CRO Stories: Good Revenue, Bad Revenue, and the Churn That Helps You Grow with Jackie Rousseau-Anderson

Jackie Rizzo Anderson: As you start pivoting north of 100 million, you have to start looking at the quality of the revenue. When you broke it down and actually looked at it from a gross margin perspective, layered in with company size, you saw a much different story where some enterprise clients were hyper focused on margin. And so for them, right, they had actually been compressing with the sales teams and driving for additional discounts on pricing. And because they were an enterprise customer, and because at the top line revenue revenue level, they looked like they were a huge part of the overall revenue, the sales team had just done whatever they needed to do to keep that client happy. One of the core training elements is like, it is okay to say no to a deal. And depending on the culture of the company, that can be a very polarizing experience. Right? Like if you come in a company culture that is every dollar and every deal at any cost, right? Then your reps are trained to think that way and to go after every deal.

Narrator: Welcome to Go to Market Science. In this podcast, we share tangible, actionable playbooks from the trenches, working as Go to market strategy and RevOps consultants for our clients here at Union Square Consulting, and candid conversations with revenue leaders in the market that have been there. Now let's get into it

Host: today on the CRO Stories segment. I'm with Jackie Rizzo Anderson, CRO at InformData. Jackie has spent over 15 years leading revenue at data and analytics Companies including Forrester, J.D. power, Simmons Research and Blueconic. Today we're talking about what happens when a company crosses a certain growth threshold and realizes not all revenue is good revenue. And how to rebuild the go to market engine around revenue that actually has strong margins, that lifetime value and room to grow. Thank you so much for joining us, Jackie.

Jackie Rizzo Anderson: Yeah, happy to be here today. Awesome.

Host: So I wanted to start us off, um, asking about how, you know, most companies celebrate every dollar of revenue more or less the same, but at what point does that mindset actually start hurting the business?

Jackie Rizzo Anderson: Yeah, I think that's a great question. Um, especially if you've been in any early stage companies or companies on a hypergrowth, you know, everybody gets really excited about every single dollar that comes in and every deal sold. Um, but I think as you start pivoting up past, you know, 50 million especially, and definitely north of 100 million, you have to start looking at the quality of the revenue, um, and start to figure out, okay, is, is what we're selling actually profitable? Uh, in the initial sale, but then so through the lifetime of the relationship too.

Host: Right?

Jackie Rizzo Anderson: Are we setting ourselves up for success from day one. And I think a lot of times, especially if you're in a company that's, you know, continuing to grow, whether it's through acquisition, organic growth, you just kind of go dollar after dollar, um, and not a lot of people implement that pause to actually look at their revenue and say, hey, are. Is what we're selling profitable for us? Um, and even can we figure out if it's profitable? Right? Because a lot of times, if you're growing a company either organically or inorganically, you don't always have your arms wrapped around all of your cogs that you have to account for. Um, and so even just starting there and saying, hey, can we figure out if this is profitable? Like, are we using the right pricing assumptions? I've worked through a lot of organizations where we've built out even complex pricing models, but then nobody's stopped to say, hey, are the actual underlying cost assumptions that we're basing this off of still applicable? Are they the right ones? Um, and building from there? So I think if you see yourself pathing towards growth, which I think anybody in a revenue position is hoping for, fingers crossed that instilling that doctrine from the start is the best place to be. Right? So then you don't have to chase it afterwards. Like, start with that understanding that, hey, we might make a business choice to go after an unprofitable deal because we're trying to hit a certain growth stage, or, you know, we're trying to put up certain numbers because we're going after press or funding or whatever, That's a business decision to go after unprofitable revenue. But if you start building your business with that mindset and that calculation of profitable revenue, then you don't have to back into it later on.

Host: So what about companies who, you know, didn't start with that mindset and now they're 50 million, 100 million plus. Um, at what point do they need to kind of pause and start looking at their pipeline and their current customers and their churn rates and ask themselves these questions?

Jackie Rizzo Anderson: I'd say today, if they. If they haven't already, um, today is the best day. If it's not today, it's tomorrow. Um, step one is, you know, becoming best friends with finance if you aren't already, and having us sit down to say, hey, like, we need to have this conversation because we can put together an AOP for the next year. We can be tracking the best metrics, but we need to step back and figure out again, do we have the Data that we need in order to figure out if we're profitable. If we don't, what is it that we need to chase down? And in the interim, until we have all of those pieces, what can we start, um, analyzing in the meantime? So for example, worked at a company where we didn't necessarily have all of the cost information. It was a really complex situation, um, where there are a lot of levers that went into our cost model. But we knew we didn't have everything yet. But what we could go off of were some base assumptions. So we made some, you know, educated guesses and assumptions in the model, documented those, and started to rebuild our, uh, pricing model and our revenue assumptions from there. And then as we got new pieces of information and as we became smarter about our underlying costs, we could update things and reassess our margins on what we were selling and then tweak from there. So it's kind of this mindset of doing the best with what you have and, and recognizing where your gaps are. Um, I think some people, especially as you get towards 100 million, over 100 million, especially if you're looking at an inorganic growth situation where you have different cost models coming in from different organizations, it can be really overwhelming, um, to say, like, I don't know, like we, you know, just acquired two different companies and I don't really know what went into their assumptions, but we can't even trace our cost model. So like, we might as well just keep selling because if we try to do something like this and try to actually figure out what our true margins are, we're going to slow everything down. It's not true. Like you don't have to slow down selling in order to be able to understand what good revenue looks like. You can do both and you can get better every day, um, as you go through that learning cycle.

