Hey everyone, excited to talk RevOps with Sean Lane. He’s a partner at Minot Light Consulting and formerly led RevOps at Drift. Also ran their operations podcast with tons and tons of good insights. I’ll let him give a much better introduction of himself than I can.

Cool, thanks Kate.

Hey everyone, thanks for joining us today. Excited to spend some time chatting with all of you about planning, which for me is a topic that is both really, really difficult, but also really important. As Kate mentioned, I’m a founding partner at a go- to- market consultancy called Minutelike Consulting, impossible to pronounce if you’re not from the South Shore of Massachusetts, but it’s Minut. And what we do is we help small companies with their go- to- market execution.

And so we’re gonna talk a little bit about where kind of go- to- market planning and execution come together today. And as Kate mentioned, I spent five and a half years at Drift running a whole bunch of our different go- to- market operations teams, sales ops, rev ops, marketing ops, whatever the need was of the company at the time, what was there from single digit millions in ARR all the way up through and beyond our acquisition by Vista, which valued us at over a billion dollars.

And then I worked for five and a half years at a restaurant technology company called UpServe before that. Again, in a bunch of different, both customer facing and rev ops roles.

So excited to dive in with all of you today. Please do submit questions as we go through this.

Kate’s gonna help kind of moderate and bring those questions up as we’re going through.

So we will do our best to answer any and all questions as we’re going through.

We’ve got a little bit of prepared content for you, but we want questions as we’re going through.

Sound good, Kate?

Fantastic, thank you.

All right.

So when I was thinking, sorry, go ahead.

No, no, sorry. Go ahead and finish your introduction. I forgot about this.

No, no, all good.

So when I was thinking about this topic today, I was thinking back on kind of how I first learned what good planning looks like. And I remember from one of my very first operations roles that I ever had, I was starting to get worried about things like timelines and readiness. And the fact that January 1st always comes after December 31st, you’ve gotta be ready.

And I had a sales leader at the time who was basically like, don’t worry about this. Like most companies don’t even get their operating plan or their comp plan or their new territories out the door until like mid February or March, like don’t stress about it. And I was probably too naive to understand why that was at the time, but it kind of blew me away that that was the norm and that people just like accepted that. And I kind of made a promise to myself that that was not gonna be what the case was at the places that I worked.

The beginning of the year can be very like filled with doubt and uncertainty for people. And sales reps are looking at that at that moment as can I make money at this place this year? And if you just add more uncertainty and doubt by making them wait six, eight, 12 weeks in order to get that information, it can be a really rough start to the year. And so I’m very proud that at Drift, we, instead of having our fiscal year transition go live in the third month of the new year, we were done on the third day of the new year.

And so there’s a ton of planning and work that goes into making that possible, but just something to leave you with as we go through everything here is, how can you kind of strive for that same thing so that people in the company feel that level of confidence and feel that they are gonna be set up for success in that coming year?

Awesome. Okay, so we have some questions to kind of seed the conversation with. So when you’re getting ready to do good planning, what are the components that you need to prepare?

Yeah, so there’s a few things here.

The first is you gotta figure out who’s actually gonna drive this process, right? And you’re gonna have a whole bunch of different cross- functional players in this. There’s gonna be folks from operations, folks from finance, folks from all of your different go- to- market internal stakeholders. So that’s sales, customer success, marketing. All of those different teams need to be pulling in the same direction to make this process work.

But you probably also need someone to be what we call the DRI, the directly responsible individual for that process, right? And so if everybody owns it, nobody owns it. And so you really need someone who’s gonna actually drive that entire process.

So figure out who that is and kind of what that project plan is gonna look like.

And then another really important input that you need is to know what’s the company gonna do in the upcoming season that you’re planning for, whether that’s annual, six months, quarterly.

Not everybody’s ready to jump ahead and make a perfect plan for a 12- month period of time. And so it’s okay if you’re planning for a shorter period of time, but you need to know what those big bets are.

What are the initiatives that you are expecting the company to focus on and invest in in that upcoming period of time?

Because that’s gonna play a really important role in the planning process itself.

And then another thing you really have to have before you can even get started is you have to have good data, right? Garbage in, garbage out type of situation.

If you don’t have the right inputs ready to prepare you for that operating plan process, you’re gonna be in trouble. So that could mean internal reporting, right? All the different parts of your funnel, how you think about what you measure, all the different milestones.

But it could also mean important things about your customer base. How do you think about the firmographic information about the accounts you’re gonna sell to? Is that information stale?

