journeys that I took, some of the marketing things that I've done. And, and I encourage, like you just said, I encourage sales leaders since it's the highest percentage of CROs to really invest in learning that side of the business, because it drives everything that a sales leader. Absolutely.
[00:20:05] Ray Rike: And for the people who are currently a director of sales or VP of sales, take your head of marketing out for lunch for dinner, ask 'em about their challenges. How do they, how are they measured? How do they get promoted? Do the same for the head of customer success. Cuz even if you learn about how they're motivated and how they're measured and then maybe you can go to the next level of, well, how do you do that?
Just by learning? Not only will you build better relationships with. Colleagues and peers across functions. You're educating yourself to be the CRO of the future. And the other team I would say, learn about what they really do is the operations team. If you are a CRO of the future, you better have some process and operational orientation.
So find out what, if you have a rev op team, great. Find out what they do, how, what their objectives are. If you have sales ops marketing ops and CS ops, find out what they. and by curiosity, you'll be amazed at how much better of a CRO you'll be in 2, 3, 5 years.
[00:21:06] Warren Zenna: Yeah. Yeah. That's an interesting point. You bring up and there's so much unpack from this part of the dialogue here.
Mainly one of the things I think is you point to something that we talk about a lot here, and that is mindset. Right, because all this stuff we're talking about is measurement things, which are all obvious. They make sense and, you know, tying together what the board wants and all those things are logical.
But the, the barrier we're all recognizing here is people and the way people think, and you know, their biases and their competencies and their strengths. Right. And I, I, I don't wanna get psychological, but a lot of this is predicated on people's, you know, operational survival, right. Someone gets put in a job.
And in the instance that you mentioned, right, they're promoted to becoming a COO and they're from sales, they're naturally gonna lean on the things that they're comfortable doing and that they know. Right. Because that's the stuff that that's survived on for the last 20 years of their career.
Naturally, they're gonna go and run the sales organization cuz they know they can win that way. So it it's not as much. It's also about competencies. It's also about. Having people all collectively understand that they have to all learn new things together. And to your point, as a CEO of a company, I could understand why a CEO wouldn't wanna have an experiment with all these people, trying to figure out new things while I'm trying to grow my revenue next quarter.
I mean, I don't want to interrupt that short term. So what, what do you do? How do you develop an organization that manages these sort. Mindset, growth opportunity. I mean, requirements at the same time, fulfilling on the same boards, Des demands for short term results that they were promised this quarter or next quarter.
That's a, that's a tough balance. And what's the way that a CRO would manage both of those at the same time so that they maintain, I don't wanna say making everybody happy, but doing it in a. That takes advantage of all the business requirements, not just the long term ones.
[00:22:47] Ray Rike: Well, I don't have that magic wand to say, if you do this, it'll happen.
[00:22:51] Warren Zenna: Sure. I,
[00:22:51] Ray Rike: but here's a couple,
[00:22:52] Warren Zenna: well, maybe. Yeah, exactly. Maybe a couple of things you can think of.
[00:22:55] Ray Rike: So if you are a VP of sales, And your goal is to be a CRO. Yep. Make sure you have a couple of your directors who could step into your role, who can be great VPs of sales. And she can actually measure all the day to day operational aspect of leading sales.
So you don't need to just be super salesman. Cuz so many people got to be a director of VP of sales by being the best salesperson on their team. But they. Make sure that there's people underneath them that could do what they do. So that's number one, same with the chief marketing officer, right? If you're a VP of marketing, you wanna be a CRO, make sure you have someone, whether it's your head of product marketing or demand gen who could step into your role and you don't have to manage that function.
Like you were still this head of marketing. So that's number one. So number two if I'm the CEO, right? I think if we don't set the expectations of the organization of I'm promoting Ray to be this CRO, he doesn't have as much marketing and customer success experience. So we're gonna make sure that the VP marketing and VP of customer success are fully on board with supporting them.
And it's through common metrics. Okay. Miss VP marketing, you're gonna be responsible for contracted ARR growth also. Rate success is gonna be your success. So you gotta, I think somehow it's not easy to get the CEO to build that shared vision, that together we succeed or fail. And if we see a CRO not being supported by the other functions or the CRO, not supporting the other functions and understanding them that we gotta have a difficult discussion early and.
