How to Deliver Better Lifetime Value from Customer Insights with Rouzbeh Rotabi, Chief Revenue Officer
In this episode of the Revenue Insights Podcast, host Lee Bierton speaks with Rouzbeh Rotabi, Chief Revenue Officer who has led revenue-focused teams at Orum, Marqeta and other FinTechs. The free-flowing discussion pivots around staying engaged with your customers and using the insights to tailor your go-to-market strategy. Rouzbeh explains how feedback from customers and prospects can identify pain points that can be addressed with messaging and positioning. A quick caveat, they can vary from market to market. Lee and Rouzbeh also discuss implementing feedback loops and engagement metrics to identify risk and shape strategy. There’s a brilliant piece on leveraging revenue efficiently for sustainable growth, a paradigm shift from the growth at all-cost strategy—“Slow down to speed up.”
Rouzbeh Rotabi is a Chief Revenue Officer who has spent over twenty years leading revenue teams across companies like Orum, Marqeta, and many others.
- Rouzbeh’s LinkedIn
- Rouzbeh’s Book Recommendation The Hard Thing About Hard Things by Ben Horowitz
- 00:46 – 03:34 – Rouzbeh’s story
- 04:11 – 05:59 – Why is Customer Success and RevOps often overlooked in the revenue function
- 06:44 – 10:37 – How Rouzbeh drives higher lifetime value from his customers
- 11:35 – 14:31 – Measure and track these key metrics vital for your business success
- 14:56 – 16:01 – Why you need to measure the impact of new product releases on your revenue
- 16:43 – 19:01 – The key to unlocking new markets lies in understanding the customer
- 20:06 – 23:10 – Why Product and CS should own the customer feedback loop
- 23:29 – 26:04 – Why misunderstanding is holding Revenue Operations back
- 26:41 – 29:03 – The role of Revenue Operations in FinTech
- 29:45 – 32:43 – How to use engagement signals to identify churn risks
- 33:43 – 36:40 – Measuring relationships to identify risk consistently
- 36:50 – 42:23- Why building a sustainable business model will be crucial in the next decade
- 42:38 – 43:50 – Rouzbeh’s Book Recommendations: The Hard Thing About Hard Things
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I think the more you understand your customer and your clients and you can aggregate their needs into, yes, we should do it, maybe we should, and no, we shouldn’t. And you start building metrics around that. Some of it could be in service just to retain your biggest customer. Many people do that. Some of it could be to drive net new features and net new solutions that create the value.
Welcome to Revenue Insights. Every week, we’ll be joined by revenue leaders from some of the most successful and highest growing companies.
Together, we explore how they built their revenue teams, the journeys that they’ve been on, and the lessons they’ve learned along the way. Revenue Insights is brought to you by Epstor. We’re a revenue intelligence platform designed to help revenue teams to build more pipeline, close more deals, and retain more customers. Hello. You are listening to Revenue Insights today. Today I’m joined by Rizbe Rattabi.
He’s the chief revenue officer who’s led revenue teams with his experience at Aurum, Marqeta, and a host of other businesses.
Rizbe, lovely to chat today. Thanks for having me, Lee. Excited to dive into all things revenue and all things scaling companies. Absolutely. Let’s start with a little more about you.
I think most of the audience will probably have heard of Aurum or Marqeta, but for anyone that doesn’t know your background and where you’ve worked, could you give a little more context on your story and how you got to where you are today?
No, thank you. It’s a great question. I’m an accountant by trade. I actually was a public accountant out of college and realized that that’s a very unique life and a very unique career path. I quickly transitioned over into sales, business development, working at ADP, which is the largest payroll company on the globe.
From there, I was introduced to payments because ADP came out with a payroll card that was trying to help folks that are underbanked or didn’t have the same socioeconomic background as traditional corporate earners. They were trying to give them banking services. I met one of the founders of the company called Wild Card Systems 20 years ago. His name is Gary Palmer and went to go work for them.
My first indoctrination into the startup world, having lived in San Francisco from 98 to 2003, I passed on a lot of the startups then, but I joined one in 2003 when the dot-com boom was over. For the last 20 years, I’ve been in fintech payments and focusing on scaling organizations across a multitude of verticals or business ideas. It’s been a fun run.
As you mentioned, I’ve worked at Marqeta, Green Dot, Blackhawk, and most recently at Oram. It’s been across the entire payment spectrum or fintech spectrum. If I’m wrong, you’ve also worked across a number of different departments within the go-to-market function as well. Most recently being Chief Revenue Officer, having looked through your LinkedIn, I know you’ve gone through the customer success side as well.
