Revenue Operations and The Future of Go-To-Market With Bernie Taracevicz

In this week's newsletter, we're introducing an interview-style format that offers a fresh take on our content.

The link to Bernie and I's full conversation can be found here.

Guest Introduction

I interviewed my business partner, Bernie Taracevicz to discuss how the discipline of revenue operations is changing the go-to-market formula. Bernie has experience leading and guiding executive management and teams from VC-funded startups, Fortune 500, and Private Equity owned companies through all phases of the product and business life cycle, to achieve revenue objectives. He's a business leader and entrepreneur with more than 27 years of experience accelerating growth, creating and driving go-to-market strategies, and building high-performing revenue teams for organizations across multiple sectors, including; B2C and B2B SaaS platforms, wireless communications, consumer products, contract outsourcing, insurance, and hospitality.?

Bernie and I, together with Steve Busby , co-founded Slate Point Partners. Here, we’ve developed the Quality of Revenue assessment, which is a new standard for evaluating, benchmarking, and quantifying the operational aspects of how companies drive profitable growth in the lower-middle market. We share a similar philosophy that revenue generation encompasses all aspects of a business's operations from sales and marketing to product and finance practices. This week’s edition will focus on this approach and how organizations can leverage revenue operations to be more customer-centric, align their go-to-market teams, and ultimately deliver sustainable, predictable, and scalable revenue.

The Evolution of Revenue Operations

Revenue operations as a concept has been around for a while, but its application has recently become increasingly important. This is due to escalating capital costs, intensified market competition, and the integration of artificial intelligence in go-to-market strategies and technologies, all of which are disrupting the conventional formulas for growth. Bernie emphasized this stating that, “The traditional approach to driving growth is dying hard. The old formula of simply hiring more salespeople, increasing quotas, or increasing marketing spend is no longer sufficient. Instead, there's a shift towards understanding how various functions within a company can collaborate and collectively contribute to revenue generation." Speak to any investor, CEO, or growth leader that is accountable for revenue in the post-pandemic era and they will confirm that the “growth at all costs” is no longer a viable playbook.

While revenue operations is still a relatively new term, conceptually, it has been around for quite some time. The real challenge lies not in understanding its principles, but in its application, which often goes against the traditional grain of organizational functions and structures where companies operate in silos.

Traditionally, companies treat each go-to-market function separately and independently which creates misalignment with the overall objectives of the company. Here is how it commonly looks within companies we have worked with:

• The marketing team is responsible for delivering marketing qualified leads (MQL’s) that do not convert to pipeline and marketing is tasked with generating a higher volume of low intent leads.

• The sales team is responsible for new client acquisition, their quotas are developed based on flawed forecasts, and their incentives are centered on closing deals as quickly as possible.

• The customer success team is responsible for providing support and service to existing customers, making them a reactive, non-revenue-generating cost center within the organization.

This approach is flawed for one major reason. It looks at each of the revenue drivers within a business in isolation and independently of one another. This is exactly what revenue operations seeks to address by considering how these functions all contribute to growth. As Bernie puts it, “Revenue operations is about connecting threads among all functions involved in the customer journey. It also implies a customer-centric approach. It involves a holistic view, encompassing not only the functions directly interacting with the customer, such as marketing, but also those that traditionally don't, like product development. This perspective ensures every aspect of the customer's experience, from discovery to onboarding and retention, is considered. Failing to not look at it holistically, you're really doing yourself a disservice because you're not really addressing the customer experience.

Revenue Operations is a Board-Level Priority

Revenue operations is a board-level issue that requires top-down leadership because it directly impacts their primary fiduciary responsibility to mitigate risk and grow long-term equity value. This is because organic growth, and the commercial assets that create it are essential to value creation. This is not a new concept, in fact, you will hear us preach this pretty regularly at Slate Point Partners. When asked, "why should CEOs and managers care about revenue operations?” Bernie summarized it very succinctly, “it’s their job.” Going on to say, “As a company, you want to feel highly confident that you are going to hit your one, three and five-year revenue projections. If you can’t do that, then your job is at risk.”