Is it accurate? How frequently do you refresh it, right?

And so you need to have all of those things in a good spot before you can even start.

We’ve got a good question here. Who owns this if you don’t have a dedicated RevOps or sales ops person?

I think probably the most natural fit is somebody from finance.

But if you’re sitting there and you don’t have a level of specialization within your company, you want someone who’s going to have one, really good project management skills, but two, they have to understand all the different parts of the business, right?

If you have someone who approaches this and they’re the marketing person, guess which team is going to get the preferred treatment during that process, right?

So you need someone who’s going to look at it objectively and also be really, really strong at project management.

Awesome.

So then what’s sort of the order of operations? And if you can provide a little bit of a timeline, we’re in October already now, when should these things be happening?

So if you’re on a calendar year, meaning your new year starts on January 1st, if you haven’t started yet, start as soon as this call is over, right? If you’re on a fiscal year and you’re shifted like a lot of companies tied to Salesforce or Salesforce’s timeline start in February 1st, I would still start as soon as this call is over, right?

Depending on the size of your company, you want to allow at least a quarter, if not four or five months in order to do a strong planning process.

The bigger the company, the more business units that you have, the more complexity there will be. And you might need to add a little bit more time to that. We’ll talk about this a little bit at the end, but there’s also this idea that planning is not a one- time annual event, right? And so hopefully you’re thinking about these types of order of operations all the time.

And it’s not, you’re just starting from scratch every time that you come to this time of the year.

But I would say whether your year starts in January or February, now is the time to kick off this process. And so I’ve got a whole bunch of ideas here for you of how you can go through this.

But if you have at least one planning cycle in your past, the thing I would start with is talk to all of your internal customers about how the last one went, right? Gather that information from them, gather that feedback from them, because they’re going to be the people who remember what went well and what didn’t about the last time around.

Especially if you’re new to the company and you’re in your first planning cycle, this is a great way to kind of cut through some of the noise or, you know, the stories you might’ve heard and actually hear exactly from those internal customers, how that went the last time. And this is also one of those things where annual planning gets, hopefully, incrementally better year over year over year.

And so this is a great way to ensure that that happens.

So anyways, start by interviewing folks in the team.

Then you’re going to identify those strategic bets that I talked about on the last slide.

And then there’s a whole bunch of things that kind of all happen in parallel to each other, but you need them to feed the next item on the list, right? So when I talk about operating plans, that’s truly where the financial plan and the go- to- market plan of the company are going to come together.

How many leads do we need in January? How many meetings do we need to hold? How many opportunities do we need to create?

What are our bookings?

Don’t just stop at the sales process either. You need to think about your customer base.

What are our expectations around churn, retention, renewals?

All of that goes into that operating plan and design. Once you know what the company’s going to have as its big bets for the upcoming year, you got to figure out, does our current team structure make sense to support the plan that we’re building?

Maybe you’re thinking about specializing post- sale teams for the first time in your company’s history.

Maybe you’re thinking, hey, we’ve got hunters on the new biz side for sales, but we need some farmers. We need to build an account management function for the first time. Or maybe, like a lot of companies right now, you’re laser focused on upgrade and expansion and retention, and you want to build a renewals team for the first time.

You have to think about that now, because that’s going to lead into the next bullet, which is, how do you think about the capacity, the quotas that you’re going to assign out, and ultimately, you need to work with your recruiting team on the hiring plan for the upcoming year to support the operating plan. You can see here how more and more teams start to get involved the deeper that this process goes. All of a sudden, you need to bring in recruiting, you need to bring in HR, you need to bring in finance to make all of these things work.

Then, once you know how many people you’re going to need on the team, and we’ll dive more into each of these a little bit as we go through the presentation, but you get into topics like territory management. That’s where that good data is going to be really, really important. We’re going to talk a lot about comp in a few slides, because that deserves its own special section.

Then, you have to think about how you’re going to roll this out. This one is really important, because…

how you communicate everything that I just talked about is going to indicate to everybody in the company what their expectations are for the coming year. And so you need to think about this just as the same way as you would think about a product launch for a new product that your company is putting out there, because the impact and the perception that people will have of it will be exactly the same as if you were launching a new product.

And so whoever are the owners of this process and of this rollout, your job is to think about this as its own product and leave people with the impression that this is going to be an incredibly successful plan, an incredibly successful year and a place where I can be successful. Awesome.