Is there anywhere that you haven’t quite covered yet?
I think the only place that I haven’t covered is Solutions Engineer. What I say about that is I know enough to be dangerous about the bits and bytes, but you don’t want me leading an API call. You don’t want me leading an implementation call. I think I can be a good advocate and a good person sitting in the third seat, if you will.
The reason my experience is a little bit unique is I started out in true sales at ADP and then moved over to business development at Wildcard. At Blackhawk, it was everything from business development to sales to partnerships to owning categories and then the transition over, as you called out, into customer success.
There was a thought and a logic there, which was if you’re going to understand the entire revenue spectrum, meaning from the first time you make that call to a prospect all the way to the third renewal 10 years later when you’ve had that customer, to understand that experience, to understand what the customer goes through, the P&L internally and how customers need to be profitable while also keeping the lens on driving hypergrowth and driving scale was an interesting experience.
I think most companies, as they go forward, they should start thinking about how to manage that revenue from the first conversation to creating long lasting revenue. By bringing folks in that have a broader spectrum or broader parabola, if you will, they will help build the right relationship between internal stakeholders and most importantly with the customers. I completely agree.
When we were chatting pre-show, the thing that stood out to me more than anything compared to I think a number of guests that I have on it is that you’ve really worked across that spectrum to get the different perspectives.
That’s the first question that I wanted to ask is from in your opinion then, is there perhaps one part of the revenue function that you reckon is the most overlooked?
That’s an interesting question. I could say there’s many times that some of them are overlooked and none of them are overlooked because it depends on the folks. I’d say the two right now that are overlooked the most is customer success and revenue operations.
The reason is that especially right now with what’s going on in the macro environment, what’s going on in the VC environment for your venture backed company, or if you’re a company trying to exit into a private equity, you’re trying to figure out how to drive top line sales. Sales always feeds the animal, but it’s a longer cycle to get to that revenue in certain industries, especially in payments and fintech.
It’s not a seat or license based business, it’s a consumption model. To get that consumption, it’s more like having a child. A child doesn’t nearly eat as much when they’re three as they do when they’re seven or when they’re 16. To manage that cradle to grave experience for a customer, you have to figure out how the child if you will, or the customer or set of customers will grow and adapt.
What makes that run and what makes that tick is the revenue operations team, meaning how do we structure the commercials on the initial contract?
How do we structure the engagement model?
How we start that is probably not how it will mature. Revenue operations can play basically internal hall room monitor and make sure that what sales and business development are selling are scalable and fit within the parameters of what the business needs. Then also making sure that the company stays profitable with each renewal or each upsell or each value added service that you manage service that you sell into the organization.
If you think about that in a holistic manner, you’re building cohorts that are both productive and profitable. Absolutely. I think it’s so timely, particularly at the minute for most businesses, particularly as a lot of strategy shifting away from looking at, I’m going to drive all my revenue from new business and looking more towards upselling and cross-selling was what you’ve already got.
Did you give perhaps a bit more context around, I would call it your theory, but your theory behind driving lifetime value from customers?
How do you approach setting up your teams for, how do we make sure that we’re not only bringing on customers that are right for us long term, but how do you also approach what the cross-sell process is and upsell?
That’s a great question. I’m going to break it down. It seems like there’s three layers.
One is how do we make sure we’re signing the right customers?
Two, how do we make sure that we set up the right teams and have efficiency metrics?
I have a whole theory on that.
Then three is what are we doing to drive lifetime value in the upsell?
On the sales end, on the front end, as you go out to market, I think there’s things that every company that is a technology-based business could be doing to improve that. The first one, it’s basic, is create a feedback loop. Every month, let’s aggregate all of the input and feedback from why we won deals, why we lost opportunities, what the customers were saying, and aggregate that.
That should give you directional information of what to build, what not to build. One customer might ask for something, and you have to have the discipline to say no. A set of customers might ask for something, and you say, oh, wow, that’s an unlock. Let’s go build that. That’s an opportunity to go drive net new revenue.
The closer that sales, if you will, or business development and customer success are, and the more they know what good looks like from a customer and what the ideal characteristics are, that will help. So bringing those two teams together. My experience at Marqeta, I worked with a gentleman by the name of Salman Sayed. He was in charge of BD.
We would have constant conversations about how we would run the customers, what the customers should look like in the next cohort.
That way, it helps us scale, helps us go from say $30 million of revenue when I entered the organization to $515 million heading into the IPO. So it’s those types of metrics that you can really look at and understand that that helps. In the middle, we talked about the theory of efficiency.
