Selling Intelligence (formerly Selling the Cloud)

In this episode of Selling Intelligence, KK Anderson, Mark Petruzzi, and Alan Rudolph continue their Diagnostic Session series by focusing on the most underinvested side of the go-to-market bow tie: customer retention and expansion.

The conversation explores why enterprise value is built not just through acquiring customers, but through keeping, expanding, and delivering value to them over time. Alan breaks down the difference between gross retention and net revenue retention, why time to value has become one of the most critical metrics in modern SaaS, and how broken retention models create pressure that sales teams can never fully outrun.

The team also discusses the dangers of applying AI to flawed systems, why bad data and weak customer alignment create compounding problems at scale, and how CROs can build healthier, more profitable businesses through stronger metrics, ICP discipline, and operational alignment.

What You’ll Learn:

• Gross vs. Net Revenue Retention: Why both metrics matter and how world-class SaaS companies measure customer health.
• Time to Value as a Growth Driver: Why TTV belongs on the CRO scorecard and how faster customer outcomes drive expansion.
• The Cost of Poor ICP Alignment: How selling to the wrong customers destroys retention, profitability, and scalability.
• Diagnose Before You AI: Why AI amplifies broken systems and how to avoid accelerating bad processes.
• Metrics That Protect Enterprise Value: The KPIs every CRO should monitor to improve retention, forecasting, and operational efficiency.

Key Topics:

• Customer retention and expansion strategy
• Gross retention vs. net revenue retention
• Time to value and customer onboarding
• Diagnosing broken retention models before implementing AI
• ICP alignment and customer fit
• Enterprise SaaS growth metrics
• AI-driven forecasting and operational efficiency
• Data quality and AI readiness
• Customer churn and expansion motions
• Building scalable revenue operations

Guest Spotlight: Alan Rudolph

Alan Rudolph is a strategic advisor at AGS with deep expertise in enterprise software, revenue operations, customer retention, and scaling go-to-market organizations. He has worked closely with growth-stage companies and executive leadership teams to improve operational discipline, retention performance, and enterprise value creation.

Resources & Mentions:

• AGS Revenue Blueprint Diagnostic
• BenchMarket
• Key Metrics Discussed:
• Gross Retention
• Net Revenue Retention (NRR)
• Time to Value (TTV)
• CAC Payback
• Win Rate by ICP

Topics:

• Diagnose Before You AI
• Customer Health Metrics
• AI Readiness in Revenue Organizations

🎧 Listen now and follow Selling Intelligence for more insights on AI, revenue growth, enterprise operations, and go-to-market strategy from today’s leading operators and advisors. Subscribe wherever you get your podcasts.

KK Anderson (00:29)

Welcome back to another exciting episode of our diagnostic sessions. And today we're going to pick up right where we left off with the last one in chatting with Mark and Alan about the go to market bow tie and specifically the last, the right side of the bow tie, what we call Keetmore, which is all around customer retention and expansion. And I know Alan will agree with this when we say that

This is really the most under invested side of the bow tie and where enterprise value truly has the opportunity to compound. so, Mark, I'll hand it over to you to kick us off and we're excited to have another great session.

Mark Petruzzi (01:08)

great. So Alan, that last segment of the bow tie that KK is describing, that customer retention expansion, this is your home turf. So what does diagnosis look like here? And why is this side the side most CROs just under invest in?

Alan Rudolph (01:25)

Do we have enough time? I'll be here for hours. ⁓ No, think it's just there needs to be a focus on gross retention, on net retention, on the whole structure of how does sales and account management and customer success, how do all these pieces come together? And we know that it drives growth and it drives value overall for the company.

But the under investment mark to your point, I probably have two, three, four conversations today. I was just talking to an exec this morning from a leading research firm and he was telling about one of his clients and their churn numbers are down, their sales numbers are off and obviously they're not growing. And if your churn numbers are too high, i.e. lack of gross retention, then it puts undue pressure.

on the sales team because we think, we can just go sell our way out of the box. And we know that doesn't work, right? We know for a healthy software company, we need to keep the gross retention north of, ideally north of 90%. Best in class is 95 % to 97%. And so this is where the pieces need to come together, right, in terms of selling, account management. Oh, let's not forget about

product because it's all about driving value to the customer. So it's definitely the art of the deal, right? It's more than just science. There's art here, in other words, in terms of finessing to ensure that we have the right overall gross retention driven into the organization.

Mark Petruzzi (03:04)

Yeah, and Alan, you are right on with that because when you then try to sell your, just sell out of that kind of churn challenge that you're describing, what happens is you really need to overextend the sales team and all the sales capabilities. And guess what that gets you? At the end of the day, that gets you a higher churn and a lower retention.

Alan Rudolph (03:27)

Right,

right, right.

Mark Petruzzi (03:28)

So

you think you can do this and everyone, every CRO I know loves to go back and say, yes, I can do that for us. But you can't just offer to do it without making sure your board and your executive team, your CEO knows what's likely gonna happen after doing so.

Alan Rudolph (03:48)

Right.

Right.

KK Anderson (03:49)

So Alan, walk us through net revenue retention specifically, because this is the metric that most leaders mess up. And a lot of times ownership of that falls on the CSM side of the business, which is perhaps why it is not as visible, right? Everyone's focusing on the logo.

Alan Rudolph (04:06)

Yeah, spot on, KK. And it's fascinating. People just get messed up a little bit. So gross retention is just that. I start the year with $1 of business. I finish the year with $1.10. I'm sorry. I finish the year. I renew the dollar. That's 100 % gross retention. If I increase that dollar to $1.10, whether it's

And again, different companies count things a little differently. But if it's, if it's a CPI increase, if it's another product going into that customer, right? If there's a price increase separate from CPI, right? So all those factors go into gross retention. I started with a dollar. I finished with a dollar. That's 100 % net retention. I start with a dollar and with 110, that's 110%. Right. And again, coming back to what I said earlier about

you know, world class kind of metrics, gross retention in the 90 to 95 range, obviously 95, 97 will be world class. Net retention north of 120, it varies a little bit by industry. You get to 115, 120, it's that much more powerful. It puts less pressure, as I said previously then, on the sales force in terms of bringing in new logos because you have a healthy

recurring revenue business that continues to drive success into the install base of customers. That's really how to think about those two numbers in terms of gross and net retention. But they are key metrics and they need to be calculated consistently, month in, month out, quarter in, quarter out, because they are key metrics that need to be

not only reported across the company, reported to the board on a regular basis.

Mark Petruzzi (05:49)

Yeah. And you know what, Alan, I've always, I've never been a fan of net retention, net revenue retention, because I really like to look at these numbers separately. And I guess companies like that opportunity to put them together because they can hide something in it as well. But I mean, there's two things. You really want to look at your churn and understand what that is.

Alan Rudolph (06:01)

Mm-hmm.

Right?

Mark Petruzzi (06:16)

Then you want to look at your revenue growth and your growth versus the targets that were set at the beginning of the year. And those are separate things. So if there's anyone out there with my kind of brain that just feels more comfortable in that space, think it's fine. It's good to have even more clarity and detail than just combining those two numbers.

Alan Rudolph (06:40)

Correct. Yep.

Mark Petruzzi (06:40)

So Alan, you also talk a lot about just time to value as one of the most underappreciated metrics. Please make the case for why TTV belongs on the sales leader scorecard, not just customer success.

Alan Rudolph (06:55)

we go back in time, for us folks that have been around this enterprise software space for a while. And we can all remember, and not that far back in time, less than 10 years, where enterprise application took months and months and quarters and years to get implemented. And in this day and age with all of the new technologies, with all of the changes that we all know about going on in the world around us in terms of,

the autonomous world that we're about to live in or we're living in already. A customer signs a contract and they want value tomorrow. And so that's why it's so important from a selling standpoint that the outcomes are clearly laid out for the prospect, you know, soon to be customer. And they understand what they're getting, when they're getting it. And again, that time to value metric, i.e. how quickly can we get that new solution implemented?

and the customer getting value out of the solution is in, I'm gonna call it days, soon we're gonna be in hours, but let's call it days, not months and quarters. And that's why TTV is so critical. That's why it needs to be on the CRO, the CCO, the COO, so Chief Revenue Officer, Chief Customer Officer, Chief Operating Officer, depending on how these titles are divvied up. But again, both sales and delivery, let's use.

the generic terminology here, need to have responsibility. And by the way, let's not forget about the product organization because the software needs to be developed in such a way that we can in fact drive that time to value. So it really is at a minimum, a three-legged stool, right? I said sales, I said delivery, I said product, and I'm putting product and engineering together in this case so that we can get to that.

Value to the customer. It's all about selling value. I by the way, let's not forget about then what we love to talk about KK. It's your buzzword. ICP, right? You're never going to get the right time to value if you sell to the wrong customer, right? If the customer doesn't fit into that, target box. So that's what I think about, Mark, when I think about how best to understand time to value and get an outcome from it.

KK Anderson (08:49)

here.

So if you're looking at time to value by ICP segments, then your marketing team has an incredible, information around which customers we're selling to that we shouldn't be, right? A fast TTV combined with a strong expansion motion is gonna get that NRR up, which drives valuation up.

Slow TTV selling to ICP that's out of our, you know, out of the wheelhouse, right? It's going to destroy it. So that's interesting as well. all feeds into each other.

Alan Rudolph (09:35)

And that's why I said

earlier, KK, it's more art than science. Sure, it's science because the numbers need to come together, analytics, blah, blah. But there's some art here to finesse this, to make sure that we're driving into the marketplace appropriately.

KK Anderson (09:39)

Yeah.

So I'll throw you a curve ball then, Alan. what if you're looking at the numbers and you see a customer that's just, I mean, this has actually happened to us at AGS before, ironically, right? Where you're just like, my gosh, this customer's killing us. Fire the customer question and you're looking at TTV, you know they're out of your ICP, you know they're draining you. When does a CRO actually...

Alan Rudolph (09:59)

Thank

KK Anderson (10:13)

need to walk away from a customer that's hurting in our art.

Alan Rudolph (10:15)

So should I say it the way somebody else would say it? You're fired, right? I mean, seriously, if there's not a fit from a product standpoint, from a business outcome standpoint, from an overall solutioning standpoint,

KK Anderson (10:15)

That's I said.

Yes.

Mark Petruzzi (10:20)

Ha ha ha

Alan Rudolph (10:28)

This is where transparency is so critical that you need to go back and have that conversation with the customer, explain what we do and how we do it and the types of business outcomes we can drive through our solutions. And if there's a match, then that's great. Let's modify and go drive that match. But if there's a gap, right, we do this and the customer thinks we did that, then this comes back to all these discussions we're having about it's not only driving.

sales and revenue, but we need to run a healthy business. We need to have our costs in line and we need to have a profitable business. And when there's that huge gap between what we're selling, the ICP and what the customer thinks they bought, if the gap's too big, we're going be spending tons of times with the services team. We're going to try to modify the product. We're going to change our roadmap for the product to meet that customer.

It's just, the one thing that does step in the way here is size of customer. If all of a sudden this customer is, dramatically large and we bring our CEO in, we have a very broad discussion. But again, more often than not, that outcome has to be get the customer back to the solution we sell, not a variant of that solution that we sell.

KK Anderson (11:17)

gets it real fast.

Alan Rudolph (11:39)

that's so dramatic off that it's just costing us oodles and oodles of money.

KK Anderson (11:43)

Not to mention the reputation that's at stake.

Alan Rudolph (11:46)

Sure, everybody talks. know they do

in this industry, every industry, right? And so, yes, reputational perception is something that we all need to be cognizant of, absolutely.

KK Anderson (11:58)

So Mark, when we think about our philosophy of diagnose before you AI, and we think about the keep more motion on the right side of the bow tie, what happens if you apply AI to a broken retention model? What does that look like?

Mark Petruzzi (12:13)

Great question. Before I start with that, I'd love to go back real quickly to the fire their customer question, because that's something I have had very mixed emotions about that over the years. I believe it's so important. And there's a part of me that is so happy to fire the customers that really hurt our productivity and our...

or numbers and sometimes just customers shouldn't have become customers in the first place. So there was that aspect, but I'm also someone that really values loyalty and I always want to try to work with them first and it's just not a fun thing when most customers are like, really, you're firing me? And I'm sure at the end of the day, even though you never say fire in this,

But they do a lot of times and they're like, wow, that's something. And so I guess I just want to go back to that positive feeling. You can feel so proud when you identify a customer is really just not working out, probably not even working out for the customer either. And you do something about it. That makes me feel really good. All the rest of it doesn't.

So, okay, so the question of, what happens when you apply AI to a broken retention motion look like? And it's really, it's how AI is impacting everything today. The productivity increases, the impact that AI has is not 15 % or 20 % in most cases.

As far as impacting processes directly, it's usually 3x, 5x, 10x. So things get 7 to 10 times faster when you bring in AI. So when you do that through a broken retention motion, just, again, you just make that happen faster with more overall impact to the company.

Alan Rudolph (13:58)

Mmm.

Mark Petruzzi (14:11)

And that really, really just impacts the overall. If you can do that, you're going to have much better deal scoring. You're going to have a much more accurate forecast. most of you have heard me talk about that a lot. And just what a good forecast does for the entire business. And again, I'll say it again, good forecast means

Alan Rudolph (14:31)

Mm-hmm.

Mark Petruzzi (14:35)

accurate, not always, sandbagging and then ended up coming in 25 % higher than you predicted because there are ramifications of doing that as well. And then you just, can leverage AI even further and understand like how the scoring of your deals work and you know, what, when these things have happened, what has then happened to the, the company as well. And then,

You know, the last point on this is if you're training an AI on bad judgment, it just makes bad judgment happen faster. you could take any negative phrase with that and it's going to do that. And as smart as these frontier labs, you know, models are nowadays, they...

they can learn and they do learn all the time. But if you give them the incorrect information at the beginning, they're not capable of just figuring out the right thing to do after you told them in all this training that it has to do something a different way.

KK Anderson (15:38)

No, I was having a conversation with one of our expert accelerators earlier today about, about diagnosing your data, right? We talk about diagnosing, find more, win more, keep more, but diagnosing your data and, and Carrie is who I was speaking with Mark. And he gave it the analogy of, of your, of your body, right? You've got a human body and your organs, your, heart is your.

sales and the brain is your CEO and all of the different organs are the different parts of the body and the blood is the data that runs through it all. And if that data is not flowing, not oxidized, oxidized, oxidized, oxidized,

Alan Rudolph (16:16)

Awesome,

Mark Petruzzi (16:17)

That's a

tough one. ⁓

Alan Rudolph (16:19)

you're amazing.

KK Anderson (16:19)

then

none of these systems are going to be talking to each other effectively. And so before you can go and put in some amazing AI predictive modeling, that's going to say, hey, this customer is about to churn. Or I can see your order count is lower and you might be losing a product if you're a SKU-based business or whatever it may be to indicate retention problems or even

signals out there to go land a new customer. And if you're not looking at all of that data cohesively across marketing, across finance, across product, across sales, then you're not going to be able to leverage it in the right way. then, you know, AI is going to be the most powerful when it can look at those patterns and look at those histories.

Mark Petruzzi (17:00)

Yeah, no good stuff. And I'm gonna give some work for anyone who may have been an English major and try to say that word and you guys can let us know if we pulled it off. I think it would be oxygenated, but it's not easy.

KK Anderson (17:13)

Yeah. Yes, that's it.

Alan Rudolph (17:18)

And more importantly, Mark, can you spell it, right?

Mark Petruzzi (17:20)

Exactly.

I think I can, but I'm not going to try that one on the podcast. So, KK, kind of back to you, with this. So what's the right way to apply all this that we're talking about here and particularly on the, you know, these corrections of broken retention models that, we can leverage AI to, but you just got to do it in the right way.

Alan Rudolph (17:24)

That's not past

KK Anderson (17:44)

So, I do think that as unsexy as it is, it does start with the right data, right? Because that's the crown jewel of everything that all of these businesses are functioning off of. I think it's taking the data and it's taking your tribal knowledge and your secret sauce and what you do better than anyone and figuring out,

based on the metrics and based on what makes sense is how do you turn that into an agentic process that will take you to the next level? How do you take what you do that no one else can do and do it 10 times faster using AI and then enable your team to be able to dazzle your customers and provide an incredible customer experience as the human in the loop?

based on all of the insights that are served up with the AI that's provided to you.

Alan Rudolph (18:36)

Yeah, spot on. And as we wrap up, this section, look, when I think about retention and expansion, this is where enterprise value of a software, you know, agentic enabled company, truly, truly compounds. Right. we've talked, we've thrown out lot of topics out in this section. threw alphabet soup, so to speak, but the bottom line is we need the measurement systems.

KK Anderson (18:36)

Yes.

Mark Petruzzi (18:36)

Yeah,

good stuff.

Alan Rudolph (18:57)

those measurement systems will drive value. need to understand our customer. We need to understand their health. We need to understand, you know, are we truly transforming their business and just drive through all those respective metrics. It won't fix the TTV gap, right? That's a different issue that we need to solve for. But, as we pull these metrics together, when we think about the forecasting,

We think about the tools available to us in today's day and age. This truly does drive enterprise value once the appropriate metrics we have, we gather them, we know what they are, we know how we're measuring across the company, and hopefully we're driving them up and to the right.

KK Anderson (19:38)

So one of the tools that we've produced for our audience is a quick reference guide. It's a diagnostic blueprint. And it has a list of all of the metrics that we recommend a CRO look at as it relates to find more, as it relates to win more, and as it relates to keep more. And it's a list and there's some explanations on there as well around how

how you should read the diagnostic and the report. so Mark, we'll leave in the show notes where people can go and download that diagnostic scorecard. But so Mark, for every CRO that's listening right now and they're thinking to themselves, okay, what's the first thing I need to do tomorrow morning? What do you suggest? Do you start with downloading this list and kind of going through and calling your rev ops department, try to get some of these numbers? Like what do you do tomorrow?

Mark Petruzzi (20:26)

Yeah, great question. And the first point is do it and do it tomorrow. Meaning, this isn't something you can wait around with. The next recommendation is get those metrics. Find out where you're starting and what everything looks like there and try to work with individuals like

Companies like BenchMarket, Ray Reich is the CEO of that and find out what the metrics in your particular segment of an industry look like and compare those and get that really strong understanding of where you are today. And then kind of going into the point of doing something. There are so many things that we all could be doing with AI every single day.

The only way I can process this and recommend for my clients is, take a short window, I mean, it be a half a day, and figure out, all right, what's the list of the things I want to do, and then prioritize it, and really go for that lowest hanging fruit. ⁓ And then that's it. And like anything else, just like a good meal. A good meal is you eat, one bite at a time.

Alan Rudolph (21:26)

Mmm.

Mark Petruzzi (21:38)

try to devour the whole turkey dinner on Thanksgiving in one bite. So the idea is understand where you're starting, understand what's the best place and what are the items that add more value more quickly, and then manage to that. Then compare every step of the journey with, ⁓ where were we?

Alan Rudolph (21:54)

Hmm.

Mark Petruzzi (22:02)

three months ago, six months ago, where are we today, where do we want to go? It makes everything else that much easier to accomplish.

So KK, to you, we know the real value isn't the score. It's the conversation that these processes force. And then it's great to just, let's parse it down to three or four things that every CRO should do this quarter. And we can tie back that to some of the things I just said with

Alan Rudolph (22:21)

video.

Mark Petruzzi (22:35)

how to start it, but more importantly, what are usually the lowest hanging fruits for most companies that we work with.

KK Anderson (22:42)

All right, Mark, that's a great question. And I'll give you four things that I would do tomorrow. So in order, number one, first get a competency baseline on your sales team. Like whether it's through one of our AGS diagnostics or through any other tool, it does not matter. Get a sales competency baseline. You've got to know what are the skills of the sellers and the leaders on your team? Do they have the competency to be able to sell?

your product at your price point against your competition and your market. Like you've got to know that, right? You've got to know that. Number two, get a metrics baseline and simple at the simplest terms. need to know win rate by ICP, right? We want to know general win rated too, of course, but win rate by ICP, ideally deal size trend. it trending? Your deal size is trending up. Are they trending down? What's the sales cycle time? Is that pushing?

What are the trends there? Your CAC payback time. We want to look at NRR, absolutely. And we want to look at TTV. Those metrics at a minimum will give you a very strong indicator of where you are, where the health of your business is, where you're starting. And then third, the third thing I would do is I would map your sales process against how your buyers are actually buying.

and how buyers are buying is changing dramatically. It has changed more in the last 12 months than it has in the past 12 years. And so we need to make sure that the sales process is aligned to how your buyers are making these decisions. And then when you can apply AI to a seller-centric process like that, or a buyer-centric process, excuse me,

Alan Rudolph (24:07)

Mmm.

KK Anderson (24:17)

then you're going to have better alignment and better results with whatever you're, wherever you're layering in AI. So those are the things that I would do in order. Alan, what about you from a PEC, like when a CRO does these, these four things specifically, and what Mark has talked about as well, like what does it unlock for the business?