We have a ton of questions on compensation. I’ll bookmark them, but there’ll be a good set. So what are the key building blocks in this annual operating plan?

Yeah, so we wanted to dive in a little bit into some of those bullets that I mentioned kind of all play off of each other in that order of operations, the operating plan, the headcount and the territories. So the operating plan is going to be the place where you’re going to start to think about what are the bets that we want to make? And one of the things that I would encourage you to think about is there’s a lot of moving pieces inside of these companies.

And so if you can narrow it down for folks to say, these are the three or four key assumptions that we’re making that will make the operating plan come true, right? So in order for us to hit our plan, let’s say Kate is the VP of sales for the mid- market team. Kate, for you to hit your plan, everybody on your team needs to do X in terms of quota achievement, and you need to increase our average sale price from $ 10, 000 to $ 15, 000. If you do those two things, the rest of the plan will fall into place.

Or if you are the leader on the customer success side and you’ve got a million dollars up for renewal in a given period of time, in order for you to hit your plan, you need to be hitting 85% gross retention, right? That is your key assumption in this plan. And so the more you can start to break the massive company plan down into those little chunks that you can turn to people and say, these are the key assumptions for you to hit your plan, that will give them more operational command over what needs to be true.

And they know exactly what they need to go in turn and communicate to their teams for them to make that come true. So that’s how I think about the operating plan. It’s what are those small bets that you’re making and how do you get everybody involved?

One sort of related question, one of those key assumptions, how do you think about buffer between quota and your annual goal?

Yeah, this is a really good question. So as you think about this middle column here on the slide and this question, to start, if you haven’t built a plan before, you always wanna have a buffer between the company’s operating plan goal, let’s call it a million dollars, and the amount of quota you assign to the reps on your team. And so what I would recommend is you probably want about a 20 to 30% buffer between that operating plan goal and the amount of quota assigned out to the team.

Now, that might feel like a wide range, but it also kind of depends on how mature your company is, how much historical data you have to back up the performance that you’ve seen from reps and what you can expect in the future. So the more mature you are, the closer that number can be to 20%, the less mature you are, I would make it closer to 30%, right? And so when you think about it, the number that I care most about in any organization that I’ve ever been a part of is what we call that drift PPR, productivity per rep.

And that was the North Star metric that all of the RevOps work that we did pointed towards. And so that drives how much quota should be, that drives what the operating plan should be. And it also should give you a sense on your hiring. If you’re three or four months into your plan and you’re hitting your PPR targets, great, you’re in the green, keep hiring, keep doing what you’re doing. But if you’re in the red on that productivity per rep, just because the hiring plan says you need to start keep hiring more people does not mean you should do that.

I would actually argue that if you’re in the red on your productivity per rep, you should stop, figure out what’s going wrong. And then once productivity is at the levels that the operating plan needs it to be, then you can start hiring again.

And then the last piece of this that all plays in with the operating plan and headcount is how you think about your territories. Again, depending on the maturity of your company, you know, you might be in just like a pure inbound round robin situation right now, and you’re thinking about territories for the first time, or maybe you have, you know, a true inbound and outbound mix at your company, but eventually you’re gonna reach a point where you need to start to assign territories.

And maybe you start with something simple like how you segment the market. You know, how many employees did the companies have that we sell to? Or maybe you wanna get a little bit tighter and start to work on geographic territories. You can start super broad, break the United States down into four sections, have a whole territory for the, you know, for EMEA and APAC, but you need to start to think about how you can focus people’s attention on a particular territory and on a particular set of your target accounts.

And this is where, again, totally separate, but in parallel to the planning process, you have to have good data because this is where you’re gonna say, what is an A account for us? What is the cream of the crop that will make a great fit for one guy? You know, what are the folks that we wanna go after? All of that is gonna play a role as you think about territories. And then you wanna start to think about how do we make it equitable across our teams such that when I hand somebody a territory, that, you know, they’re gonna be set up for success.

There’s a whole bunch more we can go into on territory. So if people have questions, you know, feel free to throw those into the chat, but this is one of those things that you really want to have a plan for how you handle, not just when you’re carving them in the first place, but then how you’re gonna manage it throughout the year. All right, we got a good question.

There may be more territory stuff, but one that’s already in, how do you manage territories for high- performing reps? I think this one’s really interesting. Like, do you give them your hard strategic territory or do you give them your juicy territory? Like, do you make their quota higher?

Yeah.

