In episode 4 of Kill Yr Silos, Jason sits down with Ross Nibur, the Director of Operations at Toast, to talk about their respective approaches to revenue operations and some of the fundamental concepts that help drive revenue efficiency at SaaS companies.
Perhaps you’ve heard of Toast—particularly over the past year or so. In 2018, they became the leading cloud-based restaurant management platform and then, in light of the events of 2020, became a critical support system for the restaurant community.
What you may not know is that Ross began his career in hospitality, managing kitchens and operating a creative services and event planning company he also founded. That foundation helped inform the way he approaches revenue operations today, which is very cool.
When asked how he would explain his job to his parents (or anyone who doesn’t know the ins and outs of RevOps), Ross answered: “I make the company more money by making it more efficient.”
Driving Efficiency with Revenue Operations
Traditionally, Operations has been looked at as such a cost efficiency function for organizations and not a revenue generation engine. When you say “efficiency” in the context of revenue operations, it sounds like you’re finding things to cut, but when I think of revenue operations, I think about how we’re going to expand by finding the patterns in the buying experience that tell us where operations can actually fill in gaps that our customers are experiencing. So I do think that efficiency is something that is sometimes gained, but the real goal is to create more revenue.
I agree with you and I disagree with you. I think ‘efficiency’ is a loaded term; I think people often think of it as synonymous with trimming fat or reducing spend. That’s not what I mean by driving efficiency.
I’d like to go back to the point of driving revenue generation. One of my favorite examples to use is inbound funnel optimization, as a form of really straight line efficiency gains you can generate with operations techniques only and that really drive downstream revenue numbers.
[Go to 5:00 to hear Ross talk about a specific example of how Toast doubled the efficiency of their MQL conversion with RevOps]
When I say efficiency, I don’t mean doing things just so we’re spending, for example, five dollars less per MQL. What I mean is that we’re making twice as much money through our marketing channel by using data, technology, and process to directly change how the team is engaging with those records.
[Go to 7:35 to hear Jason explain his definition of revenue operations—and mix up a metaphor!]
Prioritizing Work With RevOps
Ten years ago, people had no way to know which parts of their Marketing funnel were working and what to keep spending money on. Then along comes marketing attribution and suddenly CMOs have more money than God because they can prove that what they’re doing is actually driving revenue. How do you prioritize things that are going to make impact versus things that are “urgent” at Toast?
First and foremost, there is no “right” answer to that question and it’s something your team will always need to figure out. I categorize ROI into one of two flavors.
There’s direct time-savings ROI, where we’re really sure that if we do this thing, we’re sure that we’re going to give [someone] 5 minutes of [their] day back, and then there’s speculative ROI. That means that we think if we do this thing, we’re going to improve conversion or performance in some way.
Speculative ROI is the one that usually gets out of control, where numbers are being pulled from thin air and not based on any data or previous experimental design. So, the thing I try and drive towards as we go through that impact conversation is this: have we proved it?
Do we know or do we think? You can make a decision based on what you think based on anecdotal evidence, but that really boils down to experimental design. Are you pushing on your team to run tight experiments—that don’t necessarily leverage tons of technology resources or Ops resources—to prove their hypotheses before you believe the impact is truly there.
The urgency piece of it, candidly, is usually going to be driven by what has the largest impact or if there’s an external factor that’s driving us there.
[Go to 10:35 to hear more on impact vs. urgency and how to prioritize operational work]
RevOps Metrics & Building Trust
[Go to 15:45 to hear Ross discuss why Ops teams shouldn’t be focusing on CAC and how he applies his chemistry knowledge to measuring operational metrics]
A lot of what we do is about calling organizations on their bullshit. We go in and say that the only metrics you should be looking at to measure your operations team are volume, value, velocity, and conversion. If someone comes to us with a vanity project, we better be able to pinpoint where that’s going to actually change the buying experience.
Now, people’s intuition is often right and there often is a problem somewhere, just usually not where they think it is. People tend to mistake their experience of the problem to be the source of the problem, so you need to do some detective work to figure that out.
[Go to 19:35 to hear Jason talk about the different between vanity metrics and momentum-based metrics.]
We [at Toast] didn’t just sit down and say ‘we think time to first touch is important, let’s focus on it.’ That was a big analysis of all this activity and MQL data from over a couple years that showed us all of these performance trends and allowed us to ask what the difference was in how we worked on these leads that led to either success or failure.
