#106 Metrics That Matter Across Sales, Marketing & CS - with Sarabeth Scott, SalesOps at Camber Partners

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I'm here with Philip and our guest today is Sarah Beth Scott. I hope I pronounced your name correctly. [LAUGHTER] Yes, that's an alpha. [LAUGHTER] No, I'm really bad with names. So great to have you on. I think we first saw you at RevOps AF in Santiago where you did a great panel with Hillary from Inside Partners on metrics and bot reporting. And actually today we wanted to talk about that exact topic. I mean, you've been a VP at Kamunda, Tether, Talkwalk, Upkey. You have a lot of experience and you recently joined a private equity company. Maybe tell us a bit more about that role and then we dive in and do basically bot reporting best practices today which is going to be a lot of metrics and why they matter. So I think it's going to be great. Awesome. Thanks for having me. I really appreciate you being here and following your journey for a number of years. So I am super excited to be here. But yes, I just made the switch from being an operator and kind of jumped over to the investment side. And Kamber is a growth equity company. So we are a little bit of a mix between venture and PE. We're really focused on companies and the investment profile that we originally targeted were very PLG heavy companies that had opportunity to grow and scale even more with adding that sales motion on top. So my role is net new to the organization. And I'm working with our portfolio companies to spend time on their sales teams and efficiency and CRM, how they're supporting the whole process. That's growing from just sales but all the way across the funnel and to DevOps. So that is the switch that I've recently made and it's been an interesting one. It's really an interesting thing to move from being an operator to not being an operator. So I'm still getting used to that. Yeah, yeah, yeah. I can very much relate to it. It's been some time in VC and yeah, definitely like operating a lot. Not every day, not every every hour. I must say as we all feel sometimes, right? Yes. Especially not. I mean, I think this like bought reporting topic is obviously top of mind. I remember at the last refops, I actually met someone and she was there taking holidays from Israel. Also very well known in refops and she was basically saying, "Actually, I'm at a conference that I booked privately but my CEO just recalled me and needs the bought reporting pack until Sunday end of day." And I think we've all like in refops have had these experiences, right? And so I mean, I think we talked about bought reporting with John McMahon, right? He's been on various boards. And today, what we want to do is really a deep dive around what are some of those bought metrics and how should you think about the core frameworks? So maybe let's start with the framework. How do you think about bought reporting metrics in general and then let's maybe dive into the specifics, say it's marketing, customer success. Sure. So generally, overall, I've been involved in preparing board decks for many years and many different companies. Revops usually takes a good either the lead or has a very, you know, kind of big part in producing that information. The couple things that I found generally, one, you got to stick to a format that the board will expect. So very consistency. Every board meeting is really critical so that they know what they're going to see and they when they look back, they have a way to compare. And really, like the opportunity in the board is like, you may have a different narrative for every meeting, depending on what's for you. You want to tell or what strategy you're employing and how the number support that. And you can do that with narrative and the different things that you call out, but the metrics should largely be the same and consistently reported every meeting. That's thing one. And thing two that I've kind of recently come into as I've been thinking through how to build out what the board reporting, kind of the customer journey or go to market holistically board reporting looks like for our portfolio companies. As we're trying to put some standardization and make it easier for them to report to the board in a consistent way. And so as I started to think about, okay, what is the framework that we can put together here? You know, I was like, let's stick to the basics. These are smaller, the companies that we work with at Canberra are smaller, less sophisticated. Well, they kind of earlier stages and say, sophistication or not. They're kind of at their early side of growing a sales team. And so their sales organizations are usually smaller. But we also need to be attention to the PLG metrics and how those things play together. So the thing that I was thinking about is how can we do this in a way that drives consistency, but that when we roll it out to teams, they understand why, kind of the purpose of it. And so we organize, I ended up organizing in around different questions that the board typically asks. And so it was kind of like this framework that is like, okay, for the sales team, are we hitting your targets? I don't want to see a book in person's plans and so on and so forth. So kind of thinking about like what are the key questions that the board typically asks when you're talking about to go to market function and the efficiency. Yeah, yeah, I love it. I think the consistency piece is crucial. And then also the story pieces crucial as we all know, right? Like the reporting might not even be fully discussed every board meeting, right? Like it might be three, four topics that