Doug Davidoff: The Revenue Acceleration Framework

The Revenue Acceleration Framework

When there’s confusion, people don’t change.

Clayton Christensen, once said: “In business strategy, the new game begins before the old game is over.”

The companies that struggle to gain traction after switching to the new game are the companies that are still trying to play the new game by the old rules.

Despite all of these investments designed to “increase efficiency,” the cost of customer acquisition kept rising as the sales cycles continued to get longer.

The dominant approach to business today is still more, more, more. Even outside of business, we’re obsessed with speed. But we’re actually conflating size with scale and speed with velocity. Speed is a measurement of how fast we’re going, but it’s directionless. Velocity is a measurement of progress. It doesn’t matter how fast you’re going if you don’t get to your destination.

Companies sink money into tech as a means of achieving growth. Growth is a common goal of any company, but growth is not equal to scale. Scale is generating growth with more predictability at a lower unit cost — capturing more for less.

Thinking, If it still works, it can’t be that inefficient. The thing is, if you jumped off of an 80-story building, you could convince yourself you’re flying for the first 79 floors.

When people get stuck doing more with more instead of more with less, they end up with twice the risk and only a fraction of the results they should be getting.

GE has the ability to issue billions of dollars of bonds at insanely low-interest rates. The game they’re playing is fundamentally different than the game a mid-market company is playing.

The Revenue Acceleration Manifesto

Jack Welch, CEO of GE that led the company during their high growth days of the 1980s and 90s, once famously said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

I’ve discovered five major trends of today’s game that can reliably determine its leading players.

1st Trend: Markets Are Noisier, and Buyers Are More Confused. According to information published by Gartner, a technological and research firm, 55 percent of consumers surveyed say they encounter an “overwhelming amount of trustworthy information.” But 44 percent of consumers also struggle with the fact that the information supplied by various companies all appear to be trustworthy, yet highly contradictory. The point is that being competitive is not enough to win. In poker terms, the fish have left the game, and everybody left at the table is a pro. It is no longer enough to have a “strong” sales process or a “powerful” message. It’s not enough to be loud. You’ve got to be clever and break through the noise. In the future, insight will be the greater differentiator between the winners and losers, not sheer competitiveness.
2nd Trend: Sellers Are Less Present. Nowadays, and as often as not, business has no decision-makers. The way initiatives get triggered and managed is more complex than ever, and sellers are less present at critical points along the buying journey. Consensus is also becoming the dominant form of decision-making on the part of companies. Additional research from Challenger Inc. shows that sellers only participate 11 percent of the time in the problem identification phase. The buyers want sellers there at the point of highest value, at the problem identification phase, but a vast majority of sellers just aren’t meeting them there.
3rd Trend: Consensus-Based Decision-Making Is the Dominant Buying Style. If you take a look at who’s directly involved in making decisions for B2B purchases, the number of direct influencers has increased by 25 percent, growing from an average of 5.4 to an average of 6.8 direct influencers, all with different and often conflicting priorities and objectives. The JOLT Effect, authors Matt Dixon and Ted Mckenna show that with the rise in direct influencers, 40 to 60 percent of B2B processes nowadays end up in a stalemate. No decision gets made. Buyers in every market are saying, “I’ll go with the safest option since I don’t know what the hell I’m doing.”
4th Trend: Companies Lack the Right Data (and the Right Questions). One of the major misconceptions in business is the idea that tomorrow’s results will tell you if today’s decision was good or bad. In reality, it’s going to take quite some time for you to know the impact of your decisions. What I find is that companies today are overwhelmed by the amount of data available to them. It’s not even that companies can’t answer the important questions because of a lack of data-handling capabilities. The real problem is that companies aren’t asking the right questions.
5th Trend: Sales, Marketing, and Customer Success Are Stumped by Friction. The average salesperson spends approximately 30 percent of their time actually selling, and they spend roughly 40 percent of their time dealing with administrative tasks. Every time a salesperson is having to do an administrative task, it creates friction. I call it the friction tax.

Good Enough Isn’t Enough Anymore.

The first key shift in mindset should happen between speed and velocity. Speed is a measurement of how fast you’re moving, but velocity measures how quickly you progress toward a specific point.

Another shift comes from utilizing big data to little data. Yesterday’s data was about giving you an overview of everything, an answer to everything. Today’s data is about getting you to ask better questions and operate under better hypotheses.

The third shift is moving away from bloated tech. This is what I call the shift away from redundant horizontal tech stacks to tight, purposeful vertical tech stacks.

Basically, the simpler the tech stack that can get the job done, the better. The next shift happens between efficiency and vectors.

Today’s game is not just about efficiency. It’s about aligning your vectors and orchestrating all of the main contributing elements to achieve great outcomes. This leads us to another important shift, the shift away from silos and toward orchestrated action.

When it comes to orchestrated action and growth, there are three ways businesses go about it: the old way, the new way, and the right way.

The last mindset shift we’ll cover here is the shift away from behavioral thinking and toward systems and design thinking. Historically, sales and marketing were approached as behavioral departments. But the winners of today and tomorrow are going to excel at system and design thinking.

The biggest winners in growth and revenue acceleration are the businesses that are able to manage and eliminate friction from their already existing framework.

A framework is like a universal translator of productivity; it keeps everyone moving in the same direction and oriented toward the same fundamental goals.

The Navy Seals has a simple mantra that goes: Slow is smooth. Smooth is fast. The business world is addicted to fast; it’s obsessed with gaining more speed without a sense of direction, or velocity.

Any change initiative that lacks structure will inevitably fall into the chasm between the strategy of a company and its execution, widening the distance between intended and actual performance.

If victory is your destination, then change is your obligation, and the Revenue Acceleration Framework is fundamental to your winning strategy.

Revenue Operations

I discovered that the biggest companies often weren’t the ones with the best ideas.