And I think, again, looking back on every organization I’ve been a part of, and I’ve been part of the dot-com boom and bust. I’ve been part of the global financial crisis and the latest economic upturn, if you will, not downturn, upturn, whatever it may be. And I think the biggest thing that we got away from is efficiency metrics.
Whether it was both from a venture capital standpoint, from an organizational standpoint, we weren’t looking at what’s the revenue per employee, what’s the contribution per customer, and it was growth at all costs. There’s many, many publications or articles or blogs that talk about that.
But I think we’ll get back to the norm, which is grow with the right customers, with the right margins, at the right internal organizational metrics of hiring tools, applications, all the costs that go with it. And then that dovetails into upsell.
If you’re aligned on the right set of verticals with the right set of customers, and you’re aligned on how to build the efficiency metrics in the middle, which is the squishiest part. Because then you get people involved, then you get personnel, and you get a little bit of a, I feel I need this and burnout if you want to categorize that.
Or people that feel that they’re unsatisfied and their jobs are unfulfilled. That’s the middle is the hardest part, Lee. And then at the end, like the upsell, if we’ve done one and two right, you should get to three pretty quickly and pretty accurately. And the upsell is now going to come around what products you should build, what solutions should you add on, what things should you walk away from.
And I’ll share a story. Walking away from something is important. When I was at Marketta, we had about call it 30 customers. They were not productive. They were causing too many Zendesk tickets. They were causing too many product requirement changes, too many open issues with compliance.
And I had to go to the executives, I had to go to the CEO and the CRO and say, hey, these folks are unproductive, we have to walk away from them. And here’s a company that lived through the hard times of 2013 to 2016. And they have someone that’s been in the seat for a year, asking them to terminate roughly 30 customers.
We got around on the idea and everyone saw the through line and we executed on that.
But again, it’s saying no to say yes to the right things. It really does love that point around actually saying no to some customers. I think so often it can be, you know, we’ve got to retain as much as we possibly can.
But often, I think to your point of like revenue per employee that you’ve got, when you’ve got customers that might be, I don’t know, you know, they’ve got a handful of people, but they’re taking all of the time of your support team, then creates so many issues. And I think it’s almost a fairly, certainly logical, but it was quite brave decision to actually let those customers go.
I’d like to dig into a bit more, you touched on efficiency metrics and I really love the point of moving away from this kind of growth all costs approach and more towards how do we become more efficient.
So to you, what would you say are the top efficiency metrics that you track and why are they so important?
Yeah, I think there’s different metrics and KPIs for every organization, whether it’s SaaS, FinTech, payments, you know, OEM, hardware, software, whatever it may be. I think the biggest thing, the best thing that we can do at a startup at an earlier or mid-stage startup is align on the KPIs every year. And every year your KPIs will change until you become a publicly traded company.
And as we all know, they stamp out their, you know, five or six key metrics and all the analysts and everyone else hooks onto them. But until you get to that point, I think you should all at the executive level, create the four to six right metrics that you’re going to track, whether that’s in the SaaS business, seat licenses, number of users, activity per user, login per user.
On the payment side, it might be number of card holders, number of businesses, number of cards in market, but you have to align around that. And that’s the first thing. The second is then how are you, those are your core metrics of what to accomplish as a company. Then it’s a matter of backing into those.
And if you say, Hey, we want to build $10 million in that new revenue, then it’s a matter of doing the math.
What’s your average contract value on an annual basis?
What is the capacity of each salesperson?
Salespeople are much like engineers. Engineers have a finite amount of capacity to code, to review code, to deploy code, to set up infra, whatever it may be. Same thing with a salesperson, same thing with a customer success person. There are capacity limits for those human beings, and it varies by type of business. But understanding those that saying, okay, if it’s 10 million, let’s do a bottoms up approach.
If we have five salespeople, are we truly being honest with ourselves?
If we say there’s $2 million that need to come from each person, and the average contract value is $100,000.
So can each person close 20 deals a year?
And from there, when you do the bottoms up, you’ll truly get to the right metrics. And the efficiency should be into the burn ratio. If you’re paying someone X and they bring in Y, or they produce Y, or they create Y as an engineer, then you’re analyzing that properly.
So if the code I deploy contributes to $800,000 in revenue, and I’ll make it easy, I’m making $100,000 a year, although I know engineers make much more than that. You have an eight to one ratio. You can start standardizing that.
In sales, typically, the salesperson and account executive should make 4X of what their OTE is. On the customer success side, it’s capacity planning.
How much ARR should you be managing to make the amount of money that you do?
