Matthew Johnston is the Revenue Operations Manager at LeadIQ.  He’s stopping in to chat with The Collaborator to discuss Revenue Enablement vs Revenue Operations at LeadIQ, the relationship between Operations and Enablement, and his thoughts on the future of both functions.

At LeadIQ, at team of around 110, Revenue Operations is a team of four, made of up Operations and Enablement professionals.  Operations is more strategic and Enablement is more tactical at the business.

Matt breaks down pricing strategies in a simple to understand manner, pure gold.

Give a listen and remain curious.

Audio Transcript

The Collaborator
Welcome.

Matthew Johnston
Thanks for having me, john.

The Collaborator
I’m super excited. You know, I do a lot of these shows about sales enablement, revenue enablement. And we always talk about the view of revenue operations, sales operations. So I’m super excited to have you here to give us a little bit of a insight glimpse, which which is often necessary, we really need to get a better view of that world. Tell us a little bit about yourself, though,

Matthew Johnston
right? Absolutely. So I’m one of them kind of the original on New Hampshire employees, we added lead IQ. So we opened up in a second office a couple years ago in New Hampshire, and I was one of the first employees to be over there. We kind of focus on sales and marketing here in the States, we do kind of our product and development stuff with our team over in Singapore. And then it ends up becoming a very kind of fun and interesting challenge to do kind of I’m working cross functionally around the world with a team in California team, New Hampshire, remote employees all over the United States and Canada now. And then, you know, that product team over in Singapore, How big?

The Collaborator
And you don’t have to be exact, because I couldn’t be exact. If you asked me this question, how many employees is lead IQ is at 100? As of 200, to 300? Do you know what kind of sizing are we talking about?

Matthew Johnston
Yes, so we’re coming up on 110. Now, what like, you know, to kind of that’s a fun size, right? 100%? You know, I like kind of the company size where you still know everybody’s name, you know, someone can type in Slack, you know exactly who that is, what team they’re on and what they do. But, you know, I think companies are kind of a lot more magic when you when you have that feel,

The Collaborator
oh, my God, my best experience, I started a company I was employee eight, and you know, eight through like, 100, where you’re at more or less, you’re right, you know, everybody, it’s awesome.

Matthew Johnston
Right, exactly. And, again, kind of the best, most rewarding part to me is everybody’s Windsor kind of company wins in team wins at the same time. You close, you know, it makes a tangible difference on the company, you know, every product you build is a tangible difference and everything you’re doing that, you know, and I think that’s just a really exciting way to be able to, you know, show up to work excited every day.

The Collaborator
Oh, I agree. I agree. But we’re not here to talk about your excitement. So let’s, let’s get boring. I’m kidding. I’m kidding. No, it is fun, though. And I would say this, just before we move off of that, if you’re watching this, and you haven’t had the opportunity to work at a small company, it may or may not be right for you. But give it a shot if you have a chance, because it’s just a different experience. And I think it’s one that’s eye opening, just like I recommend working at a big, big fortune 500 company at some point in your career, just just great experiences in both cases. So tell me tell us a little bit about what does revenue operations do? And what does it look like at lead IQ, and if you could sketch out a little bit about how that compares against what revenue enablement looks like, and how that works between the two of you.

Matthew Johnston
Right, so I think of revenue ops is kind of a strategic business partner to your executive board, for any company. And so really, from from the top that, you know, most most companies, especially in the space, where in venture backed software, you’ve got some sort of board you’re answering to, um, in between your executive board and your board of directors, there are going to be some sort of strategic initiatives that come out. And revenue operations is kind of that business partner that figures out one of those are even possible to how to make them possible and three, you know, what all the plumbing and wires that need to get put together to make those things possible, you know, so, you know, good examples are headcount, you know, sales forecasting, you know, process improvements, you know, such as win rates and things like that. And where I think revenue enablement becomes a really popular, really valuable collaborator to revenue ops is actually starting to sketch out the tactical parts of that job. So in terms of, you know, this number you gave us is impossible with a 22% win rate. But if we can get that one right to 26%, we’re in play here, like things like that. And then you would you would take, you would take those incremental improvements you need to drive you take those to your enablement team, and then enablement, figures out the different collateral, different trainings, different onboarding methods, ramp methods, philosophy, building methods, all these different kind of techniques and ways to win, basically, in order to make your company okrs. reality.