you want to touch on, right? So that's kind of the story part. But at the same time, as soon as you hit the growth stage and then if you have PEs involved, they also, I mean, even if they don't talk about it to us in the board meeting, they'll look through this in detail. And we work with a bunch of Vista Act, Vista partner and Apex and your Azeo back companies as our customers. And when you see their reporting packs, it's quite extensive. And they do care a lot about it. And I think why this is interesting is because that is actually what really like best looks like from my point of view. Because they do have a lot of a granular details versus most of the venture capitalists that don't really go SD, right? So I think you're really in the middle of that. And I think that's super interesting because obviously it can also, right? Like it's always in context of like what size are you at? And how many headcounts can you actually devote to just doing the reporting piece? But maybe we can just walk through the different questions and then talk a bit about the metrics that you would recommend to look at. Because I think that would be super helpful. So maybe we start with sales. I mean, what questions are typically being asked? And then we can just walk through that. Yeah. So I'm sure others will have their opinions and have other questions that they think should be included, but it just kind of starting at the high level, the things that I kind of came up with were one are be hitting targets. So super easy. What's your bookings versus plan number? However, you want to show that. And then what's your overall quota attainment? And usually like a quota distribution, it depends on how many, how big your sales team obviously is, but understanding how many of your reps, if you have 10 of your reps or 20 reps or 50 or 100 or 1000 reps, what's the percentage of quota attainment that each one of those is kind of banded quota attainment? Will we hit future targets? This is the next question. And that's all around pipeline generation, pipeline coverage and forecast accuracy. And the one thing that I would say about pipe coverage is because you always hear it's 3 to 5 x, it's 3 to 5 x. I would very much encourage people to really do some thinking and some research. around what is normal for the type of business that you're in. If you're selling to SMB businesses and your sales cycles are less than 30 days, pipe coverage means something very different. So then you have to move toward looking at how much of our pipeline to be creating close in a month and understanding the historical trends there to give you a better read on are we pacing to where we need to be. So I say pipe coverage but I would just issue that word of caution of like make sure that you're applying the right coverage rates for the type of business that you have in the product that you're selling. I actually remember this, you had this conversation also on Revops AF on stage on the pipe coverage and it definitely left an impression on me because we also calculate pipe coverage and we actually changed parts of our product to not highlight 2.5 X as like best practice anymore. Yeah, at least the disclaimer that you need to. Basically the best way, I mean curious what you think about it but like so as a company you should basically look at what pipe coverage that you need historically to actually hit your targets right and then this is probably like a best practice and then you should slice, dice it based on different products, geos, however your sales team is operating, however it's set up but that's essentially then the right approach and even like a pipe coverage of 0.9 or 0.8 could theoretically actually be okay. For some magical reason you always have a team that pulls out like sudden big deals out of some hidden compartment. That are probably not in the CRM or if they are there in a fraction, the amount is a fraction of the amount. Yeah, yeah. No, but it's a good point because like at Commenda we would always look at our pipe coverage coming into a quarter and we were never over 2X and usually it was somewhere between 1.5 and 2X and that was because though we were walking into every quarter with really late stage pipe. So it matters where because we had much longer sales cycles because we were selling enterprise and that's why I say all those factors play a role into how you define what good looks like in terms of pipe coverage and pipe gen and kind of pipe progression. So all of those factors need to be applied and to your point like all of these metrics that we're talking about sorry I'm going to take a side step for a minute is these are the basic metrics but you can slice and dice these in whatever way is meaningful to the business. So if it's geo, if it's persona, if it's industry, whatever that thing that is driving your business that's really important, we have one of our employees that's really moving up market. And if S&B Mid-Market Enterprise is a big thing for them right now but also the platforms that they connect into. So their tax provider, sales tax provider and so are they getting business from Shopify from WooCommerce, from where's that coming and then they can that's important to them so they know where to go. So anyway I guess I'm too much detail but the point is is that all of these metrics should be applied in whatever kind of matrix that makes sense for your business. Yeah I know, I mean quote statement I think also like do you track that against everyone or only like do you track when a rep is like fully rammed like do you only only fully ram to quote yeah quote a statement is pretty much like you're really only looking