When To Invest In Sales Operations (Plus The Right Way To Measure Performance) With Atrium Founder Pete Kazanjy

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This is a podcast episode titled, When To Invest In Sales Operations (Plus The Right Way To Measure Performance) With Atrium Founder Pete Kazanjy. The summary for this episode is: One of the most common questions we hear is, when is the right time to invest in Sales Operations in my company? When is it too early? When is it too late? Luckily our guest, Pete Kazanjy, is a bit of an expert when it comes to early stage sales organizations. He wrote a book called Founding Sales and he is the founder of Atrium HQ, a sales performance analysis company. So on today’s episode, we’re going to answer that common question about when is the time to invest in Sales Ops. And for bonus points, we’re going to go deep on the core tenets of Sales Performance, the KPIs you should care about, and reveal the highest leverage actions we as Operators can take with our Sales Orgs. By the way... Pete lists A LOT of books in this episode. Here's the complete list for you: - The Goal by Eli Goldratt - The Score Takes Care of Itself by Bill Walsh - The Lean Startup by Eric Ries - Boyd: The Fighter Pilot Who Changed the Art of War by Robert Coram - Founding Sales by Pete Kazanjy - Cracking the Sales Management Code by Jason Jordan - Leading Sales Development by Alea Homison and Jeremy Donovan Like this episode? Be sure to leave a ⭐️⭐️⭐️⭐️⭐️⭐️ review and share the pod with your friends! You can connect with Sean and Pete on Twitter @Seany_Biz @Kazanjy @HYPERGROWTH_pod

Sean Lee: Hey, everyone. Welcome to Operations. The show where we look under the hood of companies in hyper- growth. My name is Sean Lee. One of the most common questions I hear is, when is the right time to invest in sales operations at my company? When is it too early? When is it too late? My short answer has always been, you need to start thinking about your sales organizations, operational structure and measurement as early as possible. But let's be honest, that's not really a sufficient answer. One of the places that I typically turn to for thoughtful answers, discussions and advice is a group called Modern Sales Pros. Modern Sales Pros, or MSP is a vast online community for sales operations, enablement, and sales leaders. And the guy who started it all is our guest today, Pete Kazanjy. Pete is a bit of an expert when it comes to early stage sales organizations. He wrote a book called Founding Sales and he's the founder of Atrium HQ, a sales performance analysis company. And in addition to all these other accolades, Pete recently published a sales operations maturity model, which outlines exactly when and how to invest in sales ops at your early stage company, literally the answers to the test. So, on today's episode, I knew I wanted to talk to Pete and help answer that common question about when is the time to invest in sales ops. And for bonus points, we're also going to go deep on the core tenets of sales performance, the KPIs you should care about. And we're going to reveal the highest leverage actions we as operators can take within our sales orgs. So, let's get right to it. When should people start thinking about implementing sales ops inside of their company? And what's the value of implementing at all?

Pete Kazanjy: The sales operational excellence maturity model that you're talking about there really kind of extends from the point where you have one human being selling all the way up to hundreds, and of course that maturity model is in the resources section on the atriumhq. com website. You should be investing in sales operational excellence from day zero, but what your question is, when is there a human who's responsible for it? So, I think that's one of the things that a big shortfall is people are like, " Hey, we just got to sell it. We just got to sell. We just got to sell," versus saying like, " Actually, until we have a sales operations person, this is the responsibility of the founder to think about process and efficiency specifically such that we're setting ourselves in the future up for success." Then the question becomes, " Okay well, at what point does it make sense for us to have an individual human who kind of peels off that responsibility from sales leadership, from the founder, or what have you?" And really the rule of thumb there is when it gets to the point where there's opportunities for operational efficiency gain, that more than makes up for the incremental salary expense there, that's really the time to do that. As in like, rather than hiring an incremental sales person at that point, let's hire a sales operations person, what they're going to do is they're going to make the existing sales people way more effective and help us set the incremental sales people up for success. And so, then the question is like, " Okay, cool that's great, when does that happen?" And usually I think it's between like, you could see it as early as six, eight, 10 sellers, so like FDR policy, essentially humans who are being like sales humans who are being orchestrated. You can see it as early as that. You could see it as late as like maybe 15, if you get beyond that, it's kind of going to get messy and you're going to start seeing things getting broken. The problem of course, that's really dangerous there is that usually what ends up happening is you just die a death of a thousand cuts rather than it being like one big mess up. Like, " Oh man, we screwed that up. If only we'd had a sales operations person." It's like, " No, it just turns out all the SDRs are spending 30 minutes or an hour a day manually prospecting in LinkedIn sales navigator whereas really if we had a thoughtful sales operations first and they would just rip 5, 000 contacts and out of Discover Oregon, shove it into the CRM and we'd be on our merry way. So, I think it's one of those things that can be insidiously invisible and so this is why it's got to be somebody's job. Even if it's not somebody's dedicated stuff, like somebody's got to be responsible for thinking about it. One really good resource for this, there's a book called The Goal, it's an operations research book written as a novel. Actually, it talks manufacturing and it's a novel about a guy running a manufacturing plant. It's by a guy named Eliyahu Goldratt. A sales organization is just a factory that creates revenue. And so, just having an operational mindset of looking for areas of improvement and looking for areas of constraints and unlocking that constraint, it's just something that you should always have in the back of your mind or the forefront of your mind, even if you don't necessarily have a human who's dedicated job it is.