Success is also about luck and the ability to catch the right opportunities at the right time, too. How you market is just as vital as what you market.

A good idea or a good strategy is nothing without the plumbing to bring it into reality and sustain it.

One of my favorite quotes of all time came from the mind of General Omar Bradley: “Amateurs talk strategy. Professionals talk logistics.” Now, what does that mean in terms of plumbing?

Formally, revenue operations is the strategic coordination of all market-facing, revenue-oriented systems, processes, and activities designed to increase velocity, optimize throughput, and reduce friction to solve for the customer and achieve revenue objectives.

You can think of this another way: Every business is a theater production. There’s a front stage and a backstage.

Revenue operations is managing the ambiguities, the conflicts, and the gaps that exist within the processes and methodologies for how companies execute their business model, successfully deliver their value proposition, win and retain customers, and generate revenue.

Revenue operations is not corporate strategy. Revenue operations is not customer acquisition. It’s not sales. It’s not demand generation. It’s not the marketing function.

Brian Halligan, the former CEO and current Executive Chairman of HubSpot, said at the 2017 Inbound event, “It’s never been easier to start a company. But it’s never been harder to scale.”

The quantity and quality of competition is greater than ever before.

In business, the ability to understand and execute upon a framework with consistency will differentiate between a quick failure and continued success.

Many years ago, management consultant and author Peter Drucker said, “Businesses rarely go out of business because of starvation. Indigestion is far more likely the cause.”

Entropy is always increasing; that’s the second law of thermodynamics. In terms of a natural organizational dynamic, that entropy is disorder and randomness. In business, disorder means complexity. As a business grows, or even sustains, complexity is always increasing.

That entropy, that complexity, is what we often call friction.

The job of revenue operations is to solve as much of the problem and eliminate as much of the negative friction and complexity as possible before it gets to execution. Strategic revenue operations does all of this through the focus on seven disciplines, which can be further sorted into two groups. The first four disciplines of RevOps concentrate on the day-to-day, week-to-week focus of revenue operations. You might call them the tactical components of revenue operations. The last three disciplines are strategic components.

Database Management Data is crucial.
Process Compliance and Optimization What are the processes used to manage the customer/user experience? Revenue operations ensures that processes are being followed and that the systems, tools, and processes are being used as intended. Understanding the failure of compliance is crucial to optimization.
Design, Align, Manage, and Optimize the Tech Stack. Maintenance is a big part of management and optimization of tech.
Territory and Compensation Management.
Data Science, Analytics, and Metrics. “We’re drowning in data, yet starved for knowledge.” Getting the right data in the right way at the right time and ensuring that the right people receive it (and in the best manner possible to utilize it!) is increasingly a competitive advantage.
Predictability. One of the key components of a successful revenue operations team is building predictability into people. Forecasting and ongoing assessments and adjustments are an inevitable part of structuring your business’s strategic revenue operations and framework. The structure is the underlying system.
Behavioral Science and User Experience. Why do our people do the things that they do? Why do our customers do things the way they do? An underlying principle of business is to differentiate or die. Difference is a form of positive friction. It’s high-value friction. The thing is that sales and marketing is all about the communication and influence of human behavior, yet very few people in these spaces actually embrace behavioral economics or behavioral science. If you want to influence an effective, positive outcome, you must pay attention to and account for how humans actually behave, not how you think they should behave.

Tactical revenue operations will improve the organization, though it will be incremental improvement. You will likely not attribute any major change in the organization to tactical revenue operations.

Strategic revenue operations is the ultimate strategic decision, and it is a conscious one. It’s far more than putting an admin on function-coordinating activities or bringing a group of people together. It requires a strong strategy.

From the book, Good Strategy, Bad Strategy by Richard Rumelt, a strong strategy has three elements. First, a strong diagnosis that clearly defines the challenge. Second, a guiding policy which, like the guard rails on a highway, directs and constrains action in certain directions without defining exactly what shall be done. Third, a set of coherent actions that dictate how the guiding policy will be carried out.

There should be constructive tension between revenue operations and the disciplines that it is optimizing and aligning. Sales, marketing, and success are focused on the force side, while revenue operations is managing the side of consistency and friction.

For revenue operations to be at its most effective, it cannot be subordinate to the sales, marketing, or success functions.

Successful strategy is about managing trade-offs.

When you are considering the efficacy of your revenue operations, remember that its role is to manage consistency and mitigate complexity.

The biggest mistake people make is implementing revenue operations without having the organizational commitment to the operations’ purpose.

Remember that friction is a tool; it is neither inherently good nor bad. The goal of revenue operations is not to eliminate all friction. The goal is to eliminate friction where it is of low value and add it where it has higher value.

Use revenue operations to optimize your business, not the operations itself.

Why Frameworks Are Important

When Dharmesh Shah, the co-founder and CTO of HubSpot, asked Elon Musk, “What’s the most important thing you would do to successfully grow a business?” Elon’s response was simply, “Align your vectors.”

With additional people and additional inputs, diversity increases and alignment decreases. Alignment and diversity have an inverse relationship. Therefore, growing a business is an ongoing act of maintaining stability in an unstable environment.

Frameworks give us something to align ourselves against so we all know we’re operating at the same velocity and the business as a whole is headed in the right direction.

The problem with words is that words are absorbed linearly. If the words in a sentence are out of order, you have a tough time deriving the intended meaning of those words. But a picture, a framework, is different. It presents the whole as one.

Companies will often attempt to align themselves around their journey, rather than their destination. This puts a drag on revenue growth.

They make the mistake of fixating on technical details in how they get to the waypoints of the journey, rather than the destination.

The successful companies were aiming to get more juice for the squeeze while everyone else was just squeezing harder and harder.

We get tied into what we’re doing, and forget why we’re doing it.

We tend to look at products through the lens of “buying” or “doing” when what we really should be thinking about is, “Why are we doing this?” and “What’s the job being done here?” That’s the important perspective shift central to the Jobs to Be Done theory.