It’s a really good question. I would stay away from making their quota higher because the thing you have to think about here is both what is going to be good for the business and then what is gonna be good for the individual, right? And for those individuals on your team who are, you know, in a good way, breaking your comp plan, the last thing they’re gonna wanna see is like their quota going up. Quotas go up, it happens, but you don’t wanna punish your A players.

And we’re gonna talk about comp in a minute, but you wanna make sure that you’re incentivizing overachievement. As you think about their territories, you know, people will say, hey, you know, I wanna get the highest yield on the leads that I’ve got. So you could think about distributing inbound leads in a very specific way that plays to people’s strengths. I would not, however, do that as you’re carving your territories for target accounts and outbound, right? Like, at the end of the day, you wanna set up each team member for success.

And hopefully if you’re doing a good job of hiring and training folks, you’re not gonna have this wild disparity. There’s always gonna be stronger players and weirder players on your team. But I think the maintenance of a program like that does not outweigh the potential yield that you’re gonna get from it. So inbound is an interesting place that if you wanna get creative, maybe you route certain industries or certain geographic regions that you’re finding a person is really strong in. This is also a great way to run experiments as a company, right?

And so if you’ve got, you know, maybe you’ve been largely focused. I think a thing that a lot of companies have done in the last two years is they were maybe entirely focused on tech, but they’re finding that tech is hard right now. And so they’re starting to expand into other industries. You know, maybe they’re going into manufacturing, financial services, right?

And that’s a place where you can take some of those top performers who maybe have, you know, organically closed that one or two big, you know, manufacturing clients and said, hey, we’re gonna route you all the manufacturing leads for a little while. Give this a shot. So I would use it more as a way to experiment with things as opposed to just the normal status quo operating rhythms of the company. Awesome.

Let’s do comp.

Let’s do comp. So this might sound sacrilegious to some of you if you’ve built comp plans in the past, but I feel really strongly that you should go through this three- step process when you’re designing a comp plan that has absolutely nothing to do with numbers, right? Before you get to numbers, I would recommend you go through these three steps. The first step is to set the guiding principles of what you want to be true about your company’s comp plan, right?

These are the guideposts that you’re gonna use whenever you get to a really hard decision in the numbers or in the comp plan itself that you can kind of lean on, right? So one of my favorites is our comp plan is gonna be simple. And I will admit to you, I have been guilty of not having this be true in the past, but that’s always been my intention, right? How do we make it as simple as possible? Another good guiding principle is, let’s be transparent, right?

People are gonna talk, they’re gonna tell each other what’s in their comp plans. Just tell everybody, right? It’s a great way to bust some myths too.

People are gonna inherently think, oh, this person’s doing this because they’re incentivized to do it. And so that’s how very, very bad behavior starts to take hold in the organization.

So just be upfront with everybody. Tell them, hey, account management team, this is how the CSMs are comped.

You don’t have to tell them they’re on target earnings, but you should tell them these are the components of their comp plan so that they know. And then I also think a huge one, and these are just examples you can pick and choose from, but you have to have comp plan components that people feel as though they have control over, right? A good example, I saw somebody asked a question about SDR comp.

If you’re exclusively comping your SDRs on the closed one bookings from meetings that they set, they’re probably not gonna feel like they have control over their own destiny, right? And so you wanna be careful to make sure that the things that they are primarily incentivized on are on things that they have control. So the way I would answer this question is there’s usually two trains of thought for SDRs. You’re either comping them on the meetings that they’re booking or the pipeline that they’re creating, right?

And there’s pros and cons to each, but ultimately those things are more in their control.

If you wanna give them a spiff to say, hey, for every deal that you set the meeting on that eventually closes, you get a 1% kicker of the value of that deal, that’s great. That’s gonna incentivize them to find deals that are more likely to close.

That’s exactly what you want.

But meetings or opportunities is a good place to start. And so that brings us nicely into the second bucket, which is you’ve decided kind of what are the big strategic bets and focus areas of the company for the upcoming year. So how do we want to encourage the right behavior to make those things come true, right? So I mentioned earlier, a great one that I think should always be in everybody’s comp plan is you want to incentivize overachievement, right? So that’s through things like accelerator programs, bonuses or spiffs.

But maybe your company has only ever sold month to month deals and you wanna start to sell one, two, three year deals. Maybe you start to pay a little more for longer term contracts, or maybe like a lot of companies recently, you’re struggling with retention right now.

And so maybe you are gonna put an extra component into a salesperson’s comp plan around the long- term retention of the deals that they sell, right? Like based on whatever those behaviors are, and again, those should align with the strategic priorities of the business.