Sean Lee: Yeah. A few of the things that I want to unpack there first, I got to check out that book. I like what you're saying about having that mindset from day zero regardless of whether or not you have a sales operations person in place, but also your point about the point at which you can find opportunities for efficiency gain. You gave an example about LinkedIn and time saving. Is time the most common measurement at that point for that efficiency gain? If I am going to make the trade off and say instead of hiring X more incremental reps or whatever, I'm going to put that money towards an operations person. How can I identify that there is actually efficiency gain to be had?

Pete Kazanjy: This is fun. Let's continue our metaphor of the factory and manufacturing. So, the whole idea here is that our sales output is the result of a high quantity of high quality selling activity. And then of course we can measure that. We have various KPIs off ownership. Obviously, bookings is kind of the most important one, but we have quality measurements like win rate and opportunity conversion rates and average selling price and things like that. We have quantity of measurements like customer facing meetings, number of accounts interacted with, number of ops interacted with, new ops, new pipe, things like that, really what we want to do is, we want to maximize the utilization of our sales reps such that they're engaging in the highest quantity of highest quality. So, that's a framework by which to answer your question. So then answering your question, where are the opportunities for improvement there? Well, it could be people are spending time on things that could be automated or what have you such like manually cleaning prospects or what have you. It could also be things like helping reduce defect rate to use a manufacturing term. So, like a good example of this, obviously I run a sales performance analysis software company, a good example of a quality metric that identifies defect rate is like untouched opportunities. So, how many opportunities does an account executive have in his or her pipeline that has been untouched for like 30 days or 60 days or what have you, and how's that trended over time? So, yes, people spending time doing things that can be automated is one place, but then you could also look at defect rate, like do account executives lose track of their deals because they don't have good reporting in place? It could be as straightforward as, " Wow, nobody set up a opportunity view that is saved for all the account executives." And then moreover, nobody said, " Hey, you know what our operational rhythm is?" On Mondays in our sales team meeting on all of our different sales teams we talk about what are the key deals that are coming in this week and then by the way, on Wednesday, we have a team pipe review where we go through and we use that op view or that pipeline report, and we go through it together. So in that case, that's not really time savings, that's actually what it actually is-

Sean Lee: Truly dollars.

Pete Kazanjy: Well, it's truly dollars but it's redirecting time. You will be like, " Oh man, that's consuming time away from selling behavior." And then the response that it's like, yeah because if we don't redirect that time to sales maintenance behavior guess what, do you really think that account executives can keep 50 opportunities in their head and what their next steps are? No way. So, to answer your question, I think it is a time thing but then it's one, how can we reduce time spent on things that are not useful? Two, how can we raise activity levels, so in the case of account executives of course, it's customer facing meeting time? And then how can we raise quality levels and reduce defect rate.

Sean Lee: I really like the overarching goal that Pete outlined as part of his explanation. The goal of any sales org should be that the team is doing the highest quantity of the highest quality of work. The highest quantity of the highest quality of work. And we as sales operations have to be the ones helping to achieve that goal. Not necessarily by just automating things that can be automating that is useful, but also by finding places where opportunities or learnings are falling through the cracks. When you redirect that time or those flaws in a productive way, you end up with all of the benefits that Pete outlined. And if you are in fact the first or second person brought in to run sales ops at your company, chances are there are a lot of glaring areas of improvement. That doesn't mean though it's easy to know where you can start, especially if you have a long list of things to improve, which most of you do. In the sales ops maturity model I mentioned at the top of the show, Pete breaks the model down into a bunch of different categories, CRM, data management, strategy, inbound processes, hiring, there's a bunch. So, with all of these different categories, where should people start and where do people screw up by focusing too early?

Pete Kazanjy: Yeah. So, another kind of helpful metaphor for thinking about how to approach this is one of the things I like to describe sales operations folks as is a product manager of the sales organization. Previously, we were talking about the goal. Not just the book, but then you were saying like, " Hey, that's a very helpful North star." Yes, it is. And then also the book, The Goal talks about this and you were kind of talking about engaging a high quantity of high quality activity or behavior and those things happen. Another one of my favorite books is one written by Bill Walsh called The Score Takes Care of Itself. So, Bill Walsh was the football coach of the Stanford Cardinal and the San Francisco 49ers and so, he pretty much started the whole trend. I know you guys are based in Boston, so Bill Belichick is like a cultural descendant of Bill Walsh, which is like we can't control the outcomes necessarily, but we can control the inputs and the intermediaries. If that's the thing that you're starting from, so then what you would do is you would take stock. If you're coming into an organization, you would take stock of what's going on. We would say, " Great, what's our CRM situation. Is it adopted? What are our stages? Are they good enough? What's our analytics situation or what are we tracking? Are we tracking anything? Are we tracking good enough?" Keep going along through the different topics and understand where are we at here? Are we at an A, are we at B or C? Or we had an FU minus, so then once you have that, you can say, " Okay, here's our biggest shortfalls." The reason why product manager is a helpful metaphor here is when you're building a product, there's a bajillion things that you could do. There's all these wonderful features you can dream up. There's always bugs that are super annoying, but you only have five engineers or 15 engineers or 25 engineers or whatever it is that you have, so you have limited resources. The same is true with sales operations person, they have scarce resources. And so, what you're looking for is, what are the areas of biggest deficit or biggest opportunity for gain cross against a level of effort? So, first what you got to do is understand, okay where are we at? Let's do an audit of the organization and then look for areas where you have things that are at like at an F where the level of effort might not necessarily be all that terribly difficult to resolve it. So, I think that's a helpful framework there. Oftentimes what you see though, is the negative anti- patterns will be things like sales operations, people will oftentimes come in because it's a sales leadership too. And it's kind of like, all right, I got to make a splash. I got to beat my chest here. You know what we should do? We should redo the stages. Because we work with like hundreds and hundreds and hundreds of sales organizations and we're going to redo the stages that actually might not be wrong. But one of the things you got to recognize is like, " Okay, is that really the most important thing right now? Are there current stages like they pretty, I like, are they okay?" If they're a B like, I bet you, there's something way more important to work on here.

