RevOps is the key to enabling efficient growth in a down market
You know it’s bad when Sequoia Capital puts out another of its infamous decks telling its portfolio companies that tough times are ahead and it’s time to cut costs and hunker down. The first one, “RIP Good Times,” came out in 2008 when the financial market melted down. Then came the “Black Swan” in 2020, when COVID put the economy in the deep freeze. Unfortunately, the “Crucible Moment” came out less than two years later in response to the stock market correction and its impact on the availability of capital for venture backed technology companies.
In case you haven’t been paying attention to what’s going on, tech and internet stocks are going through a huge correction. For example, the Bessemer Cloud Index dropped 45% in the last six months. This created some large losses—especially to late stage investors—and produced a domino effect of more selective investors and dramatically lower multiples. Companies that raised capital recently at a rich multiple of 20x or more are expecting a tough time raising their next round, unless they’re killing it.
TLDR, the cheap money and easy fundraising of the last five years is over, and there’s no telling when it will return. Investors like Sequoia are telling CEOs to cut costs now and switch gears from a strategy of growing revenue at all costs using cheap capital to growing efficiently and trying to get to profitability. This has already triggered a wave of layoffs, with at least 15,000 people let go by tech companies in May.
For many RevOps professionals, especially the younger generation who haven’t seen a real down market, the only world they know is one with ample budget and the pressure to grow top line revenue at all cost. This led to many revenue teams operating in a “more, more, more” mode these last five years: more channels, more technologies, and more people. This created painfully complicated technology stacks that are impossible to manage, GTM campaigns that no one can really say whether they work or not, and tons of manual processes to add scale through brute force. It’s no longer acceptable to operate this way. Companies can’t afford growth at any cost. They still have to grow, but the key now is to achieve growth efficiently. The bottom line is now important too.
The RevOps team—the heart and soul of a company’s GTM operations—is responsible for an often sizable technology budget. This is the team that selects and manages technologies that touch most revenue team members, and it manages data across key systems, like the CRM, that when done well can power a high performance team, and when done badly can lead to investment in ineffective campaign strategies. This makes RevOps uniquely influential in helping companies achieve efficient growth for the next 24 months. What can RevOps tech stacks do today to help companies switch gears and achieve success and—in some cases—survival? Here are five things you can do now:
Do attribution analysis
We’ve discussed previously that you should view attribution analysis as an insurance policy for the GTM budget. When times are good and budget’s aplenty, your CMO may not care about the ROI of marketing programs. Now that the CFO is wielding the budget hatchet, the marketing budget is usually the first place to cut, simply because the ROI is often poorly understood. Lacking a good attribution analysis makes it difficult for the marketing team to defend its programs budget and demand gen team size to support those programs. Whether we’re in a bull or bear market, if you can prove every dollar you invest in GTM programs can generate at least one dollar in revenue, most CEOs and CFOs will tell marketing the budget is unlimited. This is why we always tell our customers that it’s critical to get attribution right when the times are good and budgetary pressure is low, because when things turn south—and they usually turn south very quickly like we’re seeing now—you need to lean on solid attribution analysis to demonstrate that the demand gen team is generating efficient growth.
Simplify your tech stack and reduce custom code
A complex RevOps tech stack is expensive in many ways. Beyond the license costs, you need a large team of people to run and debug it. The more technologies in your tech stack, the more skillsets and certified resources you’ll need just to keep the lights on. It’s much more expensive to maintain ten point solutions than a single platform. You should immediately inventory your tech stack and look for opportunities to remove redundancies and simplify. You may have three different dashboard products, two workflow tools, five data management solutions, and six enrichment vendors. Switching to a multi-functional platform can help reduce not only the license costs, but the number of people and agencies needed to support the technology, as well as cost you less time and effort to manage integration and debugging.
An often-overlooked, very high cost area is custom code. Custom code comes about as a quick-and-dirty solution to get something done, but leaves a legacy of high maintenance costs and makes it difficult to keep up with changes to the business. Even if IT owns the budget to support the custom code, its fragility drags down the overall efficiency of the RevOps tech stack. As part of your stack simplification effort, look for opportunities to remove custom code and migrate the capabilities to a commercial no-code platform.
Get more ROI from your tech
If you look at how much you’re getting out of the technologies and data you paid for, most likely you’re grossly underusing what these technologies and data services can do. The number one culprit for this underuse is simply the concept of garbage-in / garbage-out. Any technology you can think of in your tech stack requires good data to fulfill its promise, and unfortunately most companies haven’t invested the time and resources to provide the data these technologies need. Along with simplifying your tech stack,, we recommend that you maximize the ROI from whatever tech you keep or adopt by making sure they have the right data to do their jobs and help you create the efficient growth needed. Good data can not only help you squeeze more ROI out of your technology investment, it can also boost the efficiency of your teams and processes. In fact, if you can’t properly resource the effort to provide good data to a specific technology to extract the proper ROI, consider removing that technology from your tech stack for now and focus your limited resources on providing good data to fewer key technologies. Efficient growth means doing fewer things well vs. doing more things poorly.
Automate and boost team effectiveness
Gone are the days of brute force scaling by just throwing more people at the problem. Efficient growth means doing more with the same team, or most likely a smaller team. You need to automate the mundane manual tasks that don’t require human intelligence to maximize the value your team can add. Easy low-hanging fruits for automation are tasks like list loading, data cleansing, lead routing, and report generation. There are good no-code automation platforms that a RevOps team can use to create automation in an agile manner that are also secure and compliant. The more good automation you create, the more time you’ll free up to look for opportunities to further improve organization efficiency.
Keep in mind that every team suffers when budgets tighten—including IT, and its service levels will likely deteriorate. Relying on IT to do everything for you will severely hamper your ability to operate efficiently. But using solutions like a no-code platform to lessen the RevOps team’s dependency on IT resources can give RevOps the runway it needs to execute.
Democratize access using self service
In addition to automation, in many cases you can amp up process efficiency by enabling self-service—giving stakeholders the ability to perform more tasks faster. Time utilization analysis of RevOps teams has shown that these teams spend more than half their time doing work for other stakeholders because those stakeholders have no access to the data and systems they need. RevOps needs to stop being the service desk and achieve efficient growth by using technology to democratize the access to data in a safe and compliant way—empowering both internal and external stakeholders to easily access the data and insights they need, without having to rely on the RevOps team to do the work for them. You can create efficiency by removing RevOps from being the gatekeeper to data and systems.
Embrace efficient growth now
What’s been true in every economic down cycle is that there are plenty of companies that atrophy because they can’t become an efficient viable business when the easy capital disappears. At the same time, companies that make it through the downturn often become exceptionally strong, enduring enterprises and explode in scale when the economy recovers. As one example, AirBnB came out of the 2009 financial crisis as a world class company.
We can’t do much about the low growth market and macro economic condition as RevOps professionals, but we can help our companies become an efficient growth engine and come out of the other side even stronger. Take this opportunity and make the best of it.