at your fully rammed reps but it's also helpful for the board to understand how many reps you have in seat that are ramping and what that period looks like so that you understand because that goes to another metric that I'm going to get to in a minute which is I have what was your planned capacity versus your actual capacity so every year we all know we go through the the process of understanding your job bookings plan how many reps do we need to to have coverage on that plan bless a little buffer and it's great it's beginning the year you have a whole thing mapped out well then somebody leaves or somebody is it performing well or whatever it is or you can't get good and good reps hired you know so you fall behind in a hiring plan and so the understanding of that dynamic of what your capacity is to what your planned capacity is an important metric and that is a part of this list for sale sorry I'm jumping around yeah I don't know but if anyone is interested in that topic I mean definitely check out the episode with John McMayhem I mean we talked about that at length right this is especially I mean if you if you scale a MongoDB or snowflake and you hire hundreds of reps right this becomes basically the factor like Achilles scene and yeah I mean just just really good episode I think to recommend but okay so so we had like are we hitting targets well we hit future targets yeah what's the the third question you think of them the third one is is the sales motion efficient so are we closing business the way that we believe we should be based on historical data and you know kind of industry norms so when that category is your ESP very simple your sales cycle what are your conversion rates and you can look at conversion rates in terms of from SQO to closed one you can look at it operationally you should be looking at the full tunnel conversion so you understand where deals are leaking and things like that but that's much more in the weeds and for the board I think in SQO to close one conversion rate gives you a good picture some people look at win rates only I think the two side by side are actually somewhat interesting so win rate being just of the total number of deals closed how many were one and how many were lost but the conversion rate really tells you the quality of the pipe and then of course CAC and CAC payback which it also shows up in marketing obviously so those are kind of the efficiency metrics like again sticking to the basics these are all metrics that we've all known forever and ever and so you know they're really indicative of how the business is moving especially when you put it in conjunction with hey we really like our goal of this year is to move up market and so we because we believe we can have higher ESPs our sales cycles may be longer but if you start to look at that trend month of or month of or month you'll start to see that in mind with what your bookings are in that segment blah blah blah okay so so uh it's the sales motion efficient right like I personally love CAC payback a lot I think this is great great metric hey Philip here are you enjoying this episode well good news because you can find more free red ops and go to market resources on get reflow.com/redops access over 20 cheat sheets reports and guides that will help you become a better revenue operator or join over 2000 subscribers who already get the latest resources right into the inboxes without a free newsletter just go to get me flow.com/redops what if if you think of the sales metrics right what are some other questions you're asking yourself oh so the other thing is is the team healthy so this is getting to that capacity versus planning capacity and then what is your average rock productivity um have been in businesses where you know you know that that also is kind of in conjunction with your quota attainment if your quota if you're overall quota attainment is low then your your overall record activity is likely also low but if you have reps that are you know you're they're performing you know if you have at at least half of your reps that are performing quite well it can buoy up the overall rep productivity but that's a number that um I actually wasn't necessarily that tuned into until I got into some of the bigger organizations upkeep and uh talkwalker and then community was a big one for us I mean our average rep productivity there was over a million year old year so um it was quite it was quite strong and um that brings an interesting dynamic to the conversation around goals with finance when you have that strong performance with rep activity um and so you also like I think it's interesting when you look at rep productivity to make sure you're looking at 10 year as well yeah yeah like for the rep productivity do you only look at the financial metric like like kind of like output like sort of like in deals closed uh one or do you look at activity metrics as well like I think you have to look at both I think you have to look at both and some companies I've been in actually some of the bigger organizations it's purely just what are they producing in terms of ARR um but I think when you're in a more transactional business the activity um is really critical understanding like how many meetings because you you'll know you have historical data to understand what good looks like for a rep that produces what they have this many meetings at least this many opportunities and that those opportunities close at this rate and therefore it generates this and so that's really kind of the if you just look at the rep like funnel if you will of like they are able to have five new prospect meetings a day or whatever it is