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Annual Planning: Reflections on the Role of RevOps

Mark Lerner:

Alright, everybody, welcome to the first revamp episode of 2025, at least when this will be released. I’m really excited to have Andrew here. We’re going to chat about something that is probably very fresh in people’s minds about annual planning and some of the insights he has from that exercise this year and maybe some actionable things that you all can take home with you. But before we jump into that, Andrew, why don’t you go ahead and introduce yourself to the folks at home, a little bit about your background and how you got to where you’re at today.

Andrew Morales:

Hey, thanks Mark. Appreciate you having me on the show and I’m excited to be here as well. Some might think about talking about annual planning in January as something a little bit too late, but there’s always something you can adjust at the last minute or think about for how you kick off the year and keep in mind for next year. So I think it’s a super timely conversation. Just a bit about myself, born and raised in Southern California. I started my career in sales and in revenue. Started at a company in logistics at FedEx and started as a sales rep and lead gen back then for me was following the UPS truck at the end of the day and where they made their last stop of the day. That was their biggest customer with the latest pickup time and the largest package count. And that was going to be my biggest lead the next day and just walking onto the dock to try to win that business and my career trajectory has followed me through the years from larger companies to smaller companies and moved into operations probably about seven years ago at Tableau. And then have spent the rest of my most recent career in revenue operations and now here at Captivate iq, overseeing our go-to-market strategy and operations function.

Mark Lerner:

Awesome. Yeah, and just to echo, obviously it’ll be January when this goes live and almost everybody’s probably either mostly or has completed their annual planning, but I think this is a great opportunity while it’s still fresh to kind of review because I’m sure that there are folks out there that kind of wish they would’ve done something different or done it better to get your insights about while it’s fresh and also if there’s revisions that need to be made. So I think this is a really timely conversation, but jumping into the focus here from the perspective of a Rev ops role and rev ops team, one of the things that you and I talked about, I think offline before we had this conversation is ensuring that the planning process is more than just kind of a spreadsheet exercise. You just kind of fill in a bunch of things in a zip spreadsheet, you get an okay and then just you never look at it again and you’re really just checking off the box. So from your perspective, do you ensure that it’s not, that it becomes something more of a living document, something that is actually useful and actionable?

Andrew Morales:

Yeah, I think that one of the things that I fundamentally believe is that Rev ops teams really are here to help organizations translate their plans, their hopes and their desires into action as well. And we do that by implementing processes and systems and looking at the competencies of people within the organization to drive execution across a given motion or plan. And what that ultimately comes down to is we’re bringing what I would call a bottoms up approach and lens to the planning process. We’re typically a lot more connected to what’s happening in the field, what’s working, what’s not. We made bets last year during planning, how have those materialized matured? And rev ops really brings that rooted in what’s happening in the field to the table and the planning process. And ideally given the nature of rev ops as a bit of an unbiased organization within a company, isn’t bringing the bias of a specific go-to market function to the planning process and discussing with finance what reality potentially could look like as well. So I really see that role that rev ops can play and is really critical is bringing that bottoms up lens to the process and it’s that counterbalance to the larger longer range planning and lens that finance brings and builds targets based upon.

Mark Lerner:

Yeah, awesome. And going back to our, I think earlier conversations, and I think some of the content you had put out in the lead up I think, or during your annual planning process, there was this idea of starting with a capacity model and using that to frame planning process. So maybe take a moment to explain what that is and what that means in the context of annual planning and how you go about it.

Andrew Morales:

Yeah, absolutely. So I had mentioned that my belief or perspective on revenue operations is that connection point between process systems and people. And that process oriented lens is probably rooted somewhere in working in logistics in the past and being around so many tracks and boxes and sorting facilities. But I do think of our go-to market motions are essentially internal processes that we build to help facilitate a customer journey. So when a buyer or a customer is evaluating, wanting to make a change in their business, they go along a journey and it’s not linear. We kind of map it out as it linear, but we map it out and that’s a process map. And we then take that customer journey and all the desires and expectations that our customers and our buyers have across their journey of making change within the business. And we build internal processes against those.