So to wrap it up, organizational metrics and then capacity metrics in a bottoms up manner to really drive through to the end result.
Does that resonate?
Does that make sense?
Yeah, that makes total sense, and actually, there was one thing that you said there that I’m going to ask, even though I think it might be a bit of a stupid question. But you mentioned there measuring the impact of your engineers in terms of what they’re developing.
How easy or how viable is that to be able to go for that piece of code or that product feature that you released, this was the net impact on the business?
Is that something that you’ve been able to measure in the past and actually report on?
I think maybe not measure directly, but I think if you were to ask, if you’re creating that feedback loop that we talked about a few minutes ago, and product and engineering and marketing should be part of that conversation.
And when everyone makes a decision to create a net new solution or a new feature, there’s an obligation of the revenue team to go assess what is the total sellable, addressable market, the SAM for that feature, either into the new net new customers or into the current customers and say, okay, if the engineering team works on this project, and it unlocks a potential of $10 million in revenue next year, you may not be able to break it down into you know, might not be one, it might be a giant chocolate chip cookie rather than breaking down all the chocolate chips within that cookie to the engineers.
But that chocolate chip cookie could be sell sold for a certain amount of money. And that’s how you would aggregate it. And that’s, I think capacity planning and creating a very tight alignment between product and engineering, along with revenue, and marketing is extremely important to scale an organization.
Yeah, that makes total sense. I’m going to ask something that I feel like you can take in in a number of different ways. So I’ll leave it fairly open. But we’ve touched a lot on kind of lifetime value and driving more efficiency from that lifetime value perspective.
What would be one thing that revenue teams could do or revenue leaders could do today to research improve their lifetime value return?
And I speak about that from the context of, you know, other revenue leaders that you speak to, where are the shortcomings that are happening at the minute that you’re observing that often, you know, you find that you’re actioning on?
Yeah, I’m gonna let you know a little secret. I know that the bonus question at the end is your favorite book, but I’ll talk about one of my top three favorite books, even though it’s not my favorite, which is the trusted advisor. Trusted advisor is a great book that talks about how to get closer to your clients or your customers.
And I think the more you understand your customer and your clients, and you can aggregate their needs into, yes, we should do it, maybe we should, and no, we shouldn’t. And you start building metrics around that. Some of it could be in service just to retain your biggest customer. Many people do that. Some of it could be to drive net new features and net new solutions that create the value.
So if we go into global expansion, you know, at Marketo, we were in three countries.
We went and created a business case to say, what would it look like if we took Klarna across Europe or APAC?
Or what would it look like if we took DoorDash or Instacart down into Australia?
And we went and did the math. Some of it made sense in the form, in the, in the spirit of retention. We didn’t want to lose Instacart, who was a top 10 customer, and we wanted to retain them. We wanted to help Klarna expand because we believe that buy now, pay later, and I’m still bullish on it, is a net new solution that people will move to away from traditional credit.
So by bringing those two things to life and getting in the hip pocket of our customer and asking what their strategic initiatives are, you can expand upon that.
Now how that plays into RevOps is that RevOps is the guidepost that will always keep you in line of, okay, what are the economics in those different regions?
What is the pricing strategy across APAC?
What is the pricing model in Europe that we could be, that would be acceptable?
Who are our competitors and how are we going to differentiate there?
You know, you have your global players, Stripe, ID, and so forth, but we really had to think about how to expand that. Same thing at Blackhawk. We went into Australia, we created the gift card distribution solution in all their retailers, but it was a completely different sales environment. It was a completely different experience launching into Australia because they already had some of the prepaid services.
They were much further ahead in payment solutions than America.
And so, you know, we know APAC’s further ahead. They were much further ahead of mobile payments. So I think it’s understanding the market, understanding the customer and getting closer to them and becoming a true partner with them in this growth mode. I love that because it’s relevant to every department within the revenue function.
And it’s one of those where, as you say it, to me it’s like, well, common sense, right?
Talk to the customer and you’ll understand what pains they’re having, what problems that they’re facing.
And ultimately that’s how you can start to align and, okay, how do we solve that?
And because, as I say, it’s relevant to quite literally every function.
From your perspective, and you touched on earlier the feedback loop that needs to be in place and I was hearing it all come together as you were explaining, who is responsible for speaking to the customer?
And now obviously customer success will speak to the customer, right?
But I would love to know a bit more about what that feedback loop looks like in your head.
You know, is it one single person that’s talking to the customer?
Is everyone talking to the customer?
How long before the customer is like, oh my God, please leave me alone. This is too much.