if the special experience selling that's not the like there are easy markers that you can put out there because you know it's almost it can become formulaic to an extent if you have a rep profile that's defined and you know what the activity levels need to be in and so on and so forth. Yeah yeah okay great yeah maybe less like relevant for like the average board meeting but then at least for middle management. Yes definitely yes yeah great okay I think we have one more question on the on the sales side. Yes yes and then this is actually applicable across the board but are we growing in retaining customers. So that's your GRR and your NRR which maybe some people wouldn't put that into a sales metrics but it depends on if an AE is responsible for expansion that obviously makes it very relevant but I think it's relevant no matter what or when you're talking about anything go to market related. So you'll see that show yeah it's so critical. Yeah and then I think when you segmented by you know SMB market enterprise you often see some good surprises right because you might see that. Yes smaller companies at least most often turn more than larger companies at least that's the typical pet hand most companies see and then obviously NRI I mean I think it's just right it's is really like probably the most beautiful thing and in SaaS right like that you can actually just keep growing without adding anyone in theory and and so obviously you know if you're above 130 140 that's just like really really good and it shows up in your evaluations or the investors deeply care about it. 100 percent I mean it's kind of become the metric of the last couple of years of NRI everyone is focused on land and expand growing those existing relationships because it's really hard to to bring a new customer in it takes you know depending on your business but it's it's hard to bring to acquire net new logos and so the worst thing you can do is lead them or not grow them. So yeah I think the last metric on CAC Payback I heard was like somewhere between 28 to 32 months so meaning that you need 28 to 32 months to recoup that investment of acquiring that customer. Yeah which right like it's it's a very long time assume that you basically don't shurn them so if you have a high NRI on those customers and then obviously you reduce that CAC Payback quite significantly but yeah I think it's it's yeah I think this like CAC Payback GRI and obviously like you know booking those plans right like I mean they're all a matter right they're all a matter like yeah for different for different days if you think about marketing right like I think it's very nice to think about it in questions what are the questions you think about. So with marketing it really comes down to three things in my view are we generating enough pipeline and that's relevant whether it's a product led growth company or a sales led or mix it both and so in terms of that you look at what are the qualified lead volumes and QL's TQL's a lead velocity rate which I think is a very fancy term for just looking at qualified lead trends month of or month like how would you need to be getting in month of or month of or month. I actually wanted to ask you what that metric is like I didn't know exactly I was like somebody said that to me and I was like I literally was like I need to look that up and then I was like well I kind of like the term but I don't know that it's that widely used but I know in every business I've been in we we report month of or month lead trend so there you go and then just total marketing source pipeline and I think you know that that varies wildly and in whatever product you are selling those rates will look very different. Okay and then the third the second area is pipeline quality so is the pipeline quality sufficient enough to meet our plan as you know this is usually the push and pull between marketing and sales and so it really is that is where you'd want to look at mql and or pql's the sql conversion and pql the sql I know it may sound a little strange because it's product qualified lead that usually closes and self-serve but there are absolutely many cases where pql comes in and then it requests sales to be involved and so you want to make sure that those interactions are adding when you get a salesperson involved that it's additive and those ASPs are higher so in companies where you are you have both motions plg and sales lead you need to make sure you're looking at these metrics side by side. Total marketing source bookings of course so how did that pipeline convert into bookings? How many new paying customers do you have and then what's your annual revenue for account ARPA? Pretty standard stuff. Yeah, yeah, it makes total sense and like you say I'm assuming like wildly fluctuating throughout the year. It's very hard to get some consistency on and also okay right if you can explain it I mean it's always like campaign like many of these things some are like you would expect like a consistent sort of like baseline and then for others wisdom you have peaks like OSPikes and like due to like campaigns and like yeah it's just kind of like to put whatever your marketing calendar looks like well obviously it influenced a lot of this but I think that's why it's also there's a lot of value in looking at like is there a seasonality at place or looking at prior years you know comparison the last year things like that so yeah yeah yeah certainly and then also like I mean like with a growth hacking and quotes where like you also like sometimes you have these like new motions they suddenly like come up and then they're successful for half a year or a year and then