AMA on Strategic and Tactical RevOps Planning for the New Year

September 29, 2023

EVENT RECAP

Sean Lane has led RevOps at Drift and Upserve through 8 annual planning cycles. In this AMA, he'll talk about what needs to be done in Q4 so that customer-facing teams are ready for the first day of the new year. We'll dig into tactics, including building an operating plan, quota and headcount planning, and territory planning.

We'll take questions from the audience and discuss topics like:

  • What's a good Quota: OTE ratio?
  • What's a reasonable quota attainment assumption for your capacity model?
  • Should you adjust your territories year to year?
  • How should you allocate books of business across your CSMs?
  • How should you announce your plan to your sellers and CSMs?

Can't attend live? Registrants will receive a copy of the event recording following the session.

Video

Unnamed Speaker

Hey everyone, excited to talk RevOps with Sean Lane. He’s a partner at Minot Light Consulting and formerly led RevOps at Drift. Also ran their operations podcast with tons and tons of good insights. I’ll let him give a much better introduction of himself than I can.

Unnamed Speaker

Cool, thanks Kate.

Unnamed Speaker

Hey everyone, thanks for joining us today. Excited to spend some time chatting with all of you about planning, which for me is a topic that is both really, really difficult, but also really important. As Kate mentioned, I’m a founding partner at a go- to- market consultancy called Minutelike Consulting, impossible to pronounce if you’re not from the South Shore of Massachusetts, but it’s Minut. And what we do is we help small companies with their go- to- market execution.

Unnamed Speaker

And so we’re gonna talk a little bit about where kind of go- to- market planning and execution come together today. And as Kate mentioned, I spent five and a half years at Drift running a whole bunch of our different go- to- market operations teams, sales ops, rev ops, marketing ops, whatever the need was of the company at the time, what was there from single digit millions in ARR all the way up through and beyond our acquisition by Vista, which valued us at over a billion dollars.

Unnamed Speaker

And then I worked for five and a half years at a restaurant technology company called UpServe before that. Again, in a bunch of different, both customer facing and rev ops roles.

Unnamed Speaker

So excited to dive in with all of you today. Please do submit questions as we go through this.

Unnamed Speaker

Kate’s gonna help kind of moderate and bring those questions up as we’re going through.

Unnamed Speaker

So we will do our best to answer any and all questions as we’re going through.

Unnamed Speaker

We’ve got a little bit of prepared content for you, but we want questions as we’re going through.

Unnamed Speaker

Sound good, Kate?

Unnamed Speaker

Fantastic, thank you.

Unnamed Speaker

All right.

Unnamed Speaker

So when I was thinking, sorry, go ahead.

Unnamed Speaker

No, no, sorry. Go ahead and finish your introduction. I forgot about this.

Unnamed Speaker

No, no, all good.

Unnamed Speaker

So when I was thinking about this topic today, I was thinking back on kind of how I first learned what good planning looks like. And I remember from one of my very first operations roles that I ever had, I was starting to get worried about things like timelines and readiness. And the fact that January 1st always comes after December 31st, you’ve gotta be ready.

Unnamed Speaker

And I had a sales leader at the time who was basically like, don’t worry about this. Like most companies don’t even get their operating plan or their comp plan or their new territories out the door until like mid February or March, like don’t stress about it. And I was probably too naive to understand why that was at the time, but it kind of blew me away that that was the norm and that people just like accepted that. And I kind of made a promise to myself that that was not gonna be what the case was at the places that I worked.

Unnamed Speaker

The beginning of the year can be very like filled with doubt and uncertainty for people. And sales reps are looking at that at that moment as can I make money at this place this year? And if you just add more uncertainty and doubt by making them wait six, eight, 12 weeks in order to get that information, it can be a really rough start to the year. And so I’m very proud that at Drift, we, instead of having our fiscal year transition go live in the third month of the new year, we were done on the third day of the new year.