Go-to-Market Strategy

Andy Grove, who went on to become the CEO of Intel and the man largely credited for leading the company’s transformation into the juggernaut that it is today, met with Moore to discuss what decisions Intel would make to adapt to the shifting market. As described by Grove in his book, Only the Paranoid Survive: I asked Moore, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Gordon answered without hesitation. “He would get us out of memories.” I stared at him, numb, then said, “Why shouldn’t you and I walk out the door, come back, and do it ourselves?”

An effective go-to-market strategy should sufficiently answer the following five questions:

What is your business model and how can you best exploit it?
Who do you want to be a hero to?
How does your value proposition stand out and resonate with your customers while distinguishing you from your competitive and alternative options?
How will we position ourselves in our selected markets to achieve the right message fit that resonates with our target market to stimulate meaningful conversations?
How will we profitably acquire and retain customers and revenue?

A common myth of strategy is that it predetermines action.

You won’t know if it’s the “right” strategy until after the fact.

The reality is that you can only be the best choice for a segment of your addressable market. The more time you spend trying to win over just anybody, the less distinct and the less special your business becomes.

I’ve also read somewhere that a bad strategy that’s revised constantly is better than a good strategy that’s never revised.

As long as the end point is defined and the freedom to make those minute adjustments is given to pilots and the people in your organization, everyone and everything will arrive at their designated destination.

The Economic Model

Sales and marketing is a unique discipline in business because it’s an open-loop system, meaning you only control a portion of the system, the market controls most of it.

Your go-to-market approach is the start of your business’ revenue acceleration.

Without defining your go-to-market approach, you can’t increase your velocity. You can’t align your vectors because there’s nothing to align towards.

The four key components of the go-to-market approach — the economic model, the go-to-market strategy, the sales model, and the messaging, positioning, and narrative.

An effective economic model focuses on the important contributors and constraints that increase the predictability and success of your efforts. In other words, how does your company transform revenue into profit and enterprise value?

The first number that I want to define for you is referred to typically as ACV or ASV. This number is the “all commodity value” or “average sales value.” On average, how much revenue does a customer generate in a year?

The next step in understanding the economic model is calculating your gross margin or gross profit.

While I firmly believe you should look at your customers as the individual people and entities that they are … from an economic perspective, what you’re acquiring is an asset.

You’re investing in your sales, marketing, and customer success efforts to acquire a revenue-producing asset.

Churn is the percentage of customers that you lose per year. So, if you’re in a recurring-revenue business (like a subscription service), then you would need to track churn.

Repeat purchase rate is a term that we use when we have more of a transaction business or programmatic sale. What percentage of your customers will repeat their average purchase pattern from you every year? That percentage would be your repeat purchase rate.

Churn measures loss and repeat purchase rate measures retention.

There are a lot of different ways to break down acquisition cost, but the easiest way to understand it is to answer the question: How much money do you spend to acquire a customer?

The biggest barrier to growth acceleration that I see in companies, especially those that are not funded by outside sources, is that they’re not actually investing enough money into customer acquisition.

What the best businesses do is establish a target range where they keep their cost below a certain percentage and above a certain percentage.

The first thing you must do to understand your demand generation is define your lead.

Like with the greater economic model, the demand generation model has its applicable ACV, churn, and repeat purchase rate. It also has three additional terms: fit rate, closing rate, and win rate.

Fit rate. How many qualified leads need to be touched to get to the opportunity where someone would buy from you?

The last step is buying, which brings us to the closing. This number reflects the distance from your penultimate step to the last step. From the proposal to the buy. If I need to make three proposals to get one buy, my closing rate would be 33 percent.

The win rate is what takes me from the very first step to the very last step, and it’s basically: Fit rate × Closing rate.

When you understand your demand generation model, you can run different calculated scenarios to establish a hypothesis, to be able to test what you’re doing, and to guide the actions that you’re taking.

My favorite quote of all time from Joe Lewis, who said, “Everybody wants to go to heaven, but nobody wants to die.”

The Sales Model

Your sales model, or sales structure, is the element of your go-to-market approach that gets at the machine that enables you to generate customers and generate revenue. There are basically three types of sales models.

The first sales model is what I call the self-serve (or unassisted) model.
The second is the rep-assisted model.
The third is the rep-directed model, where a sales rep is leading the process.

How you can better utilize the people in your organization. Far too often, we’re assigning people to do things even when they’re not the best choice for the task. The second part of the sales model is the two angles of new business and existing business (or the land and expand, respectively). A land portion of the sales model is where you have salespeople focused on new business and new customers only. The other reps responsible for managing customers and growing that customer base belong to the expand side.

So the first choice question you need to ask yourself about your sales model is, “Are you a self-serve, rep-assisted, or rep-directed?” The second question should be, “Are you a land or land and expand?”

The third aspect of your sales model — the structure.

For the sales model, we basically have four structures, and the first of those four is what I refer to as the traditional structure.

Within the traditional structure, sales reps are “full cycle” reps. They handle things from the beginning to the end. As companies grow, they tend to become territory-based or product-line-based operations, and regions begin to develop.
The second form of sales structure is the specialized structure. Here, the roles of sales are broken up. The most common specialization of roles happens when an organization is differentiating between generating new business and managing existing customers.
Larger companies, normally those dealing with more complexity, will trend toward matrix structures. In a matrix organization, roles are viewed through the lens of vertical and horizontal responsibilities.
The last structure is what I’ll refer to as an integrated structure. That’s where you’re actually bringing together multiple elements from the previous three structures.

The advantage of the traditional sales structure is that it’s simple. It’s the least expensive model.

The specialization structure allows you to increase productivity. But there’s a major trade-off: For a purely specialized element to work, there will be an increased volume, so you’re also increasing your cost.

