The Great Unsiloing and the New, New "Normal"

"No man is an island entire of itself; every man is a piece of the continent, a part of the main." ??

MEDITATION XVII. Devotions upon Emergent Occasions, John Donne?

A few years ago, I had the opportunity to interview dozens of revenue leaders for a blog series. Those discussions were centered around the question of why Revenue Operations had proliferated in prominence.

I realized that RevOps was just one of several outcomes of a more significant shift in strategy in the SaaS space.

This shift will have to accelerate massively as the economic ground has recently shifted considerably underneath our feet.

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Living in Silos

The term "silo" when referring to an organization or company means to isolate (one system, process, department, etc.) from others.

It's a natural outcome of putting like-minded employees together and giving them goals that are separate from one another.

Finance is concerned about spending; Sales is concerned about new customers; Marketing is worried about leads.

And these concerns can actually be counter-productive to the company as a whole.

Revenue Operations is a straightforward solution to the problem related to operations.

Traditionally, companies had an "ops" person attached to each revenue organization; Sales Ops would manage the CRM and other sales tools, Marketing Ops would be in charge of Marketing Automation, and we also see Success Ops, which focuses on managing CS tools.?

This reinforced the separation between these organizations within companies, a separation that was already there but continued to become more problematic.?

For example, the Marketing Qualified Lead was the gold standard of Marketing metrics when I was early in my career.?

In reality, marketers could define this however they wanted and say, "I generated x amount of MQLs this month; the fact that Sales wasn't closing them isn't my fault!"

This was unsustainable.?

More innovative companies began to realize that there couldn't be separate worlds between these groups, and they all needed to be focused on a singular north star - revenue.?

A compounding factor is how the technology that supports GTM has been developed.

If you look at the tech stack in most companies, you will see:

A CRM for the Sales Team.

A Marketing Automation for the marketing team.

A Customer Success Platform for the success team.

And so on.

When we all live with different tools, using other metrics, and with different methodologies, the silos are reinforced.

And this was one of the problems Revenue Operations was meant to solve.

As a result, a slew of technology has arisen in the intervening years to facilitate the breaking down of the technological silos between these tools and teams.

But operations are only one part of the puzzle.

One Goal to Rule Them All

Revenue.

One would think it obvious that it should be the overarching goal of every person in a company.

But, in reality, it hasn't always been that way.

The traditional structure of a company is that each GTM organization reports to its leader.

Customer Success had a VP of Success, Sales had a VP of Sales, and Marketing had a VP of Marketing or CMO.

Each organization had its own metrics, goals, and strategy.

Much like the tech stack, this led to misaligned - and sometimes competing - incentives.

Enter the Chief Revenue Officer.

By definition, a CRO is responsible for all revenue generation processes in an organization. They are accountable for driving better integration and alignment between all revenue-related functions, including marketing, sales, customer support, pricing, and revenue management.

Whereas RevOps was putting the operational aspect of revenue teams into one position, CRO was meant to put the whole team under one organization - to make this unified group a revenue-generating machine.?

PLG, CROs, and RevOps all emerge from the same thing - creating greater efficiencies and more focus on revenue growth.

The New, New "Normal"

There is a massive market upheaval, with recent big-time layoffs at powerhouses like Meta, Strip, and Twitter disturbing things even more.

But, in reality, it's been happening for some time.

According to data from Profitwell, revenue growth has slowed to a crawl that has not been seen since 2008.

According to this data, both B2B and B2C markets are seeing a 20-30% decrease in new sales and an increase of 15-20% in cancellations.

You don't have to be a CFO to see the issue here...

And companies are reacting by pulling the most potent lever for cost-cutting that they know.

Headcount.

According to OpenView's recently published SaaS benchmark report, in Q1, no companies had plans for reducing headcount or freezing hiring.

0%!

In Q3, that number shot up to nearly 20%.

Efficiency, Alignment, Fundamentals

However, in reality, the market will push more companies to embrace this alignment.

Because if they don't, they won't survive.?

"Growth at all costs" will not cut it anymore. We are no longer in a world of free money.?

Revenue will have to be the goal from the start, which means aligning all the players in a company that impacts revenue.?

Sales, Success, Marketing, and the operations that support them all.?

Focusing on fundamental revenue metrics is the most straightforward path to success in a business environment that cares less about vanity growth metrics and much more about sustainable businesses.

Going back to the OpenView report, two metrics are the most significant success indicators based on their research.

Net Dollar Retention and CAC payback period.

Companies with high Net Dollar Retention and lower CAC payback periods are the keys to sustainable growth under current market conditions.

Easier said than done, right?

Well, maybe not.

Focusing on expanding the spending of your current customers is the most straightforward route to the kind of efficiency and growth that OpenView is talking about.

Compared to net new revenue, expansion revenue is:

• 4X less expensive to acquire.
• Has a CAC payback period of 3 months compared to 18 months for net new revenue
• And has a conversion rate of 60-70% compared to 5-20%

These numbers are mind-boggling.

And, unfortunately, generating more revenue at lower cost will be increasingly important for companies that want to stay afloat right now.

What Now?

There's no better time than the present to take action.

If you have "growth at all costs" tattooed on your forehead, today would be a good day to have it removed.

It's time to look for inefficiencies in your spending and how you organize your teams.

And it's time to kill vanity metrics and focus on the things that will sustain your business in the future.

LFG!