The RevOps Pyramid
Process > People
Consider the following scenario: a company hires a new VP of Sales. This new VP works for the company for a year or so with mixed results. Before the two year mark, that VP of Sales is fired because they did not produce the desired outcomes. That summary of events is quite common in the world of RevOps, but why?
The short answer is because most companies simply do not do RevOps well. To be more precise, though, people are the result of process, and most companies do not have the correct process in place. Most companies were originally constructed in the mold of an upside down pyramid, and are now teetering perilously close to disaster. This is, unfortunately, the situation most new employees walk into.
The RevOps Pyramid (Common)
For many companies, their genesis does not involve a dedication to the science and analysis of revenue flow. In short, many companies lack a firm foundation. A very common founding structure is one of an inverted pyramid.
This inverted pyramid is the result of a company making the product its sole foundation. To get off the ground, the founders simply sell this product or service. Once that process gets going, a sales team, led by an account executive (AE), is formed.
A repetitive sales pitch, usually in the form of a PowerPoint presentation, is then created. On top of that comes price standardization, forecasting what will close, and comp plans.
Comp plans produce quotas. Soon, more dashboards are needed and the business and revenue team members grow with the hiring of additional AE’s and a sales operations professional.
Sitting on top of all of this comes training and playbooks (to attempt to create a repeatable process) for the AE’s, the hiring of SDR teams for prospecting purposes, the acquisition of a sales enablement platform (SEP), and finally database enrichment to have better lists.
The upside down pyramid has been created, and it’s not stable. The building blocks are out of whack.
As an example, if an AE is not performing well, that “brick” essentially falls off and puts the entire structure in danger of failing (i.e. org chart nightmare). At this point, consultants are needed to prop up the system and prevent it from collapsing.
The Hire/Fire Tactic
This, in turn, creates another inverted pyramid. The foundation of this pyramid is the hiring and firing of new people. As a result, a form of superstar culture emerges where individuals dictate the process.
Stacked on top of that are tools, then training, then enablement. At the very top of this pyramid sits process, which is the complete opposite of what it should be.
For RevOps professionals, this setup is a nightmare because here the process actually matters less than a single person, especially those individuals who are top performers, at the bottom. To fix this, a complete deconstruction is necessary.
The RevOps Pyramid (The Change)
A stable pyramid is necessary for growth, and stability comes from having process be the foundation. For GTM motions there is a data model, and that data model creates a process where we can, in turn, answer specific questions. On top of the process are tools. The ability to pick the right tools enables the team to execute properly on the GTM motion.
Then, based on all of that, the organization of the sales team can become a priority because you then know your GTM structure and what needs to be measured. Based on what needs measured, you then know how many sales people you need based on conversion ratios.
When process is the base/foundation of the pyramid, it enforces the idea that people are the result of process.
A Scenario Revisited
Returning to the scenario mentioned at the beginning, that VP of sales failed because of the flawed process in place. That VP was likely not trained properly, the ramp time was probably insufficient, and the proper playbooks were not available. The process, not the person, failed. But since it is easier to fire a person than to change a process, it is a common scenario.
RevPartners CRO, Matt Bolian, sums it up like this: “People are so quick to fire, that’s why we have 18 month averages for VP’s of Sales. You know how long it takes to validate a GTM motion? 18 months.”
When a revenue operations team structure is aces, it enables a business to then focus on small details in key areas. Don’t think small changes can make a big difference? Think again.
Small Changes = Big Differences
The average cup of coffee at a drive thru costs about four dollars. In a vacuum, that four dollars doesn't seem like a lot of money. Yet, if a person were to eliminate that seemingly negligible expense from their daily habits, the compound effect of that savings over weeks, months, and years would be huge. Pennies in the bank today equal dollars in the bank next week.
The concept of RevOps lift is very similar to that example. By making only marginal impacts on specific conversion and time rates/ratios, a company can produce exponential and compound impacts on revenue down the line. As a note, RevOps lift can only occur within the framework of the business model, the data model, and math model.
RevOps Lift Example
As an example of how small tweaks to individual processes within the revenue journey can result in large impacts to revenue over time, consider the following:
A company has:
- 100 leads
- C1 of .3
- C2 of .2
- C3/C4 of .2
The end result of this is an ARR of 12k (ACV was 10k)
By making only very marginal gains on some of these conversion rates, their ARR can double:
- 100 leads
- C1 is .35 (instead of .3)
- C2 is .24 (instead of .2)
- C3/C4 is .25 (instead of .2)
The end result of this is an ARR of 25k (ACV was 12k)
That same company, with the same number of leads, just doubled its ARR with seemingly negligible conversion ratio improvements. The lesson? Don’t sleep on depositing pennies in the bank.
Need Help Restructuring?
Is your RevOps pyramid inverted? Maybe non-existent? Whether it’s time to restructure or build from scratch, RevPartners is your go-to RevOps team. We have a maniacal drive to improve anything we are given and create order from disorder with pinpoint precision. Let us build for you!