Sean Lee: Is it the stages themselves or is it our adherence or usage of those stages? Is that actually the silver bullet here or not?

Pete Kazanjy: Yeah, exactly. I did a podcast with Salesforce, the sales cloud people and I think it was the 10 deadly sins of sales operations or something. It's kind of like how at a party everybody's always like, " Oh yeah, the DJ sucks." Invariably, it's like, "Oh, yeah these stages are wrong." Oh, you guys do medic? We got to do medtech." And it's going to one of those things like, " Come on guys." Especially early on, you want to have an appropriate level of operational rigor where you're not totally wrapped around the axle about things that don't necessarily matter. Like, " Oh, we got to tune these stages here." That's interesting because from what I can tell here, you're not even tracking how many customer meetings your account executive have. If I were to trade off here, I'd say like, " Hey, we should probably understand how it's selling activities going on first and foremost before we get spun up about that over there." So, that's the first anti- pattern is focusing on things that are easy targets or like, " I want to make a splash." And then the second thing is I think running after shiny objects, there's a whole industry of people and vendors who are like, " Look over here. Look over here" This is the most important thing for you to be focused on right now, and it's hard because you've got very persuasive marketers and social pressure and what have you to maybe look at the shiny bright object. But oftentimes it's like, " Okay, cool." You really see this a lot where you have a sales operations person who get mitered in implementing CPQ for six months, for like a 10- person sales organization where it's like, okay I get it that maybe we want to have more rigor around our quoting process or what have you, but you guys only sell one type of product and really the only variation there is the number of seats. So, there isn't a lot of complexity or maybe the right approach here is just for you guys to have a Google doc template that people have to use and have good operational rigor around that, as opposed to saying like, " No, no, no, no, no, no, no we've got to throw$ 30,000 steel brick and spend six months banging our head against the wall. " Because the other thing you have to think about is, what's the opportunity cost associated with that? If you're going to disable that sales operations person for six months, what are all the other things that he or she could have been doing during that time? So, it goes to the biggest anti- patterns just like shooting at typical things without actually really taking stock and then getting distracted by shiny objects.

Sean Lee: Pete isn't our first guest to compare operations to product managers for the organization. And I like the prioritization system he gives us here. He asks us to weigh the biggest deficit or biggest opportunity for gain versus the level of effort. Challenge yourself here, if you draw out a quadrant and actually plot out the projects you're considering by opportunity for gain versus level of effort, I bet it will provide a lot of clarity. But let's extend the product manager metaphor here. Priorities change, roadmaps shift. Pete talks to growing sales organizations every single day. So, in a hyper- growth business, I wanted to understand how can I stay fluid from an operations perspective and shift in sync with the business that I'm supporting?