Host: Mhm. So when you went through this yourself, I'm guessing you did it several times? Yes. Yeah. What does that process like actually look like? What are, you know, the warning signs of? Oh, we need to look at this. And then what did you end up actually, uh, looking at? And how did that end up changing the outcome?

Jackie Rizzo Anderson: Yeah, um, I mean, it kind of depends on where people are tracking wise, but you should be tracking your gross margins, um, on your profit. And I mean, you can kind of see if your revenue is increasing because margins aren't getting better or.

Host: Right.

Jackie Rizzo Anderson: Worst case scenario you're seeing more your top line revenue and your gross margins are decreasing. Um, then you need to kind of hit the reset button. And say, hey, what, what is going on here? Um, in the different scenarios where I've gone through this practice, it was actually a combination of margins, um, as well as looking at churn revenue too, and seeing what was staying in the door and what was leaking out the door. Um, and so one of the bigger times when we were doing it, when we were working through that really complex model, we first sat down with finance and rev ops. So it's also going to depend on who the players are in your organization and what people are responsible for. Um, but we sat down across the teams and said, okay, let's start by making a laundry list of everything that we do know in our cost model and when was the last time that those cost assumptions were updated? And it seems like maybe a very basic exercise, um, but if you haven't done it before or if you're trying to do it across multiple businesses, right. That fundamental step is, it's almost like, you know, looking at your bank account if you haven't built yourself a budget before and just saying like, all right, we're going to have that come to Jesus moment where I need to peel back and just be honest about what is in these numbers or isn't in these numbers. Um, so that was step one. So we went through with figuring out, okay, what do we know about cost assumptions, when were they updated, what do we need to update? And then we went through and did a gross margin analysis by segment. So at that point in the organization, all of the segmentation was done on account size. So it essentially assumed that every enterprise customer looked and acted the same. Every SMB customer looked and acted the same. And then, you know, kind of every mid mark market account looked and acted the same. But when you broke it down, uh, and actually looked at it from a gross margin perspective layered in with company size, you saw a much different story where, you know, some enterprise clients were hyper focused on margin. And so for them, right, they had actually been compressing with the sales teams and driving for additional discounts on pricing. Um, and because they were an enterprise customer and because at the top line revenue level, they looked like they were a huge part of the overall revenue, the sales team had just done whatever they needed to do to keep that client happy. Right. And I, I think we're could all sit here and think of at least one client in our history where we've had that experience where you know, you, you know how much money they contribute to the company, but either they're super high maintenance to keep on the books or, or you know that you are throwing every single discount possible at them. Um, and so what we did was actually kind of put in a behavioral segmentation element into that, um, client segment. So it also allows you to not only think about going after profitable revenue from the start, but then how do you maintain and grow that profitable revenue and throughout the customer life cycle? And I think that's one really important piece of the puzzle too, as you think about, you know, finding and growing profitable revenue. Yeah.

Host: So did you end up, um, making sure that reps were logging in their CRM, um, these behavioral signals, like, you know, this client, they're really trying to get a lot of uh, discounts and stuff or they're doing this and that?

Jackie Rizzo Anderson: Yeah. So what we did is we actually, um, pulled analysis. We use DOMO, um, for reporting. So we have a snowflake database and DOMO at this point. Um, and we did segmentation analysis in DOMO to create new segment clusters. Um, and basically we developed core segments. All of the accounts were um, tagged within those segments. And then we had uh, these kind of like archetypes within the segments. And that would tell you, okay, is this more of uh, a uh, margin focused client? Is this, you know, more of a grow at all costs client? Like what is their underlying, um, factor? And then we carried that segmentation through all of the reporting that we were using across the organization. So it went in the CRM, it went in our CS tools. It also went into the financial reporting that we were doing to track across um, our, our AOP and like our weekly financials that we were looking at as a leadership team.

Host: And so what did you end up, um, doing with this new information? Do you, you know, once did you teach sales reps, like, oh, if they're asking for all these discounts, it's just,

Jackie Rizzo Anderson: just don't do it.