So lead qualification processes, configure price, quote processes, handoff process, those are all internal processes that support a customer journey inherently in a process. Then process, there’s multiple steps that exist within a process, and what I’m breaking it down to is that a capacity model is essentially looking at all the steps that exist within our selling motion. So I’m going to break the customer journey down into looking at our acquisition only motion. So not talking about retention or expansion, but looking at the acquisition of new business. And I expect our sales team to go through a number of steps within that acquisition motion. That’s our process. And it’s pretty clearly mapped. It can map to sales stages. There’s quoting things that can happen in different stages. There’s lead qualification that can happen in different stages and each of those steps take a certain amount of time, they just inherently do.

Back when I was at FedEx, my CRM entry took a lot of time because we didn’t have sales engagement platforms to automate data capture and inputting it. But when I think about a capacity model, it’s evaluating all the steps that your team is taking and then breaking it down into what is coined. Toyota made this really popular in the Toyota production system and the book, the Toyota Way, they talk about value added time. McKinsey talks about this as selling time versus non-selling time, customer facing time versus non-customer facing time. And you break those processes down and the steps down into where are reps spending their time and where do you want them spending their time? And you can essentially build a capacity model that says, based on all these steps and things that I do and how much working time a rep has in a year, how many opportunities can I work? And then using your conversion rates across various stages and your win rates based on how many I can work, how many will I win? And that gives you a very bottoms up lens based on throughput through your system, how many opportunities a rep can actually work and win. And then you can start looking at planning based on changing levers within those steps within those systems. And that should then drive what is going to be the improvement to the different levers within my financial plan.

Mark Lerner:

Yeah, super cool. I think that’s certainly, I would imagine appreciated by a lot of folks because instead of throwing unrealistic unachievable quotas out there about, well, this is what we need, so you have to make it happen. You’re kind of taking the other approach, like you said, bottoms up as opposed to top down where you’re saying this is what’s possible. And I guess if there’s company goals that aren’t possible with the given variables that there needs to be tweaks further down the line to create additional efficiencies or optimization.

Andrew Morales:

And I think it’s one of those things too is it gives you a frame, a lens of what’s happening now, what is the possible now? And what it brings is that lens in the conversation with finance, when you do get that tops down target, you’re coming with an approach of instead of saying we’re going to change a lever, call it a SP win rates, or whatever lever a team might have within their own finance plan by a certain amount to get to that threshold, you’re bringing the lens of like, okay, this is what I can do today. If my target is x, I believe I can do y, guess what, Mr. And Mrs. Finance person and team, I need these things and it’s going to cost us this much for me to bridge the gap from Y to X, right? There’s always a healthy negotiation.

Finance is going to push us to try to overachieve our bottoms up, might be a little bit more conservative, but at some point you can end up with a pretty big insurmountable gap to overcome and using a capacity model and bring in a bottoms up approach. You’re then coming with a data informed and backed ask for, well, I need these things to help bridge that gap because this is the change I need to affect within my business. And those things can look like I need more headcount. My throughput is such that I just need more headcount because I need to add more people to the mix. That’s a lot of the way planning used to be in the past. Or it can be we need to drive a specific change in the business, so I need more enablement or operations resources because I need to affect this change in the business. Or it could be we need to invest in these product limitations that have been showing up in a bunch of our closed loss reasons. We need to invest X amount in products so that we believe we can materially change one of the conversion rates in our steps because it’ll improve our product. You’re then coming to the table with a data informed, again kind of approach of how you can bridge the gap from the tops down number that finance is setting.

Mark Lerner:

And it sounds like obviously this is pretty well thought out and this is probably something you’ve done year over year and maybe tweaked and gotten better over time. Do you have tooling or templates or systems that have the ability to create that capacity model so that you don’t have to reinvent the wheel every year? Or do you go into your CRM and other systems and build out some sort of model?

Andrew Morales:

Historically, it’s been a lot of rebuilding. There’s set templates. I’d heavily encourage team members to listening to look up how to build a bottoms up capacity model, researching Toyota Way production system. There’s a lot of the core concepts we’re talking about in there, and then there’s a lot of companies that are building technology to help facilitate that as well. I do think as a rev ops team member, one of our traits or value adds is that agnostic of the tools. We can sort it out based on what’s available in front of us. And companies such as CIQ are starting to build planning technology and software to help facilitate those types of activities. But again, I think rev ops team members have an Excel spreadsheet and that’s what I’ve historically used in the past, and you can build out a template based on that and then it’ll sit with you for an extended period of time.