Pete Kazanjy: So, it's about fluidity and rhythms. So again, extend the product manager metaphor and you guys do this at Drift. We do this at Atrium. You take stock of what's going on. There's two other books for people to read. One is called The Lean Startup by Eric Reese. It's all about observing the situation, making a decision about what experiment we want to run and what hypothesis we want to test? Doing minimum viable implementation of that and seeing if it actually approach, like if you use the CPQ example there. Like, " Hey, cool our guys are quoting things terribly or they're doing bad discounting or whatever." Rather than saying like, " Okay, cool. We should immediately implement SteelBrick." and I'm not beating up on SteelBrick, it's obviously a very important piece of software, but just like at the right stage, the response to that might be, " Oh, interesting. If that's the hypothesis, well maybe we should just template out something. Let's wait a month. Let's see if that gets our discounting issue under control." So, that's the first thing like this notion of like MVPing. There's another book called Boyd. It's about, Oh God, what's his first name. I think it was John Boyd, who's a fighter pilot. He was the person who originally came up with this notion of the OODA loop so that observe, orient, decide and act loop, which then informed lean startup and informed total lean manufacturing and things like that. The whole idea here is, well, we want to have is we want to have loops. So, what does a loop look like in the case that we're talking about? Okay, we're going to take stock right now. We're going to make a decision as to what it is that we're going to shoot at. We can only do a couple. We're going to think about what the minimum viable approach is to see if we can get utility out of that and we're going to go work on that work, work, work, and then we're going to stop. We're going to come back and we're say, " Cool, did that fix it?" And if it fixed it, great, wonderful. Now, we take stock again. And ideally when we took stock, the first time we made a big list, like mark off those first two because we have achieved them and now let's move to number three and number four. And so, this is just what product organizations do as they're continually getting feedback from their customers. But also you have a release rhythm where say you have a list of different things that you think you'd want to do. You can only work on these two or three or four right now and then at the end of four weeks, you release those, things you see, did they have the impact that you wanted based on the metrics and your product metrics similarly, okay, cool. We had this hypothesis that if we remove prospecting from the account executives plates and only redirected that test, it would allow them to have more second meetings and more meetings in general. Okay. Well, we instrument first and second meetings. Wonderful. We implemented this process and then in the subsequent month, we then look at how many customer facing meetings, those account executives had, as compared to the month before. " Oh, look, there was a 30% rates. Hey, all right. We achieved our goal. Wonderful. What's the next thing that we can work on." So, it's essentially just like a loop. Four weeks is probably too fast. Maybe quarterly is probably a little slower than you would like. So, what you want to just have is an operational rhythm where it's like, okay, here are the things that we think that we need to work on. These are the ones we're working on right now. We're going to have checkpoints on the way to make sure that we're executing against that like stand- ups and what have you. And then we're making progress against that when we're done with those, we're going to evaluate whether or not we achieved our goal and then at the end, we're going to say, " Wonderful. What's the next thing we're going to work on?" It's just a cycle.

Sean Lee: It's so funny how so many of these concepts end up getting either recycled or rebranded slightly in different ways. I literally have a sticky note on my desk with observe, orient, decide, act or with U-Dub, but I know it from extreme ownership as opposed to from Boyd, but it's the same exact thing, but it's just funny. But I do think applying that as your rhythm and your operating rhythm, I think is the key there and not getting bogged down in the stuff that becomes less important or is this the flavor of the week. Fluidity and rhythm. Fluidity and rhythm. I know in my work, I spend too much time on the doing and not enough time stopping to take stock of where we're at. That's a forced rhythm that I've had to put into my routines and cadences, hence the sticky note. And that operational rhythm is what Pete is advocating for here. It's not just for ops either, he believes in these rhythms for any cadences or routines on any team, the agenda of the meetings you hold, the numbers you look at, what happens daily, weekly, monthly, which brings us to Pete's company, Atrium. Atrium specializes in sales performance analytics. And so, I wanted to dig into what exactly performance analytics means. Pete breaks down the whole wall for me. And first, he explained to me that there's a difference between analytics and analysis.

Pete Kazanjy: Essentially, performance analytics and then performance analysis, which are two different things. It's just the instrumentation and comprehension of various metrics that track that quantity and quality of selling behavior that we talked about earlier. A number one challenge that organizations have is that they instrument too few things because oftentimes a lot of sales organizations don't come from a metrical background. This is why sales operations can be very helpful, more modern, newer school sales leaders have more comfort around metrics and analytics and what have you. The second problem that organizations have is they just don't look at their metrics like, " Hey, cool, good thing. We've made a bunch of dashboards that no one ever looks at, but now at least we can tell ourselves that like, Hey, we're like data metrically excellent." And that's actually where Atrium really focuses is on automating the analysis of those metrics so the way that Atrium works is, Atrium instruments hundreds of metrics across SDRs and AEs and importantly, continuously monitors them and looks for the physical anomalies. So, the things that we normally have to use our eyeballs and our understand like, " Hey, that person's line is going down into the right. That's not good." That could just be done mathematically and automatically. And so, that's just the notion of a sales performance. Analytics is distinct from sales performance analysis, which is what you do with those analytics. And those are kind of the failure modes associated with it.

Sean Lee: Focusing on that second part of what you do with those analytics. I think whether you have Atrium or to like it, or you don't have anything like that, I'm curious how you view ops role in either translating those metrics or doing something with those analytics because one of the things that I think is a little bit dangerous and can be a trap for ops to fall into is either they fall into one of two roles. A, they're like this weird police officer that's just kind of there to tell you when things are broken or you're not doing something right in Salesforce, which isn't helpful to anybody. Or B, you might have something to bring to the table, but you don't have sales experience or you're trying to bring data about the wrong things and you're not really in a position of power to actually do anything with those. And so, I'm just curious, like where do you think that ops should fit on that spectrum of doing something with the analytics?