Alan Rudolph (24:36)

CRO gets to take a nap. mean, that means

he or she is running the business, I'm gonna say appropriately, right? It's effective, it's efficient. We understand the metrics, we know what the metrics are, right? And that's what every CRO wants. He or she doesn't wanna be stuck out there trying to drive value to a prospect with each and every one of his reps, right? They wanna be able to run the business.

And that's what that does, KK. And when they do that, it drives valuation. It drives a better narrative to future acquirers. It drives a better narrative to those customers, right? You don't have miss set expectations. You don't have customers you need to fire, right? It's a healthy way of running the business. But let's not forget that while you're doing all this, right? We're constantly changing.

what we sell, right? The product's constantly getting better. I like to say, for those that don't know me that well, I live in the great state of Colorado and I'm a skier. And so we use the phrase, don't get too far over the ski tips, right? There's a healthy balancing act, right? You want to be slightly forward, but not too far forward. So that's just an important concept to think about from a business standpoint as we're working with customers.

to make sure they understand what's coming a week, a month, a year, whatever for now as we continue to drive value in the product. And that fits into this whole discussion about optimizing the business of the CRO and giving the CRO that healthy discipline to be able to explain what is coming tomorrow.

Mark Petruzzi (26:12)

Yeah, and Alan, your comment about the CRO gets to take a nap or the CRO gets to show up and be on time, not 35 minutes late to their child's field hockey game or the dance recital or anything else. So that's really, really what it does. And when you have good, smart people,

thinking strategically in ways that they haven't in the past, or they haven't had the time for in the past, it does a lot for the business. So like in a general closure for this segment, really there's four key things that I think kind of drives this for our clients. And that's the behavioral baseline, really figuring out where you're starting, figuring out the metrics baseline,

the numbers, things you can measure and evaluate every step of the way, alignment over the organization, the entire sales organization, and over to the rest of the C-level individuals on the board. And then, the placement of AI, like, where do you put this in first? And when you can do these things, these four things in that order,

you've already by itself have done more than 80, 90 % of the leaders we talk to every day. this is not, like again, you don't have to be perfect, you don't have to do 20 things, but if you can do these things very capably and reliably, you're gonna get benefit out of all these steps.

KK Anderson (27:49)

It's a playbook really for how to do it. And so if you, remember nothing else from this session today, AI is going to amplify whatever motion you have, wherever you put it. So if you have a broken motion, it's going to amplify that broken motion at scale. And if you don't know what your motion looks like at the competency and the metrics level, you're not making

Alan Rudolph (28:00)

Right.

KK Anderson (28:13)

decisions on where to put AI, you're rolling the dice and it's going to come back. It's going to come back and bite you.

Mark Petruzzi (28:19)

and that starts with diagnose before you AI. If you don't do that, AI can be the most expensive thing that you ⁓ invest in and it could be the most impactful for the rest of your 2026 because again, you really have to know where you're starting from to really get the...

types of benefits we all know we can get with AI, but sometimes we don't.

Alan Rudolph (28:46)

And then Mark, I just say from an ownership standpoint, coming back to the comment I made earlier about the CRO, know, the CRO needs to be able to go take the naps, go to his or her kids, play school, sports, whatever. And so don't rest on what exists today. Fix it, make it better. Reach out to, you know, whether it's folks like us at AGS or there's great, great operators out there that can provide this advice and counsel.

is make it better. If we, we always can look back on our careers and say, God, I wish I would have done this. I wish I would have done it faster. Right. And I think we all have a huge opportunity right now. Take, take, take stock at what we talked about today and, and change your business and change it fast. Right. We're not talking about months or quarters worth of work. We've seen value from our customers in 30 days. Right. We've seen results. And so, drive that accordingly. So a lot of fun today.

We really appreciate it. KK, I think you're going to bring us home.

KK Anderson (29:43)

Yep, I will. again, I'll put in the show notes, but you can download our revenue blueprint diagnostic on our website. And it will give you those, all the metrics we talked about today and give you a starting point for how to get started tomorrow. And again, you're welcome to reach out to any of us for assistance, but we don't care where you get the help. We want you to grow. We want you to be successful.

And we want you to not only create but protect your enterprise value. And it's an exciting time to be in business. It is an exciting time to be in business. Everything is changing. And we're here to support you as we go through.

Mark Petruzzi (30:18)

KK, thanks so much for...

for closing this off for us as articulately as you have. We so appreciate Alan, you joining us and being a part of this. we are definitely going to just grab as much of Alan's time as we can and have him on here as much as we can as well because of all the great insights he brings. And as always, I just wanted to thank our incredible

audience, people who are in here investing time with us every week. We appreciate it and thanks again. All the best.

KK Anderson (30:50)

Thanks, Mark. Thanks, Alan. Thank you.

Alan Rudolph (30:53)

Thank you.

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General Episode Description:

In this continuation of the Selling Intelligence Diagnostic Session, Mark Petruzzi, KK Anderson, and Alan Rudolph go deeper into what happens when AI is layered onto a broken go-to-market system.

The team explores real-world examples of companies that accelerated pipeline volume with AI, only to later discover collapsing win rates, longer sales cycles, and poor ICP alignment. They also unpack the critical difference between sales activity metrics and true behavioral competency, highlighting why qualification skill remains one of the biggest hidden weaknesses inside modern sales organizations.

The conversation closes with a deep dive into the “discount trap,” forecasting discipline, and the operational signals private equity firms use to evaluate the maturity and long-term value of a revenue organization.  

What You’ll Learn:

• AI on Top of Broken GTM Systems: Why more pipeline volume can actually create worse outcomes.
• Qualification Competency Matters: How weak qualification destroys sales efficiency and forecast reliability.
• AI Done Right: What happens when strong ICP discipline and human judgment combine with AI-driven signals.
• The Discount Trap: How discounting erodes enterprise value and creates downstream operational pressure.
• Forecasting as a Maturity Signal: Why investors care more about predictability than heroic overperformance.

Key Topics:

• AI lead scoring increasing volume while lowering win rates
• Weak qualification competency as a hidden scaling bottleneck
• OMG sales competency assessments and qualification benchmarks
• AI-powered signal intelligence for outbound prospecting
• Using hiring patterns, LinkedIn activity, and market signals to prioritize outreach
• Human judgment combined with AI-assisted targeting
• Behavioral competency vs outcome metrics in sales organizations
• Two teams with identical win rates but completely different operational health
• The “discount trap” and the dangers of unmanaged pricing
• Why selling value matters more than discounting to win deals
• Forecast accuracy as a signal of operational maturity
• The shift from “gunslinger” sales cultures to data-driven revenue organizations
• PE diligence around trends, forecast reliability, CAC efficiency, and sales discipline

Guest Spotlight: Alan Rudolph

Alan Rudolph is the leader of the private equity division at AGS and a strategic operator with extensive experience building and scaling enterprise revenue organizations. With a background spanning sales, operations, and enterprise value creation, Alan helps organizations diagnose GTM inefficiencies, improve operational discipline, and build scalable growth systems.  

Resources & Mentions:

• AGS (Advisory Growth Strategies)
• Objective Management Group (OMG) sales assessments
• Concept: Diagnose Before You AI
• Concept: Qualification competency in enterprise sales
• Concept: The Discount Trap
• Metrics: Win rate, cycle length, forecast accuracy, CAC efficiency
• AI-powered signal intelligence for outbound prospecting
• Clari, Aviso, and Collective[i] forecasting platforms
• AGS Sales Cycle Diagnostic Tool

🎧 Listen now and follow Selling Intelligence for more diagnostic sessions, AI strategy insights, and practical frameworks for scaling modern revenue organizations.

Mark Petruzzi (00:38)

So KK, what does AI applied to a broken front of funnel motion look like? What are the ramifications of getting that?

KK Anderson (00:47)

Mark, let me share with you an actual real live case study, a real customer of ours. this is a growth stage SaaS company. They invested heavily in AI lead scoring and outreach. And they were ecstatic because, their pipeline jumps up 40 % in one quarter. The amount of leads coming in the door was just through the roof.

leadership was celebrating and what happened and when they ended up calling us is that six months later, all of a sudden, their win rate is collapsing and their sales cycle is just getting longer and longer and longer and deals keep getting pushed out into other quarters. And so it got worse. And the reason why, once we did the diagnosis is because what it turned out is that the underlying qualifying motion of the sales team, when it comes to win more,

was weak. It was deplorable weak. And to the point that Alan made earlier, the ICP was not the correct ICP and that was not disciplined. But because the sales team had a weak qualification competency, they were not prepared to be able to accept more of anything, even if it was the right ICP. And so it's interesting, just a note on that qualification competency,

objective management group who is a partner of ours here at AGS, they have assessed it's got to be close to three million salespeople by now and interesting fact that of all of those three million people only 27 % are strong in the qualification and competency. So I said 27, two seven. So that means that if you're a CRO listening to this, it is likely that your team is not

super effective at qualification. Right. And these are the things that you need to know before you start deploying a lead gen system that's going to against an ICP that's not disciplined with a sales team that doesn't qualify effectively. So AI on top of we qualifying is just expensive amplification of the wrong thing.

Mark Petruzzi (02:50)

I think

you hit it right on there.

KK Anderson (02:52)

now, Mark, back to you on this one. tell us a story of when AI applied to the type of funnel works, right? We know we've got the horror stories, right? But tell us when it actually delivers. Give us an example of where you've seen it work.

Mark Petruzzi (03:07)

before I even

do that, I'm going to give you a little bit of props here that you would always be too humble to share. But Objective Management Group is a company that KK has been working with for over 10 years. She has done more of these SEIAs, which are those as their assessments, the biggest in sales. There's nobody who does the does more of them than OMG.

And there's nobody who has done more of them over the last eight, 10, 12 years than KK. she knows this space. She's got a lot of personal data in addition to all the metrics and everything else we track. So, okay, let's go to, let's talk a little bit about another story if you all don't mind. B2B Services Company that we work with, 40 reps.

And in general, the first thing we noticed, they're in the top quartile on qualifying competency. They were really good. They knew it. The data confirmed it as well. They had a pretty tight ICP discipline. And they tried to work with AI a little bit on the prequel research, account intelligence side of the equation. But then they really picked this up.

in the standpoint of really understanding signals. What would happen out there in social media, in their TAM that they're going after. Things like job changing, changes, hiring patterns, general press, LinkedIn activity, all of that. What then happened is that their outbound conversion went through the roof.

they're able to go in there and really figure out how to be, and this is really so much of what almost every one of my clients struggle with today. You know, it's great to reach out to companies that could be part of your TAM. It's really great to reach out to companies in your TAM that have some sort of signal of why they may need your services at that point. It's kind of like this.

If you're in your late twenties, whatever you're at, and you really want to get married in the next couple of years, well, what would you do? Would you reach out to every woman you've met ever? And would you reach out to the ones that are married already and said, would you go on a date with me? No. would you reach out to every woman throughout the world to see if they are interested in

marrying some American from New York City? No, you would find the right Tam. And then if you, not that we can get to this level in our personal lives, but if you knew women that were out there, they've kind of spent time with the, they've dated enough and they're kind of like, I'd like to settle down in the next three to five years. Well, wouldn't that be something?

Right? So, and that works for every side from men looking for women, women looking for men, men looking for men, women looking for women, all four. It goes everywhere. But the same thing, that's the it just it really blows. It's just amazing what it can do. And what we saw is that their outbound conversion went up to 60 percent. Their cycle length dropped.

And it just turned the signals that AI can bring into pipeline for that company.

KK Anderson (06:20)

I love it. So basically the AI didn't replace the human judgment. The AI just gave that like use signals, pattern analysis to be able to figure out where even more of their ideal customer was and then brought into a sales team that had the competency and the ability to act on it compounding results.

Mark Petruzzi (06:40)

And you know what?

And what the AI did? This it's some kind of a thing that I've done that we're really covering the personal side in a number of areas here. But I have most of you all know I have two amazing children. I have an amazing wife as well. But so we got a great, great family. Right. And one of the things that I did from the beginning with my kids

is I've given them a lot of latitude. I know some people that are like, I want my kids to be an amazing student or want them to be an amazing athlete or whatever you do. And then you kind of push your child in that direction. I tried to be open with that. The one thing I did orchestrate a little bit is the books that I propose that they read and not like, you this is you have to get this done by the end of the week.

It was always more of what I was reading. read this book talking to my, you know, and whether there were classics, whether there were new books, but it's the same thing in all of this. Like if you're looking at the right lists of companies and know that these have all been vetted through the process that you built with your agentic programs and there's a connection, there's a signal, then you get to use your gut and say, okay, out of these hundred companies,

These 15 are what I'm going after first. And sometimes you may get a higher rating and you may say, no, that company I'm never going to break into. you say, forget about what the agent is saying. That's where the, so you're kind of doing the same thing I did with my kids. You promote books that they really can get a lot out of, or you promote targets that your team can really get a lot out of as well.

So now back to you. So what does the behavioral competency piece tell you that win rate doesn't? Back to OMG, back to the things you figure out within your sales team. What do you get out of all of that side?

KK Anderson (08:36)

first of all, when I'm thinking about win more, And we're thinking about sales excellence, there's really two core layers and both are required, right? So layer one is that behavioral competency that we've chatted about a little bit today. And that is really what is your team capable of, especially when they're under pressure to perform and to produce revenue, right? That's the objective management group work.

Mark that you mentioned the 21 core competencies and layer two is really the outcome metrics. And so that's what do the numbers actually show. win rate, deal size, cycle time, pipeline coverage, forecast accuracy. know, most CROs are measuring some sort of each and each of those behavioral and the actual metrics, but I don't know that.

Mark Petruzzi (09:02)

Mm-hmm.

KK Anderson (09:22)

that truly that many of those 600 plus organizations that I've worked with are doing either necessarily well, So for example, they might be measuring calls, activity, meetings, emails, that pipeline stages and things like that, but that's not gonna tell you if your team can actually compress a sales cycle, actually move a deal across that finish line.

So it really takes both of those kind of layers. And so when you ask me, what does a behavioral competency tell you that a win rate doesn't, right? It's, competency tells you why, right? And then the win rate, the win rate tells you what's happened. that, I don't know if I'm articulating this the right way, but it's, really two different conversations. two teams can have identical win rates.

for completely different reasons. Take team A, right? They win 35 % of their deals. They qualify hard. They walk away from bad deals. They're only investing in real opportunities. And then you've got team B who also has a 35 % win rate because they're discounting aggressively. they're doing everything they can to drag deals across the finish line. And it's a race to the bottom, right? They both have the same win rate.

but they have totally different behavioral profiles underneath. And that's why it's so important to know what that behavioral competency is. It's being able to ascertain the health of your sales organization, right?

Mark Petruzzi (10:45)

I think you hit it right on the mark. I think, and by the way, I've heard Alan kind of name this whole approach, the discount trap. Walk us through it, Alan. The discount trap is exactly where AI applied to a broken motion accelerates the damage.

KK Anderson (10:53)

Mm-hmm.

Alan Rudolph (11:03)

often, Mark. mean, that's the problem with a discount trap. And it was just that fascinating discussion in terms of the diagnostics, diagnosis, and behavioral impacts, and all the metrics that KK just threw out. But this discount trap is so critical. And here's another bold statement I'm going make today. How many companies do we know in this broader, softer AI space today that do not have a target price point?

Right. Freelancing on every deal. We see it way too often. So the CRO hits his number, his or her number. They outperform on the top line, but they do it by discounting. And we don't even know what the discount is half the time again, because we don't have a price book. And that ripple impact of that discount and the pressure it puts on the downstream systems in terms of time to value, in terms of implementation, in terms of success, in terms of getting to

you know, all the appropriate retention numbers, it just has a huge impact on margin, which ultimately has a huge impact on overall valuation of the firm. And by the time the team has trained itself, about this discounting in terms of getting the deal done, AI just accelerates it. It just makes it that much worse. Right? We get greater proposals out. They look great. They speak great. They talk great. Right. But we don't drive the

Value of the solution. Oh, by the way, what am I going to say next goes back to that target ICP, right? So we're discounted because we don't have the target ICP. So how do you fix it? Sell value sell value to this in terms of the solution to that ICP and Don't discount if you sell value you don't have to discount. So you that's how you go about diagnosing that overall competency gap. You have to fix it at the individual

contributor level, you obviously need a price book. And then you can leverage AI appropriately, but don't get caught in that discount trap.

KK Anderson (12:56)

I couldn't agree more. And Mark, I'm curious for your perspective as well. I know you've sat in a lot of PE diligence conversations. What do investors actually want to see on the deal cycle from your

Mark Petruzzi (13:08)

Yeah.

I'm really excited to answer that question because it's different than what most CROs or sales leaders would think they want to see. They don't want to see you having a history or your team having a history of overperforming in significant ways from their, say, beginning of their quarter forecast.

meaning they don't want to see a team that always comes in 20%, 25 % higher, just tells you you have a sales leadership that doesn't know how to forecast. So at least by the beginning of the quarter, you should be able to define what you do at the end of the quarter. They, of course, don't want to see things that are more, that just tell,

show risk and instability as well. So that's where this CRO role has, has changed. Like, early in these more enterprise software space, 20 years ago, you had, know, you had these gunslingers at the senior sales level, you had gunslingers at the rep level. And, they frankly just knew that if they work hard, they were going to make a lot of money.

But they really had no idea what their potential was or what they can do. So those are the things that a P team or board on the due diligence side would focus on. They're looking a lot more at the trend than the absolute number. That's something I've seen. They want to see that win rate stay stable, getting better. They want it high.

They don't want it to be volatile. They get to learn average deal size, typically trends whether you're in an up market or down market for your product. They wanna really look at cycle time and the trends there, because they really wanna know what kind of process, a selling process this leadership team has driven.

⁓ sales leaders, when they're talking to sales managers or sales reps, they're always going to ask for a stretch goal. And I've grown to be okay with that, but I don't want to ever see a board or a CEO asking a CRO for a stretch number. I want them to say, what is the number? I want there to be a lot of technology and AI in identifying that number.

We can do a whole nother podcast around the things I've learned working with Clary, Avizo, Collective Eye over the years around forecasting. Same thing, gut process there doesn't work. The data is out there. You just got to have a tool that finds it for you. And then that kind of comes to the final point on this. Forecast accuracy.

is the cleanest signal that you can get from just knowing whether you have a business with operational maturity or when you have a business filled with a bunch of gunslingers.

KK Anderson (16:05)

So you need both layers, right? You need the competency and the board definitely wants to see the metrics, Behaviors and outcomes. And as a side note, one of the free tools that we've built at AGS on our website is a sales cycle diagnostic. It's a mini, if you will, sales cycle diagnostic. I will link that in the show notes as well so that if you're curious, you can go check it out on our online.

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General Episode Description:

In this first-ever Selling Intelligence Diagnostic Session, Mark Petruzzi, KK Anderson, and Alan Rudolph go deep on one of the biggest questions facing revenue leaders today: where does AI actually belong inside the go-to-market motion?

Rather than a traditional guest interview, this episode introduces a new format focused on unpacking real operational challenges from inside the work AGS does every day with CROs, CEOs, and private equity-backed companies. The team explores why “diagnose before you AI” has become a core principle in modern GTM strategy, and how AI can either accelerate enterprise value creation or amplify existing operational problems.

The conversation also dives into the bow tie revenue framework, ICP discipline, and why retention and customer outcomes matter far more than simply generating more pipeline activity.  

What You’ll Learn:

• Diagnose Before You AI: Why AI amplifies both strengths and weaknesses inside your GTM engine.
• The Cost of Moving Too Fast: How scaling AI without operational diagnosis creates value erosion.
• The Bow Tie Framework Explained: Why “find more, win more, keep more” changes how leaders think about revenue.
• ICP Discipline Matters More Than Ever: How weak ICP alignment destroys CAC efficiency, retention, and enterprise value.
• Why Gut Feel Is No Longer Enough: The growing importance of data-driven decision-making in AI-enabled sales organizations.

Key Topics:

• AI increasing productivity while amplifying broken processes
• The pressure CROs face from boards, CFOs, and AI vendors
• Why “slowing down” can actually accelerate long-term results
• Enterprise value creation and AI investment decisions
• The hidden danger of filling pipelines with the wrong customers
• The relationship between ICP discipline and long-term retention
• The bow tie model: find more, win more, keep more
• Why investors care more about post-sale execution than contract signature
• Customer onboarding, time to value, and retention as core valuation drivers
• The evolution from founder-led growth to scalable GTM systems
• CAC payback, pipeline coverage, and modern SaaS benchmarking
• The rise of data-driven CRO leadership in the AI era

Guest Spotlight: Alan Rudolph

Alan Rudolph is the leader of the private equity division at AGS and a strategic operator with deep experience across growth-stage companies, enterprise sales, and operational leadership. With a unique background operating at the COO level, Alan specializes in enterprise value creation, GTM transformation, and aligning revenue organizations with board-level priorities.  

