“Tomorrow’s dangerous idea becomes today’s orthodoxy which becomes yesterday’s cliché.”
The more SaaS and subscription firm CFOs I speak with, the more the notion of building a revenue operations team has been coming up. They created sales ops to handle pipeline management, and marketing ops to manage the funnel, now with the rise of subscription models, revenue operations is becoming the team to attack the unique priorities that come from this type of business.
With the amount of investor capital continuing to come into the market, most spaces are attracting a host of companies, just look at the number of firms in account-based marketing, artificial intelligence, drones, and many others. That critical time in Series A & B of building a product that solves big customer problems is now followed by the equally tense transition to Series B & C to building a billing model that allows potential clients to try, learn, and expand their usage, by making yourself easier to work with than your competition.
The tension here comes from balancing flexibility with automation. And this manifests itself in several ways:
- How do you quote in a consistent way?
- How do translate what the client is buying to the billing and operational system without leaving data entry up to interpretation?
- How do you get a holistic view of all the potential ways you could help that customer and translate that into upsells and renewals?
- How do you make controlled Performance Obligations in what you sell, so that you can deliver and recognize the revenue?
- How do you forecast on those billings, revenue, and cash to be able to fund the future growth of the company?
I hosted a discussion on all of this with Pete Kazanjy and Tony Gonzales. Pete is a serial founder and seasoned early stage SaaS executive, advisor, and investor. He also founded and runs the canonical invite-only nationwide sales operations and management “salon” (The modern sales pro salon), featuring 3,000+ members from a who’s who of sales operations, enablement, management, and leadership from leading sales organizations. Tony leads sales operations here at Sage Intacct with a unique insider view on how we have scaled in handling this.
The goal here is how do get the right product at the right price to the right person, with a focus on giving sales enough flexibility to package the deal to win, with finance getting a contract that is clear on performance obligations and revenue determinations. If you are not proactive on the communication on ‘what is a good deal’ and how to quote it and bill for that good deal, then finance gets seen as being deal preventers and sales gets viewed as cowboys.
Pete made the good suggestion that you start with what is the ideal quote, and build the swim lanes on options and exceptions, to whatever you are selling, be it user, usage, project, or volume-based. Then create the checks and balances on the quote building between rep, management, and ops to build that repeatability and predictability.
He went on to say that setting up the contract correctly up front is what enables building the long-term revenues by being able to see and set-up upsells, upgrades, and renewals. From his experience, being proactive with sharing the information across the organization not only increases sales, it allows you to reduce churn, which is a big factor of enterprise valuation. The way to achieve this is putting rules into the pricing engine, this avoids rep error on over-discounting, and other errors that can occur from commitments.
Tony added that having the native integration between CRM/CPQ system and the financial system reduces the errors on data entry, ensures understanding on contractual and performance obligations, and speeds the path to provisioning and revenue recognition. It also allows you to build the rules up front of how you want to structure the contract. As he shared,
“Automation is the number one way to avoid the risk of error.”
Where the puck is going in the marketplace is having a Contract master record that takes the order information out of Salesforce.com, then does the billing, upsell/renewal, revenue recognition, and forecasting, that the RevOps team can use automate and scale. In conjunction with our Platinum partnership and 10 years of native integration experience with Salesforce, Intacct has built this needed and innovative workflow for SaaS and Subscription companies. Many of the current Unicorns and Forbes Cloud 100 firms have chosen Intacct to scale upon, in fact, Intacct’s customers have raised over $11.3B in funding since 2010. Category leaders like Marqeta have reduced the time to create and process new billing scenarios by 80%, even as they double sales.
RevOps is quickly transitioning to becoming today’s orthodoxy on how to best manage the contract to differentiate through billing, increase CLTV through customer insight, and maximize valuation through proper revenue recognition and cash management. Being proactive in how you want to monetize the buyer’s journey, and talking that through as an extended team in the best recipe for success. That automation and integration across the revenue lifecycle gives you the efficiency and scale you need to win your space.
Recommended Next Read
Outcome Metrics: The Unsung Hero of Fundraising Season