Pete Kazanjy: Yeah. So, I think the way that ops should view this is one as an enabler of management and then two as a doer of the thing, because unfortunately we could say like, " Hey, you know what, I'm going to do the math for you." And I think a lot of sales operations people would empathize with, it's like, " Oh yeah, on Sunday evenings, I have all my dashboards that I refresh. I take screenshots of them. I drop them into a Google slide deck and I distribute that to the leadership team and all the managers who then don't look at it." That's not really a good use of anybody's time there where it's like, " Hey, cool. I agree that this thing together, now you have to use your eyeballs to go look at it." So, I think there's two things there, one is you can be a bringer of insights, and this is one of the things that we're really focused on with Atrium is, Atrium does the monitoring and does the reasoning for you. So, rather than saying like, " Hey, here's a bunch of metrics, figure out what's wrong with this rep." It's like, actually this reps bookings issue come from his win rate being lower than everybody else's and when his rate is lower than everybody else's because he has a substantial conversion rate problem at stage three. That's the answer. So, we do that with software. But if you as a sales operations manager can deliver those insights. Like, " Hey, I reviewed these metrics and it looks like this SDR is low on opportunity creation and I went and I looked at his activity metrics and its quality metrics and I see that his activity is actually quite high. It just seems that his email response rates are very poor." So, that might indicate that he has either a context selection issue or a messaging issue or an objection handling issue by email or something."And so, Mr. SDR manager or Ms. SDR manager, this is a place where I think it would be worthwhile for you to go investigate." So, essentially that's like doing the work for the manager, but doing work for them in a way that's actually helpful rather than like, " Hey, here's these slides to look at." That's the first thing.

Sean Lee: Can you translate it?

Pete Kazanjy: Yeah. It's a great metaphor. Now, the problem with courses that like, I mean, how many people are in the drift sales ops team? It's like a handful, right?

Sean Lee: Yeah, it's like three.

Pete Kazanjy: Yeah, it's like three. How many sellers do you guys have? I don't know, like 50 or 80 or something like that.

Sean Lee: 70.

Pete Kazanjy: Right, exactly. Who's got time for that. You can imagine like, " Oh, okay. If you had like a bunch of BU finance kids, like finance grads, like if you had like five 22 year old finance graduate, econ grads or whatever, maybe you could do that, but that's like an incremental, like$500,000 or$ 400, 000 with salary expense. So, good luck getting that right, dude. So the problem with what the approach that I just described is that it's not high leverage. It's human intensive. So, then the other thing we can do is rather than give somebody a fish, we can teach them to fish. And so what that can be is one putting together a metrics harness that it's useful per the Atrium sales operational excellence maturity model. But then secondly, you can't just like, " Hey, here you go. Here's your dashboards because any sales operations person that's put together dashboards, like we've all had the experience where you go back to it like a month later and it hasn't been refreshed crosstalk. And you were pounding the table that all you needed. All I really need is the conversion rate of SQL to SQL and then everything will be fine on my team. And I added that to that dashboard for you and it took me a half hour and then I came back a month later and you haven't even refreshed it because you are full of malarkey. So, just like providing people with those tools, without the operational rhythm or training them on it, is really just like, that's going to be low leverage too. You can tell yourself a story like, " Oh, it's high leverage because they can self serve." But then if they're never self- serving, it's actually, was like zero leverage. And so, then that goes into, this is something that I talked with. I think I was talking with Jeremy Donovan from SalesLoft about this and maybe Cory Bray. With sales enablement so often, we spend all of our time enabling reps. And so, what about the managers? So, what we're describing right now is the notion of in order to be a good manager, there's a bunch of different things that you have to do. You have to hire people and onboard them and train them and motivate them and hold them accountable and so on and so forth. But you also have to be able to metrically comprehend, unless you have an army of 22- year- old BU financial reps, you have to be able to metrically comprehend what's going on with your team and then reason against that. So, that's a new behavior for a lot of sales managers because everything where sales managers come from, they're promoted account executives or promoted STRs, or what have you. They don't necessarily have that muscle. They have other muscles, but they don't necessarily have that muscle if we just hand them these things without actually helping them develop that muscle, and then putting in a framework of like, " Okay, cool, it's Tuesday afternoon and we're going to do the sales manager metric hour together where essentially we all do our really unpleasant metric squats together." And so, we all get like really yolked metrics, but you got to do that because if you don't do that and you'll leave it up as an exercise to managers, who knows, maybe you're lucky, maybe they are magic and they'll figure it out. But generally speaking, it's not a reliable, I mean, how about this? If you ask Bill Walsh or Bill Belichick chance you don't right. What you do is you follow the process, any great sports coach, whether it's Bill Belichick, Coach K, or what have you, there's a process or Popovich or what have you. The process is more important than the individual, it's our process and good things come out of it. The score takes care of itself.

Sean Lee: Pete's advice here boils down to one simple truth. If you are in sales operations, or any type of operational role, you have much higher leverage with managers who manage six or seven reps than with the individual reps themselves. I think this ties in well with his maturity model too. I know in my case, when I got to drift at the beginning of 2018, we only had about 20 sales reps. And I could often go to each of them and have individual conversations, probably not the most efficient thing, but I did it. But as we grew, I had to change that approach. And it probably took me too long to make that transition fully. We've always had good communication between ops and sales leaders, but that's not really the lesson Pete's lesson is about spending time on enabling those managers, not just communicating with them and making them better at the stuff that we do in ops performance analysis. That's an important bridge we all have to cross together. Otherwise all the work that you're doing out there as operators to help the business will be for nothing. In his explanation, Pete used the term that I hadn't heard before, a metrics harness. So, I asked him what that meant. The metrics harness is that enablement piece that you're talking about of actually making sure that they have the enablement that they need in order to translate or take the things that have been provided to them and put them into those routines. Like when you say metrics harness, is that component?