Resources & Mentions:

• AGS (Advisory Growth Strategies)
• Concept: Diagnose Before You AI
• Framework: Bow Tie Revenue Architecture (Find More, Win More, Keep More)
• Concept: Ideal Customer Profile (ICP) discipline
• Metrics: CAC payback, pipeline coverage, gross retention, net retention
• Winning by Design bow tie framework
• Ray Rike and SaaS benchmark analytics
• Concept: Founder-led growth vs scalable revenue operations

🎧 Listen now and follow Selling Intelligence for more diagnostic sessions, GTM insights, and practical frameworks for AI-driven revenue growth.

Mark Petruzzi (00:00)

Welcome to Selling Intelligence. I'm Mark Petruzzi, joined as always by my co-host KK Anderson, and in a very special way today, joined by Alan Rudolph, who is the architect and the leader of our private equity division at AGS. Alan has been a guest on Selling Intelligence before, so our regular listeners will know him already.

He brings a rare lens to the revenue conversation. He's operated inside growth stage companies. He's advised PE boards time and again, and he's built sales and go-to-market engines from the ground up. But most importantly for us today, he's built those engines from the CIO level, which gives us a really distinct and important vantage point to.

really how boards and CEOs and COOs need to balance these initiatives when we're looking at growing faster or building our revenue. He's also a close friend and I'm really happy to have him with us here today. Quick note for our listeners, today we're trying something entirely new. We're calling this format Diagnostic Sessions. No traditional guest interview.

just three operators going deep on a single revenue topic from inside the work that we do every single day. We've been getting so many questions from our listeners about what we actually mean when we say, diagnose before you AI, because that mantra has been showing up in nearly every CRO conversation we are having. So we decided to spend the full session unpacking it, and Alan is joining us from the operating.

side of this conversation because we really feel it an operator's voice as well.

KK Anderson (01:44)

Thank you, Mark. We're so excited to be here, Alan. We're so excited to have you. And we're going to keep bringing you the amazing guests and the revenue leaders and the business operators that you've come to know and expect on the show. Don't worry. But from time to time, when there is a topic that we really want to go deep on, when we start getting a lot of questions from our audience, as we have been lately, we're going to drop in.

a diagnostic session like this one. And we'd love your feedback on the format. So please leave us a comment, send us a note, tell us what you think. So today's session is all about where AI belongs in your sales motion. And just as importantly, where it doesn't across the full revenue cycle from finding new customers to winning deals and to keeping and growing them. There is an AI technology out there that can

I to fix everything at every stage, I promise you. And the question is whether AI actually delivers or whether it amplifies problems that your team already has. And so we're gonna talk about this in four different areas. Number one, what we actually mean when we say diagnose before you AI. Number two, the bow tie framework that anchors how we think about revenue and how we think about the go-to-market architecture.

And number three, how to diagnose each part of your go-to-market funnel. And we'll walk through specific examples of actual clients that have done it the right way and sometimes the wrong way. And then finally, the fourth thing that we'll talk about are four things that every CRO should do this quarter before scaling AI investment. So we have got an action-packed diagnostic session today. Alan, Mark.

Welcome back to Selling Intelligence.

Alan Rudolph (03:28)

Thanks, KK. Great to be here today. I think one of our challenges is going to be, can we clearly say diagnose how many times throughout this podcast? Because the diagnose before you AI conversation is so critical, as KK just said. And we're going to keep unpacking it as we go through this session. And I think you, as our listeners, will

Mark Petruzzi (03:37)

No, no, no.

Alan Rudolph (03:50)

be intrigued with what we say and hopefully challenge us through the journey. Because the pattern is real, the cost of getting it wrong is real, but the opportunity to get it right is even bigger. So looking forward to going deep with you on this topic throughout the session. KK, where do you want to start?

KK Anderson (04:06)

Okay, Mark, let's start with you. So you have been saying for over a year, since I can remember honestly, AI doesn't solve, AI amplifies. So what do you actually mean by that?

Mark Petruzzi (04:19)

Yeah, KK, thank you for that question. For me, and you hear this word out of me very often, and so we'll be saying diagnose and we'll be saying productivity and efficiency. And those are the things I focus on and talk about with my clients every single day. And so what does that mean? know, AI amplifies, it just amplifies the productivity of everything you do.

everything you do gets more efficient and when done right, it can get more effective. However, when it's there isn't that diagnosis up front, you have, you just start to amplify your problems and challenges you already have in your go-to-market process. you know, think about it that way. It makes you more effective at all the bad things you do.

You know, makes you more effective in finding clients that would never buy your products. And maybe they'll listen to you for a couple of meetings, but they're not, they're not a good ICP. It makes you reach out to more individuals. You know, as you're targeting and lead Jen and the people who just really would be a huge uphill climb to be able to get them excited about making an investment in your product. So.

It's got to be done right up front to really get the productivity. Productivity comes together when there's something that really helps you that gets amplified rather than more challenges being amplified out there every day.

So KK, you're in CRO conversations every week as well. Why are so many leaders rushing AI before doing the diagnostic work?

KK Anderson (05:55)

That's a great question. Every CRO I talk to is getting pitched by AI vendors 30 times a week, not even kidding. And the pitches are all very similar. We promise a shorter sales cycle, more closed deals, a better forecast. And at the same time, they're under pressure from their boards asking, what's the AI strategy? And the CFO saying,

prove your ROI before you AI, right? And from vendors, of course, saying just buy this like I just mentioned. And so they're really getting it from all sides. And I just attended a transformation event last week in Houston with about 30 CROs in the room. And every single one of them had the same questions. They wanted to know how do they measure AI? How do they validate it? Where do they apply it? And I think what became abundantly clear in that room

is that the one consistent thing is that there are, there's just a million unknowns. The one consistency is that nobody really knows yet, right? There's so many unknowns. And so I feel like the pressure is there to be decisive and to make a decision. And, you know, our perspective has been and will continue to be to slow down, take 30 days, diagnose first, make sure you know your numbers.

and know where to go in. Do you want to go in solving a find more problem, a win more problem, or a keep more problem? And if you know your baseline, then you know where AI belongs and where AI can help you to solve and have the biggest impact first.

Mark Petruzzi (07:23)

KK, you, if I can add one additional thing to that. So when we talk about slowing down, the way I look at it, know, 30 days, if we're looking at a football analogy, it's a wide receiver, you know, stopping, looking back at the quarterback for a second, and then go in on that fly pattern afterwards, entirely wide open because the strong safety now, you know, bit on that.

So that's really all it is. I do have to admit, early into this gen AI world that we're all in the middle of, this phenomenon, I was just running around all of my CRO friends and relationships and just saying, you gotta move. You're getting beat up by your board every week because you don't have a plan. Jump in, move, make it happen.

because your competitors are going to, and if you don't, you're going to lose all those efficiency gains that your competitor is finding. And again, that worked in many cases. Sometimes you can do a quick little diagnostic as you launch, but in a lot of cases now we're seeing some of the damage that can be caused by that type of an approach. So it's a quick move, it's a quick pause, and then it's full out from there.

as well.

KK Anderson (08:38)

Yeah, 100%. And Alan, I'm curious for your perspective. I know you're seeing this from the PE side and from the operating partner seat. Like in your opinion, what's the cost when a CRO scales AI in the wrong area or before they've diagnosed really?

Alan Rudolph (08:55)

thanks, KK. You know, it's fascinating. It's all about enterprise value creation, right? And, you know, March analogy, you know, on the football field, even though we're in May and it's not football season, still is so relevant. And so, you know, from the operating seat, it's one of the most expensive mistakes I see right now, right? Not doing that diagnosis. So when the CRO scales before they do the work, right? And it's the heavy lifting work.

They just think they want to get to, you know, volumes. so the cost is just wasted spend. It's value, value erosion. So every quarter you spend amplifying a broken motion is quarter compressed that compresses that multiple at exit. And who knows where the multiples are today versus tomorrow versus, you know, X months or quarters from now. But the pattern I see most often is AI drives volume, right? We get more leads.

Those leads lead to more meetings. That leads to more outreach. The board's excited, right? There's super activity. The CRO feels good. The AI line item gets celebrated. All of a sudden, gross retention starts to erode. And why does it start to erode? Because we filled the pipeline with bad customers. Again, it comes back to that discussion we were having about ICP. And by the time it shows up, you know,

You've burned six, eight, 12 months in that value creation runway. So AI doesn't fix the ICP. It amplifies the fact that you need to have discipline. If your ICP is loose, you get the wrong customers. You have to diagnose first. Again, in summary, we all think about AI is going to create the activity, create that volume. What Mark said earlier about less work, get the activity.

Drive gross sales, but the wrong gross sales and long-term that impacts the value creation.

KK Anderson (10:46)

Yep, and that's so well stated and exactly why we always say, you know, again, diagnose before you AI. So the alternative is not slower progress. It's faster regression. Wow.

Alan Rudolph (10:58)

Yep.

KK Anderson (10:59)

Mark, let's go into talking about the bow tie go to market and kind of the bow tie framework, if you will. And before we get into the diagnose topics, tell us a little bit about the bow tie framework. It's the structural framework for so much that we do, the anchor, excuse me, for so much of what we do. Why is it so important and why do we talk about it every day?

Mark Petruzzi (11:22)

Excellent question, And first off, let me give some props and credit to Jaco, the CEO of Winning by Design, who he and his team has built that framework, that bow tie framework that we know and love here at AGS. So what does that do? It extends the traditional funnel, the traditional mindset that many CROs have on just, you you have a great funnel,

KK Anderson (11:22)

That's it.

Mark Petruzzi (11:47)

You have good sales and marketing upfront, good BDRs. You'll get leads. You have smart sales team. They're going to close leads over time. as you would hear from and will hear from Alan, that's a part of it. But it's not even 50 % any longer. And when I say that, I of course mean in the reoccurring revenue segments of software.

You know, of course we know SaaS is built on that premise, but it's really, really relevant in almost every complex B2B selling organization that I have seen. And I'll give you an example of that. I was fortunate enough to write, I'm selling the cloud. We get a little bit of a group behind that and very strong.

level of sales performance, which we never expected when we did it. But then what I would then get is a lot of questions from individuals that were not in the cloud space, the SaaS space, about how can I use these principles in my business? And my answer was always like, you can use it in exactly the same way. Whether you're, unless you're just a company that sells something,

once and then you don't sell that again to a client for 20, 25 years. But even if you're selling to a client every four or five years, there are things you need to do to really retain the mindset, even if they paid you all your money, retain the mindset, make sure those customers are happy. And then looking at the expansion side of all this and, know, CEOs and boards.

They love the whole concept of cross-sell. So it's really funny if I look at the evolution, medical device companies were the ones that caught this the first, caught this earliest in my estimation, other than traditional SaaS companies, software companies. And they have gone far into building, really building their go-to-market models in exactly the bow tie model.

Matter of fact, they're also starting to sell things on a reoccurring subscription basis. When they can sell a medical device for X dollars, they now sell it for 150th X and they kind of expand that over a four or five year cycle with their clients. So I'll pause there because there's so much I want to hear from Alan and KK about their perspectives.

So let's throw it over to Alan. You live across three sides of the bow tie when you're doing P.E. Why does the bow tie framework matter in the way you access a portfolio company, the way you access a new acquisition? How does that all come together?

Alan Rudolph (14:33)

Sure, thanks Mark.

The most important aspect when I look at the broad PE due diligence on the bow tie is keep, right? Find more, win more, keep more, right? And so what happens is if we don't look at all three aspects and focus in on keep, the enterprise value is simply not created. It's actually destroyed. Funnel thinking, if you just stay with a traditional funnel,

You know, think about the CRO, they close the deal, they're done, they're on to the next deal. But again, it's all about that value of the deal. And the bow tie keeps going through the onboarding, through the time to value, through the expansion and ultimately retention. And the more retention to get, the more opportunity we have to cross sell, upsell, sell more. So as a PE operator, when I think about due diligence, when I think about value creation, that's where I spend my most time is that

KK Anderson (15:11)

It's gone.

Alan Rudolph (15:25)

that circle, that evolution of the overall customer journey into Keatmore. Because the truth is, investors care more about what happens after the contract signs, not when the contract signs. And one of the comments I always make as a CCO, as a COO, when I look at all the post-sale activities, the customer has huge

expectations upon contract signature. They're excited. They just want to drive, you know, the outcomes, the value. And if it goes wrong, right? If that journey gets off the track, that impact is on Keapmore, right? And that impact hits gross retention, net retention, et cetera. So connecting the variables, you know, the find more, win more, Keapmore, like that we always want to say.

It's all about making sure I have the right ICP. I find the customers that match the ICP and I inherently keep them longer. And that drives the enterprise value. Well, one quick anecdote. Two companies ago, I was on a podcast, similar customer event, et cetera. And I was talking to a customer and it was their anniversary of 25 years with the company.

And so, you know, and this is obviously across a broad spectrum of, know, before AI, before SaaS, it was just traditional software, some of it was just services. But think about that 25 year experience of a enterprise customer with a company. That's what it means in terms of Keef more. KK, back to you.

KK Anderson (16:56)

it makes a lot of sense. And even this week, we are helping a client prepare for a board conversation where the team was selling, but there was a lag between when those sales would come in and when everything would be activated and the bills would be paid and whatnot. And so it just goes to show that that Keep More is everything. Right.

getting the clients activated and making sure you close that gap. So, okay, Mark, let's go into the diagnose, you know, what it means for any change of the funnel. And specifically, Mark, when we say diagnose, find more, right? The front of the funnel, what does that actually mean? What's a CRO supposed to look at?

Mark Petruzzi (17:40)

So it's, mean, of course, the FIMOR side is still exceptionally important. And we don't ever want to take our eyes off of that. We want to make it more productive, better matched to the market and what you can sell. But we always want to invest appropriately in those areas. And that kind of comes back and it ties to a lot of the metrics.

KK Anderson (17:46)

Yeah.

Mark Petruzzi (18:03)

that are out there in the software industry, the CAC, CAC payback period, general pipeline coverage ratios, lead to opportunity conversion, your overall channel efficiency, ICP fit. Private equity firms that focus in the software space, I mean, they run those numbers to the minute, and they're evaluating those numbers 24-7. So if you look at it like, OK, so median SaaS CAC

payback. I would say that's 18, 24 months somewhere in that range. Best in class, under 12, different world. And with all this stuff that the private equity firms are doing, most CROs don't have any idea where they stand. And what do you think it looks like from a, let's just look at it as a CRO bonus perspective.

How much bonus do you make when you're driving a 10 or 11 month CAC payback versus 18 to 24? It's a different world. So that and pipeline coverage is always have to be really defined and it's very important. We're just so fortunate at AGS that we have a team, we have a partner group, including Alan that just knows these

these areas inside and out. We also have Ray Reich. Ray Reich is part of our expert accelerator team. He is, I was going to say one of the best in the business, but in the software space, there's nobody better than him. His benchmarks are incredible. His metrics and the data he already has is incredible as well. So, you know, when it comes down to it, I'll also share one example of a shortcoming.

that I felt I've had in this evolution of gen AI. And that is, I looked at it and I always like to make things simple for my prospects to hopefully turn them into clients in the easiest way possible. So I kind of just looked at this upfront and was like, okay, you know what? I'm going to make your team more efficient, more effective and more productive. And that's going to increase revenue.

Isn't that, that's kind of enough, right? Isn't that great? I mean, we can, we can monitor, we can view it. Well, like anything else in business, you need the details. you can learn things about ratios that you just, don't learn if you just see a 15 % increase in your revenue over what you were trending beforehand. Okay, that's great. But you have so many more signals and signs that come out of it.

So that's where Ray comes in play and that's where great operators like Alan come into play as well.

Alan Rudolph (20:35)

Plain and simple, and I'm going to be bold in a couple of my comments here. It's the cornerstone of everything, Without adherence and strict definition of the ICP, valuations will erode. And we've seen that across the mark. There's many examples. So let's step back for a second. Think about early stage firms. Founders are phenomenal at the early on. of firms.

Mark Petruzzi (20:47)

Hmm.

Alan Rudolph (20:57)

They build personal relationships. say, I, you know, they put their hand up. I am the founder with that first set of customers. They know what they can and what they cannot sell when the product will break. Right. They just, they built it. So they know it. And, and so as the firm evolves, as the, software company evolves in that transition from founder led growth to scaled growth, the variable we keep coming back to is that clearly defined ICP.

Mark Petruzzi (21:10)

Mm-hmm.

Alan Rudolph (21:25)

Who is the target customer? Not in vague terms, in very specific terms. But here's what happens when the ICP is loose. Every stage of the bow tie gets that much harder. The CAC payback stretches because you're chasing customers who inherently don't fit. And it comes back to the point I made earlier. You sell something, you start the implementation, and all of a sudden it's a square peg and a round hole and

we know what happens with that journey. And or win rates drop because the discovery just doesn't land, right? There's no fit there. Time to value gets worse because it's all about that square peg and round hole. And then clearly net retention drops. Earlier in my career, the middle part of my career, I spent a ton of time in the broader outsourcing business. And in that business, we didn't make any money on those deals till give or take year three.

And the only reason we were successful at that business across many major world-class firms was to get the ICP right. So when we talk about diagnosing the front of the funnel, the first question I ask any portco as I start talking to them is, who's your target customer? And how disciplined are you about that definition? Because again,

If I'm loose in that definition and as the CRO, if I can hit my number that quarter, if I can blow away my number for the quarter, that's great. But all of sudden they then create this huge backlog of potentially unsatisfied customers because they don't meet the target ICP. We can't create the outcomes, right? Remember, at the end of the day, it's all about driving those business outcomes. And if that answer is fuzzy,

Right? In terms of the target customer and the ICP and the deals I'm bringing in, the downstream work is just going to be that much more difficult.

Mark Petruzzi (23:12)

Great, great stuff, Alan. I'd like to go a little deeper in what happens when CROs start a new company and they just don't have these numbers. And what really comes down to it is most don't, even to this day, even with so much private equity investment in the software space. You know, if they have the ARR, they know the pipeline coverage, but

then they just manage by gut feel. And when you can kind of move, and I've seen this happen with some of the best CROs in the business. I use my friend Paul Mulchiori often with this. When he was younger in his career, his first couple of CRO gigs, he was, well, my perception of him was that he was just.

so much of a gut feel kind of guy. And he, was really good at it and he always did the right thing. And I was like, wow, isn't it amazing when you have those kind of instincts? Well, guess what I learned about Paul? You know, Paul actually, you know, he quietly went off and he got an MBA from Villanova. He learned about the numbers, you know, nobody didn't talk about it to many people. And

Alan Rudolph (24:21)

Uh-uh.

Mark Petruzzi (24:22)

He started really looking at these numbers and he started putting his sales operations, sales enablement team into developing these numbers for him. And that has served him extremely well. Now I can say 15 or 20 years later, you know, especially now that Paul's taken over, been an interim CEO a couple of times, you know, he, he was a lot more than just a CRO when it comes down to the ability and the numbers.

And I guess all I'm saying with this is, maybe every CRO can move to a level of, Paul and, know, really get that excited by the numbers and the metrics, but, but they also try and, know, really we've, moved the, especially in the world and the, days of gen AI, the gut feel isn't enough anymore. It just isn't, you got to still have a sales gut.

but you got to really have all the metrics and you have to pay attention to them as well. and before I go even to KK, Allen, is there anything on that that you'd like to add

Alan Rudolph (25:22)

it's fascinating that the whole discussion around numbers, and AI and, know, I think overall, we think through, find more, win more, keep more, we need to have the right analytics, the right data, the right, diagnosis so that we can analyze the numbers appropriately. and it's just so relevant in,

Mark Petruzzi (25:38)

you

Alan Rudolph (25:43)

today's world. If there's one thing I've learned operating in this world, over the past 15 years, it's, it's data driven decision making and, and AI just helps us that much more. know, clearly Mark leads us into the, know, the next discussion about, know, you were talking about Paul and, know, what happens when CROs, you know, don't have these numbers? How do they, how do they make it all work? And I think we're KK, this is where you, you know, have some thoughts of wisdom here.

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General Episode Description:

In this continuation of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Alan Rudolph, Strategic Advisor at AGS, to explore how sales and marketing alignment, time to value, and retention strategies directly impact enterprise value.

Alan breaks down why misalignment between sales and marketing often starts with a lack of shared ICP definition, and how that disconnect destroys both efficiency and effectiveness. He also shares where AI is creating real leverage today across prospecting, coaching, and personalization, while emphasizing that human judgment remains critical in enterprise sales.

The conversation closes with a deep dive into time to value, gross versus net retention, and the bow tie revenue model, highlighting how leading organizations connect the full customer lifecycle to long-term value creation.  

What You’ll Learn:

• Sales and Marketing Alignment: Why ICP clarity is the foundation of both quality pipeline and efficient execution.
• Where AI Actually Works: Practical use cases in prospecting, coaching, and personalization.
• Time to Value (TTV): Why speed to value is now a critical metric owned by the entire organization.
• Retention Metrics That Matter: How gross and net retention signal true business health.
• The Bow Tie Model: How “find, win, keep” connects the full customer journey to enterprise value.