Unnamed Speaker

And so there’s a ton of planning and work that goes into making that possible, but just something to leave you with as we go through everything here is, how can you kind of strive for that same thing so that people in the company feel that level of confidence and feel that they are gonna be set up for success in that coming year?

Unnamed Speaker

Awesome. Okay, so we have some questions to kind of seed the conversation with. So when you’re getting ready to do good planning, what are the components that you need to prepare?

Unnamed Speaker

Yeah, so there’s a few things here.

Unnamed Speaker

The first is you gotta figure out who’s actually gonna drive this process, right? And you’re gonna have a whole bunch of different cross- functional players in this. There’s gonna be folks from operations, folks from finance, folks from all of your different go- to- market internal stakeholders. So that’s sales, customer success, marketing. All of those different teams need to be pulling in the same direction to make this process work.

Unnamed Speaker

But you probably also need someone to be what we call the DRI, the directly responsible individual for that process, right? And so if everybody owns it, nobody owns it. And so you really need someone who’s gonna actually drive that entire process.

Unnamed Speaker

So figure out who that is and kind of what that project plan is gonna look like.

Unnamed Speaker

And then another really important input that you need is to know what’s the company gonna do in the upcoming season that you’re planning for, whether that’s annual, six months, quarterly.

Unnamed Speaker

Not everybody’s ready to jump ahead and make a perfect plan for a 12- month period of time. And so it’s okay if you’re planning for a shorter period of time, but you need to know what those big bets are.

Unnamed Speaker

What are the initiatives that you are expecting the company to focus on and invest in in that upcoming period of time?

Unnamed Speaker

Because that’s gonna play a really important role in the planning process itself.

Unnamed Speaker

And then another thing you really have to have before you can even get started is you have to have good data, right? Garbage in, garbage out type of situation.

Unnamed Speaker

If you don’t have the right inputs ready to prepare you for that operating plan process, you’re gonna be in trouble. So that could mean internal reporting, right? All the different parts of your funnel, how you think about what you measure, all the different milestones.

Unnamed Speaker

But it could also mean important things about your customer base. How do you think about the firmographic information about the accounts you’re gonna sell to? Is that information stale?

Unnamed Speaker

Is it accurate? How frequently do you refresh it, right?

Unnamed Speaker

And so you need to have all of those things in a good spot before you can even start.

Unnamed Speaker

We’ve got a good question here. Who owns this if you don’t have a dedicated RevOps or sales ops person?

Unnamed Speaker

I think probably the most natural fit is somebody from finance.

Unnamed Speaker

But if you’re sitting there and you don’t have a level of specialization within your company, you want someone who’s going to have one, really good project management skills, but two, they have to understand all the different parts of the business, right?

Unnamed Speaker

If you have someone who approaches this and they’re the marketing person, guess which team is going to get the preferred treatment during that process, right?

Unnamed Speaker

So you need someone who’s going to look at it objectively and also be really, really strong at project management.

Unnamed Speaker

Awesome.

Unnamed Speaker

So then what’s sort of the order of operations? And if you can provide a little bit of a timeline, we’re in October already now, when should these things be happening?

Unnamed Speaker

So if you’re on a calendar year, meaning your new year starts on January 1st, if you haven’t started yet, start as soon as this call is over, right? If you’re on a fiscal year and you’re shifted like a lot of companies tied to Salesforce or Salesforce’s timeline start in February 1st, I would still start as soon as this call is over, right?

Unnamed Speaker

Depending on the size of your company, you want to allow at least a quarter, if not four or five months in order to do a strong planning process.

Unnamed Speaker

The bigger the company, the more business units that you have, the more complexity there will be. And you might need to add a little bit more time to that. We’ll talk about this a little bit at the end, but there’s also this idea that planning is not a one- time annual event, right? And so hopefully you’re thinking about these types of order of operations all the time.

Unnamed Speaker

And it’s not, you’re just starting from scratch every time that you come to this time of the year.