Pete Kazanjy: The notion of metrics harness is just the notion of a set of metrics that we use to instrument the totality of our account executives or on SDRs or what have you. So, like the harness metaphor of course, is like think of a horse rider, think of like a team of horses. In order to guide them in the right direction and make sure that they're not like running all over the place. They have a harness in place that just this notion of having few dozen metrics that allow us to understand the quantity and quality of behavior happening with Ken executives, quantity, quality of behavior that's happening with our SDRs. That's that. Then there's the next step which is the consumption and comprehension of that actioning of that. It is implemented in an operational rhythm which is managers with teams, but then also those managers with like a failed operations person. So, the way to kind of think about like a sales operations person to disregard is they're kind of managing the managers, but not in like a boss sort of fashion, but like a part, and this is where you see some of the most successful sales operations, sales management partnerships in organizations like LinkedIn or Ox or Okta. And so generally speaking what you have is, you have a sales operations business partner who is assigned to maybe it's two, three, four or five managers depending on what your ratios are there. And then they're responsible for having an operational rhythm with those managers to help them. Maybe it is to show up with like, " Hey, here are a couple of key insights that I derived for you." Also it's time for us to do our pushups together. So you can show up with insights next time.

Sean Lee: Let me ask you about that rhythm. So, if I am that sales operations person and I've got a handful of different managers who I'm going to be giving those insights and doing those pushups with, I think that one of the challenges that I have is the opposite of one of your common failure points that where you were saying that like the people just don't have enough things that they've instrumented. That they don't have enough metrics that they even pay attention to. I would argue in my business honestly, sometimes the opposite are there too many metrics that we're looking at that only gets more varied when you go across those multiple business units. And so, if I'm that sales operations person serving multiple business units or serving multiple people, how much do you recommend that they try to keep those kind of like pushups sets or workout sets as uniform as possible between those different managers versus having a completely different workout plan with every single one?

Pete Kazanjy: I agree with you. So, it is a less common problem for people to have too many metrics to pay attention to. That's like a fancy problem. Most organizations by far just have no idea what's going on. It's like when we interact with hundreds and hundreds and hundreds of sales organizations and to say they have no idea what's going on is of course a comical overstatement for comedic effect, but they're tracking a much more constrained set of metrics versus having kind of sprawl. So, there's a couple of ways you can sell it. So, first of all, instrumenting a lot of different things is actually really powerful and important. The problem that comes along with it is now you've got that monitoring piece. So, you could have them implemented but somebody has to use their eyeballs. So, the way that we felt at that Atrium of course, is a robot just statistically monitors him. And they say, " Hey, by the way the opportunity conversion rate for this account executive right here from proposal out has been declining over the trailing six months." There's no way that a sales operations person would've ever been able to... Because you'd have to monitor that for every single rep in order to identify that in this rep right here, it's not possible for a human to do. So, if you are doing this with humans as opposed to doing it with machines, what you would do is you would start at, the way this kind of thing about metrics is as a good tree. And so we actually have this like a decision tree where you have a metric and there are precursor metrics to that metric. And so we actually have this documented in one of our resources on the Atrium resource library where it's like, let's use bookings as an example. So, where does bookings come from? Well, it comes from attempts crossed with win rate. So, that's going to give us our wins. And then we have ASP average selling price across with that. Okay, cool. So, given individual rep, if they are having bookings issues or if they're not tracking towards booking success, what we would do is we would go up a level, so, okay, cool. You're not pacing as compared to the other SMB, let's use drift as a case study here, because I assume you guys have like SMB reps to mid- market reps and enterprise reps. Is that pretty accurate?

Sean Lee: Correct?