Host: Like you can lose the deal, you can lose this enterprise deal because it's okay.

Jackie Rizzo Anderson: Yeah, I mean that was one of the core training elements is like it is okay to say no to a deal and dep culture of the company. That can be a very polarizing experience. Right. Like if you come in a company culture that is every dollar and every deal at any cost.

Host: Right.

Jackie Rizzo Anderson: Then your reps are, are trained to think that way and to go after every deal and you have to kind of come in if you're in that situation and say it's okay, like it's okay to close loss a deal. It's okay to have an initial discovery, figure out that this client isn't a fit um, as long as you can understand why. And so there was a lot of training that had to go into reps and you know, just reskilling from general discovery questions all the way through. Um, but there was also, right, this modeling process that we went through. Once you have an actual idea of what your costs are, you can calculate your base margins, like what is the lowest margin that we can take on selling this, this um, product. And if a client is coming in and we've identified them as this potential segment, you know, call, call them like cost sensitive. Right. Then we know that here's what your sales price process is probably going to look like. Right. It's going to be a bit more transactional. We know that they're going to want to race to the bottom. So reps, here are your levers, here's the floor that you can go to and then here's the CS model that we are going to apply. Because I think the other part that companies, especially in that 100 to 250 million growth stage get trapped in is they're putting too many resources across the company, CS included against companies that aren't going to grow and prove out lifetime value the way that others are. And so when you combine you know, sales NCs into a holistic revenue organization, I think that's when you have the most power to be able to accurately identify those particular clients in the early stages, sell them using you know, the levers that, that makes sense and then service them accordingly. Right. Because they are an enterprise client. Right. It is a large uh, number against them. If you can keep it in a healthy margin, that's great. Then the goal is to retain it.

Narrator: Right.

Jackie Rizzo Anderson: Uh, you know, you're not going to 2x that revenue. You know, it's not going to be a land and expand kind of situation. Which is fine. You just want to know that because then you apply a different service model to it. And in this situation because of the tools that we had, we actually were able to create a growth model in Domo and so we were tracking clients actual um, revenue usage uh, and track it against the model to say hey, is this client growing as we expect it to? Even if it's in that kind of conservative uh, revenue group or you know, are we behind pacing? Then we can have ah, an intersection moment. But it's by carrying that analysis all the way through and using the available tools and really systematizing it that allows CSMs to hey, take five minutes, log into Domo and check their pacing against this and be like yeah, no we're, we're not doing a whole lot more than we were, but we're also not churning. So check like that account is in a good place. Let me go spend my time somewhere else where I can maybe drive more growth as opposed to not having that transparency. And Suddenly you have CSMs who are spending hours trying to chase down meetings or like figure out what' going on with a client that they don't need to.

Host: Yeah, I love how structured and like how much of a structured system that is. There must be like so much enablement and stuff that went into creating all of these processes to make it this like enclosed system. Um, did you have to also change the way you incentivized your salespeople to ensure that they were going after this good revenue instead of just closing the big deals that they could? Because, you know, if they're getting, they're going to go where the money is, right. If they're, if they're paid out for big enterprise deals, they don't want to close those, right?

Jackie Rizzo Anderson: No, absolutely. I'm a big proponent. I think most people are at this stage of setting commission plans that rewards the behaviors that you want to see. And so in this case it is, you know, paying more for good revenue, um, and not only good revenue, but you know, because of some of the other, um, legacy situations, um, that these companies were involved in through the whole acquisition cycle, um, it was restructuring so that it was rewarding of a good revenue, uh, and even adding extra reward for diversification of revenue because there were some products that were easier to sell than others. And so again, you know, easiest money is the easiest for most frictionless, uh, sales process. And so we had to completely restructure that. And I think the other really important thing that we did and shout out to finance folks that we got to partner with is build out calculators for each rep. So we kind of went through the commission changes and then we built them each an individual calculator, um, and just in Excel to say, like, hey, plug it in and figure out, you know, so you can estimate what your actual earnings are going to be on this deal instead of making it such like a black box. Because that's the worst, right? When somebody doesn't know what they're going to make off of a deal and then you're waiting till the quarterly payout, that's not incentivizing. But our finance team were macro wizards and we're able to create that tool and hand it off to the sales reps and let them figure it out on their own.

Host: That's awesome. I think I heard once from uh, one of our consultants or uh, one of our internal operators, like Once you hit 2, 3 or more calculations that ah, a rep has to do in their head, that behavior is out the window. Like you cannot trust them to follow that behavior that you want to incentivize at all. Because if they can't calculate it like very quickly, they're not going to know what to do in that moment because, you know, they're thinking of so many things as they're sitting there talking with the customer or a prospect.