The matrix structure can handle more complexity because of its horizontal and vertical role specialization. It is a structure that allows you to orient and align with your customers better.

With the integrated structure, its biggest advantage is that it is the most robust, most resilient structure for any organization. If scaling growth and sustaining growth is the direction you want to go, this is the structure that can withstand the high level of complex demand generation.

Messaging, Positioning, and Narrative

Do you know what customers call the effort that everybody in your market is expending to catch their intent to buy? They call it noise.

I realize that the people and organizations who are really different, never seem to have to tell people that they’re different.

Your messaging, positioning, and narrative will determine whether people see your business as a resource to achieve their desired outcomes, or as just another bit of noise.

If I had ten good, qualified prospects for your business and all ten prospects made the right decision, the right way, as defined by you, how many of those prospects would buy?

Great companies define and align behind a very clear message, something that I like to call a “point of view” message.

A clear point of view message is one that focuses on your prospect’s world. Your message should make a connection to an important or critical issue for your prospect. It should challenge their thinking.

The five components of a strong message.

The first component is simplicity.
The second element of a powerful message is it’s emotional. If you want to sell, then you should be telling the customer’s story, not your own.
The third element is that the message is concrete. Make a promise. Be clear. Avoid allusions to promises that you can’t keep, or vague platitudes.
The fourth element is context.
Fifth, a strong story is polarizing. It not only attracts the right people, it repels the wrong people.

Every great narrative has a hero. Every great narrative has a guide. There’s always a problem or an enemy, and it ends with a transformational outcome.

What Is Structure

The objective of strategic RevOps for an organization looking to scale growth is to be as purposeful as possible and to define the elements of your structure so that you increase the likelihood of people making decisions the way you want those decisions to be made.

According to Gall’s Law, a complex system that works is invariably found to have evolved from a simple system that worked. The inverse of that is also true. A complex system designed from scratch to be a complex system will never work. It cannot be made to work.

From a market-facing, revenue acceleration perspective, there are three primary elements of your structure that you need to focus on. Those elements are the system design, the tech stack, and the scoreboard.

It turns out that managing behaviors is not an effective approach to producing sustainable, repeatable, and scalable outcomes.

We like to think we’re in control of what we do. We like to think that our conscious minds are issuing orders. But really, we’re just retroactively rationalizing our impulses and subconscious motivations.

“Humans are not logical creatures who sometimes feel; we’re feeling creatures who occasionally think.” — Brené Brown

“Structure” is not a group of parts, but the bigger picture — the dynamic between system design, tech, and the scoreboard is what creates the whole.

Structure is the invisible hand that guides all actions. Structure creates incentives, and incentives drive behavior.

System Design

The goal of a strong system design is knowing when (and how) to solve your problems upstream and downstream. In other words, know the difference between fire prevention and firefighting, and have both.

The traditional approach to sales organizations is designed to produce inconsistent, disruptive, all-over-the-place outcomes with lots of surprises.

A well-designed system frees your salespeople to perform at their best instead of becoming another thing to be actively managed and accounted for by sales.

The second law of thermodynamics says that entropy is always increasing.

You can say that friction is the entropy of business. As your business grows, or simply survives, it will pick up more complexity. That complexity creates friction.

When growth is a primary objective, you are basically lighting a match beside the gasoline of friction, multiplying the friction you must manage.

The three elements of HubSpot’s flywheel are as follows: Attract. Engage. Delight.

Historically, executives have only been able to work on one part of the flywheel to increase its momentum. Their only play was to increase the force to push the flywheel faster.

What can I do to reduce the friction in the flywheel? Reducing friction provides a high degree of leverage to your organization.

The latest research from CSO showed that salespeople were spending just over 30 percent of their time actually selling.

Based on my company’s research into the efficacy of reducing friction, the time that a business’s salespeople spend selling should ideally be somewhere between 37.5 and 45 percent.

The system we will be referring to here is the design of all of the elements that are impacting the people in your organization as they move forward.

Complicated refers to problems or situations that are difficult to address; but they are addressable. They’ve got rules, recipes, and heuristics. Oftentimes, their solutions involve algorithms.

Complicated issues and complicated systems are typically independent. They’re closed loops.

Complex problems and systems, on the other hand, involve too many interdependent issues, unknowns, and feedback loops to be perfectly understood.

Good system design requires us to differentiate between the two; a business is a complex ecosystem. We only control a portion, never the whole.

Complex problems need to be managed, because complex problems are never actually solved. The ongoing nature of complex problems is also why the work of growing an organization is never truly done.

An effective system design maximizes value creation within the constraints that exist for you and your organization. It’s a forever ongoing process that has four recurring steps to it.

Step one, empathize. You cannot enhance, iterate, or improve your systems without a strong foundation of empathy.
Step two, hypothesize. To sustain improvement, you must be able to build a strong hypothesis about progress. This requires divergent thinking.
Step three, analyze. With your hypotheses laid out, the next step is to analyze potential approaches and determine which ones fit best to get the job done.
Step four, synthesize. Synthesizing is about bringing convergent thinking to the forefront. Step two was about divergence. Now, in the fourth step, we’re bringing things together.

Through the entire system designing process, you will also be managing three core trade-offs.

The first one is feasibility. Right off the bat, you should ask yourself, “Can we do this?”
The next trade-off is viability. “Will we be able to sustain this?”
The last trade-off is desirability. “How disruptive will this be?”

The Tech Stack

Your tech stack and tools will not be the reason you win. However, your tech stack is still important to integrate into the structure you build, so we are still going to discuss the five main principles and components of an effective tech stack.

The Five Principles for Implementing an Effective Tech Stack.

The business process must drive the technology, not the other way around.
The simplest stack that meets the organization or system’s needs is the best tech stack.
Automation is the byproduct of a good process, not the objective.
If you can’t do it manually, you can’t automate it.
Don’t buy technology; hire it. Focus on the Jobs to Be Done. Solve for the whole (the business).