The Collaborator
Interesting. You know, I don’t always view it that way. But I think that’s how it can run in some companies. And I think it can run other ways, too. But it’s interesting to hear, Matt, because in many companies, I think that’s how it runs. And that’s great. I don’t think there’s a right or wrong answer. That’s why I was so curious about how you see it, because I think that is a a way it can run and it can run very successfully that way. What What does your operations team look like? Is it a team of one or is it different people doing different kinds of things these days? You’re small, so I’m assuming small,

Matthew Johnston
right? So I was our first operations hire. So I was our ops guy for about a year and now we have a team of four You know, so the hire director over me that’s got about 10 years of experience, he really knows what he’s doing. I’ve learned a lot from him. We have a, we have a second revenue Operations Manager as well. And so I focus on more strategy pricing, monetization, forecasting that sort of stuff or the revenue operations manager, she’s more hands on in terms of, you know, Salesforce outreach, tooling, stuff like that. And then our last member of our ops team is our sales enablement manager who we brought on the last couple months. Because I kind of when we were looking at our numbers and looking at our 2020 plan, with our sales org, getting to 30 or 40 people in that range, we realized that we had enough people were any type of incremental improvements that we could drive from an enablement perspective, whatever really big impact on the business

The Collaborator
smart, none are really smart. So in your organization, its operations enablement, part of operations. Do you report to a director? Do they report to the VP of sales or equivalent? Is that is that more or less? I would say, though,

Matthew Johnston
they just report into our CEO.

The Collaborator
Oh, nice. Oh, really, really? Great, then. Right? Yeah, Tom,

Matthew Johnston
we’ve a relatively flat organization, though, just being 100 people. Yeah, that that is kind of a nice thing, you know, when you mentioned working at a small company is, you know, you are going to know your CEO, personally, and be able to talk to them and have direct lines. You know, and that is, that is an important thing, where you can come up and say, hey, I’ve got a really awesome idea that, you know, I think we can drive X, Y or Z with it. And you can you can get a stamp pretty quickly to try to act on that.

The Collaborator
If I can jump around on you a little bit, man, I’m curious, how does it work? As you mentioned, pricing increases, and those types of things lie in your world? How does that typically work? And I don’t mean from necessarily detail. But if your boss comes to you and says, Hey, we need to it are the conversations more like, Hey, we need to increase the price of this by 3%? How do we do that and hit the targets? Or is it? Hey, man, we got a target of x. And you got to tell me how we’re going to get there? How did those conversations typically flow with you?

Matthew Johnston
Right? So usually, the, by the time something comes across my desk, it’s we have a target of x? How are we going to get there? Okay, because monetization goes both ways. You know, sometimes the answer is the increased prices, sometimes the answer is to actually decrease prices, a lot of a lot of instances of that will be like a localization strategy, where when people are paying the right price, they actually turn a lot less than people that are paying the wrong price. And a lot of time varies by country varies by segment, it varies by product line. So there’s a lot of there’s a lot of different analysis that goes into that. But it’s not like you’ll see a lot of kind of lazy words that’ll just blank and say, Hey, we’re gonna take a 3% rate or something like whatever they want to do, really, which feels so

The Collaborator
willy nilly. Let’s try 3% and see what happens. So what’s the smart way that you mean, because you said a number of things there that I don’t want people to miss out on? You know, it, it could be different for this geo, this locale this, whatever, you really pointed towards a really strategic way of thinking about it, how do you approach figuring out what even makes sense in that kind of example,

Matthew Johnston
100%. So everything that you should charge, a prospect for your product is based on their willingness to pay. And so a lot of companies do what’s called cost plus pricing, which means if you were selling t shirts, if it cost you $10, to make a T shirt, you’d sell it for $15 and say, hey, I’ve got a 50% margin, I made $5 on a T shirt, what I would do is I would go talk to 100 people and find out that on average, they’re willing to spend $37 on that same t shirt in charge and 37 for it. And then you’d make $27 on that same t shirt instead of the $5 have a much better margin. And then Believe it or not, you’d be much more likely to have people rebuy t shirts from you with the $37 than the $15 because they’d have a higher perceived value.