Needless to say, our discussion is framing this around revenue operations, but at the end of the day, it’s really about growth leaders having the confidence that they are going to meet the financial outcomes they are tasked with achieving.

Bernie summarized this nicely by saying that investors, CEO’s and growth leaders understand that the valuation of any company is being driven by a multiple on their top-line, bottom-line, or some combination of the two. If you are not tracking towards optimizing those two things, and you don’t have a high degree of confidence that you're well positioned to achieve those goals, then you are constantly having to play defense and be reactive. In football, they say that defense wins games, but in business, if you are having to play defense 85% of the time, I guarantee that you are going to lose. This is where the concept of revenue operations, and our Quality of Revenue assessment model, comes into play. It’s giving you the ability to be proactive and take action before the results manifest on your P&L.

Implementation Requires Top-Down Leadership

Any business can unlock more growth and value by improving the return on its commercial assets. Most CEOs have a large opportunity to generate more revenue and profits from these commercial assets. Implementing this approach effectively, however, requires top-down leadership.

Successfully implementing this playbook is a top-down initiative that involves concrete action items, deliverables, and a commitment to documenting processes and setting up robust systems. This means support has to come from the CEO and C-suite leaders, and they must be fully vested in this strategy, recognizing that without it, the company risks falling short of its revenue and profitability goals. Without this buy-in, companies risk falling into the old way of doing things.

A common problem is that executives cannot agree on the causal chain of events that leads to revenue growth and future cash flows. This leads executives to have no financially valid way to make growth bets and tradeoffs and optimally allocate resources across growth alternatives. It also makes it difficult to build a business case and management consensus on the capabilities that can create the greatest value to the organization.

In high-tech companies, the challenge can become particularly pronounced where existing departments like product development or engineering dictate the company’s direction and everyone else must fall in line. This can lead to resistance to integrating new operating models that consider the whole system.

This is why leadership commitment is pivotal and requires active engagement to steer implementation and ensure that every team member from sales to product to customer success is aligned with the company's goals. Bernie shared an example of how incentives play a big role in successful integration. “In my experience, uniting revenue-related teams around a single metric, such as aiming for a specific cost per customer acquisition, can significantly enhance motivation and clarity. I've applied this in several younger companies by extending commission structures to roles traditionally not associated with direct sales incentives, such as customer success, sales operations, and marketing operations. This is important because they signify recognition and reward for contributing to shared revenue goals. This strategy ensures that everyone, regardless of their department, is invested in the company's collective success.”

How Quality of Revenue Can Help Companies Think Holistically

This discussion around revenue operations would be meaningless without the ability to execute. To be successful, investors, CEO’s and growth leaders need to work directly with the sales, marketing, customer success, and operations leaders within their companies to drive more scalable, profitable, and consistent growth. They must find ways to leverage data, systems, insights, and process improvements to unlock more revenue growth from customer relationships, selling channels, and markets they already have access to.

The good news is that they can get better at creating value and capturing it by understanding the underlying value levers that generate revenue growth. Doing this systematically, in a data-driven and empirical way requires a standardized proven framework.

The QoR assessment model is built on the premise that sustainable revenue growth is significantly influenced by internal operational levers and functional drivers. These include, but are not limited to:

• The alignment of the commercial teams, systems, processes and operations that support the full revenue cycle across people, product, processes, and technology;
• The robustness of the core functional capabilities in marketing, product, and revenue cycle management;
• The strength of growth leadership and the growth strategy, planning process, and culture they have instilled;
• The maturity of core operational capabilities in pricing, analytics, performance measurement, and customer experience management.

Through a comprehensive evaluation of 50 distinct criteria across 12 core operational domains, the QoR model offers private investors a granular view of a company’s revenue generation ecosystem. This assessment facilitates the identification of potential gaps in execution and strategy alignment, thereby enabling targeted interventions for improvement.

Until next week!