Key Topics:

• Marketing optimizing for volume vs sales needing quality
• The breakdown of lead quality when ICP is not aligned
• AI enhancing research, call coaching, and content personalization
• Limits of autonomous SDRs in enterprise sales today
• Defining and reducing time to value (TTV)
• Gross retention vs net retention and their impact on profitability
• The hidden cost of poor retention on CAC and EBITDA
• Customer journey ownership across the entire organization
• The bow tie revenue framework: find more, win more, keep more
• Why traditional funnel thinking ignores retention
• The importance of cross-functional ownership of the customer lifecycle
• Strategic priorities for CROs: ICP discipline, full revenue ownership, and efficiency as advantage

Guest Spotlight: Alan Rudolph

Alan Rudolph is a Strategic Advisor at AGS with deep experience advising private equity-backed companies and scaling enterprise sales organizations. With a strong operational background at the COO level, Alan specializes in aligning sales, marketing, and customer success to drive measurable enterprise value and long-term growth.  

Resources & Mentions:

• AGS (Advisory Growth Strategies)
• Concept: Ideal Customer Profile (ICP) alignment
• Concept: Time to Value (TTV)
• Concept: Gross vs Net Revenue Retention
• Framework: Bow Tie Revenue Model (find, win, keep)
• Concept: AI-assisted sales and marketing workflows

🎧 Listen now and follow Selling Intelligence for more insights on enterprise value creation, GTM alignment, and building high-performance revenue organizations.

Mark Petruzzi (00:34)

Alan, let's talk about the marketing side of this equation. Because in our experience at AGS, sales and marketing misalignment is one of the biggest destroyers of both efficiency and effectiveness. What does a well-aligned value creation oriented sales and marketing motion look like? And where does it usually fall apart?

Alan (00:53)

So it's fascinating because when it's working, it just works, right? It's invisible. It doesn't matter. But when it starts to fall apart, It's usually, and this is where we start tying all these pieces together in terms of ICP, because it's the definition of that qualified lead or the quality, maybe said another way of that qualified lead, right? So marketing is always going to optimize for volume, right? Throughput.

not the quality, right? The actual lead that comes in and making sure it's a good lead. And then sales just starts ignoring it. Sales starts going, doing their own thing and marketing thinks they have this great volume and sales is saying, you no, because they're not matching back to the ICP and that shared definition, that quality of how do I bring a great customer in the door?

KK Anderson (01:44)

That makes a lot of sense. And Alan, let's pivot to everyone's favorite topic, AI, for a minute here to round out this topic. So AI is reshaping both how we find customers and how we serve them. And so in terms of this kind of efficiency mandate, where are you seeing AI create real measurable leverage for sales and marketing teams right now?

like in your port codes that you're working with or have worked with in the past, like where's it working and where is it still mostly noise?

Alan (02:14)

three areas are where I see it working. First of all, and let's frame this all in the context of making us humans better, not replacing us humans. let's start there. That's first and foremost. so number one, prospecting and research, right? Who should I be talking to? Who should I be reaching out to? Right? That time spent in building those lists, et cetera. Number two is call intelligence and coaching.

And I can remember, my God, one of the port codes I was working with probably five-ish years ago, actually in the middle of COVID, we started doing call recording. And the value prop around what I can, the takeaway from our calls, right? What worked? What didn't work? How should I change the script, et cetera? Just a huge opportunity for training, for coaching, for getting much more effective results out of our calls.

you know, again, huge in terms of intelligence and coaching. lastly, content personalization at scale, right? Using AI to tailor the case study, to tailor the solution definition, to tailor, the whole presentation, to make sure that it matches specifically, you know, to that, that prospect we're going, going after. So it's not noise.

It is real. AI is real. The one thing I would stay away from, right, in terms of what's not working is sort of these autonomous SDRs, right? Because it just, it's not there yet. know, tomorrow is, we don't know, but it's just not there yet. Again, it comes back to, it makes us all better. It makes humans better, but it doesn't replace that human judgment.

That is so important in a high stakes enterprise class sale.

Mark Petruzzi (04:02)

Excellent, Alan. All right, well, let's move us into our final topic, time to value retention and the revenue bow tie. Earlier on, Alan, you introduced us to the concept of time to value, TTV, as a critical metric that most sales leaders do not own, but absolutely should. Please define TTV for our audience and make the case for why it belongs on the sales leader scorecard.

not just customer success.

Alan (04:29)

Absolutely. So TTV is, as you said, Mark, time to value. It's how quickly can I get from that contract signature to value from the solution, whatever that means, right, in terms of the solution up and running. And I can remember going back in my career, we'd be talking six, nine, 12 months. And customers want 15, 30, 45 days. So it's just so critical that the

Really, and I'm going to broaden it between customer, beyond just customer success and sales, the whole organization, the whole executive leadership team needs to get focused in on how do I define a solution, sell a solution and drive that solution to quote unquote live to value with the customer as quickly as possible. And that's what TTV is all about.

And that's why it needs to be both on the seller scorecard as well as the success scorecard. And it's going to tie right back into the bow tie. So it's just, it's, it's, you think about a customer journey, right. And I'm drawing a circle here because the customer journey is in fact, is a circle, right? We find a customer, we win the customer, we keep the customer. And it's so important that the, that whole journey.

that the executive leadership team is, you know, it's on the scorecard. They're evaluated on the success of driving TTV as low as possible.

KK Anderson (05:55)

That makes a lot of sense. so building on TTV, right? And thinking about, you know, gross retention versus net retention. So walk us through, if you would, the gross retention versus net retention, you know.

Alan (06:04)

Mm-hmm.

KK Anderson (06:11)

concepts, right? So thinking, you know, at AGS, we see this constantly. A team will sell aggressively. They'll hit their new logo acquisition number. But gross retention is quietly eroding in the background, right? So what does that diagnostic conversation sound like with the CEO or a board of directors when those two numbers start to diverge? And I know, know TTV fits into that for sure, but

How do you fix that? How do you fix it when your gross retention is not aligned with your net retention?

Alan (06:43)

Sure. So let's go back to definitional, right? So gross retention

is I open my doors on day one of the year. If I have a dollar and I renew that dollar, that's 100 % gross retention. So let's be clear on definitions here. And then net retention is how much additional do I sell? And depending on how the scorecard is kept, that additional can be everything from a CPI increase, 4%, 5%, 6%, or whatever the number is that you choose.

to true add on to increase in the actual pricing so that when I take the dollar, I renew the dollar. But if I have, you know, an, an, an extra 10 cents, excuse me, of add on now it's a dollar 10. And now I have a net retention of 110%. This whole conversation you hear us talking about this through this whole podcast comes back to selling value.

selling value to my ICP, my ideal customer profile, and making sure the customer is getting that value vis-a-vis the previous topic around TTV as quickly as possible. The more we can tighten in on the combination of the solution along with the ICP and driving that value to the customer, the customer is going to renew, the customer is going to buy more. World class metrics have

Gross retention in the mid to upper 90s. World class metrics have net retention, 110 % plus. That's world class. What happens is if we see net retention, this comes back to the way you phrased the question, KK, if we see that net retention staying that 110 plus, but the gross retention slipping, for example, into the 80s, maybe even only 90, that means we're putting in

Too much pressure on net new sales, right? Too much pressure on selling that more, selling additional, and we're losing that gross retention. And what happens when you lose gross retention, number one is what I just said, too much pressure on the organization overall to get that add on sale. Number two, the overall cost of acquisition goes up. And so inherently, the EBITDA for the organization is getting impacted because I'm selling net new.

and I'm not retaining my bass.

Mark Petruzzi (08:59)

And you know, Alan, I've seen over the years, there's almost this kind of machismo sort of looking at new opportunities and new revenue. And everyone wants to be that hunter that leaves the village and comes back with an antelope on their back, carrying it back to the entire village and everyone gets to eat. But we find in a lot of ways,

It's really the individuals who are out there foraging and growing and doing things in the village are the ones that really keep a village alive much more than the big celebrated hunter that comes in. So it's amazing how that mindset just, it still hasn't gone away. Everybody still thinks a new logo is worth more than additional revenue and an old logo. And it just really doesn't.

Okay, so let's switch to the Bowtie revenue architecture and go a little deeper here. The whole concept of find more, win more, keep more. That's the framework that ties the full customer lifecycle into that single value creation narrative that we started this entire podcast on. How do you use that framework when you walk into a port co or leadership offsite and

Alan (09:52)

Okay.

Mark Petruzzi (10:13)

What does it unlock in that conversation that traditional funnel thinking just absolutely messes?

Alan (10:19)

It misses the keep more, right? The whole premise is, you know, find and win. That just is the beginning of the journey. And I can't lose sight of that keep more, right? The whole discussion we have, and we spent a lot of time in off-sites talking about this is what is the customer journey? to, think about it from a RACI standpoint, right?

Who touches the customer throughout the lifecycle, throughout the customer journey to ensure that the customer is ready, willing, and able to buy more throughout, again, that customer journey, that customer lifecycle? And that's why the bow tie in terms of find, win, keep is so critical and intertwined with this whole discussion of gross and net retention and making sure that the

Whole organization drives value to the customer throughout the entire journey.

KK Anderson (11:13)

Really interesting. Okay, so as we round out this last topic, let's bring it home with a forward looking question, Alan. ⁓ So if you're advising a chief revenue officer or a CEO heading into a new fiscal year, right? They're still navigating a tough SaaS environment, PE pressure on EBITDA, and buyers who are more cautious now than they were three years ago.

Alan (11:20)

Mm-hmm.

KK Anderson (11:36)

What would you say are the two or three moves that separate the leaders who will create enterprise value from those who will just survive?

Alan (11:44)

I sound like so repetitive on number one. Ruthless, ruthless ICP discipline, right? That will just drive tremendous value as we look forward. Number two, and this might be a little bit controversial, own CRO, Chief Revenue Officer. Revenue, not sales, revenue. So own the entire revenue lifecycle. So let's, I don't want to.

KK Anderson (11:44)

Alan (12:09)

We're have a whole other podcast about ⁓ how should a port co be organized. But suffice it to say that an executive leader that owns revenue needs to own that whole lifecycle, needs to own find more, win more, keep more, needs to own the customer journey of driving great value through TTV, as well as making sure we get the renewal signed. And then lastly, if you remember,

half a dozen questions or so ago, we talked about efficiency and effectiveness. Make efficiency a competitive advantage, right? Drive the value. Make sure we understand where the buyers are coming from. Why are they coming through us? How do we drive through the sales cycle as quickly as possible? How do we leverage AI? Right? So you said it, KK. This is the culmination of what we've been talking about throughout this podcast. And it's about

speed and efficiency and effectiveness and pulling that all together into a competitive advantage.

KK Anderson (13:09)

I mean, it all comes together, right? It all comes together. Okay, Alan, we are gonna move on to our favorite part of every podcast we do, the rapid fire questions. And I'm gonna kick us off and then we'll, Mark, you can take the next one, okay? And I can't wait to see what you're gonna say for this first one. Okay, the metric you think every CRO should have tattooed on their wrist.

Alan (13:29)

Net Net retention.

KK Anderson (13:30)

at rest.

Mark Petruzzi (13:32)

Great, so okay, growth or profitability? If you can only optimize one for the next 12 months, which do you pick and why?

Alan (13:40)

So these are all mature companies. So it has to be profitability. I'm not in startup mode, right? So it has to be profitability with an asterisk optimizing for profitable growth, right? So we've talked throughout this podcast about, you know, a successful organization historically was at least rule Now those that that's even, you know, with AI with everything that's going on in the world around us, even growing more. So it's got to be profitable.

And it's got to be growth. And you take the sum of those two, and it's got to be a big number. And I'm going to argue that number, the rule of 40, has gone by the wayside. And we're talking about something in a rule of 50 plus to get to world class valuations.

KK Anderson (14:20)

You heard it here first folks, rule of 40 is no more, rule of 50, here we come. Okay, sales or a business book, Alan, that you think every revenue leader should be reading right now.

Alan (14:32)

So I'm going to take us back in time because I truly, truly believe that relationships are critical to the successful enterprise sale. And there was a guy named Dale Carnegie who wrote an unbelievable book in terms of how to win friends and influence people. And I'm to go back to basics, which it is, but there are just so many learnings in that book about what those relationships mean, how to build them, how to nurture them.

how to deal with those relationships in good time and bad. So it's an old book, it's been around. Hopefully all of us, anybody in sales has seen it, read it, go read it again, and then keep reading it.

KK Anderson (15:10)

I put that book in both of my kids stockings at Christmas this year. fact, fun fact.

Alan (15:13)

Hahaha!

Mark Petruzzi (15:15)

Great, next one, one leadership habit every sales leader should build right now as soon as he can.

Alan (15:22)

Yeah, I have long discussions about balancing between deep dive forecast reviews and structured deal reviews. And I think structured deal reviews capped at a 30 or 60 minute slot adds tremendous value for the leadership team to understand what needs to get done for that deal to win and helps the salesperson bring that deal in.

So again, recommend structured deal reviews by ⁓ strategic deals selected appropriately and going through the win of how do we make sure that deal gets across the finish line.

KK Anderson (16:00)

Love it. Okay, my favorite question. Advice you would give to your 21 year old self. And it can be about building a career and whatnot, but just what would you say?

Alan (16:08)

Learn the ins and outs of the business model, the financial model. And it's really all about what levers. Like take the example I was giving earlier in terms of cost of acquisition and an existing customer versus a new cost or effectively customer acquisition cost or as we call it CAC. So learn the financial model. Understand what drives revenue, what drives costs. How do I ⁓ impact costs? What ultimately drives EBITDA? Right? Most sales leaders

They just can't do it, I hate to say. And so that's a learning that I think is really important. Reach out to me, I'll take you through it. Right? But again, I just think that the core financial model, the better you are at understanding it, the better you'll perform in the board.

Mark Petruzzi (16:52)

All right, our final one. The one thing the P community still gets wrong about go to market.

Alan (16:57)

the time it takes to influence or change sales culture. It's hard, right? The operational fixes, the process changes, the people, everything that goes into an overall sales culture that drives all the metrics we've been talking about through this podcast, it just, you know, most boards, most PE firms think they can snap their fingers and it's going to change.

and for us as practitioners in the market, ⁓ can we get to the change? Yes. Does it take longer? Absolutely.

KK Anderson (17:31)

Realistically, we always say it's 12 to 18 months and I know it's hard for people to hear that. and you know, we can do sprints that have meaningful impact on acceleration, but it does. A true sales transformation and culture shift takes 12 to 18 months.

Alan (17:37)

Board don't like that.

Yep, 100 % agree.

Mark Petruzzi (17:49)

All right, well, Alan, this has been an extraordinary conversation. It was the kind that audiences will be referencing long after they listen. ⁓ We will be referencing it long after we listen. So for everyone tuning in, if you took one thing from today, let it be this. Enterprise value is not just a finance concept. It really is the basis of what we're all out here doing. Why we work as hard as we do.

why we jump on planes at six o'clock in the morning and, you know, jump back on a flight at 11 or midnight. So if you can look at it that way, you really as a sales leader, learn to speak the language of the board, because again, that's the thing that they need. That's the thing that they're focused on. And that's where their fiduciary responsibility is as well. So

It is really the outcome of every decision a sales leader makes about how to find customers, how to win them, how to keep them, how to grow them, how to keep them becoming happier every single day. Allen has given us the framework to talk about all of these concepts.

KK Anderson (18:59)

All right, Alan, wonderful conversation. And to our great audience, you can connect with Alan through AGS at get-ags.com. That's get and then the dash symbol, ags.com. And we will include all of his contact information in the show notes and also an area where they can connect to you on LinkedIn, Alan, if that's perfect.

Alan (19:20)

Yep, absolutely.

KK Anderson (19:22)

Okay, and if this episode shifted how you think about the sales leader's role in value creation, share it. Like and subscribe. Share it with a CRO or a CEO who needs to hear it. And we will see you next time on Selling Intelligence.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

General Episode Description:

In this episode of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Alan Rudolph, Operating Partner at AGS, to break down what enterprise value creation really means for modern sales leaders.

Alan shares why CROs must move beyond just hitting quota and start thinking like operators responsible for long-term enterprise value. The conversation explores how retention, expansion, deal velocity, and cost of acquisition directly influence valuation, and why aligning go-to-market execution with investor expectations is now critical.

They also dive into the shift from founder-led growth to scalable sales organizations, the importance of ICP discipline, and why effectiveness and efficiency must now coexist in every revenue team.  

What You’ll Learn:

• Enterprise Value Creation Explained: What it actually means for CROs and sales leaders beyond hitting quota.
• The ICP Foundation: Why defining and sticking to your ideal customer profile drives valuation.
• Efficiency vs Effectiveness: How modern sales teams must balance both to compete.
• Destroying Value Without Knowing It: Common mistakes like discounting, churn masking, and selling to the wrong customers.
• From Founder-Led to Scalable Sales: What must change to build repeatable revenue systems.

Key Topics:

• Value creation plans and their connection to company valuation multiples
• The four drivers of enterprise value: retention, expansion, deal velocity, and acquisition cost
• The “discount trap” and its impact on profitability and valuation
• Net revenue retention as a core board-level metric
• Customer acquisition payback and time to value (TTV)
• The bow tie revenue model: find, win, and keep customers
• Transitioning from founder-led sales to structured go-to-market systems
• Leading indicators of inefficiency: activity without outcomes, extended sales cycles, poor handoffs
• The role of ICP in both agentic workflows and traditional GTM execution
• Why misalignment between sales and delivery destroys trust and value

Guest Spotlight: Alan Rudolph

Alan Rudolph is a Strategic Advisor at AGS with decades of experience working with growth-stage and private equity-backed companies. Known for operating at the COO level, Alan specializes in aligning sales, marketing, and operations with investor expectations, helping organizations build scalable revenue engines that drive long-term enterprise value.  

Resources & Mentions:

• AGS (Advisory Growth Strategies)
• Concept: Enterprise Value Creation (EVC)
• Concept: Ideal Customer Profile (ICP) discipline
• Concept: Rule of 40 and evolving efficiency benchmarks
• Framework: Bow tie revenue model (find, win, keep)
• Metrics: Net Revenue Retention, CAC payback, Time to Value (TTV)

🎧 Listen now and follow Selling Intelligence for more insights on scaling revenue, aligning with investors, and building high-performance go-to-market teams.

Mark Petruzzi (00:28)

Welcome to Selling Intelligence. I'm Mark Petruzzi, joined as always by my co-host, KK Anderson. Today we have a guest who sits at a genuinely rare intersection. Someone who has operated inside growth stage companies, advised P backboards, and built sales and marketing engines from the ground up.

and also from the COO, Chief Operating Officer, Level, which has been his core focus. He's also a close friend and a member of our team here at AGS. Please welcome Alan Rudolph, Strategic Advisor at AGS. So,

Alan (01:03)

Thanks, Mark.

to be on the podcast today.

Mark Petruzzi (01:06)

Great, we're happy to have you, Alan. So Alan brings decades of experience across boardrooms, PA backed operators and enterprise deal cycles. He's known for helping leadership teams connect the dots between investor readiness, revenue acceleration and overall sales team performance. And also for making the case that great sales leadership is not just about hitting a number.

It's about building a machine that creates lasting enterprise value. That is exactly where we would like to go today. We're going to talk about what enterprise value creation actually means for the sales leader, why efficiency now sits alongside effectiveness as a C-suite mandate, and how the boat-time revenue model, finding, winning, and keeping customers,

maps directly to the metrics P investors care most about. Three topics we'll cover. EVC, enterprise value creation, what it is, why sales leaders need to understand it and own it. Effectiveness versus efficiency, the dual mandate for modern sales and marketing leaders and why building an efficient team is no longer optional.

The third one is time to value retention and the revenue bow tie. How customers onboard focus on gross retention and how important net retention is to the overall enterprise value and what the best senior operators do about it. Again, Alan, we're so happy to have you here. Let's jump right in. So, okay, first topic, enterprise value creation.

You know, really what a sales leaders get wrong here. And let's start with a framing question because this concept of enterprise value creation gets talked about in boardrooms, but rarely makes it onto the whiteboard in a sales QBR in plain language. What is an EVC and why should every CRO SVP of sales and VP of sales have it front of mind, not just the CFO in the board.

Alan (03:04)

Thanks, Mark. Great question. So EVC or value creation or value creation plans has been the buzzword, as you say, of boardrooms, of private equity firms. And at the end of the day, a value creation plan, also a transformation plan, simply drives to whatever that target multiple is. And so everybody thinks, it's just about the multiple.

pick the day and age, pick the year, pick whatever time frame you want to pick in terms of what are target valuations. But let's forget about the number for a second. And again, let's talk about what the CRO needs to worry about. And so as you said previously, CROs think, it's just the number, right? I got a quota. What percent of quota? How am I doing against my sales forecast, et cetera?

When I think about a value creation plan for a CRO, I think about things like customer retention, right? How am I doing? How am I driving value across my install base? Because we know the higher the gross retention, that drives into expansion capabilities. That drives into a broader opportunity to sell more of what I have in my toolbox, number one.