Well, you just opened up Pandora’s box. So we’ll go all in. I don’t think there’s any right or wrong answer. What I’ll say is this. If for example, during my time at Aurum, it was really important to get the product team as close as possible to the customer. So we had the product folks come in and really get tight.
When you become a skilled organization and you’re working with the likes of a cash app or an Instacart or even Blackhawk when we were working at Kroger and walmart.com, I think you have to have the right folks.
So what I’d say is when it’s a small team of say sub 45, 50 people in a startup, you probably want a couple people from your product team, buddying up with your CS folks and they just shadow the calls.
They just listen and understand and build a relationship with the customer because one thing you don’t want to happen is that the customer talks to the product people and puts them on the spot to say yes. That’s one. That’s the traditional method. As you get older, there’s things that you could put in place such as a customer advisory board.
You can start creating customer panels and doing the voice of the customer and really getting your biggest customers across the different verticals to share with you what they’re solving for. And then what they get in return is they get the early launch of a new product. They get the early feature. They might get some exclusivity going into some services and say, hey, look, I want to really expand upon this.
So I think as you’re small, you got to do it with a broader team as you get more mature and scale the organization. Probably your head of CS and your head of product and that’s about it. And underneath all that, revenue operations should be the backbone of all this because they’re the ones all the notes and documentation and information should be in Salesforce HubSpot, whatever CRM you’re running these days.
But it should all be aggregated in there with an attachment to a Google Doc that has the interview or has the notes from the meeting so that everyone can have the same line of sight to that information. And then I think there’s ways to accentuate that, whether it’s customer panels, customer summits, user meetings, user conferences. But I think it’s a combination of rev ops product and CS. Amazing.
And you actually beat me to the punch because my next question was quite literally going to be where does revenue operations fit into all of it?
But actually you beat me. You beat me to it.
Yeah, I’m a huge fan of revenue operations and they’re the Swiss army knife, if you will, of revenue. They have the lens of and they’re not tied to a bookings or sales number. They’re not tied to a implementation counter or time to value TTV metric. They’re not tied to a CS revenue metric. They’re responsible for all of it.
So they have very aligned goals with the CRO and buddying up the CRO with the VP or the head of rev ops really creates that dynamic workflow where they’re going out and attacking the same problems, which is how do we do more every year?
How do we build efficiently and how are we great liaisons and partners across the organization?
And more importantly, is everyone getting religion around the tools and applications that we’re using?
Yeah, a hundred percent. And so I’m curious then, because, you know, to go back to the first question, but second question that I asked, you mentioned that you thought that alongside customer success, that revenue operations was perhaps the most overlooked.
Can you elaborate on why you think that is?
I think people don’t understand it. If you don’t sit in revenue, I think it’s really hard to understand. I think a more universal one that’s understood in the startup or consulting world is biz ops business operations, or it could be something to the effect of, you know, true operations or organizational strategy.
And I think there’s, there’s a nuance within revenue that goes untold, which is there are a lot of mechanical pieces and moving parts that need to be constructed together. And the connective tissue is rev ops. So I think first it’s just people haven’t spent time to understand it. Some people and the folks that have are all in on it.
Second, I think it’s one of those things of like, when do I build the function?
How do I scale the function?
What parts of the function are truly liaison-ing with marketing, like lead generation, demand generation, BDR work?
And what part is partnering with finance on models and pricing and all of those things?
So at Marketo, we had a revenue operations function ran by a great gentleman by the name of Scott Morris. And he was really focused on deals desk, making sure that the deals were profitable building models out.
He had an FP&A background, but he was also focused on what are the leads that are coming in?
How are we scoring them?
How are we making sure that they’re matriculating through the system and doing all of those things?
There’s a lot of good outsource services now that you could buy and basically lease that you leverage until you’re ready for a full-time rev ops person. But I think it’s a matter of knowledge, education, and dare I say, building a charter of what your remit is within that organization.
I reckon it’s a matter of time then, before we kind of get to that point where it’s a much more, I guess, fully fledged part of the business, a little bit like BizOps. Yeah. I think in SaaS, it’s there. If you speak with most SaaS companies, most fintech companies are there. Most financial services companies are coming around to it.
I think where I haven’t seen it personally is folks in telecom or OEM, folks that make software, make hardware and ship actual boxes or downloads now, or sell hardware into companies. But I think it’s all coming.
Whether it was the old terminology was inside sales or it was customer enablement, I think it’s all coming together under the right umbrella to become a force multiplier for an organization and a true value add across not just revenue, but these are folks that are partners with product and engineering and finance and marketing.