Pete Kazanjy: Yeah. Cool. I mean, it's fairly standard and you guys are a big kid company. You hope 80 sellers. That's a lot, most of the people listening to that probably don't have that many sellers. So, what you would do is you'd say, " Okay, cool." So, you're not tracking towards where you need to get to Mr. SMB rep or mid- market rep let's go up a level. How are you doing on attempts? How are you doing on your win rate? How are you doing on your ASP? Well, how would we evaluate that? Well, what we would probably do is we'd evaluate it as compared to the other people in that segment, you actually are getting plenty of ops and your win rate is fine. It looks like your ASP is lower than everybody else's, that's interesting because you guys probably have, like, if you have 80 reps, you probably have like 20 mid- market reps or something like that. That's a pretty good sample. If you imagine if an individual over the trailing 90 days has a far lower like 30% lower ASP as compared to all the other mid- market reps, that's going to add up. So, now we're like, " Oh, okay, cool." So at our second level, we've now figured out that ASP is an issue. We don't know what the root cause of that is, but then we would go to the next thing. Okay. Well, what goes into ASP? Well, is it that you're just working on small ops? How would we answer that? Well, what's our average op size, or maybe you actually, you have a bunch of big ops in your pipe, but you're just not spending any time on them. So, where are you spending your effort? Or are you just like not penetrating organizations very well? So, like, are you like, how many contacts are you interacting with for op or do you just discount? Like you just drop your pants on price which is not uncommon. So, then that's like tier three. So, what you can do is you can say, " Hey, cool, let's instrument our tier one metrics." And maybe we'd even instrument our tier two. And continue to look at that and then when we see that something's funky, then we can dig in our tier three versus if the expectation is like, " Hey, Sean, I would like you to monitor all tier three metrics for all 80 reps in the drift sales organization." You would tell me to go pound sand because it would just be very challenging to do. So, that's like the first approach is like, " Okay, well, how do we be rigorous about this?" And so, we just don't like drown ourselves in data. It's like, " Okay, we're going to look at these specific of these." Again, assuming that we don't have a computer monitoring these for us, because if a computer doesn't care, they can just monitor all those things for us and be like, " Hey, Sean, this rep over here has an ASP issue. And it's coming from the fact that their average discount is way higher than everybody else's. Can you go tell the manager to help coach them on negotiation and discounting?" So, assuming that we don't have a computer doing this for us, what we can do is we can have a tier one tier two metrics in place and then have the other ones potentially built, or we can build them just in time or ad hoc to then investigate problems there. So, then your second question was like, " Okay, well, should that be uniform or should that be different on a business by business basis or sorry, within an organization?" Well, generally speaking, everybody's kind of got like the same sales motion in your organization. It'll change a little, let's use drift as an example, first grade software, it helps you convert more of your website, traffic into qualified meetings and opportunities. Wonderful. The humans that we're going to sell to are probably going to be different if it's an SMB organization versus mid- market versus enterprise, maybe the titles change a little bit or what have you. But generally speaking, the metrics are probably going to be pretty uniform. It is going to be those ones that matter, obviously bookings, win rate attempts, ASP, deal cycle what have you. Now, the expected levels will probably be different because the ASP's that we would expect out of an SMB rep are probably going to be pretty different than the ASP's we would expect out of enterprise rep. And the sales cycles are going to be different and so on and so forth. But in general, the metrics are the same. And so, one of the metaphors, as you can tell, I'm a sports fan. One of the metaphors I like to use here is the metrics that are used to evaluate basketball players or football players or hockey players, or what have you. They're uniform between teams for the most part, with the exception of like wildly different categories of persons. So, you're talking about hockey, the metrics for a goalie are different than metrics for-

Sean Lee: A forward.

Pete Kazanjy: Yeah, exactly. But in general, there are going to be a shared for the forwards or whatever for the defense are like, " Yeah, they take shots, the number of shots maybe are a little different, but they take shots and we can instrument their impact based on the plus minus of scoring when they're on the ice or what have you." The same is true with basketball, we would expect that a center would have more rebounds than a point guard or whatever. In general, everybody's shooting, everybody's scoring points, we want to evaluate them based on their shooting percentage, want to look at their assets, all these sorts of things. So, that's kind of the case in a given business. And also the reality is even between businesses. So, a lot of organizations like the core metrics that instrument SDR eight year CSM success are uniform between organizations. It's just that because sales operations and metrical management is so new, people just haven't admitted to themselves that there is a uniform set of metrics that can be used to evaluate folks that yeah, there may be arcane things here or there, around the edges. So like, if your organization has a weird consumption- based sales motion, say like Twilio or something like that, but you still win deals. Okay, but we don't know how much revenue is going to come out of this over time. Okay. Yeah. You're right. You probably model how much demand do you think is in the organization, because how else are the account executives going to know where to spend their time? The upshot is that one, if you have a human paying attention to it than a computer having constraints set of metrics, such that you can have early warning on those and then dig into the root causes is the right approach. And then largely being uniform throughout the organization, which goes back to the notion of sales operations as the enabler of the organization. So, rather than being like, all right, sales managers figure it out on your own terrible. Like, " Hey guys, we've coalesced by working with everybody. We've coalesced a set of things that are successful." And it was blessed by another really great book that people should read is Jason Jordan's Cracking The Sales Management code. Aligns very heavily with what Jason Jordan talks about in here and what Jeremy Donovan talks about over here and what Alea Homison talk about over here and getting sales development. So, these are the metrics that we're going to have in place, and it's the operating rhythm we would expect you to have. And we're going to help you implement that and everyone's going to be happy.

Sean Lee: If you're in sales operations, or you're a sales manager go back and listen to the last 10 minutes over again. Pete just did a live performance analysis and coaching session completely off the cuff. And really without any context from me, he came eerily close to a bunch of real coaching conversation that could and should be happening at drift right this very moment. There's a blueprint there and you should just outright steal it. Before we go, at the end of each show, we're going to ask each guest the same lightning round of questions. Ready? Here we go. Best book you've read in the last six months?

Pete Kazanjy: Best book I've read in the last six months is probably Leading Sales Development by Jeremy Donovan and Alea Homison. Super fantastic. It's very much focused on leading sales development. I suppose the specific tactical implementation, it's like one level up and it has a bunch of really great statistical analysis and studies in it as well. So, it's both practical and academic and has a lot of science in it, but also art to very high quality sales development leaders wrote it.

Sean Lee: Awesome. Favorite part about working in ops or with ops.

Pete Kazanjy: The continuous challenge and creativity. So, operations people are very creative they're problem solvers. They want to, again, the book, the goal, like people who want to have continuous improvement and are satisfied with the status quo and that's what makes very creative, thoughtful, intelligent folks are fun to work with. And it's what makes life worth living.

Sean Lee: Least favorite part about working with ops?