Think about what you want to incentivize, right?

Don’t just start with the plan you had last year. What are the behaviors that we want to be true this year and how can we incentivize them? Which brings us to the third thing, which is what are the levers to actually make this come true?

We’re starting to get closer to the numbers, but we’re not quite there yet.

So the most typical thing in a sales plan at least are the base commission rates, but then you might have, we’re gonna run an accelerator program, or maybe we’re not gonna put something specifically in the comp plan, but we’re gonna run a quarterly spiff around a particular target. There’s a whole bunch of different ways that you can use to break these plans down. So just knowing which levers and which types of comp plan components are available to you is a good way to build a comp plan.

Awesome, okay, we’ve got a bunch of questions.

Cool, let’s do it.

So starting off with the basics, good guidelines on quota to OTE. Yeah, so you wanna be targeting about four to five X quota to OTE. And so for folks who are asking about this, basically what this means is if you have, again, I’m just gonna use round numbers here.

If you’ve got a million dollar quota, then that person’s comp in a five X situation would be a 200K OTE, right?

And four to five X, I will say, can be very aspirational for some companies, right? And so if you’re in the threes, don’t stress, but know what that ratio is, and think about that as one of the guide posts when you’re setting your quotas, right? So when I think about setting quotas, I think about what does historical performance tell me the quotas should be?

What does our hiring plan and kind of like the territory plan for our quotas tell me it should be a factor? What are some things that are gonna be true about our operating plan? Maybe there’s a new product, maybe the pricing is gonna change that might give me more or less confidence in the historical performance changing.

And then I would put this quota OTE ratio in there as a final factor to consider, right? If all historical performance is telling you that your quota can only be 800K, but you’ve got a team that’s being paid 300K in OTE, something is off, right? And so you wanna incrementally make that ratio better cycle over cycle over cycle. So four to five X is a great thing to aspire to.

If you’re not quite there yet, that’s okay, but make sure you’re taking that into consideration because if your OTE is at a certain point, there’s probably a basement that that person’s quota can be.

Awesome.

It seems like three X used to be more common. Is this a recent compression thing that we’re pushing more towards five or is that just best practice always?

I think it’s the best practice.

I think in reality, some folks are struggling to get to that, but yeah, four to five X is best practice.

Cool.

So some other comp questions. Should CSMs have quota?

This is a great question. So I would start by thinking about the roles and responsibilities of your team. So what is a CSM responsible for at your company?

Are they there to ensure that the customer is getting the most value out of the product, but they have no commercial responsibilities? Probably shouldn’t have a quota. But that doesn’t mean that they can’t have a variable comp plan. So something important to think about when you think about setting a sales teams quotas or sales comp plan versus a customer success comp plan is usually a sales person’s comp plan and their OTE, their on target earnings is based on 50% of base salary and 50% variable salary.

So a sales person’s putting half their paycheck on the table every single month. And so their comp plan is designed in a specific way.

Usually in customer success, that number is more like 85% base, 15% variable, maybe 80, 20, but it’s usually not much higher than that in terms of their splits.

So the reason I say all that is when you’re talking about 20% of somebody’s comp, if you have four different components of that person’s compensation plan, all of a sudden each thing that you’re talking about is only worth 5%, right?

And so you have to be really careful about how many components are in there because at a certain point, like the actual impact of their paycheck is probably negligible. The one caveat I will give you to this is CSMs just based on the type of work that they do and kind of their profile, they care about that 5%.

Like they are super nitty gritty and they wanna impact every single part of it, which is awesome. Like that, I give them so much credit for the fact that that’s how they operate, but you wanna keep it simple.

So I would be very much in favor of having some sort of retention component to a CSMs quota, right?

So whether that’s net or gross retention, you gotta figure that out for your, what’s best for your company. And then a trend in the last couple of years is companies are trying to have more leading indicators in their CSMs comp plans than lagging indicators. So gross retention, lagging indicator, right?

A leading indicator might be if you have a health score for your company, right?

Or for your customer base, how can you incorporate, you know, we need to have, at Drift we did, you needed to have X percentage of your install base in the green. And we had a red, yellow, green health score. If you haven’t developed a health score yet, that’s perfectly fine. Maybe you can do some sort of product usage data to help you set that component. But you wanna have more leading indicators because oftentimes the lagging indicator of retention, it’s too late for the CSM to make an impact.

And so that’s how I would think about setting those components.