I think a big part of building that [trust] with your leadership team is helping them understand how to look at the data your business is creating. Have you created a shared language within your business where everyone starts to have an understanding of what metrics matter and how you should ask for things from one another.
[Go to 22:20 to hear Ross give some specific examples on this topic]
Measuring RevOps Maturity & Impact
If you can [teach people to ask unbiased questions in order to get unbiased data] within your business, teams are gonna want to come to you because they’re gonna want to be part of helping release the most impactful processes and technology, and really solve the most urgent business problems you have in a way that has lasting impact.
[Go to 23:20 to hear Jason explain how Go Nimbly measures RevOps maturity]
Instead of asking if we can be more efficient and save money, we should really be asking what we’re leaving on the table because we don’t know what to ask our customers or because we’ve already eroded that trust or because we sent them an email while they’re already in the middle of a buying cycle. For them, [buying our product] is a huge investment and they don’t want to feel like we’re just another big tech company who doesn’t care about their business. These are very human factors that operations has to address at scale through technology, process, and people.
One thing I would also go to is the planning process your team has already developed. So many members of senior leadership teams are gonna come in and [cite their experience] as a reason to do something. As the operations leader, you need to be able to figure out how you’re going to verify with them whether or not [their solution] will work within your business.
That’s going to boil down to whether you’ve created a common process between teams to make it clear that you’re not saying ‘no’ or [that this senior leader doesn’t know what they’re talking about], you just want to make sure that person’s hypothesis is actually going to hold true here [given the processes you’ve put in place].
What experiment can we run? Do we already have the data to determine whether the gap is there? That culture is the hardest thing to build, particularly for companies going through hyper-growth. These teams are bringing in very senior people to be their silver bullet and know how to solve all their problems but even if they have insight about where the problems could be, you still need to confirm that’s where the problems actually are.
[Go to 27:05 to hear more on RevOps maturity and validating intuition and experience-based gaps]
[Go to 34:53 to hear Ross talk about how art, design thinking, and the restaurant industry have shaped and impacted his thinking and career]
Generalists vs. Specialists in Operations
I’m a big proponent of range when it comes to the role of an operator. I believe an operator’s role (especially in RevOps) is to execute the core capabilities of revenue operations at scale. I think that often organizations tend to choose operational specialists as opposed to operators who have range. Do you believe in a specialized Operations team or do you believe in the power of generalists?
I believe in a range approach, as well. Teams need specialists, but as an operator your job is to look across all the needs of the business and unless you can understand those things well enough to engage with any of those players, it’s going to really inhibit your ability to be completely effective.
So much of my time is just spent translating. I’m sitting down with a go-to-market leader who’s saying they want to launch some initiative and I’m taking that and turning it into user stories or business requirements and then sitting down with a very technical person and explaining what the business needs and what the technology can do to support that. That also involves gathering their very technical requirements and those are two totally different languages to need to be able to speak. My job isn’t to make that systems change or understand the world of that go-to-market leader, it’s to make sure I’m bringing everything together in a way that creates commonality.
So I’m not at all saying we don’t need those specialists. We absolutely do. But to your point, as an operator, you kind of need to be able to swim in any [area]. If you find yourself struggling to do that, you need to surround yourself with people who can fill in that gap and think that way for you.
[Go to 40:45 to hear Ross discuss how he leverages his background and experiences to create his operations philosophy]
Causes of Silo Syndrome: Inconsistent Incentives
[Go to 41:55 to hear Jason break down the causes of Silo Syndrome]
At Toast, which of the four causes of Silo Syndrome that you’ve run into was the hardest to ‘kill’?
I want to say it’s the incentives piece because a lot of my background is working with sales organizations and marketing organizations. When making changes to incentives, you’re touching people’s income—something that’s so important to their day-to-day lives—and if you make mistakes, it can be very costly to the business. Either because you underpay people and you lose a lot of talent or you overpay people and it’s literally too expensive for the business.
I think that when people understand their role through the lens of an incentive structure, it’s so hard to go to them and try and change the way they understand success or failure in their role. It creates a tremendous amount of uncertainty and stress for those individuals. To them, what they’re hearing is that you’re going to make their job harder or take money away from them. You’re going to change a system that they have already worked to make successful. That is a very nuanced conversation to have.