less so again and yeah yes nice okay one more I think on the market again. The one more is marketing efficient so then you're right back to your to your CAC and your K-BAC KAC payback period and your LTE to CAC so you're used to enter it in the marketing world. I have a general question so we talk about sales we talk about marketing we're going to talk about customer success where do you see like the kind of outbound game is that is that part of sales is that part of marketing just curious. It depends on where your BDR or SDR team sits. If you have one I do think though it really does belong to be reported in whatever function it sits within but I think it's relevant for both because marketing whether it sits in the marketing organization or not it obviously has a very strong overall and supporting that motion but it's the it is the wraps that are doing the outreach and that to me is falls under pipeline generation so whenever you look at pipeline generation you want to understand what is the source of that pipeline generation so that's the only not the only one but one of the only metrics I would really encourage no matter what look at the source of that pipeline generation every single time. And honestly like it's a big factor we were talking about GRR and all these metrics like it's a really good exercise to go through at least one or twice a year certainly during planning to look at what are what are what all of these metrics actually look like across different industries across different segments and you'll very quickly be able to kind of use that as a proxy almost to get to an ICP. Then a word of times I've looked at like all of these metrics like literally lined up across the the different industries that we have been targeting in the times that we've been like whoa we've been targeting this industry and not performing super well. So our retention rates are lower than industry our sales cycles are longer our ESPs are lower like any one of those metrics that looks off you need to dig in and understand why but sorry I took a major side step here but I think it's relevant. Yeah so I think makes total sense right and like you said I think like all of these I mean all of the metrics that you just mentioned so far we still have to cover customer success. Yes customers. But and like it always makes sense to look at it like by geo by industry and segment segment segment whatever like you however you slice and dice your revenue organization this is also I guess how you should slice your your KPIs that you report for the for the board because like you that's what that's what it's for right you want to make strategic decisions for different parts of your organization. So yeah. It feels almost like we're gonna we're gonna have to do one on ICP because I think this is something that is so hard and like you have so many different like often so many different ICPs and then you think this but then is it back on real data and like how do you how do you go about it right like and I think it it goes through like it basically touches so many aspects but yeah let's not do it today. I don't know customer success. That's so much. That's already really good. It is really good. Sorry, this is a dense episode, but I hope you love it. I certainly do. So yeah, customer success. What are the key questions there? First, are we retaining customers? So that's looking at your gross retention rate and then your logo retention. And that's important to have that distinction because you can replace, you know, someone could churn or voucher, but they could downgrade. But then they get added from product and still maintain and you could, you know, ostensibly. So anyway, the point is is that those two things by side will give you a really good picture of how many customers you are actually retaining. And then secondly, is our re-growing those relationships? So what is your NRR? And then what is the expansion revenue rate or just what is your percentage of expansion, bookings and/or revenue as a percentage of your beginning, ARR, whatever you're using? And then for any PLG-led companies, is there a self-serve expansion, meaning our customers coming back and saying, this is great. I need more. And then the third question are simply our customers healthy. So hopefully you have a health score of some sort. And so understanding what that health score distribution looks like. So if you look at your customer base and, you know, kind of, if it's just to be super simple about it, Rand yellow green or whatever those scores are for your business, looking at the number of customers that sit in each one of those. Is it good indication of how much risk or how well you're doing? And then of course, MPS, I'm a little mixed on how I feel about MPS, but I know I think it's one of those things that is just there and will forever be there. And, you know, and so easy to hack. So easy to hack. It is easy to hack. And usually it's like, you can put an MPS for up. We had this happened in one of our businesses or one of the business I was in. It was like the board asked how many customers responded to give you that MPS for. And it was like a very small percentage of our total customer race. So then it's like, I've seen MPS implementations were basically like the defining like rules of triggering the survey. We're like no crash within the last 60 days, no submitted support tickets. Basically, basically just tracking lots of things and only showing the MPS survey. If you actually like fall into that category, which I'll see. Are you serious? Yeah. I'm serious. I'm not going to say who obviously, but like, yeah, that's a, that's what I'm saying. Like