And make some tough decisions because if you've got the head of marketing fighting the CRO or the head of sales fighting, the CRO who grew from marketing, you're gonna have silent embargoes. I E they're not gonna do that. They're gonna shake their head to say yes, or they're going to create friction and landmines for that new CRO.
[00:25:04] Warren Zenna: Hmm.
[00:25:05] Ray Rike: And the CEOs gotta clear those landmines man.
[00:25:08] Lupe Feld: Yep. Can you think of a way to baby stepped a transition on joint metrics and, you know, to kind of, to Warren's question, you know, you've already gone out to the board and you've presented what your quarters results are gonna be, or projections are gonna be.
and then now you have a new CRO in place and, and now you adopt maybe, you know, you listen to the podcast and you go, wow, light bulb went off. I should do this. How do you kind of baby step that transition so that it's not, you know, overnight that you rip off the bandaid of the old metrics to the new metrics and how do you convert that in a reasonable way?
[00:25:49] Ray Rike: So most companies, when I go into the annual planning process, They have two or three primary goals, right? It's growing C R maybe 40% or increasing our customer retention by 3% more. Right. So only have those two or three goals. Number one, then bringing the head of the departments and the impact there's goals.
Let's say. net dollar retention. Let's just say it's net dollar retention. We know that if we get to a hundred percent, our enterprise value to revenue multiples or four X higher. Okay. Ms. Head of sales. What do you think the top two or three things you can do and the metrics that are leading indicators, it's gonna drive increased net dollar retention and how that discussion?
Oh, well I think it's gonna be, if I have a higher close. Okay. How does a higher close rate impact net dollar retention growth, right. And kind of walk 'em through that and then ask the head of customer success to do the same thing. What are the top two or three measurements? Outcome measurements that you can be responsible for?
That's gonna impact net dollar retention. Oh, well retention logo, retention. Yeah. Logo retention is good, but how does that impact dollar retention? Ah, well maybe if we make sure we focus and retain our largest customers, that inherently is gonna give us a higher gross dollar retention. So we're starting from a higher foundation of existing ARR.
So it's gonna make our expansion should make the net dollar retention look even bigger. So I really think it's as simple as focus on two or three. And collaborate and brainstorm with the department heads of what's the two or three metrics that are directly correlated to those company metrics. And very quickly, ed mark is gonna say, well, if I generate more leads, I'm not sure how that's going to really drive higher net dollar retention.
Maybe if they convert higher, right. And they are retained better. Maybe that's a way I can understand it can impact N. But that's just pulling your thread all the way across. Does that, does that resonate with you Lupe?
[00:28:04] Lupe Feld: Yeah. No, it, it, it, it does resonate. And I think, you know, it actually shines a really bright light on something you said earlier, that the way that these different organizations are compensated or rewarded or measured is going to be, you know, really important because if you see the right path, but the wrong path gets you a bigger bonus. You're gonna choose the wrong path every time.
[00:28:30] Ray Rike: I'll give you a simple example. Once in the last 25 years, I took a role that didn't include marketing sales and customer success. I took a SVP of sales job because I thought it was a hot company and they wooed me and I'm like, okay. So one of the first challenges I faced was our head of customer success.
Also had professional service. and she was like, I'm gonna drive the hell out of professional services revenue, but that came at the expense of ARR. Cuz if a company has a $200,000 budget, you can get 180 for the ARR or 24 services. But if her whole team is focused on getting. More services. We often went on that 200 K we did a 60, 40 split, one 20 ARR and 80 services and her services, revenue, and her services margin look great.
Yay. But if you look back on that two years later, it's like, well, why her C a R R growth, not at the level. It needs to. Because we sacrificed the long term cash generation end of a SaaS company for short term service services metrics. but you gotta kind of identify and think about that upfront.
[00:29:48] Warren Zenna: Yeah. You need someone who has sort of a good financial projection mindset to be able to look forward to the future and see the implications of that sort of thing.