The Collaborator
Which makes perfect sense to me. But I don’t hear enough people talking about it that way. Which is why I’m why I’m sitting here going. Yeah, it makes sense. Why? Oh, let me let me let me take you a little bit lower level, then you want to go talk to 100 prospects or 100 customers? How do you how do you actually make that happen? Do you sit down with your sales team? Or how does that work?

Matthew Johnston
Yeah, and this is where this is another really important part for Reb ops and for enablement is you need to be the business partner with your other units. Yeah, never, you know. So in a bigger organization, typically, Product Marketing handles this function. We don’t have a dedicated product marketer, but I’ll sit down with my, with my marketing team, we’ll segment our database and figure out who makes sense to talk to you from different segments. So you want to talk to some happy customers, some prospects, some friends of friends, some people that churn but you want to get it you want to get a nice value of everything you want to pull from from the bottom all the way up to the to the C suite. So a lot of mistakes that I see for people that talk to customers is they only want to talk to the very top or they’ll just blast something out, which means you only get things from ICS you want to get both if you have any kind of freemium offering or upgrade On your product, it’s going to be more of the ICS that end up investigating that out, well, if it’s a pure buying decisions typically going to be the other way. So it’s important to get that whole segment of data. And then the other thing to look out for that I see in SAS more than anything is, I mentioned cost plus pricing and value based pricing. But the worst type of pricing, which we see in SAS all the time is competitor based pricing, which says, if you’re selling t shirts for $15, I’m gonna sell my T shirt for $14. Because I’m cheaper. And that’s, that’s all over the place. And it’s a race to the bottom, it’s a race to the bottom, and then yeah, but it might cost me You know, a lot.

The Collaborator
No, no, go ahead, Matt, please,

Matthew Johnston
I was gonna say it might cost me $15 to make that same t shirt I’m selling for $14. When it cost you $10. like everybody’s costs are different. Everybody’s got different structures, you can only price your product and package based on what makes sense for your organization. And the biggest mistake I see for all these companies, like if you go to any pricing page, and I see that there’s a free plan at $25 month plan and a $50 a month plan. I know they didn’t do any research. Because if you do any research, you never get flat numbers like that, that scale linearly.

The Collaborator
Okay. That’s interesting. Intuitively makes sense to me. But it’s, but you see so many sites that do it that way. Right? So do you have a standard set of questions you ask people, you know, is it do you generally sit down with them and go through a list of four or five questions to figure out what they’re really willing to pay? What is that? Can you tell us more about that?

Matthew Johnston
Yeah, so there’s four questions you need to know, which is what’s so expensive that you’d walk away and when to buy it. So t shirts, I don’t know, $50. If it was the best t shirt on the planet, you wouldn’t pay more than $50 for that T shirt. This is this is the one for SAS, that’s important, too, is what is so cheap that you’d walk away. So if I offered you a $4 t shirt, you’d probably be like, I don’t trust this, I probably put it on, you know? Exactly. And then the other two questions are,

Matthew Johnston
what is what price? Is this starting to get expensive, but you do it anyway? if the value is right, so maybe 25 or $30? And then what price Do you feel like you got a really great deal on that and would buy it again, which is you know, typically 1920 bucks for a T shirt. And when you get those four, four numbers from everybody, you you put them all in aggregate and you graph them out against each other, and you get a couple of axes. And that’s how you price your your low option, your better option and your best option. And that’s that’s called the Van westendorp analysis. That’s how Apple Samsung the smarter software companies price. When Apple raised the price a couple years ago from the iPhone from $600 to $1,000. That was what they did is they did that analysis and realized that they were leaving $400 on the table from what people were willing to pay.