so easy to hack. And yeah, yeah. So it's not just the end, right? Basically, it's like, tell us exactly how you implemented that MPS survey. What is the trigger? Like, yeah, yeah. Okay. No, this is great. I really like it. And so just to recap. So we covered three questions in customer success, three questions in marketing, five questions in sales. We put those questions into our show notes. So you can copy and steal them from there. But I think that that will help you in any board meeting in the future. And maybe one question from my end, just just because this is Revops lab podcast, just your perspective, you know, what's the role of Revops when it comes to all of this, these questions. Yeah. How do you see the role of Revops like helping to put these numbers together? I feel like Revops is in a uniquely good position to a, um, understand these metrics and recognize when there's red and green flags in them. Um, and I think that the ability to take the metrics and put the context of the business around it or vice versa, putting the context around those metrics is, is, is, I don't know that there's another place in the organization that where you can do that as well as you can from Revops because you understand all of the back end, the process, what goes into it, how things should be working, um, what campaigns are running like you inherently know all the things that are happening to support the good market functions at any given time. And so having all of that contextual knowledge, I think is sometimes, I remember the first time I was like, I actually know a lot more just from talking to reps like I, that's one of the biggest things like you gotta talk to the people in the field, but also like you understand what's happening. Um, you have an engagement with sales leaders with sales reps with, you know, customer success managers, you have, you know, Revops works with all of these people every day. And so having that color commentary around the numbers helps support or bring to life a narrative that maybe other leaders, no organization don't necessarily have. Yeah. I mean, maybe just a comment to add. So, right, like, getting to like, now we run through a lot of metrics and questions, but like, getting to those metrics and being able to actually track them properly and report on them accurately is, is, is, is, kind of, right? Like, is, is also not easy. It's just not easy. And so, it's right, like, you have to get to that. And then you have to get to the ability to segment, because if you can't do that, that's almost like a superpower. Because you can go to your CEO, you can go to your CEO and say, hey, look, I analyze, you know, our mid market business. And I realized that in this industry, we're spending that much for customer and we actually spend that much for customer in a different segment, you know, shouldn't we redirect marketing dollars that way or pipe gen dollar stack way, right? So, so I think like, when coming up with these like strategic insights, then, yes, realistically, the other one, see, is really a superpower that can help you, you know, grow your career faster and get to see that at a table. 100%. And of course, all of that is particated on the fact that Revops needs to construct a tech stack and a system and a data structure. The data infrastructure is so critical. And you're viewing a lot of people talk about that now as people want to infuse AI. Like, if your data structure is not sound, you will not gain anything from any of those tools. And so that's thing number one is making sure that the systems and the process are set up in a way that will that are kind of in and there's a data structure behind all of that that supports getting to these metrics, cleanly and easily and accurately. So that's thing one. And then the second part of that to your point on the superpowers is like having that contextual knowledge to then bring that to life and see the opportunities that live in that data. Love it. Okay. Wise words. Thank you. I think this is a great place to end. As you know, we always ask one final question at the end. What is that? As you know since 35 minutes ago. So, yeah, the question is always like, what is a recommendation for a book or like a show or like a podcast that you would make for our audience? Yeah, I have been really into Cliff Simon just launched his load star. Business are Polaris apps, but he's got a newsletter called the load star. And I read it every time it comes out. And he watched a number of his podcasts. He's got some really great folks on there. So I love his voice. I love his viewpoint and his vantage point on a lot of things with Rob Ops. And so he's always been a voice that I've appreciated. And I'm really enjoying his new content. So there you go. Awesome. We should get him on the show. We actually had him on this show. Oh, you had him on that. Yeah. So that actually, such a thing. So Philip wasn't there. Like Philip was. But Cliff and we hang out at different places actually because he also see his at a lot of events. No, he's great. I mean, we searched other at the last wrap-ups AF and then he and Berlin next year at an event and so on. So yeah, great person to follow for sure. And Sarah rest. Thank you so much. This was awesome. Really enjoyed it. And yeah, all the best for your new role. Thank you. I appreciate it. Thank you. Thank you for listening to the Reathers Lab podcast. If you enjoyed this episode and would like to support us, share it with a Reathers friend or Truppos 5-star rating right now. And if you have feedback, questions or guest ideas, just send a message to Janice or me on LinkedIn. Thank you and see you next time.