And, you know, we speak to the CROs. We, we mentioned how important it's that they have these sort of computational, you know, mathematical forecasting skills or, or have somebody on their team that has those skills. Right. I mean, I had a job like this. I'll be up front. I mean, that's not a strong skill of mind.
I don't look at Nu numbers or a spreadsheet and be able to look at it and become some. I see people look at that stuff. They can look at a spreadsheet. They go, oh yeah, I see a trend here in 20 years. Like, what the hell are you talking about? I see a bunch of numbers. Right. But there's some people that, that naturally think that way.
So either you're that way, or you have someone who thinks that way, whom you can say, would you take a look at this and tell me what I'm missing here. So I think to your point, it's like CRO needs to sort of understand their strengths and their competencies and how to build a team that reflect. How to bring forth what's best for them and the people that can do exactly what you just described.
Because without that, it goes back to what we talked about before you lean on the things you're strong with on, but you have a blind spot where the business get suffers because you're not having its paid attention to, you know, I had a client two years ago who said something to me, which, you know, I knew it, but the way he said it was great, he said, you know, a good CRO brings in a rain.
he, isn't a Rainmaker. You need someone whom is kind of like comes along with you. That can handle the competency of running a sales organization underneath you. And a CRO who comes from sales sort of has to let go of the reigns a bit and hand it over to somebody else. So they can focus on the bigger picture, which means that person needs to be excited about the possibility of expanding the scope of their role and not feeling like they're being.
Somehow marginalized by not doing the thing. They're great at that's a big interview question that I think you have to ask, find out what does this person really want to do? What are they really excited about? Because if they're excited about running a sales organization, they're gonna have blind spots in the areas they need to be strong on. Like you just mentioned.
[00:31:42] Ray Rike: It's interesting, Warren. I, you know, using sports analogies can be dangerous, right? Cause not everyone is passionate about sports as you are, but I'm gonna use one anyhow. Yep. Yep. And it's a very simple one. And in football you have kind of their sales and marketing there. You have the offensive coordinator and you have the defensive coordinator and great teams have a good offensive defensive coordinator.
The biggest mistake that someone who gets promoted from an offensive defensive coordinator to a head coach makes is they want to keep running the offense or call the plays cuz they know they're good at that. Right? Yeah. And what happens mm-hmm is they have a grid offense they're scored a lot of points.
The problem is the other team's scores. One more point because his defense sucks, right? Yeah. So it's the same thing you wanna make sure that you don't just play to your strength? You hire someone who can take that role over and you understand that you're the orchestrator, you're the coordinator of the offense and the defense sales and marketing.
[00:32:41] Warren Zenna: Yep. You know, we had this conversation with another guest recently, we're talking about like a difference between like a relationship based person and a science based person and how they, they look at the world differently. Right. You know, great sales people. And as I like myself, I'm much more of a relationship based person.
You know, I can build bonds of people and build trust and, you know, create, you know, persuasion and get, you know, confidence in all that stuff. And it's great skill. You need it. but you know, if you wanna do what you're talking about, you need someone who looks at things more scientifically looks at the bigger picture, understands how systems work together and how they operate together.
And you're sort of not getting yourself caught in the weeds of being caught in relationships more just how do things work? Like what's the impact this is having on things. And I think that that's an important distinction to make in the way you look at this role, that this is a weird kind of amalgamation of skill sets that the unicorn person out there probably doesn't.
But you need to know where you sit inside those competencies to know how to manage yourself appropriately when you have to get the job done.
[00:33:34] Ray Rike: Yeah. It's interesting you say that cuz the other thing, so I'm, as you can see, analytical warned that science of cells, right? Yep, yep, yep. The relationship, management's not my core strength, but let's a lot of people are like you, Warren are really good at the relationships, et cetera.
So I think one of the biggest, most important hires you can make is a revenue operations. Almost your chiefest rev staff and what a hundred percent or she's really good at is not only operationalizing all the measurements, metrics, processes, et cetera, but challenge her and say, I don't want you just to operationalize all the data into measurements.