Jackie Rizzo Anderson: Yeah. And I think, I think that's such a good reminder, like you mentioned, how much enablement went into this. 100%. Right. Like enablement is super important. Not only the initial training, training, but like the ongoing enablement. Right. The refreshers. Because it's different when you roll something out and you kind of walk reps through it versus, you know, the first time they're at stage one in the sales cycle versus stage three and what behaviors and things they need to be doing. Um, also like leveraging the tools. Whether you're using HubSpot, Salesforce, whatever. There's so many like guidance points that you can create for reps. Um, and we went through and remapped the whole sales process and then put new activities that had to occur at each stage. And at first, right, Reps reactions are usually like, okay, you're at, you're adding, you know, three gates to this stage. Now there's more information I had to put in Salesforce. You know, this can be harder to get to the new stage, but what we did was actually point out like, uh, these aren't gates to keep you from the next stage, but they're actually, you know, prompts to help you make it easier so you don't have to remember all of the details that you have to do at each stage. Um, and building that up as they go along. And then it becomes muscle memory. More right. Then they know, like, okay, at this stage I need to put in, you know, the expected ACV and um, you know, the um, margins on it or whatever you might be tracking that becomes memory. But if you can help guide them, um, to start, it makes a big difference.

Host: Absolutely. And everyone needs to be doing this. We work with a lot of companies that are, you know, 50 million plus where, you know, they should have these systems in place and they do not. And that's like a part of the work that we do with them, making sure like, we can build this into the systems. Because it's like you said, it's not, it's not like trying to prevent them from making their money is to make everything easier. It's to help make them their money easier and go through the process quicker and more efficiently.

Jackie Rizzo Anderson: Yeah. And I think it can seem overwhelming, right? Especially as you're hitting some of those like 50 plus million, whether you're going 50 to 100, 100, 250, 250 above, it can seem like, oh man, these are so many levels of processes or systems, right. There's inevitably some executives somewhere on the team that's like, why do we need another tool, right? Like don't we already have a tool that does this? Like why are we adding more layers? Um, but it's actually the like strategic addition of those layers and processes that makes their growth go faster. Right. I'm a big fan of slow is smooth and smooth is fast. Um, and I've seen, yeah, I've seen companies that hesitate. They're like, well we can't, the reps are taxed. Like we can't roll out another tool. It's going to be too much. Like it's going to be way too much if you wait for another, you know, 10, 15, 25, 50 million, 100 million to try to backtrack and fix this.

Host: Oh my God.

Jackie Rizzo Anderson: Or add something in later. So not into over systematizing things, but I'm also into taking a practical approach of like, you gotta use the tools that are available in the right way and really ask yourself, like, what if I don't put this in now? What if I'm trying to put in this new system, um, this new tool, new process, whatever, three months from now, six months from now, like what does that look like? And what data and insights and efficiencies have I lost between today and that timeframe? Because you know, like, you know if you put the systems in, then you suddenly have new supporting data, right? So now you can go back to your reps and say, hey, here's the data on what your conversion rates look like. If you do grab this information at this stage, if you do go back and listen to the gong tape, if you make sure that you know, as soon as um, somebody in your discovery call starts talking about price in the first 10 minutes of the call, right, your close rate drops 60%. Something like that. Like feed them back those nuggets of insight and show them like how these tools that maybe seem burdensome to them are actually helping them and it goes through the rest of the organization. Too, Right. Like sharing that up to the executive team, across the executive team, over to product to support, you know, to the CEO. Depending on what kind of story and insights that you're trying to garner.

Host: Absolutely. Well, you wouldn't have been able to, you know, figure out what your good revenue looked like if you didn't have that information. To see, like, how are enterprise prospects, prospects negotiating their contracts in the sales stage. Like if you never had that data to begin with, how would you have discovered, you know, what your actual margins were? At the end of the day you'd still be chasing these enterprise deals that are probably not best for your, you know, brass tax revenue outcome. So.

Jackie Rizzo Anderson: Right. Yeah. Nope. 100%. Um, and especially, you know, as you path to exits, if you're working with like, you know, P backed companies and you know, there's always some kind of move on the horizon, you need to be able to account for the revenue that you're bringing in and show healthy growth.

Host: Right.

Jackie Rizzo Anderson: And all of that, right. Whether you're talking about churn rates, it impacts your, your multiples, as does your profitability and your gross margin. So you need to be mindful of that. I mean, in a revenue role, that's part of your responsibility to the overall company. Quick pause.

Host: Everything we talk about on this show, diagnosing go to market ops, prioritizing projects for revenue impact, processes, metrics, insights, building

Jackie Rizzo Anderson: a predictable go to market engine.

Host: We've built frameworks for all of it. They're free and ungated on our website, unionsquare consulting.com frameworks. The link will also be in the show notes, so make sure you check that out. All right, back to the episode. And so when you were building out this full loop system for creating good revenue, uh, how did you tie in marketing to all that?