Mark Lerner:

Yeah, I love that. I’m a big fan of building internal tools and I think that the ability to do that has gotten much easier for non-technical people, but it’s a whole other conversation.

Andrew Morales:

That’s right. That’s right. It can be really fun too. I mean,

Mark Lerner:

Yeah, I’m doing it currently with some stuff and you hit a blocker with, there just aren’t enough resources internally. Other people run off time. It’s not a priority, alright, instead of going around it, I’m just going to go through it and then build something. And that’s a lot of fun.

Andrew Morales:

Yeah. Yeah, it absolutely is. And I think that with the introduction too of, I know we’re not spending the time that talking about ai, but I mean it’s facilitated a lot of that internal build as well. Things that I used to have a larger team helped me out with a Captivate iq. We’re a much smaller team now and there is just a lot more information available at your fingertips to go self build and create the things that you need to do the work that typically would’ve required a lot more people.

Mark Lerner:

Yeah, yeah. I don’t want to get too far down the rabbit hole of ai. I could go on forever, but I agree and there’s a lot of fun stuff out there. But switching back to annual planning, if you’re okay with it, I’d love to maybe talk a little bit about some of the reflections of this year of the planning. You had some of the lessons learned and maybe some things that maybe the folks at home could walk away with and just things that you’ve noted that were challenges that maybe for next year do like this. So what were some of the key challenges from this year’s planning cycle that stood out and how did you go about addressing?

Andrew Morales:

Yeah, I think that there’s a couple of things that stand to mind. So one of them is going to be external from myself, and then one of them is going to be more internal to myself. And I think they’re both applicable to people listening to the podcast. So start with the one that’s external to myself. So we made a conscious decision at the beginning of this year to materially change the segment of business that we were focused on and a push up market, which is not an uncommon trend at the beginning of this year. And when you’re going through annual planning, there’s a lot of, we were talking about capacity model, bringing a data informed perspective to the table. Well, when you make a wholesale change to the business, you no longer have the historical data set available to you of what worked in the past to then build upon that foundation when you’re looking to make changes to your financial plan for next year.

So historically, what we might be able to do is say, okay, our business look like this mix of SMB mid-market and enterprise and we’re going to make different bets in each of the segments. And based on that, that’s how we’re going to build our plan for next year. By making such a dramatic shift in how we were approaching the business, we no longer had that historical perspective to take a look at. And so what made it a challenge for this year is that without that historical data, a lot of our bets and changes felt or started to feel like a little bit more finger to the wind. How are we going to actually affect the lever and the finance plan to get to where we want to get to is the trend that we’re seeing over the last three months, a trend enterprise sales cycles are long or is it an anomaly or an outlier?

We don’t have that historical data set to use. So to get around that this year we relied pretty heavily on our capacity model to say, okay, in our current state, even though we decided to go more up market in our current state, this is what the team is doing and what the team can achieve. So using that bottoms up capacity model helped inform what are some of the changes that we could make for this year. And what we also did then to get around that is we scenario planned our financial plan, which is not an uncommon thing, but we essentially said, okay, we’ve got a worst case scenario, a base case scenario, an upside scenario. And we essentially took some of those trends or highlights that we were seeing in our pushup market and we said, okay, our worst case scenario is that stuff stays at the status quo and none of those signals actually materialize.

Our base case scenario is one of those things actually starts to take off, and then our upside is there’s a number of those things start to materialize. And that scenario plan allowed us to then build out paths of what’s going to happen. And so as we’ve built the plan for this coming year, we’ve committed to two things. We’ll reevaluate the plan more frequently than we have historically in the past so that we can grab onto those signals and trends because we are still early in this journey. And then the other thing is that we’ve probably anchored a bit more towards our base case scenario just because we are not sure yet if all those other bets are going to pan out and to help counterbalance that base case within our upmarket segment or motion, we’re then looking at can we overachieve in the parts of the business or build more aggressively where we’ve had the longer running success in the mid-market business for example as well. So that’s more like the external factor. And then there’s one that’s more internally learned within myself, but I’ll stop there for a sec.

Mark Lerner:

Yeah, I mean there’s a lot to digest there. So first of all, I’m interested to know, so you’re shifting or moving more towards up market, that’s kind of a stage of many companies growth and there isn’t a lot of that kind of historical data to benchmark against to understand what the capacity is and what the outcomes might be. In that case, are you or have you used industry benchmarks, external data points to kind of fill in the blanks?