I want you to provide insights. What are you seeing? What is all this data that you're generating in these dashboards? What do we need to do? I want you to be a Canary in a coal mine. Tell me before we're dead. That we're. And that might be. Your pipeline philosophy.
[00:34:28] Warren Zenna: That's so great. The Canary and the coal mine. It's such a great, perfect context for the rev ops role. It's a person that walks over to you and taps you on the shoulder and goes I see a train wreck coming down the road here in about two weeks, and here's where it is. And, you know, okay, thank you for being my eyes and ears on this sort of thing.
So I can manage that appropriately. You know that's such a great an astute way of looking at it, cause that is exactly what it is. It's someone who sort of mitigates risk for you by being able to show how the system is gonna crash. Or go off a cliff if we keep going this direction. Right.
[00:34:56] Lupe Feld: You know, one other question that I have for you, Ray, is, you know, as you work with different CEOs, are, do you see any kind of a trend.
When they hire a CRO, are they hiring a little bit of a, of themselves or are they purposely looking at like the makeup of their team and balancing that out? Cuz I, I kind of see. In the marketplace, a lot of lookalike, you know, C levels. And I think that is maybe a, a gap. I'm just wondering if you're seeing that as well.
[00:35:30] Ray Rike: Well, I think that's human bias, right? The whole diversity trend is cuz we tend to hire, like to hang out with people like us. Right. But I think this is at another, another level and that is it's a, a 20, 80 rule. I think 20% of people. of CEOs are brought up in a traditional silo departmental world. So I think when they say we have a revenue problem, or we need somebody to help take us to the next level of revenue growth, they quickly go to, I need new customers.
Oh, I need ahead of sales. Right. Or I need new pipeline. So I think about the head of marketing. So I don't think it's to fix mindset versus the growth mindset. And Warren, you talked a little bit about mindset. I think far too many CEOs have a fixed mindset of what they've seen work in the past and not where we need to go tomorrow. So I think it's a mindset issue and it's a, yeah, it's a bias issue.
[00:36:27] Warren Zenna: So much of this is about that. So much of this is about that. You know, I wanna kind of explain that little thing that I came up with, which I'd like your opinion on. So for someone like myself, whom is less systemically oriented and is more relationship oriented, The sort of the thing that we don't talk about enough in these types of conversations is the importance of the customer success role has emerged over the last 10 years or so in terms of running a business.
And I think that's because, you know, we, so we so always focus so much on sales and marketing as this engine that runs, right. So for me, what I sort of came to the conclusion of a while ago was. Okay. What's the most important thing in a business, right? Whose perspective is the one that matters most? It's the customer's perspective matters the most, right?
Because ultimately that's gonna inform how we do things. Satisfied customers kind, satisfied, experiences, retention, growth, et cetera, et cetera, etc. So I look at the customer success organization as sort of the sort of relationship tether to the bigger picture around the organization, where if I have a customer success organization and I put the customer's outcomes or the customer's needs, or the customer's experience at the center of the context, all of these other organizations have a much simpler way to understand the relationship they have to the outcome, because it's all.
Customer outcomes, right? How do we speak to a customer? What's the first time we touch a customer? When we bring a customer on how do we like move them from sales into, into the, into the delivery funnel? How do we keep them happy? How do we derive the insights that we get from the way that they're using our products to help make product better?
How do we help them retain and what they want? I don't think that this is done enough, in my opinion, I don't think customers are as important in the context of things they should be. Matter of fact, I think the way that we go to market these days, it actually makes customers feel angry and pissed off with all the emails and crap they get that seem so much more directed by the company's growth, grow goals, as opposed to customer outcome goals.
I like to know what your perspective is on that particular part of this revenue.
[00:38:21] Ray Rike: It's funny. We did some research recently with gain site MC meta over at gain site. Mm-hmm kind was one of the leaders and customer success platform, but also the profession and the function as a whole. And what we found was the companies that invested in the top 25 percentile in CS as a percentage of revenue had the highest net dollar retention makes sense.
Right. So, so he's like, okay, so we invest 10% industry average is 6%, but our net. Retention is 8% higher. A lot of numbers there. Yep. So number one. Okay. I think customer success is critical, but it's how do you measure them? You can't measure them on. Okay. They delivered a QBR to 80% of their customers.