As you come from a primarily fintech background, could you share a little more then on what I think is becoming more commonly referred to as revenue leaks, but where those efficiencies are?
I’m curious to know the role that revenue operations played in your teams.
So was it one of those where you’re going to your revenue operations team of, I want to know more about this, this and this, can I get a report?
Or are they more integrated into the strategy?
Just curious to know what your outlook is on their role in the go-to-market function. In the go-to-market function, that’s a great question. That’s a really good question.
I think across all three organizations, I’ll name Oram, Marketta and Genesis, when you’re trying to figure out either your hyper growth moment like Marketta was of how did we 10x the business or a company like Genesis, which was in the loan origination business or even Oram, which is in the money movement. It’s a matter of three things. One is three vectors or elevations.
One is being an advocate and being naturally curious about building out a go-to-market execution plan by understanding verticals, understanding who the players are in those verticals, what the competitive advantages of the company you work for versus the market, are there incumbents?
And then really distilling that down and saying, if we went and won this vertical, does that align with our margin?
Does that align with our end goals of how we’re building our finances?
That’s the first elevation.
The second is how are we building the team out and scaling?
So they should be the person that’s almost like the analogous to FP&A that’s building customer or sales forecasts. They should be the ones building human forecasts of saying, if we have 10 salespeople, this is what we can expect them to close per quarter.
Hence, this is what our goal should be for the year. And if they build that across the organization for sales, partnerships and customer success, they’re assisting not only the CRO, but also the executive team to have a clear understanding of what the capacity is.
And third is making sure that all the trains run on time, the reports are out, running the pipeline report, making sure that everyone’s aware of what opportunities are coming down the pipe, what opportunities are straight in the middle of the fairway where they can be implemented no matter what, what requires a little bit of a custom build.
And they should be the ones raising the red or yellow flag and saying, hey, we have a really unique opportunity. They’re really outside of our scope. Let me go talk to product and engineering and solutions engineering and see if we want to do this. They shouldn’t be saying yes to everything. They should be really thinking holistically about the organization so that we can attain the efficiency metrics.
And I think both at Orem and at Mercado, we did that through a very, very distinct pattern of cycles of planning, execution and day-to-day operations. I want to take a look at slightly the bigger picture, just as we kind of come to a close.
From the past 12 months and past 12 months alone, what have been perhaps the three, and I kind of thought of it as factors or tactics that have had the biggest impact on your revenue growth?
So that might be a specific initiative that you’ve done.
It might have been one thing that your revenue operations team spotted that you’re like, oh my gosh, why were we not doing this before?
Actionable things that you found had a really big impact for you. That’s a juicy question.
I think, and it’s in unique times, right?
Because it’s the last 12 months of certainly unique. I think the biggest one is understanding customer, the customer behavior. So if you’re selling, let’s just pretend we’re a SaaS company. If you’re a SaaS company and you sell into technology-based organizations and you’re seeing all of these layoffs, you should start assessing what the churn rate is from the licenses. Just naturally less humans means less licenses.
In the fintech and payment space, it means I think it was around what’s the number of true total users you had?
Companies like Cash App, who Marquette had, would explode during it, have a chance to increase during a downturn because they’re offering a more holistic, affordable banking solution. Whereas companies that were more in the lending or B2B payment space, those would probably be going down because people aren’t willing to take as much credit.
So it’s a matter of staying ahead of the curve on the customer metrics and understanding where they’re going and sharing that internally so that people aren’t caught off guard when a customer goes from $1 million in monthly revenue to say $700,000 in monthly revenue down to $500,000.
Get raising the flag and saying, what are we doing to make up for that?
How are we making up that $500,000 delta on the other side?
I think that was something that we saw at Orem, where we really focused in on the right verticals that were going to drive growth and the right solution that was going to drive growth. But I think the biggest one is that. The second one that I’d say where revenue operations can really help is understanding all the aspects of cost of goods sold.
So if you are truly understanding the SG&A or anything that we have to license, buy or lease, how are we improving those unit economics with our providers or our internal efficiency metrics to create more margin on the bottom line?
Because if we know our customers are going to ask for a discount and we don’t improve our backend costs, then you’re going to have a double whammy effect. You’re going to get paid less and you’re going to increase in costs or your costs are going to stay flat.
So how do you decrease that?
How does that resonate with you as being a former person in marketing and rev ops and advocate for rev ops?
Yeah, no, 100%. And I think particularly the first one stands out is very consistent with a lot of the stuff that we’ve been talking about. And it’s one of those that, as you say it, to me, it almost sounds like common sense. So in the space that we live in, I mean, we love engagement scores. We work with relationship scores from a go-to-market perspective.