Don’t buy technology. Hire it. Never forget that technology, despite what the providers say, is not a solution. At best it’s an enabler or an accelerator for a solution. Here’s a simple way to define the job/problem. Just answer these four questions: What is the outcome that you desire? What is the gap? What are the symptoms or indicators? Then, dig into the causes. Is it a people problem, a process problem, or a tech problem?

The most damaging emotion that every tech provider today takes advantage of is the “fear of missing out,” or FOMO.

CRM is the biggest white elephant in the history of tech. It’s estimated that companies spend 4.6 billion annually on CRM implementations.

There are also three core contributors that contribute to poor adoption and poor utilization.

Number one, when you’re implementing a CRM, small misalignments are magnified. Technology is an accelerator. It can accelerate solutions, but it can also accelerate problems.
Number two, inertia is a powerful beast (and we’ve all got day jobs). Remember it is the changed behavior that causes new results, not just acquiring a new tech or tool.
Number three, there’s a difference between the theory and the reality of how things work. When you’re designing systems, you get to do it in a laboratory. But in the real world, things don’t work like they do in perfectly controlled or purely hypothetical environments.

The Scoreboard

As much as I love data, the business world has become obsessed — too obsessed — with it.

Under the auspices of being smart, being scientific, or being purposeful, we throw data and metrics around.

Goodhart’s Law. “When a measure becomes a target, it ceases to be a good measure.”

We humans, even the most conscientious of us, are subject to what’s called the “experience fallacy.” Everyone has an opinion when it comes to what works in sales, marketing, or customer success, because everyone’s got some experience. We’ve either done it ourselves or been on the buyer’s side of it. While these opinions can be important, they’re just opinions. They’re not facts. You see, the fundamental problem with opinions is that they’re based almost exclusively on the experiences and prejudices of the person who holds said opinions.

While I definitely do not think data can tell the entire story, I do think data can tell a compelling component of the story when used properly, when we push back against our experience fallacy.

The only valuable analytic if you’re in a growth motion is the one that gives you the ability to form an intervention.

To utilize data effectively, we need to separate and understand the difference between a lagging metric and a leading metric.

Profit, sales, and revenue are lagging metrics. They tell us what has happened.
A leading indicator is a signal or a metric that looks forward. It is designed to increase predictability of future outcomes and events.

An example of a leading indicator is a metric we use called “meaningful conversations.” A meaningful conversation is a conversation where (1) we learn at least one piece of material information that enables us to personalize, contextualize, and/or customer our approach to the prospect, and (2) both parties (salesperson and prospect) commit to taking a definable action by a specific time.

The most common “scoreboard” in sales is the sales quota. Sales (or revenue) quotas are a foundational element for sales.

I don’t quota my reps on revenue, because revenue quotas are lagging indicators that measure results. They don’t measure causes or contributors.

The “meaningful conversation” is a conversation where the sales rep learns something material about a potential customer that would enable us to personalize, contextualize, and customize our approach. Within a meaningful conversation, both parties would agree to and commit to doing something with specificity by a certain time, and this increased the likelihood of enabling a successful outcome for our customers.

Whenever I’m brought in to assess an organization, its structure, or its system design, one of my two favorite questions to ask is, “Are you winning?” And if the response is, “Heck yeah. We’re winning!” The follow-up question I like to ask is, “How do you know?” How do you know, at the end of the day or week or month or quarter … How do you know if you’re winning or not?

Approach Overview

Work on your business, not in your business.

The largest businesses can afford to work on initiatives rather than exclusively delivering and executing on a day-to-day basis. Smaller businesses simply can’t.

The transformation from a people-or behavioral-driven organization to a structure- and process-driven one requires an identifiable and well-defined approach. This is crucial if you want to be able to sustain growth, let alone scale.

Your approach — your process, methodology, and playbooks — creates the constructs and the constraints you use to align your people’s efforts into momentum and velocity for your organization.

Process

One of the main reasons why processes tend to fail is because they’re too rigid. This is one of the first mistakes most people make when they define their process.

This is in contrast to the second major problem of ineffective processes, which is being too vague.

Both of these situations are caused by the human tendency to view processes from a bottom-up perspective, rather than a top-down perspective.

Although there may be more than one process that succeeds, the ones that are designed too rigid, too vague, or from the bottom-up perspective rarely become part of an effective approach.

So much of what we’ve been taught in sales and marketing is inaccurate on a fundamental level. We’ve been taught that the buyer’s journey is a very linear, logical model. We’ve been taught that it operates like a series of gates. In reality, it’s more like a pinball machine.

People hate making decisions, and there is a good reason why. The word “homicide” and the word “decide” have the same Latin root and mean the same thing? They both mean to kill. When you decide, you are killing other options.

When it comes to closing, our job is not about managing a sale. It’s about managing a decision.

One of my favorite learning models, which I got from The Design of Business by Roger Martin, is something called the “knowledge funnel.”

By having a role in the learning and decision processes and making potential customers comfortable with saying yes or no, we defeat indecision.

When it comes to understanding the buyer’s journey, there are five general stages of the processes that you’ll need to map out for your business.