So that's retention and expansion. Then add to that deal velocity. Again, the deeper relationship, the clearer understanding, I have faster deal velocity. And then lastly, think about it from what does it cost me to win that deal? That's what's so critical for the CRO. these are, if you take, just take those four things I just said, retention, expansion, deal velocity,

and costs of acquisition and you put that into a value creation plan. Okay, so what does that really mean? Let's dig into that for a second. When I think about a value creation plan around retention, I'm going to have a key set of initiatives that I'm going to drive across my sales team, hunters, farmers, whether it's customer success or account management. I'm going to have key initiatives that drive

increases in overall retention. That's what a value creation plan is. Separate and distinct from my quarterly forecast as the CRO. Right? So it's the combination when I think about what does a good CRO look like when he or she steps into the boardroom and starts talking about how am I doing this? How did I do this past quarter? What's the forecast for the next three quarters? How am I going to do for the year?

And how am going to improve that overall value prop into the value creation plan, which ultimately drives the multiple in terms of the overall valuation of the.

KK Anderson (05:50)

So as you think about, am I echoing by the way?

Alan (05:53)

You are.

Mark Petruzzi (05:53)

You are, yes.

KK Anderson (05:55)

Okay. Hang on. that better? Okay. I think it might be gone. Okay. Sorry about that. so as you think about these, these specific value creation plans, you know, and you think about sellers in general, right? Salespeople. What would you say are the top two or three places where sales teams

Mark Petruzzi (05:56)

It actually seems better

KK Anderson (06:13)

or sellers unknowingly destroy enterprise value, even though they may be hitting their top line number? What are some things to look out for where they're inadvertently impacting in a negative way? Great question.

Alan (06:23)

Great question and I

see it too often and don't laugh too much when I give you the first comment. The discount trap as I call it. Right? We get to the number, we outperform, but I do that by discounting and we know that that discounting inherently puts challenges all throughout the organization because now our profitability numbers, our bottom line isn't where we need them to be.

So we just really need to be careful in terms of selling value that we're, have a, you know, I've walked into companies that don't even have a target price book, right? And so it's important that we understand what our price structure is, how to drive value with that price structure and not to ultimately fall into the discount trap. That's number one. Number two is the, I'm gonna call it the yin and the yang or the tie between, and this comes back to,

find, and keep more is churn versus new business. So is a ⁓ lower retention massed by net new business. And we know the cost of acquiring new business versus the profitability of a long-term customer is dramatically different. And so we don't want to overachieve revenue numbers because we're bringing more in the door net new.

but we're losing or reducing on gross retention. then lastly, and again, I'm an ops guy, right? And so I need to manage and maintain customers throughout the life cycle. It's selling to the wrong customers. And the hardest thing we all can do in an enterprise SaaS company is fire a customer. But we know that sometimes we just need to do that because

For whatever reason, there's a gap between the solution sold versus the expectation of the customer. So it's just really when we come back to that question about how can a CRO destroy enterprise value overall, is get that right customer base that truly understand the value we drive, that can benefit from the solution.

Mark Petruzzi (08:11)

is really important for me to come back to that question.

Alan (08:26)

We know it's a very small world out there that will talk to their peers in their respective industry about the solution. So again, it's all about getting to the right customer.

Mark Petruzzi (08:37)

Excellent, excellent points, Alan. So one of the things we hear constantly from P E operating partners is that founders and early sales leaders are often great at the hunt, but man, do they struggle to build the system when they really have to take it past founder led growth. You have described this as the difference between being the lead salesperson and being a sales leader who builds organizational capacity.

Alan (08:54)

Mmm.

Mark Petruzzi (09:02)

Walk us through that ⁓ transition, typically breaks and what really does have to change to make it successful.

Alan (09:09)

mean founders are phenomenal, right? Because they build, they grow, they have personal relationships with that first set of customers. And by the way, they know what they can and cannot sell, right? They know where the product does or does not break. The discussions I have with founders in earlier stage companies really boils down to one primary aspect. Definition of the ICP.

Who is my target customer? Right? So comes back to what I said earlier about whether it's finding customers or selling to the wrong customers, et cetera. It's all about the ICP. So I have a well-defined solution. And I know that that solution is relevant to a target set of customers. So how do I define that ICP? That's what will drive an organization to go from a founder-led sale that he or she can

basically make whatever decisions need to be made and can drive that solution into a much broader sales team that needs to understand what is that profile of the customer that I'm looking for? How do I drive the solution into that customer and win those deals?

KK Anderson (10:23)

You know, ICP is the cornerstone of everything really. And even now this week, we've been having a lot of conversations around agentic workflows and go to market and all of it hinges on the ICP. If the ICP is not effective, then none of the agentic workflows are effective. And it sounds like it's the cornerstone of our value creation as well, huh?

Alan (10:43)

KCAD, add to that, without the definition and the adherence to the ICP, the firm, the company, the SaaS provider will not get to its target valuation. I would be very bold in making that statement, but I'd stand behind it.

KK Anderson (10:58)

Well, and you might somehow weave this into my next question here. so, you know, thinking about making this concrete and you know, we like to measure everything. if I'm a CRO at a PE back SaaS company and I'm going into a board meeting next month, what are the two or three metrics that I should be walking in with that signal? I understand enterprise value. My team understands enterprise value. So.

Like beyond just ARR and pipeline coverage, like what are those metrics?

Alan (11:27)

net revenue retention. It comes back to ICP. Am I selling to the right customer that continues to buy more from me? And so let's be clear for a second. Net revenue retention, everybody gets this messed up. Net revenue retention is I start the year, let's call it $1. And if at the end of the year I have $1.10, that means I grew at 110%.

KK Anderson (11:30)

Right. Yeah.

Alan (11:49)

revenue retention is the combination of my gross, what I'm renewing, plus the additional sales, cross-sell, up-sell, et cetera, into that customer. So first and foremost, a clear understanding of that revenue retention. Number two, and I talked about this briefly earlier, is the payback period for our customer, right? We know that the costs are higher in the first months and the first year of managing

implementing owning a customer. So again, this comes back to ICP sell to the right customer, right? It's I spent a lot of my career middle part of my career in outsourcing. We didn't actually make any money in large complex outsourcing deals to year two, three or four. So right, it's all about making sure you have the right ICP, the right solution selling into that customer. And then lastly, TTV time to value in this day and age.

Customers want value as soon as they sign the contract. So we all know that in a SaaS world, customers sign the contract, they get an invoice, they pay us upfront for a year. Well, they want value immediately from that. So we want to make sure we're continuing to address time to value and how much we are decreasing the implementation time frame number one.

Mark Petruzzi (13:09)

.

Alan (13:09)

and or number two for depending on the solutions and the more complex solutions that we're segmenting that implementation so that we get pieces

of the solution implemented as quickly as possible so the customer is getting value out of the money they're spending with us.

Mark Petruzzi (13:26)

Good stuff. So let's move on to topic two. Effectiveness versus efficiency. Building the team that is able to move the needle. So the era of growth at any cost is over. It's way over, right? It's, you know, we've moved much more to the rule of 40, which means you have to have a growth rate plus a profit margin that is 40 or greater.

and it's probably going to be moving past that metric as well pretty soon because, you know, was the good old days, right? It was, we, we had to grow each year. A sales leader was asked or was told what the number is and they would come back and say, okay, I need to hire 30 new reps this year to be able to get that. Well, it doesn't work that way anymore. So we're hearing this from.

Alan (13:54)

Absolutely.

Mark Petruzzi (14:16)

every PE board and every PE firm that we work with, efficiency is now as important as effectiveness. help us to find the difference and why is it so hard for most sales leaders to genuinely operate on both dimensions simultaneously?

Alan (14:34)

because they're almost diametrically opposed, right? That's the problem. So efficiency, I think about it's just numbers, right? What's the ratio of output to input? know, what's my sales forecast? How do I go from, you know, lead flow and, you know, an MQL and SQL, blah, blah, right? It's just efficiency is just how quickly can I get that wheel spinning. Whereas effectiveness is all about finding, engaging,

closing the right customers. It's almost like quality versus quantity. And coin operated salespeople struggle with effectiveness. But we know that effectiveness, go to my previous answers, effectiveness drives higher net retention. Effectiveness drives a better overall ICP. Effectiveness drives overall increase in

you know, the valuation of the firm. And I would argue that in the world that we're living in today with, you know, with everything we talk about from an agentic standpoint, the introduction of agentic workflow, et cetera, we're going to need to look at, you know, valuations that are rule of 60 plus. And so to get there, both effectiveness and efficiency are important. We need to

value where we spend our time as sellers, as a CRO, thinking about effectiveness and efficiency and making sure we're bringing the right customers into that bow-tie journey of find, keep, find, and keep and ⁓ driving our sales force to be as effective as possible in winning deals, maintaining deals, keeping deals.

and closing deals without discounts. I'll end on that.

KK Anderson (16:19)

So, Alan, you go into a PortCo and you do a go-to-market assessment, what you're saying makes complete sense around the inefficiencies with the sales team inadvertently driving down enterprise value. sure, there's going to be all kinds of lagging indicators in Monday morning quarterback, where we can look back and recognize where they're failing.

Like what are the signs, like what are the leading indicators? What are the signs that you can look for now? Like when you're in that diagnostic stage, assessment stage with the client, like what are the signs that a team is burning capacity?

Alan (16:52)

The first thing I look for is a

The first thing I look for at the sales rep level and obviously depending on size and scale, sales rep, sales managers, VP, CRO, et cetera, is activity that does not connect to outcomes. We all know, we've seen it. We have salespeople that have tons of activity. They have deals, they have demos, they have outbound, et cetera.

There's just tons of activity, but we're not seeing the close. Number two, along with that then, is a sales cycle that keeps stretching, right? We have a target close date and it just keeps moving, right? Well, that comes back to, don't know my customer. I don't know who to contact at my customer. I don't understand who has to sign off, who the ultimate buyer is, how the decision is made. So it's all about

Mark Petruzzi (17:33)

you

Alan (17:41)

understanding, knowing my customer. So too much activity, lack of knowledge at my customer. And then lastly, again, this is the Ops Guy speaking now is we close the deal, we hand it off to the implementation team. They have a first conversation with the customer and the customer said, ⁓ I thought I bought X and we're delivering Y. And there's just this gap around that overall what

Mark Petruzzi (18:03)

Hmm.

Alan (18:06)

does the solution look like? How do I drive that solution to value in the customer? Right? It's all about value based selling. So it just is, you know, those are the key indicators are start to look for in terms of inefficient sales teams for, know, versus, you know, a very efficient and effective sales team will have less activity, will meet their targets in terms of closed States and won't have any issues with the handoff when it happens.

to the implementation or services team or whatever the firm calls it.

Mark Petruzzi (18:37)

you

KK Anderson (18:37)

And once

again, that comes down to the ICP,

Alan (18:41)

It does, 100%.

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General Episode Description:

In this continuation of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Ray Rike, founder and CEO of BenchMarket, to go deeper into how companies should measure, operationalize, and compete with agentic AI in go-to-market functions.

Ray breaks down why most companies still lack basic GTM measurement discipline, what new AI-specific benchmarks leaders should track, and how legacy SaaS companies can realistically compete with AI-native organizations that are operating at dramatically higher efficiency.

The conversation also tackles the hard truth about workforce reduction, the rise of AI operators, and why companies must rethink their entire operating model, not just layer AI on top of existing processes.  

What You’ll Learn:

• Measurement Before AI: Why most companies must fix GTM analytics before introducing AI.
• AI-Specific Benchmarks: The emerging metrics for measuring agentic GTM performance.
• Competing with AI-Native Companies: Why legacy SaaS teams must rethink their entire playbook.
• The Role of AI Operators: Why AI expertise is becoming more critical than traditional RevOps.
• From Pilot to Scale: What success should look like at 90 days and 180 days.

Key Topics:

• Cost per pipeline and cost per ARR before vs after AI
• Agent cost per opportunity, pipeline, and revenue
• Designing modular AI workflows instead of “monster agents”
• The four-layer framework: productivity, effectiveness, efficiency, and ROI
• Revenue per FTE gap between SaaS and AI-native companies
• Why legacy SaaS companies struggle to match AI-native efficiency
• Radical restructuring: reducing headcount and rebuilding with AI-first processes
• AI enabling deeper personalization at scale for outbound teams
• The rise of “AI operators” as a new critical role
• The “SaaSpocalypse” and pressure on net revenue retention (NRR)
• Using AI to improve retention, expansion, and customer insights
• Benchmark expectations for agentic SDR performance at 90 and 180 days

Guest Spotlight: Ray Rike

Ray Rike is the founder and CEO of BenchMarket, a leading provider of B2B SaaS performance benchmarks. With decades of experience as a go-to-market leader, he helps organizations move from intuition to data-driven execution. Ray is also the creator of the AI to ROI newsletter, where he analyzes hundreds of AI developments weekly to help leaders understand what actually drives business outcomes.  

Resources & Mentions:

• BenchMarket
• AI to ROI Newsletter
• Concept: Agentic AI in go-to-market
• Concept: AI-first operating models
• Concept: Revenue per employee as a key efficiency metric
• Concept: AI operators vs traditional RevOps
• Concept: SaaSpocalypse and NRR pressure
• Framework: Productivity, effectiveness, efficiency, ROI

🎧 Listen now and follow Selling Intelligence for more insights on AI benchmarks, GTM transformation, and building high-performance revenue organizations.

Mark (00:26)

Excellent. All right, well, Ray, let me bring you back into the days of you and I starting all our research and all the pre-work for data and diagnosis driven selling. So I hope that doesn't cause you to develop a Twitch or anything like that, because as you and I both know, that was hard work. So, but let's, you know.

What we really saw right up front is, and we really pushed hard on this, is the idea is you can't manage what you don't measure. And you need external benchmarks, not just internal comparisons to know if your metrics are actually good. You know, it's great. It's great to be able to say, improved this process by 20%. But if you were 45 % behind most of your competitors before that,

That 20 % still has you on the back of the pack. So how do you bring that same philosophy to measuring an agentic BDR or an AI-powered deal coaching agent? And we've touched on this, but what's the equivalent of a CAC payback for agents and the entire investment?

Ray Rike (01:33)

Well, I would start with let's make sure you have your go to market measurements in place, because honestly, we've been talking about these for years. Less than 50 percent of companies have great GTM analytics. ⁓ So things like cost per dollar a pipeline, less than 40 percent of people are measuring cost per dollar a pipeline. So make sure you do that and look at your current state before AI and then measure it post AI introduction. Right.

So cost and I'm talking right now, I'm looking very specifically at the customer acquisition process. So cost per dollar pipeline before and after cost per dollar of new AR before and after when rate before and after your average and your contract for you before and after. Cause those are all going to be hopefully much better with AI to your point, Mark. I mean, let's use outreach. Everybody had to have a sales engagement platform, right?

How many companies actually said, well, after I invested $1,500 per SCR, I had a better conversion rate or a lower cost per dollar of acquisition? Nobody. You're going to need to do that with AI. So that's my first thing. The second thing, which haven't been defined yet, but I'm working with some VCs on this right now, is AI specific customer acquisition efficacy. So I'm looking at agent costs per opportunity.

Agent cost per dollar pipeline, agent cost per dollar of new ARR, agent dollar per cost of retained ARR. So you can think about your gross revenue retention and agent cost per dollar of expansion ARR. Now I'm projecting that we're going to be using agentic AI a lot in those processes or sub processes. And by the way, that's the other best practices.

When you design a process, it's better to design a lot of subprocesses underneath so you don't have one large unwieldy AI agent. You have a lot of subprocesses that you have different people auditing and evaluating.

KK Anderson (03:28)

All right. Let's dig into that design a little bit. So walk us through, and I know this is new, as we've said multiple times for so many of us, what a well-instrumented, agentic, you know, GTM for the purposes of our audience, pilot could look like. You just gave us one great clue, which is, you know, don't make monster agents and, and to break them up so that you can, you know, be more agile and

and predictable with those. You've walked us through some baseline metrics that you want to set before you launch, things that haven't necessarily been done in the past with programs like our outreach launches over the years. But what does the pilot to scale gate look like? And how do you separate the agent did something from the agent created revenue attributed value?

Ray Rike (04:14)

Well, let me go to the baseline metrics first, KK. So I think I have four levels of metrics I like to see in any initiative, including the Gentic AI. So one is a productivity metric, and that is outputs per time, you know, whether it's outputs per human hour, outputs per day or time spent per activity.

That's what we've been measuring for the last year and a half and AI in marketing and sales. But that's what then you have effectiveness. How effective is my AI enabled process going to be? ⁓ How many desired outputs am I getting versus the inputs? Hey, for every hundred emails my agent sending, how many meetings do I get set up? Right. Then there's efficiency. That's the cost per outcome. And then there's

actual ROI, which is outcome value divided by the AI investment. So productivity, effectiveness, efficiency, and ROI. I'm not going to go into detail what that's like for just an SDR program, but at least it gives you a framework and a layer approach to designing those four layers of metrics you need to measure.

Mark (05:19)

Excellent. All right, let's move into topic three, the benchmarked view, and tell us a little bit about what the data has been telling you and your team at Benchmarkit. And let's go with, guess, a baseline of that. Some of your initial benchmarks that you have been working on are showing AI native companies hitting two to three times higher ARR per FTE.

than a legacy SaaS, as one example. From our listeners who are operators inside non-AI native companies that are trying to deploy these agentic go-to-market programs we're describing, how do they close that gap? What are the structural differences they need to address? Not just the tooling, but the operating model as well.

Ray Rike (06:02)

In the let's be real. It's going to be real hard. And the reason being is a lot of the AI native companies are getting new budget. They're getting experimentation budgets. They're getting budget from labor versus budget from I.T. investments. Right. So I hate to say it, but it's going to be hard. But hey, there's a lot of people out there in legacy says companies that they need to get there. Right.

So number one is you've got to be laser focused on number one, the effectiveness. Can AI help you get more conversions? Can they get higher ACV? Can they increase your win rate? And you got to go right to cost per. If AI is not getting you a reduced cost per dollar of new ARR, it's going to be really hard. And honestly, Mark,

The hardest part is for me, if it was me and he brought me into a $50 million SaaS company, I would say we got to throw out the old playbook and start from scratch. But I don't have the new playbook based upon years and years of experience. So it's going to be really hard to throw out the old playbook and build the new one. So that's why I bring in someone who's got maybe six, 12, 18 months of experience and an AI first culture.

and have them do it with you or hire a third party consultant.

KK Anderson (07:22)

Wow. And it's quite the conundrum that we're all faced with right now. All of these native SaaS leaders trying to compete with these AI native companies who are just crushing it.

Ray Rike (07:33)

I mean, when you're talking about your best in class, SaaS companies are doing 600 ⁓ to 800,000 revenue per FTE and Anthropics doing three to four. How do you compete with that? It's a little bit like saying, how did JCPenney compete with Amazon? ⁓ I'll bring in a guy from Apple who created the Apple retail experience and that's going to fix it. We saw how that worked, right?

KK Anderson (07:42)

blue.

really is.

Ray Rike (07:57)

Sometimes it's just nice being part of the next generation versus trying to reinvent the current generation. I'm being honest here.

KK Anderson (08:04)

you know, and I know it's hard to answer that, but if you were a CRO in one of these old school SaaS companies, what, aside from calling a consultant, like what, where do think you would go first? Like what would you, what would you do? How would you that gap?

Ray Rike (08:17)

I would completely get rid of my SDR team and make it 100 % agent based. I would reduce my number of salespeople by probably 50 % and say, okay, now that we got 50 % less staff, how do I manage more of their task with AI agents, research discovery, etc. So I would just basically look at what the AI native companies are doing, and then burn the ships and say, we got to do this with 50 % less people.

Having a bandaid, I don't think helps. You got to rip it off. So even customer success, right? I do a lot of work with Gainsight. It's like AI is the best retention vehicle in the world because you can look at things that humans can't, kind of like usage patterns, et cetera. And they can predict churn faster than any CSM can. But when you've got 10 CSMs, they're like, that's my job.

Well, if I only have three CSMs, I'm not going to be able to do this much, right? So I'm forced to try AI and automation.

KK Anderson (09:11)

Yep. And just since we're talking about the sensitive topic of AI replacing humans, is something, you know, questions we get a lot of, right? And we are firmly of the belief that yes, of course AI is going to replace some humans, but it can also make humans, that super intelligence can have an exponential impact on their effectiveness, sellers in particular, on their effectiveness if they're using AI correctly.

So if you've got the three BDRs instead of the 10, what are some ways that, I don't know, talk to me about how AI can help them be more effective in these roles where there's less people.

Ray Rike (09:48)

I'll give you BDRs for example is research and doing a lot more targeted research and personalized outreach to those contacts in your ICP at scale. Where maybe I could do 20 or 30 emails that were personalized, best case now maybe I can do 50 a day or 75 a day. So research, highly targeted. That'd be one thing I'd be doing as a BDR every day.

I would be using AI to say, how do I follow up with this person who I talked to three months ago? What's the best approach? Let's look at their LinkedIn profile. Let's look at the latest corporate articles out there in the ethos, you know, and on the internet, and let's tailor my next follow up based upon my AI agent helping me get more personal and personalized.