Unnamed Speaker

But I would say whether your year starts in January or February, now is the time to kick off this process. And so I’ve got a whole bunch of ideas here for you of how you can go through this.

Unnamed Speaker

But if you have at least one planning cycle in your past, the thing I would start with is talk to all of your internal customers about how the last one went, right? Gather that information from them, gather that feedback from them, because they’re going to be the people who remember what went well and what didn’t about the last time around.

Unnamed Speaker

Especially if you’re new to the company and you’re in your first planning cycle, this is a great way to kind of cut through some of the noise or, you know, the stories you might’ve heard and actually hear exactly from those internal customers, how that went the last time. And this is also one of those things where annual planning gets, hopefully, incrementally better year over year over year.

Unnamed Speaker

And so this is a great way to ensure that that happens.

Unnamed Speaker

So anyways, start by interviewing folks in the team.

Unnamed Speaker

Then you’re going to identify those strategic bets that I talked about on the last slide.

Unnamed Speaker

And then there’s a whole bunch of things that kind of all happen in parallel to each other, but you need them to feed the next item on the list, right? So when I talk about operating plans, that’s truly where the financial plan and the go- to- market plan of the company are going to come together.

Unnamed Speaker

How many leads do we need in January? How many meetings do we need to hold? How many opportunities do we need to create?

Unnamed Speaker

What are our bookings?

Unnamed Speaker

Don’t just stop at the sales process either. You need to think about your customer base.

Unnamed Speaker

What are our expectations around churn, retention, renewals?

Unnamed Speaker

All of that goes into that operating plan and design. Once you know what the company’s going to have as its big bets for the upcoming year, you got to figure out, does our current team structure make sense to support the plan that we’re building?

Unnamed Speaker

Maybe you’re thinking about specializing post- sale teams for the first time in your company’s history.

Unnamed Speaker

Maybe you’re thinking, hey, we’ve got hunters on the new biz side for sales, but we need some farmers. We need to build an account management function for the first time. Or maybe, like a lot of companies right now, you’re laser focused on upgrade and expansion and retention, and you want to build a renewals team for the first time.

Unnamed Speaker

You have to think about that now, because that’s going to lead into the next bullet, which is, how do you think about the capacity, the quotas that you’re going to assign out, and ultimately, you need to work with your recruiting team on the hiring plan for the upcoming year to support the operating plan. You can see here how more and more teams start to get involved the deeper that this process goes. All of a sudden, you need to bring in recruiting, you need to bring in HR, you need to bring in finance to make all of these things work.

Unnamed Speaker

Then, once you know how many people you’re going to need on the team, and we’ll dive more into each of these a little bit as we go through the presentation, but you get into topics like territory management. That’s where that good data is going to be really, really important. We’re going to talk a lot about comp in a few slides, because that deserves its own special section.

Unnamed Speaker

Then, you have to think about how you’re going to roll this out. This one is really important, because…

Unnamed Speaker

how you communicate everything that I just talked about is going to indicate to everybody in the company what their expectations are for the coming year. And so you need to think about this just as the same way as you would think about a product launch for a new product that your company is putting out there, because the impact and the perception that people will have of it will be exactly the same as if you were launching a new product.

Unnamed Speaker

And so whoever are the owners of this process and of this rollout, your job is to think about this as its own product and leave people with the impression that this is going to be an incredibly successful plan, an incredibly successful year and a place where I can be successful. Awesome.

Unnamed Speaker

We have a ton of questions on compensation. I’ll bookmark them, but there’ll be a good set. So what are the key building blocks in this annual operating plan?

Unnamed Speaker

Yeah, so we wanted to dive in a little bit into some of those bullets that I mentioned kind of all play off of each other in that order of operations, the operating plan, the headcount and the territories. So the operating plan is going to be the place where you’re going to start to think about what are the bets that we want to make? And one of the things that I would encourage you to think about is there’s a lot of moving pieces inside of these companies.