The Collaborator
And I just shook my head at him at the time saying I’m not paying 1000 bucks. But I’m with you. A lot of people did. And they made a lot of money from that process.

Matthew Johnston
But when you when you get that graph, you’ll it’ll show you like when you do the economic analysis at what percentage of the people will walk away at that price. Yeah, and for I don’t know what the exact numbers were for Apple because I wasn’t there. But my my understanding is, is probably somewhere between 10 and 15% of people said I’m not touching this, I’m going to get an Android, then probably the other 580 5% of people said you can have my extra 400 bucks. They’re breaking it up on my carrier plan, whatever, you know. Yeah, it’s not gonna hurt that bad. They doubled their stock price. So

The Collaborator
yeah, they’re doing something right, then, you know what, when you’re having these types of conversations are doing this analysis, is enablement, playing any sort of role at this point? Or where you are today? Or is enablement more of a complimentary function? Once you understand what the new pricing is going to look like? Is that where your partnership really begins?

Matthew Johnston
Right? Yeah, so I do I do a lot of the pricing work kind of on my own, like, you know, it’s it’s kind of my passion, but like when I kind of take those numbers and taken everybody get them approved, and they say, Okay, this is cool. And then I’ll take it to enablement. And they’ll design the training, they’ll design how to roll it out, they’ll really work with the wraps, they’ll put together all the supporting documentation. Yeah, that is honestly just as important as the pricing itself, like you can, you can have really fantastic pricing. But if nobody understands it, then you lost a great, a great, there’s really, there’s really well priced software products out there. But it’s kind of hard to understand the pricing, like, you know, for certain certain products out there, especially like in the in the platform space or people that are like infrastructure as a service or platform as a service. Where you know, you’ll have a base price. And you’ll have different calculations depending on how many compute hours you need and terabytes of data and stuff like that. Where if you don’t if you don’t explain that right to your prospect, you’re going to lose them even though it you know, it’s a really, really well put together mathematical model. I

The Collaborator
remember the first time I tried to buy anything from AWS, you know, Amazon Web Services, it was like, I don’t know how many computing cycles I need to run. It was just to your point, it probably made a lot of sense, but it was extremely confusing and hard to understand. Right? Is there advice you would give to anybody in enablement who’s trying to become not necessarily more operational But maybe you know, in terms of becoming more analytical in how they approach the job, or the things that you’ve seen in your own in your own work, or just in your opinion, that would help enablement professionals,

Unknown Speaker
I guess

The Collaborator
I’ll say up their game, but I don’t necessarily mean it as a slap of how we’re doing what we’re doing today.

Matthew Johnston
I think I think the best thing you can do is to become like a real business partner, where when you have those calls, like they they happen all the time when you’re talking to customers, that you’re sending out survey emails, or things like that, just getting yourself involved in the process and you like, at least that’s how I learned is kind of through osmosis like that, where when there’s something I want to learn, I’ll get myself involved in these projects, even if even if I’m just kind of listening in the beginning, that you know, you don’t, right, it takes a little bit to kind of understand stuff. But once you can kind of watch that process the first time, the actual work of pricing, your product isn’t difficult, you just have to do the work. Then there there’s like, if you want to look up different spreadsheets and templates out there, they’re there on Google just to just to take all that survey data you collect, and it’ll actually spit out the models for you. It’s pretty easy.

The Collaborator
Yeah, life is life is a lot simpler than it used to be. Everything is at our fingertips, good news, and good information, and bad information is all at our fingertips. Um, you know, one of the things I was curious to get your take on that. I think that operations and enablement are slowly converging in terms of being a supporting function for customer facing teams sales and so on. What’s your view on that?