KK Anderson (10:32)

And what's interesting is more and more we are hearing about this kind of crisis of sameness, right? Where AI has enabled, know, everyone's got the same content, everyone's saying the same things, everyone's sending the same emails. Like you can tell if it's AI, you know, from a mile away. And then we also are also hearing this theme around how now, you know, your humanness is your uniqueness.

And people are loving when they see a typo in an email or a message or a, hey, by the way, this is really me. This is not a bot.

Ray Rike (11:04)

So, you know, I don't know if this is good for this podcast, but I have to call, say it the way I see it. So I don't know if we saw the New York Times research from about a month ago, where 54 % of people prefer AI written communication versus human written communications. 54%, right? And

KK Anderson (11:11)

Yep.

Mark (11:23)

Yep.

Ray Rike (11:25)

that's going to increase as AI becomes more, more able to personalize the communication to KK versus Mark, right? Which humans are going to have a harder time doing that. So ask me the question again, KK, I went on a tangent.

KK Anderson (11:28)

normal.

What,

when I was just thinking, you know, we're hearing now that your humaneness is your uniqueness. And so,

Ray Rike (11:42)

yeah.

So an enterprise class sells, I think it's going to continue to be the case. But, know, I think even having, you know, children who are early career people, right. So and I hate these type of generic comments, but be the person who knows how to use AI in your function better than anyone. Everyone should be spending at least an hour a day on their own, learning how to use AI in their role.

They should be learning a new tool at least once per quarter, if not once per month. So that's one thing, because for the next few years, those who know how to use AI in your function, whether it just is your assistant to do your function better, or you become what I call the AI operations guru, you can go into any company and say, I'm going to improve your sales development process by 5X.

by doing this, that, this, this, and this that I've done four times before. So doing it as a practitioner and then be able to do it as a consultant, you're going to have job security for quite a while.

So that would be my advice. Learn it and be better than anyone else. And by the way, make sure that your boss knows that you're the person who knows it better than anyone else. Because when it comes time to get rid of people, like, I can't get rid of Joe. Joe knows more about this AI agent than anyone in the company. So that's why, Kay, I think you asked me this earlier. I believe that AI operations is going to be much more strategic and important.

Mark (12:52)

Yeah.

Ray Rike (13:07)

than rev ops ever became. And I actually saw three different job posts just on Monday from big companies asking for to hire AI operators. They didn't call them AI operation specialists, they called them AI operators.

KK Anderson (13:21)

Really cool.

Mark (13:22)

We can't let you go without going into some of the narrative that we're all hearing out there. And it starts with the term the SaaSpocalypse. So we all know that traditional SaaS and NRR is under significant pressure. Some companies in the bottom quartile now below 100 % of NRR.

For listeners who are sales leaders, not just the executives of those companies, what does that signal mean for how they need to sell differently? And how does agentic AI factor into the defense strategy, the attack strategy, or whatever you pull together from here?

Ray Rike (13:58)

Well, net revenue retention is a combination of how much ARR you retain from existing customers plus how much expansion ARR you add. Right? So if you have a leaky bucket problem, i.e. your gross revenue retention went from 88 % last year to 80 % this year, which by the way was Zoom Info's big issue. They lost so many of their customers in the tech sector. You better quickly try to understand what I can do.

and how you can harness the power of AI to increase customer retention, right? And then second, you've got to get a hell of a lot better on your customer expansion motion. And in fact, if you only have one or two products in your portfolio, I would start talking to your CEO and had a product about why these other three near adjacent products could really help you from an NRR and how it impact you. But start with

How do you retain customers better? How do you increase the efficiency of your expansion motion? And how do you open the aperture of the opportunities to expand your existing customers? New ARR is still going to be really hard as a legacy SaaS company if you're competing against agentic AI or AI native software vendors.

KK Anderson (15:06)

Okay, last question before we move on to the rapid fire. And this is gonna be one where again, you know, it may be too early to tell, but just work with us here, on this one and let's kind of think about what the hypothetical is and just try to make this a little bit more concrete for our audience. So let's think of a real world benchmark anchor, okay? So a company with 25 million to 50 million ARR

They're deploying their first agentic SCR or pipeline management program. What do we think good should look like at 90 days or even at six months? Which of these benchmarks that we've talked about today would tell you that this program is worth scaling versus killing? And how quickly do we know?

Ray Rike (15:54)

Within 90 days, your agent should be performing as good as if not better than a human SDR. Because you take some time to make sure you train it, you refine it, etc. Days 91 to 180, you should see a minimum of 25 to 50 percent lift on your conversion rate from outbound activity to sales call.

You should see at least 25 percent lift from sales call to opportunity and your win rate should go up by at least 10 percent. So these are just some benchmarks out there, but you can't be just as good. It's got to be better.

So I don't know if that gave you enough granularity, 90 days to prove the case, 180 days to make it tangible with real ROI.

KK Anderson (16:32)

It does. It does.

Mark (16:37)

those are reasonable timeframes and that's why this is working. Okay.

KK Anderson (16:39)

Mm-hmm.

Ray Rike (16:42)

by the way,

Mark and KK one day, I mean, the days of experimentation were in the last three innings of that using a baseball metaphor. You're going to start competing for budget for AI. So you're going to need to say, here's my AI project and here's my projected ROI. And if it's lower than this one over here, you may not get it. So you better be ready to fight for your budget.

Mark (17:04)

You know, Ray, you hit on such a great point with that because I, you know, it's funny, as we've jumped into more of the pure play at Gentic work that we have done over the last year, maybe a year and a half, the real discussion with me reaching out to CEOs and board members that I know was, you know, okay, like, what are you guys doing with AI?

ask your CEO, okay, you have seven direct reports reporting to you. What are they thinking about doing with AI? Because you had all these board members, especially kind of two years ago, a year and a half ago, going to everybody, come on, man, you got to do this, you got to get us a piece of this, we got to become more efficient. And it was really about like they were getting dragged in most of the executives I spoke with.

we're getting dragged in to do this. So they had to go do something. But as we've gone over the past maybe nine months or so, I've seen and I've changed my approach accordingly, that it's now, you hey, it's not, you've got to be doing something in AI, but you got to be doing the right things in AI. And with the work I've done being on the board with Humigentic and the work KK and I have done with Humigentic as one example of a company,

There is, you have to have that precision as well. So before we go into rapid fire, any thought that's popping in your mind based on what I just shared?

Ray Rike (18:30)

So I've done state of AI research and finance and marketing and sales and customer success and two thirds to three quarters of the time, the person who pushed AI into the department was the CEO, not the departmental executive, which is telling. And to your point, man, even

If you're not that comfortable with it as the head of marketing or head of sales, you better hire someone. Maybe you hire your AI ops person instead of a rev ops person who's got that deep experience. And you're like, I need you to take this process completely redesign it and share with me how we can make this AI first. You got to take that lead because you're going to become obsolete so quickly.

If you don't do it because you're fearful or you don't know, what you're not going to know is where you're going to get your next paycheck from. You need to know it and you need to learn it and embrace it.

Mark (19:23)

Yeah,

Excellent advice. Okay, rapid fire. Let's finish up here. ⁓ First thing you've ever sold professionally or even as a kid.

Ray Rike (19:34)

My dad had his hobby, which was a small engine and lawnmower repair shop. We also sold new lawnmowers. So I got good at selling upsells to doing like total engine rebuilds or selling a new lawnmower when the old one was going to cost too much to get fixed.

KK Anderson (19:49)

Very good. Okay, one metric most go-to-market leaders are still measuring wrong.

Ray Rike (19:54)

customer acquisition cost ratio because they're not measuring it and they don't separate the measurement for what it costs to get a new customer's dollar of ARR or an existing customer dollar of expansion ARR.

Mark (20:05)

So if a CRO could only instrument one thing about their agentic go-to-market pilot, what should it be?

Ray Rike (20:12)

You are outbound.

And specifically, that's not one thing. I would want the research and the outreach to be the first thing they automate.

KK Anderson (20:20)

advice you would give your 21 year old self.

Ray Rike (20:23)

be an entrepreneur. And by the way, I helped many entrepreneurs and VCs make a hell of a lot of money, right? Five exits out of seven companies. But being an entrepreneur at the last stage of my career is the most fun I've ever had. And in today's world, the chance to build a business, because you know AI better than anyone, there's never been a better opportunity to be an entrepreneur, never.

Mark (20:46)

Okay, your favorite chapter in data and diagnosis driven selling. And what would you write differently with me ⁓ if we had to do it again?

Ray Rike (20:47)

Thank

probably the different metrics by stage of the customer acquisition process. And I would layer a lot more AI measurements. And quite frankly, even though we had a chapter dedicated to this, you know, and this was only what less than three years ago, a lot more focus on the AI first acquisition retention and expansion process versus how we wanted to automate and make it more efficient.

Mark (21:15)

Yes.

We thought we were, yes. And it's funny, we thought we were so far ahead of what was about to happen. And we were pretty proud of even how we integrated stuff in and that one chapter that we were able to go a little deeper. But man, oh man, that tidal wave just came over our head, didn't it?

KK Anderson (21:21)

I sense an update coming.

Okay, one sales ritual or habit that no AI agent will ever replace.

Ray Rike (21:47)

Maybe they can fake it or emulate it, but it's true concern about your customers win. Like one of the things I always try to do is understand what my buyers personal win was. My economic buyer and my influencer champion. Why are they going to win? Because they do business with me and my company. And then of course, how does the business really win? Right? And

Be really curious about that and don't just even take what you hear for the truth. Kind of say, well, but I've also seen this or heard this. So how do you marry these two? I think it's just a human authenticity, curiosity and true concern to make sure you win, KK.

Mark (22:28)

Good stuff. So, and where will SAS benchmark data be most disrupted by AI in the next two or three years?

Ray Rike (22:36)

I think it's all going to be pretty disrupted, but it's going to be revenue per employee. And it's going to be how much I spend and operating expenses versus cost of goods sold.

Mark (22:45)

Beautiful. Well, Ray, thank you so much for spending the time today with us. It's always a pleasure. And also thank you to KK and our incredible audience. Thanks for joining us each week. All the best.

KK Anderson (22:58)

really

Ray Rike (22:59)

Hey Mark!

KK Anderson (22:59)

great.

Ray Rike (22:59)

Hey Mark, can I make a plug?

Mark (23:00)

Of course!

KK Anderson (23:01)

Yeah.

Ray Rike (23:01)

so me and my partner, we publish the AI to ROI newsletter every day. We cover a different topic, but we'll look at 200 to 1000 news articles a week and we pick out the top five to 10 and we share that with our audience and we do deep analysis on what it means. Man, if people could go to AI ROI dot sub step dot com, I really believe in. By the way, we don't. This is not a

Get the free one so we can charge you subscription. Everything I do is for free to help the industry evolve. I think it'll take hours of research away from every individual who reads it and hopefully give them highly relevant contextual research and analysis.

KK Anderson (23:43)

And it's AI, the number two, ROI.substack.com. And you do not need to have a Substack subscription to be able to participate. And it's a fabulous newsletter, highly recommend.

Ray Rike (23:58)

That's it. And by the way, just go out there and get uncomfortable, do the unfamiliar and create the future that is AI.

Mark (24:06)

Beautiful. Thank you again and we'll see you soon.

KK Anderson (24:06)

Amazing.

Thank you, Ray. Really enjoyed it.

Ray Rike (24:11)

Thank you.

Mark Petruzzi (24:12)

We hope you enjoyed this conversation and found it valuable. If you did, like and share it with your network. That's the best way to support us and the work we're doing here at AGS. And if you're curious where your sales team stacks up in the AI era, head to get-ags.com. That's get and the dash symbol, AGS.com for a complimentary sales team benchmark. Until next time.

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General Episode Description:

In this episode of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Ray Rike, founder and CEO of Benchmarkit, to tackle one of the most critical questions in enterprise AI today: how do you actually measure success in agentic AI programs?

Ray shares why most AI initiatives are stuck in “pilot purgatory,” the common mistakes companies make when trying to automate broken processes, and why an AI-first mindset requires a complete rethink of data, workflows, and metrics. The conversation also explores how go-to-market teams should define ROI, what benchmarks matter in an AI-driven world, and why traditional SaaS metrics are no longer enough. 

What You’ll Learn:

• Why AI Projects Stall: The real reasons most agentic AI initiatives never scale beyond pilots.
• AI-First vs Human-First Thinking: How redesigning processes for AI fundamentally changes outcomes.
• Data Readiness Matters: Why poor CRM data and lack of governance derail AI success.
• Measuring AI ROI: The new metrics leaders must track to justify AI investment.
• The Shift in GTM Economics: Why cost structures and efficiency benchmarks are changing fast.

Key Topics:

• “Pilot purgatory” and lack of enterprise-wide AI focus
• The importance of data hygiene and enrichment for AI success
• Redesigning processes with AI at the center, not as an add-on
• The rise of vertical AI and pre-built agent workflows
• Defining success with leading, mid-term, and lagging metrics
• CAC ratio vs AI-driven efficiency benchmarks
• “COGS is the new CAC” and shifting cost structures in AI-native companies
• Revenue per employee as a proxy for AI productivity
• Token consumption and cost predictability challenges
• Building smaller, modular agents instead of large monolithic systems
• The four-layer measurement framework: productivity, effectiveness, efficiency, and ROI

Guest Spotlight: Ray Rike

Ray Rike is the founder and CEO of Benchmarkit, a leading source of B2B SaaS performance benchmarks with data from over 1,800 companies. He is also the host of the AI to ROI podcast and a founding member of the SaaS Metric Standards Board. With decades of experience as a go-to-market operator and executive, Ray focuses on helping companies move from intuition to data-driven decision-making in both SaaS and AI-driven environments. 

Resources & Mentions:

• BenchMarkit
• AI to ROI podcast
• Concept: Agentic AI in go-to-market
• Concept: “Pilot purgatory” in AI adoption
• Concept: AI-first process design
• Concept: COGS as the new CAC
• OpenAI Frontier Alliance
• Vertical AI platforms (example: Harvey for legal)
• Metrics framework: productivity, effectiveness, efficiency, ROI

🎧 Listen now and follow Selling Intelligence for more insights on AI measurement, GTM strategy, and building data-driven revenue engines.

Mark (00:31)

Welcome to Selling Intelligence. We're joined today by someone who might have had the honor and privilege of calling both a collaborator and a friend. Ray Reich is the founder and CEO of BenchMarket, the industry's most comprehensive source of B2B SaaS performance benchmarks with data from over 1,800 companies.

Ray is also the host of the AI to ROI podcast. He's a founding member of the SAS Metric Standards Board. And full disclosure, my co-author on data and diagnosis driven selling, Ray has spent decades as a go-to-market operator, having served as president of Simply Learn, CEO at Higher Mojo, SVP at Moment Feed,

and multiple times SVP market and sales and SaaS companies before founding Benchmark it roughly five years ago. And they have a singular mission, give every B2B reoccurring revenue software operator access to data driven benchmarks so they stop flying blind. Today, we're going, well, first off, let me welcome you, Ray. Thanks so much for joining us.

Ray Rike (01:43)

Thank you, Mark. Sorry that I'm so old that you had it took that long to read everything I've done.

Mark (01:47)

Exactly. Well, you know what? That's also a good thing because you've done some amazing things throughout your career and you're not that old. So, yes, let me tell you, let's talk a little bit about today and where we're going to go on this podcast. ⁓ What we'd like to do is tackle what might be the most important and for sure most underserved question in enterprise AI right now.

How do you actually measure the success of agentic AI programs? And even more specifically, what does that look like for go-to-market functions? We'll dig into what benchmark its data, what is it revealing, where the industry is setting the bar, and what separates teams that are generating real ROI from those stuck in pilot purgatory. Ray, welcome to Selling Intelligence.

Ray Rike (02:36)

Okay, excited to be here. Let's dive into it.

Mark (02:39)

All right, so Ray, you've been collecting SAS performance data for years, and now you're turning that lens on AI. From what you're seeing at Benchmark and in hearing on your podcast, what's the core reason most agentic AI programs never graduate from pilot stage? Is it a data problem, a change management problem, or something else?

Ray Rike (02:59)

I think it's an evolutionary problem. So I did some research with scale venture partners last year about what the state of AI and GTM adoption was. And what we found, Mark, was it was primarily individuals adopting generative AI tools like Clot or Chat GPT to help them with individual tasks. Things like maybe it was an image creation for an ad campaign. Maybe it was

email messages for outbound campaigns, et cetera. And the primary benefit was personal productivity. Hey, I can do this much more research quicker for each account, or I can generate this many more campaigns in a month. Now, when we get to process automation, which is really where agentic AI is going to be used, ⁓ we're just at the very beginning there, and we don't have enough experience

of actually deploying agentic AI to have a lot of success stories on a production basis, especially the enterprise, because most of the enterprises, and I'm talking about companies a billion dollars and over, I see an average of 20 or more simultaneous AI proof of concepts going on, and they're not really getting the focus of the centralized IT executive team, they're departmental.

Maybe it's just customer service or maybe it's just development with a code assisting tool. So my answer is I'm not seeing enough organizational wide enterprise focus on true agentic AI initiatives yet.

KK Anderson (04:32)

And Ray, welcome to Selling Intelligence. glad you're here. And I just want to jump on top of what you just said there. It seems like the concern would also be that they're trying to put some agentic AI solutions onto maybe processes that should not be automated or were not the right process to begin with.

Ray Rike (04:52)

of the most common mistakes, and I've kind of built this framework of the variables that help ⁓ indicate success and agentic AI deployments. But one is the data is a mess, right? Think about today for what, 20 years we've been talking about how bad CRM data is and have we cleaned it up? No, we still have shitty CRM data, but the SDR or the AE will say, well, that's not the right information.

Joe doesn't work at company A, Joe's a company B or that's the wrong title, right? So a lot of data hygiene, data prep needs to be done. So that's number one. And then to your point, we're thinking like old fashioned business process re-engineering. Well, yeah, maybe we map current state process and we want to map future state process, but we're doing it with a human first orientation and an AI first orientation is

fundamentally going to change each step along the way of that process. Quite frankly, you have to identify what data I'm going to ingest, use at the field level for each step, each granular task within that process. And we just haven't re-engineered the process to be optimized for AI centricity yet. And KK, I don't think we're going to until we have a lot of people who have one or two rounds of experience.

redesigning a process with an agentic AI first mentality, then then they can do it to third, fourth and fifth time.

KK Anderson (06:16)

and has that been defined how to have this kind of AI first mindset? Because we've had several people on the podcast talk about this, right? so, and I know I'm going a little bit off of kind of the agenda here, but I'm dying to hear your take on this. When you say AI first mindset versus just a traditional business process mapping,

You know, like we're all used to, we all learned in business school, but the data scientists have been doing for decades. Like, what does that mean? What is AI first mindset? talk me through that.

Ray Rike (06:54)

I wish I could sit here and say, I've done 22 of these. here's here's the playbook. So I don't have the playbook either. I have a lot of ⁓ signals of why it's so difficult. And one of the big signals was OpenAI, what about two plus months ago, formed the Frontier Alliance. And the Frontier Alliance, right, because they said, we're going to get into

KK Anderson (06:57)

Right. I know it's all new. No one knows. That's what I'm curious.

Mark (06:58)

Thank you.

Ray Rike (07:17)

agentic AI, not just generative AI, right? They first of all introduced, I think in January, the five layer cake of the OpenAI Frontier application map. And then they announced that McKinsey, Accenture, Boston Consulting Group, and maybe it was Ernst & Young, are now forming this Frontier Alliance to partner with OpenAI to help their enterprise customers deploy agentic AI. Why?

Mark (07:35)

Mm.

Ray Rike (07:43)

because it had been failing. A lot of the open AI projects to really do process automation using AI agents were not successful. So that's a signal, right? And as far as what's the secret, I don't have one other than try to find a consultant or a third party who's done two or three of these in the domain or the area. Let's say it's SDR.

Mark (07:58)

Thanks.

Ray Rike (08:07)

I want to automate the sales development representative function, right? Either you're probably should work with a software company that they specialize in that because they've actually ⁓ embraced and bundled domain expertise in their predefined agents, which then can be customized and or a third party consulting firm that have done it, that have made some of the mistakes and learn from their previous projects.

So that's my recommendation. Go with a bundled application that has AI agent specific to that process and a third party. And if you think about vertical AI, KK and Mark, right? That's why I'm so bullish and so are most VCs on vertical AI. Look at a Harvey in legal. They actually are pre-packaging workflows, i.e. agentic AI.

specific to the nuances and subtleties of that industry, including regulatory and compliance requirements. And they're making a lot faster headway into driving real return on investment than a horizontal, agentic platform that has to be custom designed for each customer. Did I answer your question okay, KK?

KK Anderson (09:17)

Makes a ton of sense, 100%.