First Stage: Epiphany. You can also think of this as the pre-epiphany stage. This is where your potential customer isn’t thinking about what you do one way or the other. When it comes to generating business opportunities, humans are far more open to influence when we’re not thinking about something. One of the truisms that I’ve followed for years is: “Whoever controls the ‘oh, shit’ moment controls the market.” Susan Scott, author of Fierce Conversations and Achieving Success at Work & in Life, popularized the phrase, “the problem named is the problem solved.” The epiphany is when the problem is named. When naming problems, it’s useful to remember that there are commonly two types of problems. Bad problems and good problems. I sometimes call them trouble problems and opportunity problems.
Second Stage: Engagement. Once a potential customer starts thinking, “Oh shit, I have a problem,” that’s when they move on to the next phase of the buyer’s journey — the engagement phase. What’s happening in the engagement phase is the buyer is prioritizing.
Third Stage: Intent. The intent phase is typically the shortest phase. If you think of this phase from the perspective of a business, this is when you’re determining if the juice is worth the squeeze. The first level of intent is the decision to investigate the problem. The second level of intent is the commitment to do something about it. You need to be the best and the safest choice for the potential buyer.
Fourth Stage: Selection process. After establishing intent, a potential customer enters the fourth phase, the selection process. You do not win business during the selection phase. You can only lose it. During the selection phase, the buyer is seeking validation, building consensus internally, and narrowing suppliers down.
Fifth Stage: Happiness. The happiness stage is very often what triggers the next iteration of the buyer’s journey. This phase is all about judging. A buyer will inevitably return to their heuristics and judge whether a good decision was made or not. Satisfaction = Perception – Expectation.

Methodology

A lot of people confuse process and methodology for the same thing, and while these two components are strongly related, there is a clear and important distinction to be made. A process represents the value chain; it’s comprised of steps, stages, and/or milestones. Your process defines what you are doing. A methodology is how people move between those steps, stages, or milestones. In essence, process is what you do and methodology is how it’s done. The process is the map. The methodology is the style.

That’s the difference between process and methodology: The 12 notes are the process. The music is the methodology.

Steve Jobs, cofounder of Apple, has said, “That’s been one of my mantras — focus and simplicity. Simple can be harder than complex; you have to work hard to get your thinking clean and to make it simple.”

If you don’t have the methodology, you never know if you’re doing things right or wrong.

The first thing you must do to understand your methodology is connect it to your go-to-market model.

The right methodology for your business’s sales model or economic model is going to be very, very different for somebody else. So, you can’t just copy another winning company; you’ve got to understand your game.

Intent is a powerful mechanism. Engagement + Intent = Purchase.

Intent is pretty structural and, again, you can’t influence it that much. Intent is pretty fixed in any given market, and it’s not very discretionary.

90 to 95 percent of your market isn’t looking to do anything one way or the other. At any given time, only 5 to 10 percent of your market has any intent.

In today’s modern demand generation and modern marketing world, digital marketing prays at the altar of intent. Social media marketing, Google search algorithms — any number of these underlying elements — are striving to identify purchasing intent.

What we see oftentimes when companies are reliant on high-intent markets is discounting and significant margin pressure.

There is an actionable science to growth, and that science is based on three underlying acquisition processes that your methodology should touch upon.

The first acquisition process is what I call engagement acquisition.

The second acquisition, customer acquisition, gets the majority of attention in the world of growth. Like the term implies, customer acquisition is about winning the customer.

Customer acquisition is also frequently conflated with the third form of acquisition — revenue acquisition. Sometimes, when you acquire the customer, you acquire the revenue. But increasingly these days, you don’t. The revenue acquisition process is where you actually generate your revenue; revenue acquisition is about customer management and keeping the asset you acquired that produces revenue.

If you want to scale, if you want to be able to grow consistently, then you need to generate engagement at a higher rate than you’re generating new customers.

How are you generating engagement that turns into intent? How are you turning intent into customers, and how are you turning customers into revenue?

There are five phases inherent in the process of engagement, customer, and revenue acquisition that you should remember when developing your methodology. At Imagine, we call this The D.E.A.L.S. Framework ™:

Discover.
Engage.
Activate.
Launch.
Success.

Playbooks

The playbook brings to light the many factors that need to harmonize with each other to enable success within a game, within an organization. Every person has a playbook; we all have a way that we do things. The problem is, more often than not, it’s in our head.

Is the playbook you’re operating from the same as everybody else’s playbook within your organization? For the companies that want to see sustainable future growth, the answer to that question must uncontrovertibly be yes.”

Much like the failure of processes, the failure of playbooks is caused by the poor implementation of the thing rather than the thing itself, and I’ve identified five main causes for this failure.

The first problem is they’re not built for use.
Reason number two, the playbooks are either too rigid or vague.
The third reason that they fail is that they’re internally focused. Your goal should not be to make a sale. Your goal should be enabling potential customers to make good decisions.
Number four, many playbooks are built with false assumptions. They’re built based on how we want things to work, not on how they work.
The final main reason why playbooks fail is because they’re not built for iteration.

When it comes to effective playbooks, there are three archetypes you could choose from, depending on the game you’re trying to win.

The first one’s what I call programmatic, which is typically a playbook designed for high-speed short cycles.
The second kind of playbook is what I refer to as the “target and cultivate” playbook. This is an archetype designed for a sale that involves more complexity with moderate-to-long sales cycles or decision cycles.
And the third type of playbook is the account-focused or “named accounts” playbook.

The form of innovation your business offers to customers. Continuous innovation is innovation where the benefit that the customer picks up comes without the customer really having to do anything.

Discontinuous innovation is when the customer has to change to be able to take full advantage of the offered benefits.

Continuous innovation moves us toward simpler and programmatic playbooks. Discontinuous innovation moves us toward “target and cultivate” or “named accounts” playbooks.

Execution and Performance

The first game type is what I call the programmatic game type. This game is a one to two on the personalization continuum. It’s the simplest and most common approach. The programmatic game utilizes very little personalization in terms of the messaging, tactics, and underlying processes being executed. The programmatic game looks very similar to broad-based business-to-consumer companies, so it tends to be focused more on the product or service being offered than on unique needs.
The next game is what I call the contextualized game. This game is a three to five on the personalization continuum, and it’s where account-focused approaches begin to separate themselves from lead-centric approaches.
The third game is individualized. This is the most complicated and difficult game to play, rating about a six to seven on the personalization continuum. It takes the contextualized game to the extreme. With this approach, you create custom tactics, custom messaging, even custom processes to break into, manage, and win specific accounts.