Jackie Rizzo Anderson: Yeah, so as soon as we knew a couple things. One, these segments, right, and what they looked like, who they were, we could pull those forward, uh, and ICP profiles and target them. Right. We knew what products that they were buying, we knew what their pain points were. Um, we could create actual lookalike models to feed into paid marketing campaigns. Um, and we also inserted um, scorecards that we could use in gong. So in those initial discovery calls, right, we could early flag like, hey, the signs in this discovery call are all pointing to green like, you know, sales manager, pay attention to these particular deals. These look really good. Um, or on the converse side, right. All of the language used in these particular opportunities seems like it's going to be more of a, you know, conservative margin. Client, so, you know, kind of manage the sales cycle accordingly. Um, and we even got to the point where, you know, we were attributing a segment to the pipeline, uh, on each individual deal. And so we could help estimate close rates, um, deal timelines. And also we began estimating, um, like lifetime value and potential revenue growth off of those deals as they were coming in the pipeline too.

Host: And so what were the end, uh, quantitative results, if you're able to share them, of doing all this work.

Jackie Rizzo Anderson: There were so many, um, we one were able to shorten sales cycles, um, focusing on those good ones. We took some of the sales cycles down, depending on the segment, between 10 to 20%, um, which was fantastic. We reduced good churn by 15%. Um, and we also showed shed revenue intentionally. Um, so kind of going into the next year's plan, we said, hey, we are actually going to say no to these particular clients, um, not necessarily the enterprise ones, but some of the longer tail ones. And we from there were able to drive our net retention numbers up over 110%.

Host: Oh wow. Nice.

Jackie Rizzo Anderson: Yeah.

Host: That's amazing. So how much revenue did you have to shed at first?

Jackie Rizzo Anderson: We did a couple million, uh, at first in the first batch. Um, and then we began slowly, um, moving some of the other revenue that was bad towards a more positive. So we created essentially like a conversion timeline to say, hey, right now these ones have margin, say sub 10%. We want to get them up over 30% if possible. Like here's the account plan to move them back up into the positive margin. Um, and there were a couple that we couldn't get up over that and they kept pressing us. So we said, okay, fine, next renewal cycle, right, we're going to build in and say, hey, we're. If these particular accounts can't get up over that 20% margin, then we are going to kind of let them go and then if they come back, great. But if not, right, we've accounted for that in the plan.

Host: Mhm. And that's what you meant by shedding, right? Just letting them churn out because they didn't reach that margin threshold.

Jackie Rizzo Anderson: Yep. Yeah. And it has to be a very intentional plan. Right. Obviously, as we're going through that segmentation process and looking at, you know, where were we taking those gross margin hits, um, identifying that segment that was a long tail of like legacy clients that had come across different acquisition points and come in at different price points, um, and they, you know, profile wise were just not necessarily the right fit for where the company was at that point. Um, because they had come in from a legacy company under a previous pricing, uh, model or whatever. So we identified that group and then said, okay, you know, also explain to all the teams like, no, we don't want to drive churn. Right. That's, that's not a business model. But in this case, here's why we are doing this and really explaining it to them and then managing it out. Right. Because that also has to be a strategy that your, you know, executive team is on board with, that your board is on board with and understands. Like, hey, here's maybe the initial hit we're going to see to gross revenue retention. You know, maybe you agree, hey, we're going to dip below 80% for us at that point. Um, we were just in like the mid-80s on gross retention. And so we said, we're going to dip down potentially closer to 80 and then we're going to build back up. And so as long as we control the narrative and tracked it right through, through metrics, um, we were able to stick with that strategy and have buy in. Now if you show up between two board meetings and you suddenly go from an, you know, 87%, 90% gross, you know, revenue retention down to 80, and you don't have a concerted strategy or reason for that, that's a, that's a different conversation. Yeah.

Host: Or if you didn't tell them beforehand, like, hey, we're planning on doing this.

Jackie Rizzo Anderson: Exactly. Yep.

Host: Yeah. Yep.

Jackie Rizzo Anderson: But controlled. And then the other thing, you know, we tracked against it too, was the net revenue retention. Right. So the assumption going in, and basically our thesis was, hey, if we churn this bad revenue, we're going to see better gross margins, we're going to see more stable gross revenue retention, and we're going to drive more net revenue retention because it's going to be the right clients that we can drive growth with. Um, and so tracking those all together was really important. And luckily in that case, the metrics, um, panned out. Or the math. Math. And we were able to prove out that thesis. Nice.

Host: And can you say, like, how much revenue you guys ended up actually accumulating with all these changes? You know, with the increase in nrr, Even though you had people churn out.

Jackie Rizzo Anderson: Yeah, I mean, over all of the accounts, we're talking, you know, tens of millions at that point. Um, within the long tail, I think we were able to build back up over like 5 million of, of revenue just from the very long tail of small accounts.