Mark (09:19)

So

you bring me back to the concept you mentioned earlier around BPR, business process, free engineering, and how this isn't that. But it makes me get to a point of like, where is the value going to come from? And to me, I've always seen the value of companies be a part of

or partially driven, if not significantly driven by their competitive advantages, how they differentiate themselves in the market. What I love about agentic AI, when done right, it allows you to build a set of processes in a way that can't be replicated by any of your competitors. You can't just say, great, I went to HubSpot or I went to Salesforce,

and that's going to help me win against my top five competitors. Well, it's not because they all have Salesforce and in SaaS models, these systems weren't as flexible as now, know, agentic AI can be infinitely just, you know, infinitely just different than any other model that is out there today. So,

I like that connection back to the business process side and ensuring that you have people who know that business process as a consultant, ensuring that you really leverage all the expertise and the tribal knowledge out of the client side because they know how to make this work. And they probably are working within a model today that is not what they would have recommended if they weren't forced to do it.

because of the Salesforce process and what the system looks like or SAP or Oracle or whatever. take us a little deeper into that. Like, do you agree, I guess is the first question, like that these processes can now be more competitive advantages for customers and companies than maybe ever before.

Ray Rike (11:12)

Let me let me double click to the next level and KK I think you asked this question also. So in this framework, right. So one of the things because process redesign is such a critical part of this. Don't boil the ocean. Don't try to look at the entire customer acquisition, retention and expansion process. Let's get really focused and say, let's look at the outbound lead generation process.

Constraint right so you redesign that constraint process first with a I centricity you define all the data that you're going to need to use in your existing systems of record like your account data the contact data the Including title you're going to define all I need to bring in this third party data to enrich it So define what data you need at the field level?

Make sure you know where that data is coming from and how you cleanse and enrich. Think about the governance. I call this AI explainability, right? And you're going to need this, especially in regulated industries, but even if you're doing outbound sales for a software company, right? What's my government governance and policy? Who actually makes the determination that I should reach out to these people? Right? Is that in my ICP?

What do I do different with a non-ICP member? That doesn't sound like governance, but it is in a way governance. You also need to pre-define human interaction and engagement points. Am I really going to just have that SCR agent do everything or I'm going to have some points pre-defined where human interaction, including maybe reinforcement, maybe ongoing coaching and mentoring, learning of the AI agent.

You want to define those right up front. So you're prepared for that not only from a process perspective, but a resource availability perspective. Right. And then this is the major thing, KK and Mark, that I see so many people not doing is defining the criteria of success using metrics. What are my leading indicators? Maybe a leading indicator, since we're talking SDRs right now, maybe it is my

engagement per transaction or outreach, right? How many times does somebody respond to the email, et cetera? Maybe it's the conversion rate from a agent interaction to a true discovery call or a sales call. And ultimately, you're going to want to carry that all the way through. What are my measurements as measured by pipeline generated per dollar of agent invested or

dollar of new ARR generated by dollar of agent investment that I make, or agent investment plus human ⁓ reinforcement and learning. So you've got to really understand the leading indicators, the midterm, and then the long-term measurements that are going to impact the income statement. And I can go on and on about this, but I'll stop it here. If your CFO can't go to you and say you spent $100 million on AI agents last year,

What did we get for it? And if you say, we got 20 % better sales calls, we got 30 % better sales call. Nah, not good enough. maybe I got 20 % more ACV. I just did a podcast with Amanda Kalo, who's the founder of OneMine, which is a great sales AI agent. And they've compressed on average their customer cell cycle time by about 35 % and increased ACV by 25%. So

Those are real tangible things that you as the executive owning your AI initiative, you got to be ready to share with your CFO.

KK Anderson (14:43)

And you know, and I have this on my list of questions here to ask you because we read that Gartner is predicting 40 % of agentic AI projects are going to be canceled by 2027 because of exactly what you've described, lack of clear value guardrails, know, change management. Maybe they're focusing on the wrong or an invalid process. So there's going to be a lot of

ups and downs over the next couple of years as teams begin to roll out agentic AI. And so from your research there at Benchmarkit, and I know you mentioned Amanda as well and some of the KPIs that she's achieving, but what do you think the single leading KPI should be for a CRO? What should they be focusing on? To see if their program is on track to be successful or to fail? Where would you guide?

a CRO to look first.

Ray Rike (15:36)

Well, in the traditional world, I think one of the most important metrics is called the CAC ratio, cost-requisition cost ratio. And this is how much money do I invest in sales and marketing to get $1 of new revenue, ARR in the recurring world, right? And it's around $1.50, up to $2, depending if it's a higher ACV product you spend more for traditional.

recurring revenue software companies, SaaS companies. So $1.50 to $2.00. These new AI native software companies, it's 50 cents to a dollar. So it's one third to one half cheaper. if you're a legacy SaaS company or you're a CRO who is going into a AI native software company, you got to think about your CAC ratio with different benchmarks. The other thing that I would say

Mark (16:09)

Thank

Yeah.

Ray Rike (16:26)

It's outcome per dollar of AI investment. So an outcome might be new deals worth $50,000 per $25,000 of AI agent. So always be thinking about what's the input. It's my investment in the, used to be people and all the tools and stuff. Now it's more in AI tools and agents. And what do I get for that?

That is ROI when you compare the output and outcome received to the input invested.

Did I answer your question okay?

KK Anderson (16:59)

You sure did. Absolutely.

Ray Rike (17:01)

Now I will tell you there's another metric and the CROs don't need to be aware of this, but your CFO is going to start asking this because I don't know if you've heard it here first, but cost of goods sold is the new CAC. What do I mean by that? A lot of AI native software companies are seeing 30, 40, 50 % gross margin. What that means is for every dollar revenue, they're spending 70 cents

KK Anderson (17:15)

Mmm.

Mark (17:16)

So, so.

Ray Rike (17:28)

on delivering the product, paying for AI inference, playing for your cloud infrastructure, paying for your AI agents, right? Well, that used to be 20 cents. Well, I'm not, I can't be less profitable as a company. So what do need to do? I need to decrease my investment in sales and marketing, or it can be fancy and call it go to market, right? Well, in most SaaS companies, even larger SaaS companies, like, you know, Salesforce is 35%.

an early stage, it can be 50, 75, 100 percent, right? So you're going to have to take your sales and marketing or GTM investments down by an amount kind of equal to what your cost of goods sold has went up as a percent of revenue. So that's why I'm saying COGS is the new CAC.

Mark (17:53)

Mm-hmm.

you

I love it.

KK Anderson (18:09)

Heard

it here first. ⁓

Mark (18:12)

Yep,

I love it. Great, why don't we move over to topic two. KK, do want to kick us off there?

KK Anderson (18:17)

Sure. okay, you, have built in your illustrious career the SaaS industry's most trusted benchmark database. We've talked about CAC, Payback, NRR, Magic Number, and you're moving into AI measurement. You've talked about COGS as the new CAC, right? And so that's clearly one of the emerging KPIs that you're convinced are going to become standard benchmarks.

in the next 24 months, what else? What else is there to be focused on?

Ray Rike (18:45)

Right now, it's hard to get benchmarks for AI native software company productivity because they're too new, right? So even large enterprises who are implementing agentic AI, let's use a GE, for example, because I worked for GE for almost 10 years. They're not typically saying on their earnings calls, I invested five million in this AI agent and it saved me 20 million dollars. So.

The number one proxy that I've started benchmarking and I went back now 12 quarters is revenue per employee. Because as I become more efficient and require less human resources, hopefully that means my revenue per employee is going to be increasing. And hell, let's just look at it today. The median revenue per employee for a public SaaS company today is $395,000. The outlier is Palantir at about $800,000.

But if you look at Anthropic, they're around $3 million per employee. If I look at Cursor, I think they're at $1.7 million per employee. Even if I look at one of the least ⁓ efficient, Harvey, the legal AI, they're at $804,000 of revenue per employee. So revenue per employee is going to be something everybody needs to look at. I'd mentioned I want to start looking at the evolution of my COGS.

KK Anderson (19:39)

Wow.

Ray Rike (20:00)

I'm compared to OPEX. My token consumption, everyone's talking about when everyone. CFOs, I just did a state of AI pricing from the buyer's perspective. The number one issue for CFOs and CIOs is predictability of my AI cost. I have no idea how much it's going to cost because it's all over the board. I don't have enough history. So token consumption per outcome, because you're going to know your token cost.

That's going to become a new metric that whether you're a customer and you're paying the L.M. Ford or you're the head of R &D and you're using an L.M. in your product, you only need to know token consumption per outcome. And outcome achieve per agent interaction. Let's just say it's an inbound customer service call. Hey, for 100, my AIA agent is solving 84 % first interaction.

We used to call that resolution rate in the old human days, right? And then the last thing is cost per outcome in an agentic AI world. I resolved that customer service call. It cost me 50 cents last quarter per resolve call. And I spent $1.80 for human resolve calls. So cost per outcome is going to be important. When I say cost, start with your AI cost.

and then you can look at your fully loaded custom.

And I'm working on an entire AI metrics framework for this that I'm going to be publishing hopefully in the next month.

Mark (21:19)

I love it.

Excellent. All right, well, Ray, let me bring you back into the days of you and I starting all our research and all the pre-work for data and diagnosis driven selling. So I hope that doesn't cause you to develop a Twitch or anything like that, because as you and I both know, that was hard work. ⁓ So, but let's, you know.

What we really saw right up front is, and we really pushed hard on this, is the idea is you can't manage what you don't measure. And you need external benchmarks, not just internal comparisons to know if your metrics are actually good. You know, it's great. It's great to be able to say, improved this process by 20%. But if you were 45 % behind most of your competitors before that,

That 20 % still has you on the back of the pack. So how do you bring that same philosophy to measuring an agentic BDR or an AI-powered deal coaching agent? And we've touched on this, but what's the equivalent of a CAC payback for agents and the entire investment?

Ray Rike (22:33)

Well, I would start with let's make sure you have your go to market measurements in place, because honestly, we've been talking about these for years. Less than 50 percent of companies have great GTM analytics. ⁓ So things like cost per dollar a pipeline, less than 40 percent of people are measuring cost per dollar a pipeline. So make sure you do that and look at your current state before AI and then measure it post AI introduction. Right.

So cost and I'm talking right now, I'm looking very specifically at the customer acquisition process. So cost per dollar pipeline before and after cost per dollar of new AR before and after when rate before and after your average and your contract for you before and after. Cause those are all going to be hopefully much better with AI to your point, Mark. I mean, let's use outreach. Everybody had to have a sales engagement platform, right?

How many companies actually said, well, after I invested $1,500 per SCR, I had a better conversion rate or a lower cost per dollar of acquisition? Nobody. You're going to need to do that with AI. So that's my first thing. The second thing, which haven't been defined yet, but I'm working with some VCs on this right now, is AI specific customer acquisition efficacy. So I'm looking at agent costs per opportunity.

Agent cost per dollar pipeline, agent cost per dollar of new ARR, agent dollar per cost of retained ARR. So you can think about your gross revenue retention and agent cost per dollar of expansion ARR. Now I'm projecting that we're going to be using agentic AI a lot in those processes or sub processes. And by the way, that's the other best practices.

When you design a process, it's better to design a lot of subprocesses underneath so you don't have one large unwieldy AI agent. You have a lot of subprocesses that you have different people auditing and evaluating.

KK Anderson (24:27)

All right. Let's dig into that design a little bit. So walk us through, and I know this is new, as we've said multiple times for so many of us, what a well-instrumented, agentic, you know, GTM for the purposes of our audience, pilot could look like. You just gave us one great clue, which is, you know, don't make monster agents and, and, and to break them up so that you can, you know, be more agile and

and predictable with those. You've walked us through some baseline metrics that you want to set before you launch, things that haven't necessarily been done in the past with programs like our outreach launches over the years. But what does the pilot to scale gate look like? And how do you separate the agent did something from the agent created revenue attributed value?

Ray Rike (25:15)

Well, let me go to the baseline metrics first, KK. So I think I have four levels of metrics I like to see in any initiative, including the Gentic AI. So one is a productivity metric, and that is outputs per time, you know, whether it's outputs per human hour, outputs per day or time spent per activity.

That's what we've been measuring for the last year and a half and AI in marketing and sales. But that's what then you have effectiveness. How effective is my AI enabled process going to be? ⁓ How many desired outputs am I getting versus the inputs? Hey, for every hundred emails my agent sending, how many meetings do I get set up? Right. Then there's efficiency. That's the cost per outcome. And then there's

actual ROI, which is outcome value divided by the AI investment. So productivity, effectiveness, efficiency, and ROI. I'm not going to go into detail what that's like for just an SDR program, but at least it gives you a framework and a layer approach to designing those four layers of metrics you need to measure.

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

General Episode Description:

In this continuation of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Sabrina Parsons, CEO of Palo Alto Software, to explore the human side of leadership, trust, and AI adoption in today’s rapidly evolving business landscape.

Sabrina shares her perspective on diversity in leadership, the realities of building a career as a working parent, and why creating an “integrated life” leads to stronger teams and better business outcomes. The conversation also dives into how trust has become the ultimate differentiator in an AI-driven world, and how companies must rethink how they show up as human, credible, and authentic.

The episode closes with practical insights on how leaders should approach AI, where it delivers real value, and how to use it as a tool for thinking, not replacing human judgment. 

What You’ll Learn:

• Diversity as a Competitive Advantage: Why different perspectives lead to better decisions and stronger organizations.
• The Integrated Life Approach: How flexibility and trust improve retention, loyalty, and performance.
• Human Trust in an AI World: Why authenticity and real human interaction are becoming the new moat.
• Practical AI Usage: How to use AI for preparation, critique, and efficiency without losing credibility.
• Leading Through AI Disruption: How leaders can guide teams to experiment with AI while setting the right guardrails.

Key Topics:

• The impact of diversity and inclusion on business performance
• Supporting working parents and creating flexible, human-centered workplaces
• The myth of “doing it all” and redefining success in leadership
• Why trust is harder to earn in a world of AI-generated content
• Real vs artificial experiences in customer interactions
• The role of influencer trust and community platforms like Reddit
• Using real people and authentic content to build credibility
• Where AI overpromises and where it delivers real efficiency
• AI as a tool for critique, feedback, and preparation
• Understanding how LLMs perceive your product and brand through consensus signals
• The shift from SEO authority to AI-driven consensus and reputation

Guest Spotlight: Sabrina Parsons

Sabrina Parsons is the CEO of Palo Alto Software, makers of LivePlan, and a leader with deep experience across sales, marketing, and executive leadership. She is a strong advocate for women in leadership and brings a unique perspective on building resilient organizations, fostering trust, and navigating multiple waves of technological change. 

Resources & Mentions:

• Palo Alto Software
• LivePlan
• Concept: AI trust gap and authenticity in digital interactions
• Concept: Integrated life vs traditional work-life balance
• Concept: Consensus-driven reputation in AI search and LLMs
• Book: Into Thin Air by Jon Krakauer
• Book: Superintelligence by Nick Bostrom

🎧 Listen now and follow Selling Intelligence for more insights on leadership, AI adoption, and building trust in modern go-to-market teams.

Mark Petruzzi (00:31)

So Sabrina, you're a strong advocate for women in sales and leadership. In your experience, what do women bring to the sales equation that often gets undervalued? And what does the data actually show?

Sabrina Parsons (00:43)

Yeah, that's a great question. I think that we've, well, hopefully people have, there's been a lot of data over the years that just shows a few things, I know these days, you know, talking about diversity is, you know, a hot topic and not something everybody wants to hear. But if you actually go and look at the data,

Any time you're bringing different viewpoints in, it actually turns out the data shows that that's really good for an organization. That when you have six people who all come from the same background, who went, you know, got similar educations, have the same experiences, you're missing out. You're not getting some of these other alternate viewpoints that...

could actually give you different insights and make your company better. So from that perspective, be it women or people of color, people from different cultural backgrounds, every time you have different people in a room, you're gonna win because they're gonna bring different information to the table. And then I think that, you know.

Even though it's 2026 and I wish we were in a different place with women in leadership, the reality is that we still live in a world where, you know, there aren't as many women in technology. ⁓ And the numbers just show that and there aren't as many women in technology and leadership. And so women who are there and have made it all the way through, particularly in a leadership role, have probably worked really hard to get there.

and probably have some really good insights. From my perspective, one of the things that I think is most powerful and I think can bring a lot of value to a company is recognizing particularly working moms and working parents, but as a working mom, I'm not a working dad, so I won't talk for working dads, that

You know, there's a lot of very motivated, super smart women who want to work for a place. They don't want to have to jump from job to job to job. And if you can give them an opportunity to stay in one place, to continue to move up, if you can be the kind of boss that recognizes that there's going to be some peaks and valleys that a woman with young kids might have some

issues with my kid is sick, my kid is going to the doctor, but at the end of the day, if you help them with flexibility, not making their job easier, not giving them less job, but giving them the ability to be flexible and do their job when they can, you're actually going to retain women longer. They're going to be more loyal. if, you know, loyalty and retention, we all know is, you know,

There's nothing better for your bottom line, particularly in software and tech sales where people are your biggest asset.

KK Anderson (03:36)

You preach into the choir. Could not agree, could not agree more. I would love to hear about some of your, know, pursuits with women in sales and leadership and would love to, AGS would love to support you in those as well. Really cool.

Sabrina Parsons (03:38)

Thank you.

Mark Petruzzi (03:47)

for

Sabrina Parsons (03:48)

you. I appreciate that. it's been a really, it's interesting. I think when Mark and I first caught up prior to the podcast, we talked about it a little bit, but being a Gen Xer and having grown up in the 80s and early 90s, I am of the generation that watched

the women's lib movement, And watched all these really strong women come out of the 70s and early 80s, the Gloria Steinmans, This very powerful.

movement and we were kind of fed this idea that like you can do it all women can be super women and you can do it all and I bought it I was like I am gonna be superwoman I am gonna do it all and didn't really think anything of it until I had my first child and that's when like the brakes come on and you're like wait what what does this actually mean?

And you know, just this reality that like, wait a minute, this is a myth. Like you can't do it all, right? And there's a reason why very successful men were never expected to do it all. And yet we still have this place in 2026 where there's still a lot of judgment with women as mothers, like, you know,

Why aren't you there at drop off? Why aren't you there at pick up? Somehow you're a bad mother and all these kind of, know, guilt woven into, you know, being this working parent and how do you deal with it? And what does that mean? And as I had one child and then two and then my third as I was running the business for me really understanding that my

KK Anderson (05:14)

Guilts.

Sabrina Parsons (05:32)

take on this, my approach is very much about leaning into who I am, not leaning into the structure that exists today, which I think a lot of us were still being told even 10 years ago when Sheryl Sandberg came out with her lean in ⁓ kind of autobiography, it was all about leaning into the current structure, right? It wasn't, wait a minute, does that actually work? And for,

KK Anderson (05:54)

Mm-hmm.

Sabrina Parsons (05:59)

from for me what's worked and what I like to mentor and what I like to, you know, really.

do here at Palo Alto Software is to say that doesn't work and I have what I call an integrated life and my kids are older now and I've got two in college but when they were little that meant bringing kids on business trips with me and my mom would come with me. That meant kids in the office after school or on a snow day. It meant having appropriate places in the office.

so that they could have coloring books and homework areas. you know, I mean, we often laugh because we have a very old, ⁓ I think it's a Nintendo PlayStation, but it's a very old one. I don't even know if it's called a PlayStation, but it's a very old one where it isn't actually wireless. The console that the game console, like the player that the kids, the controller that the kids play with is actually plugged into the gaming.

console. Well, kids love the old thing ever when they come in. but they always break it because they keep unplugging the controllers because they're like they're charged. And it's like, no, these are old school. And they don't even get that, which is always funny. I mean, from my perspective, that's what I've done for myself and for people here in the company is to say,

KK Anderson (06:57)

Now

Super Mario Brothers.

Mark Petruzzi (07:11)

Hahaha

Sabrina Parsons (07:20)

I'm not going to pretend you don't have kids. I'm not going to make you apologize for having kids. I'm also not going to pretend that if you've got a kid who's sick, that you're actually going to be at the office doing any sort of productive work because I made you come in. Like, okay, you can come in and you're not going to like me and you're not going to be productive and you're going to be worried about your kid. And so why don't we treat people like humans and say, you know what, your kid is sick, go home.

Because if I do that, that person is going to work harder for me and be more loyal and be happy. And if you're happy, you're more creative and you're more innovative.

KK Anderson (07:58)

You know, in a weird way, like it's like a, whole world is coming full circle and our, our humanness, even in this AI world, mean, specifically there are humaneness is now our uniqueness. No, which is wild. And, and so, you know, kind of going back to that, how sales and marketing teams are using AI, you know, it can.

You know, we've all seen it simulate preparation and personalization. mean, we were on vacation last week and we took a family picture of the four of us, my husband and my two kids and myself. And we're sitting at a table and there were, you know, dirty dishes in front of us. And my husband just, and his AI, and next thing you know, there's no dirty dishes in front of us. Right? And then, you know, I sent the picture to my mom.

Mark Petruzzi (08:40)

Ha ha.