All right, this one’s a little bit off of comp, but I’m curious to get your perspective on org design. So as you’re thinking about sales, SDRs, account manager, I think this might be that upselling role, customer success support. Do you have any rules of thumb in terms of ratios?

Yeah, this is a good question.

So let’s start on the first couple of roles on this with sales and SDR, because these typically pair well together.

The thing you need to think about before you even think about the ratios of these is, you know, talk to your finance team.

What can we afford at our average sale price and at our customer acquisition costs, right?

Because if you’re a super transactional sale and you’re selling month to month deals at, you know, 500 bucks a month, you probably cannot afford to have more specialized roles in that team. But let’s say that same company, what I just said is true of their, you know, SMB or growth side of the business.

And you also have a mid- market and enterprise side of the business. The ASPs, the lifetime value of those customers can probably support some more specialized roles. So enterprise, I would try to get as close to a two- to- one ratio of AEs to SDRs, meaning a single SDR supports two AEs.

You probably can’t start there.

So maybe it’s more like a three- to- one type of situation, but I wouldn’t go much higher than that.

And I would try to pair them together.

There’s a lot about SDR organ design about whether you should have an inbound SDR team that’s separate from an outbound SDR team.

But depending on how you are designing your team, if you are a primarily outbound situation, I would try to get that two or three- to- one ratio between SDRs and AEs.

For all those post- sale roles, AM, CS, and support, I would base that on.

the size of your customer base and how, again, what you can afford based off of how much those customers pay. A good way to think about this might be, instead of saying I need to have a specific customer count ratio, I would think about it as a book of business ratio, right? And so whether customers pay you $ 100, 000 or $ 10, 000, a good benchmark is for a CSM to have about a $ 2 million book of business, right?

And so again, that might mean they have 20 customers, it might mean they have 200. So you have to think through that, but I would think about it through how much revenue that AM or that CSM is responsible for managing.

Cool, awesome. Let’s continue to finish out our slides and then we’ll come back to more questions, comp questions encouraged.

Cool, so in that order of operations slide from the beginning, the last one is how you should roll this out. We literally at Drift leaned into the brand that we created that was called the fiscal year flip. We made our own logo for it, we talked about it all the time and we said this is a big moment, a big event.

And so again, I would focus on that and I would communicate with folks that this is going to be a really big moment. A couple of things you can do.

One, you do not want people to hear about their rollout on the day of the rollout for the first time, especially leadership, right? So you should have been involving all leadership in every step of this process all the way through to get their feedback, get their buy- in and ultimately to have them help and contribute to make the rollout better, right? So we would do a separate set of sessions and enablement just for the leaders before the people on their team would hear it.

So I would think about that.

The other thing is you wanna be really thoughtful about how you launch it. I mentioned before the analogy of thinking about this as a product launch, we would build very specific decks around how to communicate these initiatives, right? And so you wanna start with, hey, these are the big bets the company’s making this year. We’re focusing on launching new product B, we’re focusing on moving up market, we’re focusing on retention and customer expansion, whatever your themes are.

Get those out in front of people so that everyone has heard them over and over and over and over again. And then the last important thing here is you wanna think about some version of office hours, separate enablement sessions, because the questions that people will feel comfortable asking particularly around comp in a very, very large group setting will be very different when you get them in either a one- on- one or a small group setting.

And so you wanna create as many opportunities as possible for people to ask those questions so that they aren’t sitting there wondering if, hey, I think I’ve heard this in the rollout, like I have this false assumption about it, I’m not gonna ask anybody, you have to create places where people can ask those questions and you can answer them.

And it’s everything on this slide takes a ton of time and investment, but it’s worth it, right? If you can exit that first week, that first month of the new year, having put all of these questions to bed, then you’re gonna be in a really good spot to actually run your business, right?

Like that’s the thing you wanna get to is you wanna move towards running the business as quickly as possible.

So should you announce your annual plan at the SKO? I think there’s a couple of questions embedded in here. One, should you have an SKO? Like, is that a really important part of the annual process? And then should reps know about this before or should it be announced at? How do you think about coordinating?

I think having an SKO is great if you can get the team together or rally everybody behind all the kind of strategic initiatives I’ve been talking about.

It’s super valuable and it’s also great just from like a human being perspective to connect with your peers and, you know, again, get that camaraderie and get everybody aligned. If your SKO is in the third month of the new year, no, you should not announce this stuff at SKO. You should do it well before that.