And I think from a churn perspective, things like product engagement scores go a huge way to really understanding how often people are using your product. And actually what we do internally is we blend that together with the relationship score as an indicator of like a two churn.
Because not only is it, are they using our product on a weekly basis, but also of the contacts that we have there, and that’s not only the users, but also the original buying committee, the decision makers, do we still have a good relationship there?
Are they still engaged with us?
Are they still interested in it?
And a big one is, are they still in the business?
So often, someone comes in as a really big champion of your product and perhaps the team’s not using it so much. And then after 12 months, they’ve moved on to another role. That internally is where we’re getting alerts and red flags going, hello, we need to do something here, otherwise there’s a potential churn risk first down the line.
So I think that’s a really, really huge one that we can definitely see, I think, measuring engagement. I think you just said something super interesting, which is understanding who the personnel is on the other side.
You know, you should always do a roster alignment. And I think you should share that little nugget that you just shared, which is understanding what the roles and the team dynamics are of your advocate and your coach internally. There’s a lot of strategies and sales processes or relationship management processes, but always know your coach, advocate and saboteur are in every customer.
There’s always someone in that customer that wants to put your competitor in. But to your point, if your coach is moving on, that could be a massive, massive red flag. And here I am talking about metrics and here you are talking about the human side.
Combine those and I think you have a lethal, lethal approach of how we would look at the business from a trusted advisor standpoint or from a consultant standpoint.
Yeah, definitely. Because it goes beyond just the metrics, it goes into the relationships that you have.
So to share an example of what one of our customers do to offset some of those churn risks, what they would do is very similar to almost like an account-based selling approach where you’re building relationship maps of what’s the hierarchy look like?
To your point, who are the champions?
Who are the saboteurs and who do we need to be aware of?
Who do we need to be communicating with?
But they’re applying the same thing to their own accounts. So these are really, obviously, their key accounts, their main accounts, the ones that, particularly the ones that they’re identifying as churn risks. And they’re using that to have a clear visibility on who knows who, who’s got a relationship here.
If it’s three months away from renewal and we found that the original decision maker, yeah, he’s still there, but no one’s spoken to him in the past nine months since it got signed off. So they get indicators of who, for example, has the strongest relationship with them now.
So they can actually go in and actually start to get things moving again and reignite the fire, right?
And I think so often those are things that get overlooked within customer accounts for sure. Yeah. And I think that loops back into the customer advisory board and your question of who should be talking to the customer.
In that case, if you did have multiple points of contact, so let’s say you and I are on the CS team and we were managing customer X, and then we wanted to bring in Jane, who would manage the product team. And having that relationship across the organization is extremely, extremely powerful on top of not just retaining and growing and keeping hitting your metrics and building the relationship.
But what’s going to happen on the back end?
How are we really going to build that together?
If you combine all that, I think you have a very succinct, again, parabola of revenue from that first point of contact all the way through the relationship. And parabola is always growing and always expanding.
So it’s just at what rate?
And having the team unified around that is extremely important. Yeah. I’m definitely… To come onto something that you mentioned earlier, moving away from growth at all costs.
And even though this can definitely be a very sobering period, particularly in sloughs where we work in, with layoffs and everything going on at the minute, it feels like a very necessary period to go through because the amount of wastage that was going on before, now everyone’s starting to look inwards. And I know with a lot of the…
As we start to look towards revenue efficiencies again, it starts to make you realize how that frantic breakneck speed, let’s just get growth, causes a lot of bad practices, a lot of bad habits to start to take place. And to now go back and to start to slow down and go, okay, we don’t need to get in 300 new customers, for example, this queue. Let’s just bring this down to… Let’s focus on 50.
Let’s aim to get our ACV up. Let’s take it a little bit slower. When we look at our renewals, to your point, okay, we’ve got a thousand customers here. Okay.
Well, loads of them are taking up hours and weeks of our support team’s time. And it’s not really bringing us much revenue, but we’ve got 10 customers over here where there’s a great opportunity where they’ve got more regional teams that we could potentially go into, but we’re doing nothing because we’re bogged down by these other issues.
And I think it’s one of those where I think through times like this, it can give you the clarity of perspective to then look at it and go, okay, take a deep breath. We can do things better. And I wonder, do you reckon we’ll go through the cycle of clearing house now and become more efficient and then in three years time be like, okay, go, go, go again.
Well, it’s funny you say that because I think first and foremost, I applaud what you’re saying and I think that there’s a lot of merit into understanding the value of customers. I think having, I have a lot of friends in VC, I have a lot of close networks connected in there having worked for venture backed companies, fortunately.