Host: So from the beginning of, of this exercise to the end, what Would you say the um, the percentage revenue increase

Jackie Rizzo Anderson: was um, at that stage? Trying to go back and calculate it in my head. I mean we had over 20% growth across that stage. I'm trying to like time box it, um, um. But yeah, it was over 20% growth at that stage. Yeah. Yep. That's quite a lot. Yeah, it was a lot. Yeah. And obviously like some segments were hyper, um, hyper growth segments that we really unleashed and accelerated again, like speeding up not only the initial sales cycle but the expansion sales cycle on those accounts to add growth quickly. Um, I think we went from expansion cycles at that time that were taking over six months down to three months in a lot of places, um, which was phenomenal. So we were able to really start to double up, triple up what we were doing with the accounts instead of plowing through one six month cycle and then trying to line up the next.

Host: And I know you didn't mention uh, the company name at the beginning and we can edit this out if we need to, but um, are you able to say like uh, the revenue range that this company was in or any like exact revenue numbers?

Jackie Rizzo Anderson: Yeah, I mean I would say it was, oh, it was over 50 million um, and we were just about 100 million um, when this phase started. I'm trying to remember exactly. Yeah, I think we're close to like 75 at the beginning edge of this process.

Host: All right, so I want to take um, uh, a bit of a shift here while we have some time left and talk about um, your PE experiences and scaling with a, ah, PE company. Uh, I know you've mentioned before that you've had, you've worked with several PE companies in the past including um, you know, Vista at Luconic, an Experian, Carve out at Sims Research and several others.

Jackie Rizzo Anderson: Yeah, I've been lucky to have a number of PPE experiences either directly or for a while was consulting with international PE companies. I, um, think it's lucky. A lot of people I talk to are like that does not sound lucky at all. It sounds the opposite of lucky. Um, but my first experience was when we did that carve out from Experian. So going from a multibillion dollar behemoth like Experian, we were, you know, one particular business unit and then we were purchased by a PE company carved out and they kind of broke our group up into two separate companies. Um, and so we had what we called like a 25 year old startup, um, where we went, you know, back to basics and got the experience of building out HR and finance and legal and all of that, um, all of that under, uh, STGS and Symphony Technology Group. And it was a very intense P.E. experience. Um, but I'm kind of glad that that was my first because it set the bar very high. Um, Ramash is the head of that group, and he is phenomenally intelligent. Um, what's really fun is there actually now in my current role at Inform Data, across our client base, there are a number of us, uh, executives at different companies that have had STG experience. Experience. So we've kind of formed a little club, uh, and all kind of, you know, think operationally in a lot of the same ways, which has been really, really fun. Um, and then I got to work with Vista, which is a PE company of an entirely different scale. Uh, and that was really interesting to see how a PE company with such broad experience and portfolio operated. Right. And the scale that they brought to their system. So as a system builder, like, you would have been in heaven. There was a playbook for everything. Um, and they really had created a science around that, and that's what makes them so effective.

Host: Right.

Jackie Rizzo Anderson: If you think about the power of a PE company, it's coming in, like assessing the situation and then bringing scale and efficiency to drive growth and kind of set it up for the next chapter. And Vista had that one down. They also did a really good job of creating, again, a network across leadership so that you could learn from people's successes and failures. Because when you're scaling companies at that size, you need to know, hey, we tried swapping out to an entirely new CRM system at this size, or when we were about to go through an acquisition and guess what? Failed miserably. Don't recommend doing that. Or, um, you know, here are our cheat sheets towards using GONG and how to accelerate it, especially as you are going through maybe an integration with another company. Like, how can you leverage this tool to reduce your sales reps, time, uh, to efficiency, all of those little, like, hacks. What was interesting was blueconic was in one of the smaller funds, so there was a bit of a translation that needed to happen across those playbooks.

Host: Right.

Jackie Rizzo Anderson: Because I'm sure, as you've seen with your experience, what you're doing for 150 million, $200 million company is not necessarily what's going to work when you're just over 50 trying to reach that $100 million hurdle.

Host: Right.

Jackie Rizzo Anderson: Your, your processes and your scales, uh, are different. I think what was really helpful is being able to say back to our earlier comments, I guess here's the process or the system or the tool you should probably implement right now when you are 50, 75, 100. And here's what's to keep in mind when you're getting closer to 150. So then you kind of know, because I think sometimes the challenge is, is now the time to add in the CPQ tool into my pricing, um, ecosystem and add that layer of complexity. Is now the time I need, you know, ah, a legal system. You just don't know. And when you're trying to move quickly or grow, like those decision points can be really make it or break it really. Right. You suddenly add in a, um, a legal tool and your sales cycles are now 20% longer instead of 20% shorter.

Host: Right.