Unnamed Speaker

And so if you can narrow it down for folks to say, these are the three or four key assumptions that we’re making that will make the operating plan come true, right? So in order for us to hit our plan, let’s say Kate is the VP of sales for the mid- market team. Kate, for you to hit your plan, everybody on your team needs to do X in terms of quota achievement, and you need to increase our average sale price from $ 10, 000 to $ 15, 000. If you do those two things, the rest of the plan will fall into place.

Unnamed Speaker

Or if you are the leader on the customer success side and you’ve got a million dollars up for renewal in a given period of time, in order for you to hit your plan, you need to be hitting 85% gross retention, right? That is your key assumption in this plan. And so the more you can start to break the massive company plan down into those little chunks that you can turn to people and say, these are the key assumptions for you to hit your plan, that will give them more operational command over what needs to be true.

Unnamed Speaker

And they know exactly what they need to go in turn and communicate to their teams for them to make that come true. So that’s how I think about the operating plan. It’s what are those small bets that you’re making and how do you get everybody involved?

Unnamed Speaker

One sort of related question, one of those key assumptions, how do you think about buffer between quota and your annual goal?

Unnamed Speaker

Yeah, this is a really good question. So as you think about this middle column here on the slide and this question, to start, if you haven’t built a plan before, you always wanna have a buffer between the company’s operating plan goal, let’s call it a million dollars, and the amount of quota you assign to the reps on your team. And so what I would recommend is you probably want about a 20 to 30% buffer between that operating plan goal and the amount of quota assigned out to the team.

Unnamed Speaker

Now, that might feel like a wide range, but it also kind of depends on how mature your company is, how much historical data you have to back up the performance that you’ve seen from reps and what you can expect in the future. So the more mature you are, the closer that number can be to 20%, the less mature you are, I would make it closer to 30%, right? And so when you think about it, the number that I care most about in any organization that I’ve ever been a part of is what we call that drift PPR, productivity per rep.

Unnamed Speaker

And that was the North Star metric that all of the RevOps work that we did pointed towards. And so that drives how much quota should be, that drives what the operating plan should be. And it also should give you a sense on your hiring. If you’re three or four months into your plan and you’re hitting your PPR targets, great, you’re in the green, keep hiring, keep doing what you’re doing. But if you’re in the red on that productivity per rep, just because the hiring plan says you need to start keep hiring more people does not mean you should do that.

Unnamed Speaker

I would actually argue that if you’re in the red on your productivity per rep, you should stop, figure out what’s going wrong. And then once productivity is at the levels that the operating plan needs it to be, then you can start hiring again.

Unnamed Speaker

And then the last piece of this that all plays in with the operating plan and headcount is how you think about your territories. Again, depending on the maturity of your company, you know, you might be in just like a pure inbound round robin situation right now, and you’re thinking about territories for the first time, or maybe you have, you know, a true inbound and outbound mix at your company, but eventually you’re gonna reach a point where you need to start to assign territories.

Unnamed Speaker

And maybe you start with something simple like how you segment the market. You know, how many employees did the companies have that we sell to? Or maybe you wanna get a little bit tighter and start to work on geographic territories. You can start super broad, break the United States down into four sections, have a whole territory for the, you know, for EMEA and APAC, but you need to start to think about how you can focus people’s attention on a particular territory and on a particular set of your target accounts.

Unnamed Speaker

And this is where, again, totally separate, but in parallel to the planning process, you have to have good data because this is where you’re gonna say, what is an A account for us? What is the cream of the crop that will make a great fit for one guy? You know, what are the folks that we wanna go after? All of that is gonna play a role as you think about territories. And then you wanna start to think about how do we make it equitable across our teams such that when I hand somebody a territory, that, you know, they’re gonna be set up for success.

Unnamed Speaker

There’s a whole bunch more we can go into on territory. So if people have questions, you know, feel