Andrew Morales:

We are, right. So some of that deeper analysis along with, so the data, the capacity data, we grab what we can from internal and then we’re using a lot of historical benchmarks. We are fortunate to have advisors and investors that we can lean on for a lot of that benchmark data and we’ll use those as assumptions. So we’ll say what kind of looks like us? What doesn’t look like us? What benchmarks can we use? And we use those again as kind of assumptions and inputs, but given that those are benchmarks, we don’t exactly know how those are going to perform within our specific business yet. And so that’s where we start to then anchor along our various scenario plans for the next fiscal year and ensuring that we’re setting ourselves and the company up for success versus being too aspirational or maybe even unrealistic of what the possibility is.

Mark Lerner:

Yeah, yeah. That’s super, super interesting. You talked about scenario planning and best base case, worst case scenario. I mean, I think we’ve all lived some pretty wild curve balls for the last few years. I mean, does Black Swan event kind of figure into your planning? I mean the kind of thing that I don’t think anyone had worldwide pandemic on their bingo card and the annual planning in 2019 or whatever it was. So I mean, how does that figure does it and has that changed over the last five years and how do you think about that?

Andrew Morales:

Yeah, so Black Swan event isn’t a key assumption within our financial plan or our scenarios. I think it definitely is something that depending on the maturity and the size of the business, probably needs to be considered a little bit differently. But for us this year, not specifically, but what I will say is that what is figuring in is a lot of uncertainty that things we knew and if you could see me doing air quotes, things that we knew to be true are no longer true. The recovery that was supposed to happen from a retention standpoint two years ago didn’t materialize and start to stabilize until maybe sometime this year. So we’re baking in a lot more of that intake assessment and insights from external events into our planning. So instead of just taking our upside case or our grand case and saying, yeah, our customer base is going to expand at this amount because headcount plans are going to grow by this amount, that’s no longer a key factor in the way that we’re purchasing planning. So less about large catastrophic events, but more so around taking in the market insights that have happened and probably grabbing onto a little bit more of that uncertainty of things that the market is saying are given aren’t necessarily going to be a given. So let’s approach it with some cautious optimism.

Mark Lerner:

Yeah, I think we have to be certainly cautious and got to have some optimism. I think there’s lacking of that out there in the world, but a lot of good is happening. A lot of good can still happen. But one last question on this before I go into the internal lessons learned in this model planning and your different scenarios and everything like that. Okay. Where does your alignment with finance happen? Is it throughout the process? Is it like you kind of go through and then present them something or is it like a constant back and forth?

Andrew Morales:

It’s constant back and forth. I would say that one of, if not the strongest cross-functional relationships that I’ve had in my tenure in rev ops and prior to that, sales ops has historically been finance. And I believe that it’s those kind of two lenses of the business that we bring. Finance tends to bring a more tops down view lens of the business and rev ops bringss that more grounded in what is happening at the street, so to speak, level of business. And so from a finance perspective, what I’ve done in previous lives, what we did this year is we sat down before a planning process kicked off. This year was August. We talked about doing it earlier than August, but things happen and so earlier the better. And we said, what is planning going to look like this year? And finance dictates that, right? They dictate the tops down, the growth outlook for the business.

But sitting down early enough, what we’re able to come to alignment on was introducing some of these frameworks of bringing a bottoms up perspective and approach, right? I essentially outlined to them the way that I’m going to bring a bottoms up perspective and approach is I want to build a capacity model. I then want to sit down with our heads of go-to market business units and I want to go through what is working well, what is not working well, where do we want to double down? I then want to bring in finance your tops down number and then bring our bottoms up approach. And I want them to articulate what are their asks that they need to bridge that gap so that then they can come back to you and make those asks as well. And we sat down and we mapped that out in the August timeframe, and they were super amenable to that.

They were agreeable to that and encouraged by that approach. And it looked like a project plan, right? With steps and work back schedules and finance committed that they were going to deliver the tops down number by a certain date. And that gave myself and my peers in the organization a certain amount of runway to go meet with our go to market heads and build our plan for an exec offsite. That happened in the October timeframe where each of the department presented out what they needed to go hit the plan that was being asked to them. And so that partnership is critical and crucial. And what it’s helped massively for myself and for my team is over the years planning has felt very reactive. So we kind of show up and we get a number with a timeline, and then we’re running towards that. And we’ve been able to take a more proactive approach this year and introducing our frameworks and our process. So the tops down process, and again, finance leads the planning process, but we are a core downstream process from that. And so being able to bring that information further upstream has helped us have a lot smoother of a planning process this year, which has actually been fun.