Jackie Rizzo Anderson: Like I've definitely seen that happen because now everything is trying to route, but guess what? Like the tool doesn't let you edit the contracts in the same way and you know, it's not filing correctly. And so now, you know, reps are trying to add a new sow to an MSA but nobody can find the MSA M in the right spot. Like it's those things that just having, you know, somebody who's like, hey, heads up, you need to be ready for this is really helpful. Um, and then also working with international companies was really interesting just to see like how they look at the market, what they prioritize, um, and also across pe, right. Like everybody has a different uh, portfolio and investment, um, thesis and what they're looking for. And so it's really interesting to get that perspective too.

Host: Yeah. And what would you say is like your biggest piece of advice for CROs? Um, working with PE companies and making that process as smooth and successful as possible.

Jackie Rizzo Anderson: Uh, be metrics driven.

Narrator: Right?

Jackie Rizzo Anderson: Like for PE companies everything is about the numbers. So if you are a metrics driven person and you just instill that from the jump, it's going to be much easier to converse and to align. Right. Because everybody kind of comes in and they have their own reporting that they like to do way of looking at things. And if you are maybe not as metrics driven or you're in one of those growth phases where you're like, yeah, we're just kind of like feeling out, we don't know exactly how many reps we need to cover this quota. But like, we feel like it's this or like, you know, we feel like our CSMs can probably handle about eight clients, 10 clients, whatever. It's like, no, you should know at that point, right, that your AES are carrying, you know, x Amount of quota with a 2x coverage on your goal. And if your PE company is coming back and asking you to add, you know, $10 million to your number, you can go back and say, great, here's how many head count I need, here's my ramp period and here's when they'll go into effect. So that's the premise that we have to work under. Now we can have a negotiation about what you want to do with my overall number for the year. But like this is the reality of what we're talking about. And then the same thing on the CSM side, right. Like to talk about those client segments, you can go back and say, hey, you know, based on this plan, we're assuming we're bringing in 20% more of our high growth segment. I know that my high growth segment is a, you know, 1 to 20 ratio on my CSM coverage. So here's the additional headcount I'm going to need. Like those fundamentals make a big difference and can make conversations a lot smoother.

Host: Absolutely. And you know, we at uh, Union Square Consulting, we partner a lot with PE and VC companies to like, they have us go in and then work with their portfolio companies because like you said, like they have all these playbooks and they have all these strategies. They know what they want their portcos to be doing. Um, they just need like the execution help to do it. Um, I feel like, you know, it can be jarring for a lot of companies to suddenly be backed by a PE or VC firm and be like, oh, we don't have any of this stuff in place, we need to get

Jackie Rizzo Anderson: it done right now, we need to get it done. And I think also like being able to articulate, hey, we don't have this in place. And maybe here's why we think now is not the time to do it. Um, because right. There is a trade off as you go through that adjustment period, um, where again implementing certain processes, measurements, whatever can have an impact on performance metrics. Right. Especially if you don't have a revenue operations team.

Host: Right.

Jackie Rizzo Anderson: If you're running really lean resource wise to begin with, suddenly trying to add monthly reporting and a playbook on um, onboarding reps and a playbook on churn mitigation and, and, and right. It can cause a distraction. And so you have to be able to go back and have a conversation. And I haven't found a PE partner who isn't willing to have this conversation yet to say, hey, hear you like, this is a great idea. I can see the impact of this playbook. Here's why I think maybe now isn't the time to do this and, and have that trade off. And if they're like, nope, you absolutely have to do it now, it's like, great, well, then let's talk about hiring a consulting company to help us or, you know, staffing up to, to support that. Um, because it is, it is really powerful to have a consulting group like you all come in with the playbook, with the experience and with that outside perspective to say, yep, we've seen this at this stage. Right. Like, here's almost like a map to profitability or the map to, you know, reduced sales cycles or, you know, increased lifetime, uh, value. All of those things. Um, it's, it's pretty powerful.

Narrator: Yeah.

Host: And also just the resources, too. Like, a lot of these companies, they're still trying to hit a number while they're needing to execute all of these projects that their PE company is like, you have to do this now. We need, we want to be able to see this data. And they're like, oh, man. Like, we're, we're still trying to make money. Like, we have so much other stuff to focus on. And the CRO is like, I've got to manage all these teams. Like, I don't have the time to do this. And yeah, that's, that's been like, kind of our sweet spot where they kind of know what direction they want to go in. And then we just come in with the hands and we're like, we can do it for you.