It’s better to play fewer games well, than more games moderately.

The key to effective tactics is aligning behind a clear game.

Want to assess whether your salespeople are conducting effective discoveries and sales calls? Ask yourself, “Would the prospect have been willing to pay for the sales call after the salesperson made it?”

We’re all self-centered. We like to think that we’re not, but the truth is that we are.

In the late 1800s, philosopher and mathematician Kurt Gödel created his first incompleteness theorem, which said: You cannot judge a system from within that system. Likewise, you can’t judge your tactics, your processes, or your playbook from within that system.

Building revenue today is hard. It’s really, really hard. The last 15 to 20 years have wiped out the fish — the chumps at the poker table that everybody made easy money off of. The bad competition out there doesn’t really exist anymore. Furthermore, technology has changed the underlying parameters of how businesses compete, eliminating the cost advantages that small and mid-market companies had on their larger competitors in the past.

To win, you must present a distinct position in the market.

If you are just okay, if distinction doesn’t matter, the Amazons of the world are going to eat your lunch. You might be able to make a living, but you’re not going to generate wealth. Amazon doesn’t win by being the best option for everybody. It’s just never the worst option.

Throw out the playbook that gives you an outcome where 80 percent of your customers are giving you 20 percent of your business.

The key factor that’s going to determine your outcomes isn’t what specific tactics you pick. It’s going to be how you are willing to implement, and change, those tactics in the context of your market situation.

We moved from a caveat emptor (buyer beware) where the seller controlled the game, to today where it’s caveat venditor (seller beware) and the buyer controls the game.

Disruption is not about today, and it’s certainly not about yesterday. Disruption is all about tomorrow.

Focus on where you’re going, and align yourself toward a future point.

Most people are already overwhelmed with what they have to do on a daily basis. So when things like change initiatives and transformations and new technologies come in, it becomes one more thing that has to be done.

A key mindset to have for RevOps is that you should not solve upstream problems downstream. You can also think of it as the tyranny of urgency.

The “problem” with change and transformation is that, when done properly, it focuses on the important. But what is important will never win out over what is urgent unless there’s a construct and framework in place to enable that prioritization to happen.

The three zones of execution enable you to view change initiatives not only through the lens of importance, but also through the lens of time. The three zones of execution are the performance zone, the enablement zone, and the transformation zone.

The third zone is the transformation zone, which is the period beyond a year. A strong transformation zone gives everybody a clear sense of purpose and direction. Some people call it the north star — a clear point that the people and systems of the organization can focus on.
The second zone, the enablement zone, represents the period 90 days out to one year. It’s what enables the vision to become a reality and buffers the sharp, jagged edges of change. This is where we stage our improvements. We systemize, standardize, and optimize.
The performance zone is all about now. It’s the next 90 days. It’s about meeting our short-term objectives and hitting the proverbial number.

The three-zones approach enables you to map our organization’s improvements in a way that is sustainable. To implement this approach, all you need to do is identify the action or initiative that needs to be taken and assign it to the appropriate zone.

Be sure to give your efforts enough time to work, and be sure you don’t wait too long to make an adjustment.

An acceleration cycle is very similar to an annual plan, and I should specify I mean an annual plan done the right way.

If you have a 90-day acceleration cycle, you’re determining what your objectives will be over the next 90 days, as well as your key metrics and the things you’re looking to achieve, drive, and move.

Pairing an acceleration cycle with the three zones of execution creates more predictability and stability about when things get reassessed and changed within an organization.

I also recommend there be at least one adjustment period per acceleration cycle.

The adjustment period is just a quick check-in on the progress of our initiatives in the current cycle.

If everything is a priority, nothing is a priority.

Revenue Acceleration Mindset

“Let’s try not to suck today.” That phrase captured what I think is a great mindset for anyone or any business seeking outstanding performance, growth, and transformation.

I find one of the biggest challenges people face when driving growth or transformation is that people get focused — even obsessed — with getting it right. But in something as dynamic and complex as business growth and the systems associated with it, there really is no such thing as “right.”

People tend to live in a “right or wrong,” binary world. But right and wrong actually exist on a continuum. There’s wrong. There’s not wrong. There’s not right. And there’s right. You certainly want to avoid being totally wrong wherever possible. But it’s important to remember there are actually very few places where you have to be totally right. More often than not, just not being wrong is going to be enough. That’s part of the idea behind the “try to suck less” mindset.

Most people who are responsible for executing a company strategy feel more like this truck trying to get through the underpass and less like a high-powered business person who’s two to three steps ahead of everybody.

The inverse friction principle states that the ease or effortlessness of a user’s experience has an inverse relationship to the complexity that went into designing the systems that created said experience.

To make execution simple, to enable your people to execute with ease and effortlessness, you must strive to solve problems before they happen.

Edwards Deming revolutionized manufacturing as we know it with the work that he did with Japanese manufacturers following World War II. Before Deming and his “total quality management” philosophy, the normal approach to manufacturing was to inspect for defects after the product was made. Then, Deming came along and introduced total quality management, His philosophy highlighted the fact that problems were more often than not caused by the system, not by the people within the system. According to Deming, every problem should be viewed through the lens of the system and how the system can prevent the mistake. How can we solve the problem before the problem occurs?

You cannot wait to cross every river when you get to it. The only way to execute at scale is to address the barriers, conflicts, confusions, and ambiguities before they hit the point of execution.

The only way to get more from your resources and inputs is to eliminate the disruption that drags execution. And you do that by solving problems upstream.

Go-to-market strategy leads to structure, structure leads to approach, approach leads to execution.

Number one, define your desired outcomes.
Number two, do a “what causes success” analysis.
Number three, map the processes involved.
Number four, practice hypothesis-driven growth.

Besides the four steps to creating more effective upstream solutions, you should also be aware of the five potential pitfalls of upstream solutions.