Mark Lerner:

Yeah, you’re the yin to finance as yang really keeping each other in check. So going back, you had mentioned that there were a few kind of external things that you learned, and then there were some internal lessons. So maybe we could talk a little bit about that. I think it’s really people watching their roles, but they’re also people, and I think those insights about yourself and how to handle things and how to do it better are really super valuable to people.

Andrew Morales:

Yeah, absolutely. So I’ve now been at Captivate. I joined in middle of November of 2023, so we’re sitting here at the end of 2024 recording this. So I’ve been here for just over a year, and my tenure at previous companies has been more than a year generally. And so with that comes an innate understanding and appreciation for how our business operates. And I think one of the learnings that, I’m going to say it out loud, and there’s going to be a, oh, yeah, that’s pretty obvious, but one of the things I took for granted was not truly understanding what my ramp time in to switching jobs into an organization was. And for something as critical as planning, and it was at about the October timeframe of this year that I’ve truly felt and understood the heartbeat of Captivate IQ and going through planning. When you understand that heartbeat of the company and it intrinsically, and I can rattle off all the data about it, it makes that planning process a lot smoother and easier because there are inherent assumptions that are baked into the plan that you can just look at and say, Hey, some things just doesn’t really track there because you’ve got that intuition, you’ve got that history with the company.

And so going through some of the earlier parts of this planning process, and we did a replan halfway through this year, so some of this learning is from the replan that happened at the beginning of this year. I took for granted that ramp time or lack of it at the time when I went through it and didn’t go through and triple validate and check assumptions and took them at face value. And they caught me out. They caught me out in planning, they caught me out as we were building our modeling. And so as we went into planning for this year for 2025, I went through and we quadruple check, I quadruple check the assumptions, and I also had the benefit of having the longevity within the company that I started to understand those assumptions a lot more. But I think the internal one for me is not to take for granted the previous experiences that I’ve had and that they’re going to always directly translate to where you’re at and to give yourself the time and be curious enough to actually ramp, ramp in and ensure that you’re understanding the company, especially when you’re going through something as critical as planning as somebody that’s considers themselves data oriented to not quadruple check assumptions is a huge no-no.

But I felt comfortable enough in my previous experiences that it caught me out, and I think it’s one of those things that won’t happen again, but it was a big learning as somebody newer to a company going through an annual planning cycle. 

Mark Lerner:

Awesome. So I review what we kind of learned today before we round things out here. So it sounds like knowing your stuff, right, you really make sure your company in and out and like you said, the heartbeat of the company and not necessarily make assumptions to really get in the weeds and feel fully comfortable. The second is to be proactive rather than reactive, to come with systems built and have a model that provides realistic projections and outcomes. And the third is to stay aligned with your partners and other departments, especially finance, to ensure there’s no surprises on either side, right? So keep that continuous conversation. You think there’s anything else that I’m kind of missing there?

Andrew Morales:

No, I think you hit the nail on the head for the areas to keep in mind as teams are going through planning, and obviously most teams are kind of through their planning cycles for this next fiscal year, but some teams plan on a quarterly basis on a half basis. So I think you hit the nail on the head.

Mark Lerner:

Yeah. Awesome. Well, Andrew, I really appreciate you taking the time to chat with us today. Before we end things off, if you want tell the folks at home a little bit about how they can learn more about you or about Captivate IQ or they could read a little more.

Andrew Morales:

Yeah, absolutely. So feel free to follow myself or Captivate IQ on LinkedIn from time to time. We’ll post about annual planning. Mark cited a couple of articles that we posted online. And Captivate IQ also has a brand called The Multiplier, where they are sourcing information from people outside of Captivate IQ perspectives on compensation ops planning as well. So there’s a wealth of information in the multiplier to check out as well if you’re looking to learn a bit more about what’s happening in the space.

Mark Lerner:

Awesome. Andrew, this was great. Thank you so much. Really appreciate your conversation today.

Andrew Morales:

Thanks, Mark.