And I think the one thing that they’re analyzing it differently is it’s not total customer account that gets you to your next metric. It doesn’t prove the health or sustainability of your business. It’s the productivity for each customer. It’s what’s in that customer cohort of 2022 of 2023, who are going to be your winners, who are going to be your steady eddies and who’s going to be the ones that kind of fall off.
And you want the ones that fall off that are maybe just paying a SaaS fee or have two or three licenses up and running. Those don’t really get you to where you want to. So I think that’s the absolute right way to look at it. Building the right business will be about sustainable growth.
And having been during the dot com boom in Boston, the global financial crisis, and now this, we’re going to repeat it. It’s just going to be different.
You know, in 2001, it was very much the e-com world coming into the digital world. And that’s what created the dot com boom. Whether it was Webvan, who was a grocer online or Fogdog, which was a exporting goods online or pets.com, the retailers just couldn’t catch up.
In 2008, we had mortgage with the banking industry getting a little lax with their underwriting.
In 2022, you had the VC world and the interest rates working together where the VCs were really excited about the opportunities of these companies growing and the capital was frothy. And I think that’s going to change. So I think we’ll go through another eight, 10-year cycle. And there’s always a snake in the grass.
You just don’t know what it is and you don’t know when it’s going to bite you, but it’s going to happen. It’s a matter of how we react. It’s a matter of what we learn and don’t repeat. So right now, the good news is we’re not seeing upside down mortgage companies. We’re not seeing upside down lenders. Wells Fargo is the largest lender in the US for mortgages.
You’re not seeing them because they were extremely diligent about their underwriting. And I think right now, companies that are in the seed or series A stage that are at 20, 25, 30 employees that are working on something unique, they’re going to be the ones that in 10 years will be much like the companies that we know as household names now that were founded 10, 12 years ago.
DoorDash, Square, Instacart, all these companies that were founded during the global financial crisis of 2008 to 2014. You’ll see ones that were created from 22 to 24 that will build a durable business at the right pace. And you said the right word, the breakneck pace. I think it’s slow down to speed up right now is the methodology I’ve heard everywhere.
Yeah, definitely. And I’d imagine, and I say that because I haven’t had the benefit of living through that before, but I’d imagine that’s because you’re building at a time when it is more about efficiency rather than that breakneck speed.
And so actually, you’re building a far more solid foundation, a far more sustainable foundation to build on because so often, a lot of businesses tend to build on that house of cards of, well, we’re just going to go as fast as possible, and particularly during times like this, it can all come crashing down. Yeah.
So I don’t know what the next one is, but we will go through something else, some sort of other economic setback, some sort of, we all hope that there’s never a black swan event like COVID again. It took too many, you know, that was too impactful on human life and also people.
But I think it’s one of those things that we should all be on the lookout for of how to improve going forward. Yeah.
Well, I think how to improve is a mantra for all times, but I completely agree. Final question, you alluded to earlier, the bonus question at the end. So I’m now going to ban you from saying trusted advisory again, so you’re going to have to pick another one.
What is one book you’d recommend?
I think if you work in the, and it’s probably a little bit more, it resonates more with people in tech, it resonates more with people in venture capital or that type of private equity backed companies. But the hard thing about hard things by Bennett Horowitz, I mean, it just, it talks about so many things.
It’s written from the CEO lens, but it talks about so many things of how to make decisions, how to live with the decisions, how to think, you know, dynamically, how to collaborate, but most importantly, how to build the right team and how to scale an organization.
And I think that the trusted advisor, and I’d probably say if you’re going to go for the trifecta, but only the paranoid survive by Andrew Grove, who’s the former CEO of Intel survived the Holocaust time man of the year twice. And both of those books are wartime CEO books or wartime executive books.
And I think I would say, I don’t mean war in a negative way with what’s going on across the globe, but it’s in a challenging time. And I think more people would be attuned to that now and say, we might’ve been four or five years ago or three years ago. Beautiful. I’ll make sure that we include a few links down to those to have a read afterwards.
Particularly interested in myself to have a read.
Ruzbeh, it has been an absolute delight to have you on. Great to chat.
Thanks so much for coming on and everyone that’s listened to this episode, we’ll catch you next week.
Thank you, Lee. Have a great day and thank you for having me on. It’s been a pleasure. Thanks for listening to Revenue Insights. If you want to learn more, subscribe to our newsletter and we’ll deliver every episode straight to your inbox. If you have any questions, feel free to connect with us on LinkedIn. Our links will be in the episode notes. See you next week.
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