One, upstream solutions often take time to come to fruition.
Two, measuring the ROI of problems not happening is very difficult.
Three, there is no glory in preventing problems.
Four, there’s no urgency.
Five, downstream solutions are often tangible, easier to see, and easier to measure.

If you want to accelerate revenue, you need to change your relationship with friction, and you must view it as the tool that it is. Friction is a tool; it’s a tactic. So, instead of asking if you should use friction, start asking yourself how you want to use it. Not all friction is bad.

The mistake of eliminating friction without managing friction contributes heavily to commoditizing businesses today. When the user experience is so frictionless, it becomes featureless. They can’t tell the meaningful difference between one company and another.

Whenever you’re designing or drafting any kind of experience, whenever you’re trying to achieve any type of outcome, you need to understand that you really have only two tools at your disposal; in other words, two types of pressure.

Promoting pressure. You want the people in your company to do something, so you draft the campaign.
The second type is inhibiting pressure, and friction is one major type of inhibiting pressure.

While promoting pressures incentivizes people, inhibiting pressures does the opposite; they make it harder for customers to deviate from the path you want them to take.

Four Steps to Conducting a Friction Audit Map the journey or journeys that your customers go through when buying from you.

Identify the high-impact inflection points.
Identify where people need to speed up.
Identify where people need to slow down.

Remember, where there’s no friction, there’s no value.

Deterministic thinking is binary thinking. Right or wrong. Probabilistic thinking realizes that there’s an infinite number of possibilities between zero and one.

One of the great human weaknesses is our abject desire for certainty. As the French philosopher Voltaire wrote, “Uncertainty is an uncomfortable position, but certainty is an absurd one.” This is a truth that extends beyond business, football, and philosophy.

The reason we tend to think in terms of certainty, even when things are clearly uncertain, is because when we predict outcomes we don’t take into consideration the things that are going to happen outside of our control.

One of the simplest ways to carve out an execution advantage for you over your competitors is to think probabilistically, not deterministically.

Chess is a game of managing and computing perfect information, but business and life is not a game of perfect information.

Anything that you would’ve done differently earlier in the process would’ve changed everything else that was happening. The situation that you find yourself in now will never be the exact same one that you find yourself in again. That’s why poker is a far better metaphor for business and life.

In both poker and business, there are rules; but following those rules doesn’t automatically make you a great player. In both games, consistent and long-term success is a mix of luck and great decision-making.

Realize that humans and organizations all have three fundamental resources. The first two, what I refer to as time and effort, are really the energy that people bring to bear. The third resource is money.

The key to driving success, the formula that I’ve been able to create to maximize the probability of success for any individual organization, comes down to a simple equation of focus, where your focus times the limited resources that you have, allocated to the best opportunities to use those resources for, equals the level of success that you’ll experience.

Succeeding with RevOps

I’ve long evangelized the belief that long-term success is more about the plumbing and structure that enable execution than it is about the great strategies that tend to get the credit.

There comes a point in time in everybody’s life, no matter how good they are at anything, where they’re going to come into the company of others who are almost as good, if not a little bit better. That’s when those habits, disciplines, and consistencies truly pay off.

The difference between a great salesperson and a not-so-great salesperson is that the great salesperson is a business person who sells. They’re a business person first, salesperson second.

Today, more than ever before, individuals who possess business acumen have a tremendous advantage over those that don’t. This is especially true in sales, marketing, and the emerging discipline of RevOps.

So, what is business acumen? Business acumen is the ability to intuitively grasp the performance drivers for your or someone else’s business. It is the ability to clearly explain how your processes, methodologies, products, or services will drive results and outcomes. It’s an “ROI on the fly” conversation. It’s an equal mixture of business understanding, asking the right questions, and pouncing on a great opportunity when it presents itself.

While the process is important, it’s not the way that CEOs and upper management types typically see things; they want numbers and results. The way to introduce an idea like revenue operations to a CEO that’s not already embracing it is to use the Framework and focus on its positive outcomes. What are we trying to achieve? What are we already achieving? Where’s the gap?

Identify the key metrics that are going to be impacted by whatever approach you are suggesting. Be sure to prioritize.

As we’re looking to grow our business, there’s two categories of plays that we can run. The first category is increased force. Do more, do it better. The second category is to reduce low-value friction. Revenue operations is in the friction category of plays.

Over the years, I’ve observed five additional mistakes that get made repeatedly, and the first mistake when implementing RevOps is losing the plot. The plot is the ‘why’ of doing something, and it’s really easy to lose that why. In television, when a story loses the plot, it’s called “jumping the shark.” The reason for the RevOps role is to create greater revenue velocity, and the place where revenue operations loses its plot is when the focus is on efficiency or process compliance.

The second mistake is having champagne taste on a beer budget.

The third major mistake that gets made is failing to use friction effectively.

The fourth mistake is fixating on fixes. The primary job of tactical RevOps is to fix what’s broken. But sometimes we focus so much on fixing what’s broken that we miss how the fix is more damaging than the problem ever was.

And the fifth mistake is turning RevOps into the department of sales prevention. The purpose of RevOps is to make it easier and more effective for the organization to generate more revenue.

Revenue Operations

While change is inevitable , great change is purposeful .

Transformation is a big word, and it brings on big feelings, but it’s actually achieved through small, simple decisions and actions.

It’s easy to make decisions from the sidelines, where the “decision” has no impact on the results. But when something is at stake, there is not just something to win, but also something to lose, and loss is a risk that not everybody can handle.

It’s hard to make decisions. It’s even harder to make decisions constantly and harder still to make a fair percentage of those decisions correctly. But without decision, you don’t have action, and without action, you don’t have outcomes or results.

It’s never been easier to start a business than it is today. And it’s never been harder to scale or sustain a business against the endless competition of a modern market. The 20th century was all about attaining greater efficiency. The 21st century is about building and expanding adaptability and resilience.