If your SKO is in the second week of the year, great, do it, right? Bring everybody together and align it. But again, getting this information out the sooner the better. Should absolutely be part of it.

And then what you can also do is think about what is applicable company- wide versus what can be applicable to individual roles or individual business units within your company and think about, you know, okay, this is what the broader message at SKO is gonna be. And then these are the per team breakouts that we’re gonna do at SKO to make sure that we’re delivering the message. Or even if you do have your SKO in month three, do it again, right? Reinforce all the stuff that you’ve talked about in week one and two, because people are gonna forget. Awesome.

So let’s talk about the continuation of sort of not just January.

Yeah, I think the most important thing is, you know, the tools that are available to us have changed, right? The role of RebOps has changed.

And so I think if you think about this as a one- time thing that happens at the beginning of your year, you’re probably not setting yourself up for success. And what I mean by that is, you know, there are going to be unforeseen circumstances.

every time somebody gets a promotion, that perfect plan you put in that spreadsheet, no longer applies. Every time somebody leaves the business or moves from one team to another, everything you built is no longer applicable, right? And so you have to be flexible enough to be able to adjust to those changes in your business. And so the way we thought about it, and we actually specialized our team at Drift in these three different buckets, planning, execution, and insights, was that planning is a year long role, right?

They’re very, very busy at the end of the year and at the beginning when we’re rolling it out, but every single time one of those personnel movements changes or we decide to do a new experiment or enter a new market or launch a new product, planning is a continuous cycle that’s happening. And so the way I think about this is, planning is everything that happens before a customer facing team member is even in their seat, right? Everything we talked about in this deck falls into that planning bucket.

Execution is all about how you take what you plan for and design the day in the life of the roles that need to basically run the business. So what are all the tools and processes that support the day in the life of a salesperson, of a CSM? And then insights is the bridge between the two, right?

How do you think about not just the reports and the analytics that you have, but what are the proactive analyses that we can run as a RevOps group to bring proactive analyses and insights back to the business, as opposed to just waiting for somebody to say, hey, I need a report for this, right? And so these three groups very much play off of one another. And that’s how I found was the best way to run a team.

Awesome. Cool. So we’ll switch into straight question mode. We have a couple more questions in the backlog. Feel free to submit more. And we’ll wrap it either 45 minutes or 60 minutes, depending upon how many additional questions get added. So a pair that were pre- submitted that I think are interesting. So one submitter asked, we only have three sellers. What kind of planning should we be doing? And then another asked, what does this look like at scale?

And so I’m curious if you can talk through kind of what’s the crawl, walk, run of annual planning, depending upon how big your organization is.

So I think, you know, Kate, you and I have talked about this before. A very common question is when do you even invest in RevOps? When do you invest in SalesOps as a company? I think once you have any sort of repeatable sales process and you are starting to transition away from founder- led selling into, you know, a more professional go- to- market that has dedicated salespeople, it’s time, right? You need to start, you need to start.

And your comp plan in the three- person team might not be quite as mature as it could or should be, but you need to have a plan, right? You still need to have goals. You still need to have quotas. You still need to have a way that you’re gonna pay people. And even at a three- person team, most of the reps you’re hiring, the expectation is still gonna be that 50- 50 base and variable split, right? Maybe for the first rep ever, you’re gonna be a little bit more skewed on base because there’s gonna be a lot of stuff you have to figure out.

And if the company’s unproven, the role’s unproven. So I can imagine like a 70- 30 or 60- 40 split in that situation. But even at three reps, you’re gonna have a comp plan, right? And so everything we talked about here, while you might not necessarily need to spend four months on it, you could probably get it done a little faster. You still wanna go through that planning process.

And then to the question about how it gets to scale, the first thing I would say is what I mentioned around having a specialized function within RevOps that is focused on planning year round, right? And yes, it’s going to be heavy during planning season, but think about what I mentioned before about the data.

Like just your data enrichment strategy alone is going to be an incredibly important part of that person’s job so that when they’re carving territories or setting quotas, they feel confident in the underlying data that’s helping them to do that, right? So that’s really, really important. And then as it scales out, right, you can start to specialize the team between planning, execution, and insights or however you see fit. But it just gets more complex, right?

Add in international regions, add in multiple products, right, you just have to incorporate more people. And so the enterprise and scale versions of it just require more time, better project management, and a lot more communication.

I remember you told me this once and I forgot what it was. What’s a good ratio of RevOps to sellers or customer- facing employees?

