From doing marketing strategy at a go-cart start-up, to creating informative websites on founding start-ups from scratch, it goes without saying Zach Thigpen is incredibly well-versed in the scene. His comprehensive experience has led him to the Revenue Ops team at Cobalt.io, where he specialises in process optimisation and project management to name a few. I caught up with Zach to learn more about establishing impactful KPIs, dealing with information requests, and more. After telling me about his journey into revenue ops, the interview began…
Rory Brown (RB): Can you tell me how you got into rev ops?
Zach Thigpen (ZT): Yes. I’ve always worked in startups and started in marketing. I spent four years at a go-cart startup on their marketing strategy and business development. I built the marketing organization from scratch as we moved from one location to five and from 2 million to 16 million in revenue.
Then I undertook an MBA at UC Berkeley where I focused on venture capital and accelerators to really understand what great businesses look like. For a lot of VCs, the business categories are oftentimes very new, but there are repeatable proxies, patterns, and indicators of a successful and an unsuccessful business.
So, that was really cutting my teeth and analysing thousands and thousands of startups and talking to founders and VCs to understand this pattern.
After that, I was doing a bunch of consulting work and I also created a website called Encyclopedia Entrepreneuria, which is full of information about creating a startup. It’s a resource for me to go back to and for others looking to start a company to use..
That takes me to where I am now at Cobalt.io. I heard about the job via referral and when I heard about the role, I knew it was a perfect match for my skillset and career goals. I’d been in really small startups and I was keen to be in a business that already had a presence and a revenue engine. It’s not necessarily mature but they were past founder sales stage when I joined. I joined at around 40-45 people back in October 2018 and now we are bumping up against 100 people. We’re growing really fast and a lot of that growth is in the GTM team.
RB: Great, thanks for the introduction. It was interesting to hear about your path into rev ops as it’s slightly different from the norm.
What was the first thing you wanted to tackle when you got to Cobalt?
ZT: The first thing I did when I got here was build out our dashboards and our analytics, things like LTV, cohort analysis, cycle time, and net dollar retention. I look in detail at those metrics in order for us as a company to make strategic investments and decisions about what we’re going to do next. Not only that but before we make the actual decision, it’s assessing whether we have the infrastructure in place in terms of the tools and the enablement.
So data is the foundation at the bottom of the pyramid. Next level up is tools and enablement. Upon those elements you build out processes and operations. Then finally the top of the pyramid is strategy and planning. So, I think it is the job of Rev Ops to be a good check and balance with the executive team and the board to see if the analysis and operational reality in the trenches aligns with the leadership goals from a high-level strategic thinking five-year planning process.
RB: Fantastic. Obviously in rev ops you’re dealing with every other department in the business. Do you find yourself dealing with them all equally or do you lean on some more than others?
ZT: It depends on exactly what I’m doing and what our strategic initiatives are as a company and what projects I have. I focus on marketing, sales, customer success, and what we call security operations. Basically, I work in finance and then anything that touches the customer.
RB: How does the revenue engine interact with finance?
ZT: Something I have worked on is setting up a lot of approval flows in Salesforce and moving contract templates into Salesforce under the quoting tool. It’s a little more rigid, but it also pulls data from Salesforce, so it’s a little bit easier. It makes sure that our data is consistent too.
If people need changes in redlining then they come to deal desk. That’s us on the finance team and sales leadership that support that, and we have legal counsel as well to help with that. Finance, we started also doing invoicing and collections, which is a carrot to the GTM team.
RB: How much visibility into Salesforce data do accounts have and how much visibility into finance data do salespeople have? How do you approach that set up?
ZT: In finance, we have access to all the data in the company. We’re building the comp plans, so we need to have access to all that data. We do budgets by department. We use Xero for our accounting software right now and there’s an integration into Salesforce.
When a deal is closed, you can create an invoice directly from Salesforce, which pulls over all the data we need. We can join things on UIDs and things like that so that we make sure that the data is accurate.
RB: Nice. I’d like to home in on these metrics you mentioned earlier. Coming through the background that you’ve come through, and seeing metrics in a very different way from an investment point of view (rather than an internal monitoring point of view), how have you brought those into the business, and what are the key things that you’re monitoring now?
ZT: To give some context, I’m building a rev ops department at the moment, so I’m leaning towards having basically two verticals. I want to keep the department cross-functional, so underneath rev ops there will be sales ops, marketing ops, and CS ops. In order to to maintain alignment and plan across the GTM team, I think about new business and existing customers. For new business, that mostly encompasses Marketing and Sales, and the KPIs are based on metrics like new customer revenue, cycle time, conversion rate, and gross margin. The whole new business funnel can be boiled down to Pipeline Velocity. That is (# of open deals x Average Revenue per Account x Conversion Rate / Cycle Time). The existing business team is Customer Success and a Security Operations and is mostly based on net dollar retention and customer satisfaction numbers. With Net Dollar Retention and Pipeline Velocity, you can essentially predict and plan for next period’s ARR.