Pete Kazanjy: I would say that probably the least favorite part of it in our cases, generally speaking operations folks absolutely love what we're doing at Atrium because it makes their lives easier. One of the challenges that operations, this is kind of like an empathy thing. One of the challenges that operations organizations have is they're kind of like responsible, but oftentimes not in charge. So, rather than being the dog, sometimes they're the tail being wag. They know what's true. Like they know what ought to be done, but by virtue of the fact that an organization maybe doesn't empower operations as much as they should and instead the CRO has decision making authority and it's not with distracted, like buying software or whatever, but like that certainly is one component of it. And one of the jokes I like to make is there's the Greek myth of Cassandra who's this woman who was doomed to see the future, but like no one would believe her. And sometimes my joke has that operations people kind of feel like Cassandra because they kind of see by virtue of the fact of like being closest to the ground, having good metrical instrumentation, they kind of see the future and they can see problems around the corner, but not necessarily be believed. So, that's really frustrating for operations folks. And it can be really frustrating when you're working with them, trying to help them to play things, software that's going to make their lives and everybody else's lives way easier and they're not necessarily believed. That's kind of frustrating.

Sean Lee: I thought we could do a whole other episode just on that alone, somebody who impacted you getting the job you have today.

Pete Kazanjy: Oh boy. Well, as the founder of Atrium, that makes sales performance analysis software, probably the most impactful people. There were early investors in my last company so, my software company TalentBin was my previous opera company where it went from being a founder, business generalists to a sales rep, sales manager, sales leader, Josh Kopelman, Finn Barnes, Sarker and then our later board member, Paul Lee from Lightbank now at Builders VC, who at one point when we were having a board meeting and I was running the sales organization, and I was talking about hiring a sales manager or sales leader to take it over from me and Paul kind of interjected and he was like, "I did a lot of these board meetings and you're doing a pretty great job. Maybe it's B or B plus, but why would you risk swapping in a sales? You're doing fine, just scale it up." And I was like, " Oh, okay that's a good point." And so, that was like eight years ago. And so now that was the kernel that kind of turned into all the sales excellence and sales operational excellence work that has come thereafter from my career.

Sean Lee: That's awesome. All right last one. One piece of advice for people who want to have your job someday.

Pete Kazanjy: Interesting. So, if you want to be a software company founder, probably the best piece of advice there is to work at an early mid stage software company that has their act together. And what I mean by that is like going really, really, really early where the company is still figuring things out is challenging because it's largely chaos and it's not necessarily everybody's not rowing in the right direction and going to an organization that is many hundreds and potentially a thousand people and at that point you're kind of in your own little box and you just kind of do the thing that you do, whereas there's a really nice sweet spot in there when an organization is maybe like North of 50, but like South of 500 where there's lots of opportunity for working on lots of different things. You have lots of surface area with lots of different parts of the organization. So, that just drives great learning.

Sean Lee: Thanks so much to Pete for joining us on this week's episode of Operations. One of the things that I was doing throughout my conversation with Pete was writing down all the names of the books that he referenced throughout our conversation. And I know it was a lot of them. So, I'm going to put all the names of the books into the show notes, and really quickly here they are for you again, rapid fire. The Goal by Eliyahu Goldratt. The Score Takes Care of Itself by Bill Walsh, The Lean Startup by Eric Reese Boyd, The Fighter Pilot Who Changed The Art Of War by Robert Coram, Founding Sales, which was by Pete himself, Cracking The Sales Management Code by Jason Jordan and Leading Sales Development by Alea Homison and Jeremy Donovan. That was a lot. We want to put those in the show notes for you as well. Check some of those out. If you enjoyed the show, please make sure you leave us a six star review on Apple podcasts, six star reviews only. Also if you're listening to the show for the first time, or you clicked on a link in LinkedIn or somewhere else, and you're not subscribed to our show, please subscribe. It'll make sure that the show shows up in your downloads every two weeks, every other Friday. That's going to do it for me. Thanks for listening. Will see you next time.


One of the most common questions we hear is, when is the right time to invest in Sales Operations in my company? When is it too early? When is it too late? Luckily our guest, Pete Kazanjy, is a bit of an expert when it comes to early stage sales organizations. He wrote a book called Founding Sales and he is the founder of Atrium HQ, a sales performance analysis company. So on today’s episode, we’re going to answer that common question about when is the time to invest in Sales Ops. And for bonus points, we’re going to go deep on the core tenets of Sales Performance, the KPIs you should care about, and reveal the highest leverage actions we as Operators can take with our Sales Orgs. By the way... Pete lists A LOT of books in this episode. Here's the complete list for you: - The Goal by Eli Goldratt - The Score Takes Care of Itself by Bill Walsh - The Lean Startup by Eric Ries - Boyd: The Fighter Pilot Who Changed the Art of War by Robert Coram - Founding Sales by Pete Kazanjy - Cracking the Sales Management Code by Jason Jordan - Leading Sales Development by Alea Homison and Jeremy Donovan Like this episode? Be sure to leave a ⭐️⭐️⭐️⭐️⭐️⭐️ review and share the pod with your friends! You can connect with Sean and Pete on Twitter @Seany_Biz @Kazanjy @HYPERGROWTH_pod