It's did you have successful onboarding? I E yeah. Did everyone actually start using the product? Are they engaging with their product? Right? Are they happy, but most important? Are they receiving the business value, the outcomes that they expected. So customer success needs to become almost a a financial and analyst in and herself to say, oh, you bought our product to compress your cell cycle time and grow revenue by 10% faster.
Are you doing that? And so many customer success organizations are focused on the tactical. But not the business outcome stuff. And that's a big miss and the best CS organizations that are driving the highest net dollar retention are focused on the outcomes as much as they are on the product engagement input.
Yeah. So, so great. The, the second thing, and this is for CRO, if you are mm-hmm CS organizations doing QBR and you're invited to the QBR get into the QBR, what are we doing? So many QBR being delivered by C. Or, or here's your product usage? Here's some of the stats, right. But they don't include the executive sponsor who buys a product.
And what she's being mentioned on, maybe if, you'd say marketing automation system it's, did they generate higher qualified leads and pipeline that converted in a higher rate? You as a CS organization, need to be responsible for making sure that your customer. That your product is driving the business results that the CFO and COO are going to use to re decide to renew because in today's cautious, capital headwinds, more oriented world, you've gotta make sure you're aligned to business value as much of your, your product satisfaction.
Did that answer your question a little bit about the CS organization? And once again, that means their goals needs to be more about net dollar retention, net promoter score. Right. And maybe some U level of product engage. but not a bond. Did you deliver QBR all your accounts?
[00:41:14] Warren Zenna: Yep. A hundred percent. It did.
It's a very, very good astute thing. So thank you.
[00:41:19] Lupe Feld: Yeah, no, I often have seen customer success, like really angst about a QBR and wanting to get through it as opposed to getting really into it. And. Uncovering, you know, is there a gap? What do we need to do? What are we doing? Great. What do, what do we need to improve?
And really leveraging that face to face time or that, you know, meeting to build. Trust and responsibility.
[00:41:49] Ray Rike: It's interesting that you say that Lupe, because I remember I joined a company about five years ago and I said, okay, I want to go to 10 QBR. Cause I really need to understand what the customer satisfaction is, why they bought the product, how they measuring, you know, the value they're receiving.
And we had these 30 to 40 page decks. And 80% were reports. They were reports in dashboards that was into product. So I'm like, well, why don't we actually maybe share that part of the QBR we can advance. See if they have any questions about any of the usage trends, right. Et cetera, and focus the QBR that hour to hour and a half you have with the client around.
Business oriented things. So I noticed, and like my company that I was in last where I wasn't a founder was with retailers. So it was like, what's your same store sales growth look like this quarter. What are your goals for next quarter? And how can we help impact it through our digital marketing platform that we had.
Right. That was an entirely different discussion that the manager of digital marketing didn't really care. But, you know, who did the chief marketing officer and we were able to get her to come, cuz we were talking about those outcome metrics that she's being held to. And she was like, why didn't know you could do that.
I didn't know. You could actually look at translating foot traffic into my store and do same store sales comps. She's like, why didn't I know this it's because the tactical QBR and your manager of digital marketing, you was just worried about how many people were actually engaging with your Instagram.
Who cared, right?
[00:43:32] Lupe Feld: Yeah. That's stuff you can read. It's not meaningful stuff that you can discover, you know, going back in my career at one time, I ran the merchant business in Canada and one of the things that was really important because we were not, we were a premium brand card brand. And one of the things that was most important to talk about was the rate, cuz that was typically.
Made the decision to keep the product or not. And the value that we were delivering for that rate yet it was the elephant in the room that no customer retention person, customer success person. I don't think they were called that at that point. But. Discussed. And it was the demise of that account. The minute you brought that into the forefront, the minute you were able to articulate with data, the value that you were delivering, it became a non a non-issue and now you were really partnering to growth and to different things that were meaningful.
So I think that's really valuable, valuable insight.