Matthew Johnston
Yeah, so we like, you know, our organization, we have it in the same department already. Because we

Unknown Speaker
Yeah,

Matthew Johnston
I think that the fewest number of just unnecessary divisions you can have in a company between departments, the better that you know, and that’s, that’s kind of the whole idea behind revenue Ops, instead of sales, Ops, marketing Ops, customer Ops, partner Ops, all that stuff, like you should, that you should have all your people that are doing, you know, 80%, similar work working together, or at least collaborating together. Because like, if you if you put myself and some other people in a room like rarely am, I always going to have the best idea most of the time, I won’t. But when you get the right people together, you’ll you’ll get the right idea out. And so as long as you have a good leader, that’s that’s, that’s completely willing to say, I don’t care who this idea comes from just as long as we have the right idea. And we’ve got something that’s actionable.

Unknown Speaker
For us

Matthew Johnston
and Ops, like nothing ever happens. It’s not data driven. You know, if it’s something if it’s actionable, if you’ve got data behind it, if you’ve got a good hypothesis, if you’ve got a real action plan or something like that, then you can get greenlit and go for it. And that’s that’s kind of that’s where that’s where I think this is going is I don’t think it makes any sense to take your enablement people and invest in that function and then just have them be off to their side and have them you know, look for stuff to do I think it makes a lot more sense to say this is the most important thing for our company right now. We can’t get there unless we achieve x y&z How can you do that with us?

The Collaborator
Great, a great, I love that view and dead on and I’m so excited to hear you say that, you know, we we’ve talked for 21 minutes and and I usually keep this to under 30, anywhere from 20 to 30. And we’ve covered everything. I actually was curious to get your thoughts on that. But tell me this, in we talked about that you wanted to share? And were there any points you’re like, geez, I just want to get this point across because I think it’s that important.

Matthew Johnston
Right? So I think I think there’s going to be a big split in the next year to two years. And I’m already seeing this a lot in like job postings and watching people move around a lot, but between kind of, between kind of the electrician on your ops team and behind kind of the strategy part of it. Because for a lot of the a lot of the job postings that I look at, like people are looking for an electrician to say, Hey, you know, build us dashboards, you know, Rob my route my leads Round Robin, this

The Collaborator
make the detailed work inside of the CRM, the technical work inside of the CRM.

Matthew Johnston
Yeah. And really, you know, I think people are starting to realize, but that kind of stuff like what well, it’s time consuming, and it’s important. I don’t know if it’s necessarily worth like, kind of, like upper management, like kind of director level salaries, I think it makes a lot more sense to do that in a fashion where you can, you know, take people kind of kind of more junior, maybe someone from your SDR team that’s done a good job. Like,

Unknown Speaker
kind of,

Matthew Johnston
I think, I think that should be kind of a jumping off point to get into the organization. But I think really the companies that are growing the fastest they’re they’re, they’re using operations more as like a strategic business partner than just just just someone that’s going to, you know, cross wires together. And I think that’s a really important part for companies to get to, because like GIS because if you look at it, like a revenue operations manager, job posting, or especially a sales ops manager posting, it’s the one role in SAS companies to me that I think is kind of interesting, where probably 70 or 80% of the time, you’ll see a lot of the the job asks being like very, very, very junior very, very kind of repetitive, like we don’t really want you to think that much we want you to just we want you to just bounce territories once a quarter you know

The Collaborator
I that’s an interesting observation. And I think it’s really spot on that, you know, at that at it’s certainly at a director level any role in the business should be 80 plus percent strategic, if not, why I said 80 plus. And I think you’re right. A lot of times you do look at the operations roles, and they, they tend to be more hands on tactical roles versus strategic. So I think that’s a spot on observation on your partner, be interested to see if it does evolve in the right direction. Right. All right. Well, thank you, Matt. I just want to thank you for coming on. Absolutely. Thank you so much for coming on and sharing your insights. Ya know, likewise, and, and enjoy your NBA and your move out west and stay safe and well, my friend. Take care

2 thoughts on “Revenue Enablement vs Revenue Operations – the changing relationship

Leave a Reply

Your email address will not be published. Required fields are marked *