Yeah, so I always aim to have 20 to 25 to one. And that applies for both sales and post- sale folks.

Cool. All right, this one’s a good one. What do you do when you have reps that are overpaid against benchmarks? And you’re trying to right- size that in the next year. How do you manage it?

This is really hard.

So, there’s a couple of things you can think about here. I would try, to whatever extent possible, not to change anybody’s OT, their total on- target earnings, right? That could mean that you can shift the base and variable around a little bit, right, in order to make sure that even if they are overpaid, that the variable performance that are getting overpaid for is due to performance, right? I think it’s pretty tough to go to somebody and say, you know, the thing we promised you and you signed on your offer letter is no longer true.

Like, I think that’s pretty tough. But I do think you can shift between a base and variable split there to make sure that it’s a little bit more incentive- driven and in something that’s going to improve the company. Would it impact their motivation? Absolutely. What you want to do is create levers in the comp plan, like we talked about before, that are going to incentivize their overachievement, right?

Something that used to drive me nuts as an ops person, but I grew to embrace is the sales reps who like take the comp plan home and like build their own little calculator and like try to find the loopholes in the comp plan. It used to drive me crazy because we spent so much time on it, but it’s actually exactly what you want, right? You want people to figure out, how do I make the most money using this comp plan?

And it also should motivate you as the person designing the plan to make sure that you’re not leaving room where there might be cracks or ways that people can take advantage of it in a way that doesn’t incentivize good behavior. If it incentivizes good behavior and they’re trying to break the comp plan because they want to hit the highest tier of accelerators, great. You should be comfortable paying that commission check all day long, right? And so I would think about that and again, you have to over communicate with folks.

And so the deck that I mentioned of like, these are the company big bets. These are the bets that impact your role. This is how we arrived at your quota, right? All of that. If you can back it up, people just want to know that there’s some sort of process behind the number that they’re being given, right? They want to know that you didn’t pluck it out of thin air. And so if you can prove that out to them and show them that it’s attainable and then build what we call sales math of like, this is how the funnel works in order for you to hit your goals.

That’s what people want because the second that they think that that stuff isn’t possible or true, that’s when you’re going to lose them.

Awesome. All right. So I think a final comp question. We talked about a lot of best practices a couple of slides ago when we talked about, you know, having the plan be simple and easy to communicate. I realized we didn’t talk about best practices from the company side. So when do you pay out? Should you have clawbacks? Some of the like, some of the more financial and practical implications. And so we can use this question to address some of those.

Yeah, that’s a good question. So very typical format would be that you’re always going to pay a commission, pay commissions within a paycheck in the second pay period for the previous month’s performance. So today is the last day of September as we’re recording this, the paycheck I’m getting right now is going to pay me for my August bookings, commission on my August bookings, right? That’s kind of the typical structure. Kate’s point about like, how does the company, you know, protect itself? There’s a couple of things you can do there.

Depending on the time horizon under comp plan. And by the way, I would recommend, especially if you’re an immature company, I would set my comp plans in six month increments instead of 12 so that you can come back and make some small tweaks if you need to. Also the business is probably going to change if you’re a really early stage company. And so give yourself a little bit of protection there. It also good for the reps because if you have an opportunity to overpay for something later, then you want that for them.

So do that in about six month increments. And then if you’re doing any sort of bonuses or accelerators, pay those out either at the end of a quarter or at the end of the six month time period, as opposed to every single month. Again, usually if you’re setting an accelerator, it might be on that full six month performance as opposed to a single month’s worth of quota. So you can give yourself a little bit of a time horizon.

And then clawbacks is important, especially if you sell some sort of month to month business product, or you have a really long delay between the date of signature and the date that you’re either invoicing or receiving payment. A clawback basically is protection for the company to say, if this deal does not end up being as valuable as we think it’s going to be right now, we have the ability to clawback commissions for the value of that deal. And you don’t want to be punitive in these situations, but you want to be realistic.

So let’s say you sign somebody to a year long contract, but it’s paid monthly for whatever reason, paid quarterly. If they don’t receive the full year’s worth of payments on that deal, then the company reserves the right in those first 12 months to clawback commission paid on that deal. So that would be one example.

Cool. Some really good tactical nuggets in that last question. I think this is a good place to wrap. We’ll include this recording for everybody who attended and everybody who registered, as well as links on MyNet, Light Consulting, and Sean’s Guide. Awesome. Thanks, everybody. Have a great Friday and a great weekend.

Thanks, Kate.