[00:44:29] Ray Rike: And, and one of the things I would say on that, We recently did some benchmarking research on what percentage of B2B SAS sales organizations use a value based selling methodology? I was shocked. 80% said they did well. So first of all, bullshit. Right. but beyond that, we asked the follow up questions.
So, you know, do you use some type of ROI mechanism to know the value your customers receive to justify the in. And most of 'em said yes. Right. It was about 74%. And then we asked, does your customer success team know the business value outcome that you use to get 'em to close? And do they integrate that into the QBR delivery?
Like 18% said yes. So I'm like we, as an organization are saying, we're doing value based selling. We do some level of ROI calculation, but we're not even sharing that with customer. Thus customer success. Isn't ensuring that the customer is actually getting the value that you sold 'em upon.
[00:45:30] Lupe Feld: Yep, exactly. So when it comes to making that buying decision or rebuying, or recontracting decision they're, they're missing the data that somebody else will come in with more compelling information and maybe win the business away.
So it becomes a vicious cycle.
[00:45:46] Ray Rike: And then the last thing, I'm sorry, can I add one more thing to that Lupe? Absolutely. Absolutely. So the thing we asked. What percentage of companies are doing some level of NPS net promoter score mm-hmm and like 80. No, and it wasn't 80. It was like 92% of respondent said they're doing net promoter score.
But then we asked, which of these three categories of people. Are you conducting net promoter scores on users, administrators, or economic buyers? Only 24% of companies do a separate NPS calculation for economic buyers. They're all doing it for users and with all due respect users, typically not the people signing the check, right?
It's the economic buyers.
[00:46:28] Lupe Feld: No, it it's true. And you, nobody can sell your product or service better than you can. And if you're leaving it to the users to be the ultimate, you know, closers of that business, it. It's not gonna happen as, as well as if you're the one delivering that, those metrics and then have somebody disagree with them.
I think I could talk to you all day. Unfortunately, I think we're getting to the end of our, our time here. Maybe you can, you know, tell us a little bit about something that's exciting going on right now with you or perhaps, you know, let everybody know how they can get ahold of you and reach you.
If they're more curious.
[00:47:03] Ray Rike: So everyone can reach out to me. You can follow me just at Ray Rike on LinkedIn. I post almost every day about some type of metrics. And today I talked about the top five SaaS metrics for a CRO, so very appropriate. Probably the most exciting thing is I'm putting on the SaaS metrics. Palooza event on October 11th and 12th.
And I have probably 16 of the 20 top thought leaders around SA metrics and benchmarks in the industry to keynote Jeffrey Moore wrote crossing the chasm, also wrote zone to win about what metrics are appropriate in each zone of a company's evolution. Nick Metta is gonna talk about how CEOs and CFOs collaborate on metrics to make metrics informed decisions.
Mary Dean, no Frio. Who's. Partner in charge of the entire growth fund at Bessemer over 200 SAS IPOs out of her fund and 13 other people like that. So I would say that if you're interested in metrics and learning from the best and brightest SAS metrics, Palos is probably one of the things I'm most excited about October 11th and 12.
And you can reach out to me. As I said, at Ray Rike at on linked. Or rate Rike rev hop square.com and I'll make sure you get an invitation to the event.
[00:48:07] Lupe Feld: That sounds exciting, boy, a lot of great minds brought together. So. Definitely count me in.
[00:48:13] Warren Zenna: Yeah. So I know you probably can't hear me as well as before, but I I'm back here.
So I just wanted to thank you, Ray. It was such a great conversation. I agree, Lupe. This could have been like another hour of worth of stuff to talk to you on. So we may even have you come back, but thank you so much. And that event sounds great. I certainly think it'll be good idea for you to promote that.
I'll be happy to help you do that. Cause it sounds like something. I think people really get a lot of value out of.
[00:48:32] Ray Rike: Great. Well, Warren Lupe, thank you for having me on the CRO Spotlight. Warren, thank you for what you're doing with the CRO collective. I think it's a great initiative and it is such a critical role to get our industry to the next level maturity. So thank you very much.
[00:48:45] Warren Zenna: Thank you, Ray.
This episode was digitally transcribed.