RB: Yes, got you. Maybe you could talk me through more of these metrics and why you’ve chosen them?
ZT: I think about metrics as a barometer for company health and the success of various teams, segments, and initiatives. For instance, LTV:CAC takes into account how efficient our Marketing and Sales teams are performing relative to cost and how effective our CS team is retaining customers. Based on industry averages, if our number is below 3, that’s an issue. We can also break that down by segment and pinpoint which segments are under and overperforming. That helps us decide where to invest resources and by matching those numbers with employee and customer behavior, it helps us understand if we should double down on certain areas or add additional resources to less productive areas (or reduce focus on those lower performing areas). Numbers and data are great, but they only become useful when tied to an action.
RB: I like that. I guess the next question is the richness to it. Let’s say your number is below three, other than data points or metrics that you look at, what might indicate why it slowed down like, a certain part of the sales cycle slowing or is the contract negotiation taking too long?
ZT: That’s a good question. There are a few other metrics:
- First meeting booked. I’m trying to get more visibility as to the top of the funnel but at the end of the day, what marketing is compensated on is the first meeting booked. Additionally, alongside that is our conversion rate. Is our conversion rate changing? If it is, then we need to dig in a little bit as to why that is. Are there first meetings that are being booked that aren’t real first meetings? Are we going after different customers that maybe aren’t closing at the same rate? There’s a whole number of things, but generally, those would be the top two that I would see. Additionally, there’s another thing in play there, like how many reps on quota? How many of our AEs? Especially as a growing organization, you’re going to double it basically every year. Are the new reps as efficient as the existing reps?
- If we were investing in a different segment, we break up our segments by company size, so we might assess that where we invested in X segment and we’re not seeing as much business come in, maybe we’ll scale that back, or maybe we need to do more support there, change the operations, or get them a new tool. Maybe it’s a sales process issue or maybe we shouldn’t have gone into that market
- Then there’s ramp time. It’s the bigger the segment and the larger the company, the longer it takes to ramp. That’s the other thing I keep an eye on.
- Then cycle time is a big one. An initiative now is RFs closed last cycle time is about two to three times as long as our closed one cycle time. I’m rolling out some requirements for AEs to close deals out, given certain things that are going on, like if they haven’t touched it in X amount of time, close it up.
This all feeds into pipeline velocity, which is basically a number of open deals in the pipeline, times their close rate, times your ARPA (Average Revenue Per Account), divided by sales cycle.
That’s the number I’m looking at, and if I multiply that number by 365 it doesn’t equal what our target is for the year, it means that one of those leavers is off and I need to find out which one it is asap. That’s basically the number one besides new revenue, new customers, and growth. Pipeline velocity or sales velocity metric is a good leading indicator.
We look at strategic decisions as one-way doors or two-way doors. Is it a strategic decision that you can’t back out from, or is it a strategic decision that you can test?
RB: Let’s say you need to get your sales cycle from 54 days to 50, for example. What are the things that you’re looking to implement that will actually move a needle?
ZT: That’s a good question.
I built the reps an open opportunities dashboard in Salesforce that displays all their open deals and their time, stage and how long that deal has been in that stage. They should be able to look at that, draw a vertical line and say, “Anything that’s over this number close it out.” It’s a mindset change though because they have to realise that by closing out these deals they’re helping the sales leadership team to be able to report and forecast accurately.
So first and foremost, there has to be a mindset change before you start to build in the systems and tools and processes.
RB: Moving onto dashboards. One of the topics I’ve been discussing a lot in other interviews is how to deal with information requests. Sales ops professionals often get many requests for different bits of data from different people.
What can you do to give them the information they need, whilst negating the issue of dealing with an excessive amount of requests?
ZT: Yes, I get a lot of that but mostly I get that from management which I’m okay to deal with. We’ll hire someone to do that at some point, right now it’s fine for me to do it. I don’t hear as much from reps, but we also have a lot of the information they need on Salesforce. For example, if they want to see how many prospects we have in Denver, they can do that. I can help them and train them but I don’t want to be involved in those requests every time.
RB: I want to come back to this success question that we touched on. How do you define the success of a rev ops function? The second part of that question is how much pressure is there from above to show what you have contributed?
ZT: I do have a salary that’s based on net new revenue, which is a combination of new business, churn, and expansion. So I’m directly impacted by it. I keep track of these metrics, and the numbers don’t lie. If we’re hitting on numbers for the year, and we’re feeding them and there are things that I directly worked on, that’s a pretty good indicator. Part of it is not just improving but just maintaining while you grow.
While you’re growing, there’s new infrastructure and new processes and systems that need to be put into place, because what worked at five reps doesn’t necessarily work at 20 reps. Being able to get out of the way as much as possible while maintaining some sort of consistency and accuracy and controls from a financial and legal aspect, that’s very helpful for the reps.
RB: That’s great, thanks for sharing that with us Zach.