Jackie Rizzo Anderson: Yeah. Yeah. I think a lot of times when I'm talking to friends who have gone through, like, an initial pe, um, process and they feel that overwhelm of, like, this isn't how we report our financials. Right. Like, like, these aren't the stages I use across my sales cycle. Like, I haven't seen this conversion rate in, you know, a very long time. Um, it seems really overwhelming. And I, I feel like a lot of times I have those conversations and people feel like they need to have that data, those processes, those answers already in place in order to be seen as successful from the PE company. But I think what I found is having a conversation and being open to the change and the potential opportunity is step one. Right. They don't necessarily assume and. Right. They already know. Right. They've been digging in, they've done their due diligence, they've, you know, been looking into all the numbers and all those things. Like, they know if you have certain things going on or don't Go. Not going on. Um, and so just being honest about that and then using the input for change is step one. Um, I think, you know, listen, I've said, I've said it before But CROs in PE backed companies especially, that's hot seat, right? And I think that number gets tossed around of like you have 18 months is the average tenure. Um, I know you and I both to chat with Warren Zenna sometimes and uh, that's one that he likes to reference a lot too. And so if you have that number like hanging over your head, you feel like you have to have all the answers and all the things done already which just isn't, isn't reasonable. Um, but what you should have, right, is enough of a, ah, grasp on your business and the metrics that are important to your business to be able to understand what the trade offs are of the things that they're asking. Mhm.

Host: Absolutely. It's a lot of pressure. But yeah, 18 months.

Jackie Rizzo Anderson: Yeah, 18 months. TikTok. TikTok. Yeah, yeah, yeah.

Host: What was like a specific memory, um, that you have of like a really challenging experience coming in with a, having a PE company come in and working with them and having to like make some really big changes.

Jackie Rizzo Anderson: I think one was like defending the staffing model. I think having a PE company come in, um, in one scenario it was you know, just before we were going into aop, so they were, you know, jumping into the deep end with us um, and making a lot of assumptions about what our ratios should look like when it came to both AES to quota CSMs to service revenue. Um, and having to have that, I mean bit of a battle to defend the model that we had put in place and why, you know, we had less than the check the box ratio of revenue to CSM on those key enterprise accounts. Um, you know, it, it didn't fit the formula that they had coming into every scenario. Um, and so we had to battle back and say no, but this is why. Or like this is why our sales reps are carrying a little bit less quota. Um, but you know, here's the input and output that we've seen related to sales cycles and deal conversion at this rate versus other rates. But again like if you, if you don't have that information or know how to look at that data, then suddenly you're like, yep, you're right, I have to cut you know, four CSMs off my team or you know, scale it back by 15, 20% and then suddenly, you know, six months later in the boardroom you're Having a conversation about why your net retention numbers are down, why your gross revenue is dropping. And it's like, well, hey, because you forced us to change that support model and we don't have, um, a better way to do this with this particular segment. So now we need to have a conversation about what it is that we have lever wise to move on here.

Host: Absolutely. Like, if you don't, we like to picture it like a big soundboard with all the little knobs that you can turn to like equalize this frequency, lower this frequency, and it all like has to work together. And if you turn one knob, you might have to like adjust the other knob for it to equal out. Um, if you don't even know what that sound board looks like and like, you don't have any labels on those knobs or you don't know what the knobs are currently set at, how can you play with those and twist them around and like make changes without knowing how it's going to affect something else?

Jackie Rizzo Anderson: Yeah, that's a great metaphor. Um, that's, that's exactly it. And I think one of the things that, you know, I've seen companies in that growth trajectory struggle, um, with is, well, I don't know, all the knobs or nobody labeled them or like these five knobs came from this company. They definitely aren't labeled. I think these two knobs are, you know, these two things and then they get kind of frozen because they're afraid to make a move because they're not sure what the impact will be. Um, and I think that's where making the decision to start where you are today and then move on from there is important because otherwise. Yeah. The bigger you get, the only, the more knobs you're going to add to that soundboard.

Host: Right.

Jackie Rizzo Anderson: It doesn't get, uh, easier or smaller.

Host: Absolutely. Well, we are coming up on time here. I think that's a good place to wrap it up. Thank you so much, Jackie. Um, and if people want to follow you or see what you're doing, uh, where can they follow you?

Jackie Rizzo Anderson: Uh, LinkedIn is probably the best place to find me. Jackie. Ra and always, uh, happy to engage if people have questions, want a follow up conversation. Whether they're in their first PE engagement, their final one, hopefully happy to have that conversation. So please reach out. Awesome.

Host: M. Thank you so much.

Jackie Rizzo Anderson: Great. Thanks Rachel.

Narrator: Thanks for listening to the episode. If this resonated, please give us a five star rating and a follow. It helps us reach more people and you get our latest and greatest content without having to search for it. And if you're looking for hands on help in Go to Market strategy and or revops, please reach out to us. We help our clients with everything from annual planning to improving process processes in Go to Market, implementing systems to support those processes, and Go to Market AI. Uh, we're always happy to offer a free consultation to help you identify the best opportunities to improve your Go to Market engine with or without our help. You can find us@unionsquare consulting.com and the info will be in our show notes.