KK Anderson (08:44)

And she was like, that's so great, whatever. And then my husband goes and sends it right back and we're all in like, you know, he's wearing a tuxedo and I'm wearing a ball gown and whatever. He's like, you didn't get invited to the wedding? And you're like, just making it like in five seconds, what? Right? And so, you know, we see that AI can simulate all of these things, right? And there's just, you know, the sky is the limit, the videos, the empathy, the personalization, that it's hard to know. So like,

And building off the conversation that we were just having around women in particular, like is, is humaneness like the new moat? that what, you know, what's your perspective on that?

Sabrina Parsons (09:18)

I mean, that's a great question. I think it is. I mean, it's been interesting too, because not only is it trying to figure out how do you integrate AI into how your employees are using it so that they're using it appropriately and it doesn't come out like all of our communications are robots, right? So like the humanness of interactions. One of the things we do is right now we don't have chat bots. It's all real people.

And it's all real people that we employ here in our headquarters. They're not outsourced because of that ability to say we are humans and real people. We're not just bots. ⁓ I think that's really important. I think that the trust that people need, I think they always needed trust, but it was easier to get their trust. And now it's like, because we've all seen,

pictures that are different. We've all seen videos that are AI. We've all seen essays that are written with purely AI. I think there's that constant question, is this real? Are you a human? Is this true? And so anything that you can do to help alleviate that fear of what's a fact and what's not a fact.

Right? Even now, like we talk about it a lot, like when you think about Instagram and you're scrolling through, most of us have probably made the mistake of that product that you're like, this is awesome. It's just for me. And then you order it and you know, it was supposed to be like a dress that fits me and it's a dress that fits a doll. You've heard all these stories. So I think all of us now know, like you don't trust that on Instagram.

Right. This is why influencer marketing is so big because you do trust the person, right? You don't trust the company and the random product. You do trust the person. And so I think that's where we're back. Like, and how do you do that beyond influencer marketing? Right. Why is Reddit such a huge resource for people?

KK Anderson (11:01)

trust that person.

Sabrina Parsons (11:13)

because people perceive that Reddit is moderated, that people get kicked out of Reddit if they're bad and they do bad things. And so somehow, at least at this point, people trust that it's real people on Reddit. That's why people go to Reddit.

KK Anderson (11:27)

And so how are you using that specifically within your team?

Sabrina Parsons (11:29)

you

we, I mean, first of all, it's changing all the time, but, you know, we really try to emphasize in a lot of our educational videos, we use, you know, I'm in a lot of them, real people at the company, people that, you know, we have personalities. we've just recently even started to put out some blooper videos so people can see us as real people that we aren't just AI bots.

KK Anderson (11:54)

and not the radio.

Mark Petruzzi (11:56)

Yeah.

Sabrina Parsons (11:57)

And really leaning into, you know, the way that we have all figured out how we trust things. And I think that's really important when you think about and work with sales teams is to really get people to reflect like you're out there, you're a consumer, you know the things that you won't trust. You know the things that are kind of that gray material you're not sure. And you know the things that you do trust. And so,

the more that you can get your own employees to embrace their own experiences and bring those, I think that brings a lot of value.

Mark Petruzzi (12:30)

Well, Sabrina, we should really put out some selling intelligence bloopers because there's been some big ones over the years, but probably more me than anyone else. So maybe I'll hold back on that one. Never blooper. All right, let's move into our final topic, leading through this world that we live in today that is just rife with...

KK Anderson (12:42)

No.

Never, never been a blooper.

Mark Petruzzi (12:57)

AI disruption everywhere. So as CEO, you're managing AI disruption on two fronts, inside your business and in the general market as a whole. Where have you found real efficiency gains and where has AI disappointed you or just over-promised along the way?

Sabrina Parsons (13:15)

that's a great question. I mean, I feel like AI is constantly ⁓ over-promising. I think that's a constant of like, you know, always thinking and I think everybody else thinking how much AI can actually do. It's been an interesting thread because I have two kids in college right now and working with them for them. So my oldest is a senior, AI did not exist when he was in high school.

Mark Petruzzi (13:20)

Ha

Sabrina Parsons (13:39)

and didn't even exist the first two years that he was in college. It's really just been the last two years. ⁓ And kind of working with him on how do you use it? What's the appropriate use? How is it beneficial to how you study? How is it not beneficial?

KK Anderson (13:42)

tomorrow.

Sabrina Parsons (14:01)

He's in a situation where he knows people where entire classes have been caught for AI and how do professors have to rethink things. So I bring it up because I think it's important for us to see as people are coming out of college what their experiences are going to be. So you're back to Blue Book essays in colleges right now.

But it's all kinds of issues, right? Kids can't even write because they've been on computers for so long. no one did. Like, if you want to puzzle, you know, a Gen Z person, write something in cursive. Like, it's like code. Yes, they didn't learn cursive. They don't.

KK Anderson (14:28)

Well, my kids never learned cursive.

Sabrina Parsons (14:40)

They don't actually, they can't write very quickly or write very well. And so that's been an interesting experience.

KK Anderson (14:47)

line that's gonna show up under the blue book and say, you stop.

Sabrina Parsons (14:49)

exactly. So I think that's an interesting thing to think about as you think about where, you know, how people are going to be coming into the workforce and some expectations. The fact that people find that like, if you've written it down, it's somehow authentic and right, which is an interesting idea. But yeah, I mean, I think for me, as we look at these AI challenges, the

biggest thing and what I tell employees and what I tell my kids is you actually just have to be using it all the time and constantly challenging yourself on was that the right use? Did I get what I needed out of that or did it lead me astray? And if it did, why? And maybe that's not the right use for it. You know, so like learning where those guardrails are today and then being open to the fact that

those guardrails will probably change in two months. And so very much encouraging everybody to not be afraid of it, experience it, but with your eyes wide open.

KK Anderson (15:48)

one of the things that, one of the ways I love to use AI is just asking it to poke holes in my proposals and in my approach. if you're a CFO or a board member looking at this proposal, tell me all of the ways that it sucks, quite frankly, right? And then just making it bulletproof from there.

Sabrina Parsons (16:06)

that's, mean, it's one of the ⁓ ways that I've really worked with both my college kids using AI appropriately and not writing their essays for them, but to actually say, hey, this is like a one-on-one tutor who can give you critical feedback.

on your essay, in the past this would be like if I paid for a writing tutor to like read your papers and give you feedback, this is how you should use AI. You don't want to use AI to write your paper because you're going to get caught and then when you have to do the blue book you're not going to know it, but it can be used to give you that critical feedback and I think within your company as well, right?

Mark Petruzzi (16:34)

Mm-hmm.

Sabrina Parsons (16:49)

Don't have it write your proposals, have it critique it. Don't have it write all your emails, have it help you theme them or schedule them or those things that take a lot of time but don't necessarily need the human element.

KK Anderson (17:04)

And so what would you do to kind of build off of that? Like what would you say to a founder or a CRO who's listening right now? What would be the first thing you would do to change how they're selling or approaching sales right now using AI?

Sabrina Parsons (17:19)

Whoa, there's so many things. You know, I think that really living in all the LLMs to see how the LLMs are perceiving your product. I think it's really important because people are going to LLMs to research. And so how is your product being portrayed? How's it coming up?

KK Anderson (17:35)

Uh-huh.

Sabrina Parsons (17:43)

If you don't know that, then that's a problem. And a lot of times people don't realize and that is really important. You need to be, and there's tools that can help you ⁓ kind of gauge that and see how many times am I showing up? Is it in positive ways? Is it in negative ways? ⁓ LLMs are referencing different kind of data. It used to be that, you know,

the way you showed up and the way customers found you had to do with your search engine optimization. And while there was always all this kind of behind the scenes, Google's not going to tell you if you were really an SEO expert. You knew. And there was the next Google release. And people kind of knew what they had to do to appear in the right places.

and Google would assign page ranks and they would say, that HubSpot is great at this, they are the expert. Well, that's gone now. The way that now, know, truth is assigned is through consensus. It's not because we've chosen one thing and said that's the expert piece, it's through consensus. So the LLMs are going out there and seeing.

How are people talking about you on Reddit? Where are your reviews? What are they saying? What are the common threads? And they're finding that consensus. And then that's how they're figuring out which solution to recommend. And so I would say that's the number one thing is really understand how are you being portrayed when people are looking and asking questions. And then keep doing that because it's going to continue to change.

KK Anderson (19:21)

and then use AI to get you into more places. Right, yeah. So Mark, what do you think? Do you wanna take us to rapid fire?

Sabrina Parsons (19:24)

Exactly.

Mark Petruzzi (19:28)

Sure, let's kick it off. Perfect. So Sabrina, thanks for all these great observations. So RapidFire goes right into first thing you have ever sold.

Sabrina Parsons (19:37)

I was thinking about that, I was like, oh wow, was it like a literal lemonade stand, which I think it was. But I thought what I really talk about was when I was in high school, my junior and senior year, I worked at a yogurt shop in Palo Alto right across the street from Stanford campus. And...

I actually became at the ripe old age of 17 the manager of the yogurt shop because it was run by two Stanford MBAs, one of whom her dad had bought her the yogurt shop.

that she could have experience while she was an MBA and she really didn't want to do it. And so I ended up being like the manager of the yogurt shop doing all of the decisions of like, what are the flavors? Which ones do we put next to each other? Understanding like, if I put these two flavors together next to each other, we sell more. And then at the end of the day, I don't have to clean the machines in the same way and it's better for me.

KK Anderson (20:24)

the house.

Sabrina Parsons (20:36)

Europe.

KK Anderson (20:36)

You're leaning

on that experience every day,

Mark Petruzzi (20:39)

Well, Sabrina, have, I mean, think about that. You were destined to be a CEO because you had two Stanford MBAs tell you you were management material at 17 years old. It's awesome.

KK Anderson (20:50)

Hahaha

Sabrina Parsons (20:52)

Well,

I think it was by default more than else, but I definitely took it and ran with it.

Mark Petruzzi (20:56)

Haha

KK Anderson (20:58)

If you

were like, I'm going to Princeton. A leader, you know, a leader or communicator that you admire.

Sabrina Parsons (21:00)

I'm sorry.

right, I thought about it a lot and I feel like right now I have to say I love Eileen Gough. If you watch the Winter Olympics at all, ⁓ you know, this phenomenal athlete woman and her leadership and her ability to talk to the press about her experiences.

She was embroiled in some controversies because she was raised in the Bay Area, a Chinese immigrant mom, and at these Olympics she decided to compete for China. Very smart, very well-spoken, crazy accomplished athlete who had to deal with a lot of questions that I think women often have to deal with. They're in this place where you're like, she's like the most decorated freestyle.

Olympian and you're going to ask her these questions and I just I love how quickly she responds, how she doesn't apologize, how hard she works. Yeah, so for right now I'm going to say Eileen Gough because I think she's earned it.

Mark Petruzzi (22:08)

Very cool. So one practice every sales leader should adopt this quarter or even better that today.

Sabrina Parsons (22:14)

One practice, I would say just embrace AI, all of it. Do not be afraid of it, embrace it, figure out all the places you can be using it because it is the future and the more you know, you're gonna have an advantage.

KK Anderson (22:29)

It's like the, you you can just see the lower third, the more you know, dot, dot, dot, right? my favorite question, advice that you would give to your 21 year old self.

Sabrina Parsons (22:34)

Exactly.

You know, I think I would go back to that, my 21 year old self to say, you don't have to do it all and that's okay. That you actually can think about what you love and focus in on it and you don't have to be everything for everyone. ⁓ That's what I would tell myself back then.

Mark Petruzzi (23:01)

and your favorite.

Sabrina Parsons (23:02)

It would have reduced

stress in my late 20s and early 30s, I think.

Mark Petruzzi (23:06)

for sure, your favorite non-business book.

Sabrina Parsons (23:09)

I do a lot of reading. was really trying to think about, because it depends on when you ask me, but I think I will go back to, I love Into Thin Air. I love that book. I'm an avid outdoors person, do a lot of backpacking and skiing and mountain biking and.

water sports and ⁓ I'm fascinated by the story by people who climb Everest, but I'm also fascinated by the decision making and how this whole disaster on Everest actually happened. ⁓ It's just, and it's such a well-written story.

KK Anderson (23:49)

definitely we need it.

Mark Petruzzi (23:50)

Yes, and

Sabrina and I bonded right from our first discussions on rowing as well. we both had children who were rowers and ⁓ we both had done some rowing over the years as well. I love it. And hopefully you get out on the water more often than I do, because I just seem to always be ⁓ on a rowing machine, not an actual

Sabrina Parsons (24:15)

Yo!

KK Anderson (24:15)

say on

Mark Petruzzi (24:15)

well, that's for sure. I'm going to start rowing on our podcast. That's what I'm going to do to get a little bit of multitasking in. So Sabrina, thanks so much for taking the time with us today. Thank you just for all your great observations and your insights. Thank you, KK, and thank you to our wonderful audience for being with us here every week.

You are all amazing.

Sabrina Parsons (24:38)

Thank you guys, this has been lots of fun.

KK Anderson (24:40)

It's a lot of fun. Thank you, Sabrina.

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General Episode Description:

In this episode of Selling Intelligence, Mark Petruzzi and KK Anderson sit down with Sabrina Parsons, CEO of Palo Alto Software, to explore how AI is rapidly reshaping buyer behavior and forcing a complete rethink of how companies sell, market, and build trust.

Sabrina shares how search behavior has fundamentally shifted toward AI-generated answers, reducing click-throughs and changing how buyers consume information. She explains why this creates new challenges in clarity, especially around the “build vs buy” decision, and why sales teams must now work harder to guide buyers through uncertainty.

The conversation also dives into the growing importance of trust, the evolving relationship between sales and marketing, and how organizations can use AI effectively without losing the human connection that ultimately drives decisions. 

What You’ll Learn:

• The New Buyer Behavior: How AI-driven search and LLMs are reducing clicks and changing how buyers gather information.
• The “Muddy Middle” Problem: Why AI has blurred clarity around what buyers actually need and whether they should build or buy.
• Selling in an AI World: How sales teams must adapt when buyers are more informed but also more uncertain.
• Sales and Marketing Alignment: Why tighter collaboration is critical to address buyer confusion and build trust earlier.
• Using AI Without Losing Trust: Where AI enhances the sales process and where it can damage credibility.

Key Topics:

• Shift from keyword search to question-based search behavior
• AI-generated answers reducing traditional website traffic
• AEO vs SEO: optimizing for AI engines, not just search engines
• Buyers arriving more educated but with incomplete or misleading context
• The disruption of the “why change” conversation in sales
• Build vs buy vs AI: a more complex decision landscape for buyers
• Marketing’s role in answering buyer questions upfront and building trust
• The risk of poor AI experiences damaging brand perception
• Using AI for preparation versus customer-facing interactions
• Turning AI efficiency into better personalization and human engagement

Guest Spotlight: Sabrina Parsons

Sabrina Parsons is the CEO of Palo Alto Software, makers of LivePlan, a leading business planning and financial forecasting platform. With experience leading both sales and marketing, she brings a unique perspective on how companies build sustainable revenue engines. Sabrina is also a strong advocate for women in leadership and technology, and has guided her company through multiple waves of technological change. 

Resources & Mentions:

• Palo Alto Software
• LivePlan
• Concept: AEO (AI Engine Optimization) vs traditional SEO
• Concept: Build vs Buy vs AI decision-making
• Concept: Trust equation in modern sales
• Example: Customer experience with AI chatbots (Oura Ring case)

🎧 Listen now and follow Selling Intelligence for more insights on AI, modern buyer behavior, and building high-performing revenue teams.

Mark Petruzzi (00:31)

Welcome to Selling Intelligence. Our guest today is Sabrina Parsons, CEO of Palo Alto Software, makers of LivePlan, one of the world's leading business planning and financial forecasting platforms. Sabrina has been the helm at the company, this company that has over four decades of history leading through multiple waves of technology disruption.

Before stepping into the CEO role, she ran both sales and marketing, giving her a uniquely integrated view of how companies grow, how buyers decide, and what it really takes to build a revenue engine that lasts. She is a passionate advocate for women in leadership and technology, a thread we'll weave in throughout today's conversation as well. So three topics we'd like to cover with you and with Sabrina today.

how AI is reshaping buyer behavior and what that means for how you sell. We've covered that many times on our podcasts already, but we really are excited about Sabrina's perspective and her experiences in that area as well. The second one is why the human element, why trust, story building and storytelling.

And relationships are the only sustainable differentiators that we really can build in today's business climate. And third and finally, what sales and marketing leaders must do differently today and how that integrates into the CEO role and also the board of directors. What can the boards be doing to help their sales and marketing leaders evolve in the way that they need to?

Sabrina, welcome to Selling Intelligence.

Sabrina Parsons (02:13)

Great, thanks Mark, I'm really happy to be here.

Mark Petruzzi (02:15)

All right, let's dive right into topic one. ⁓ Topic one, AI and the changing buyer. So Sabrina, you've described the buyer behavior online as having shifted more dramatically in the last 18 months than in the prior decade. What are you actually seeing? Why does it matter so much for how we sell and how we need to sell in the future?

Sabrina Parsons (02:35)

that's a great question. And I'm pretty sure as soon as I start talking, all the listeners are going to say, because we've all experienced, I think, a very similar change in how we interact online. In the last 18 months and even more so in the last 12 months, we have all seen the way our interaction on search has changed.

particularly with these new AI synopsis that you see at the top of the page.

And while there will be articles and sites that are cited in this AI, what's happened is that fewer people are clicking through because they go, they have a question, they type it into Google, and they're typing questions now into Google. used to be that we would type keywords, right? And then you'd see what happened. And now people are typing questions into Google and then the or whatever search engine, but, Google

still probably the most used. And then what they're getting back, it scratches the itch for the most part. And so they're getting this information and then maybe they're moving on, right? So that's one huge change in behavior and we're all seeing it, right? You have interacted and chosen not to go forward because your question is answered or you found what you need. ⁓ So that new way that we're getting...

all of this information displayed, it means fewer click-throughs, and so companies that are selling have to deal with that. The other thing is that search engines are really leaning on and preferring

when you can put content out there that actually gives answers, because that's what people are looking for, right? It's how do I, those types of questions, how do I do this? How do I sell? How do I market? How do I, all of these how do I's, that's what people are doing. ⁓ And then the other thing that I think we all know is that people are for the most part, very familiar with LLMs, right? With all these AI chat box. And many people

are using them instead of search engines, which I will say if you are, think about it because it's a very expensive search engine. It uses a lot of energy to do an AI query. And every time we're using

AI when you could just use a search engine, we're wasting energy. So it's something that, you know, not everybody always knows, but there's an appropriate use for AI, but it doesn't matter, right? Behavior has changed, and we're all trained now in this new behavior. And it feels like it's just been like instant, like in the last 12 months, because changing behavior used to be a huge thing, right?

From a sales perspective, people like you would teach salespeople how to help change behavior. And like we have seen behavior change just so quickly this time around.

KK Anderson (05:23)

overnight. so how does that change how we sell?

Sabrina Parsons (05:27)

So that's a great question. I mean, it has to, right? Because when you're selling, used to be that your marketing team could just make sure like, are search results going to come up on first page versus second page? And if not, let's just buy pay-per-click ads and make sure that they come up.

in those results. And it's like that doesn't work anymore. So a lot of what you have to do in terms of how to change how you're selling is address this new way that content is consumed. So you really have to think through, am I providing answers? And it's not just content that fits keywords, right? It's content that's actually giving answers. And then in the way you format your content, if you want

to be AEO forward, right? It used to be just SEO, search engine optimized. Now we're AI chat bot optimized. If you want to be AEO forward, you really have to rethink how you're putting your content together, what kind of sort of synopsis you have that's easy for AEO to grab.

Do you have the right FAQ schema? It's just a, you know, it's a different way that the LLMs are crawling through information. And so you just have to make those changes.

KK Anderson (06:46)

Right. And I'll just add to that. It's all about that trust equation. Right. And so that's what our prospects for all of us, you who are running businesses and running sales organizations, they're all looking to, they're looking for value and that value is what's driving trust. And that trust equation ⁓ is going to what finally converts. And so when your buyers do get on the phone with you finally,

They're going to be so much more educated. going to know so much more. They will probably have an LLM, create a table stack ranking, the three top options to solve their problem. And so they're going to be so much more educated when they get on the phone with your team as well, which is another, when you get sort of that sales process behavior that it just, all the changes at top of funnel are filtering down.

into that as well. Everything changes.

Sabrina Parsons (07:37)

and I think that's important, right? And salespeople know this because they're getting confronted. It's like they used to have their process, the information, they've done their homework on the prospect. And now you have to be prepared to understand what are they seeing in chatbots, what is coming through, what kind of, because the other part is that it doesn't necessarily, it

There are opportunities to help someone understand that the landscape may be more nuanced than the AI LLM has put out there, right? But you have to do your homework ahead of time. You have to understand what they're seeing, how much more research, so to speak, they think they have, and then how do you address that, particularly, KK, like you said, just from that trust side of the equation.

KK Anderson (08:25)

And Mark, I'll give the next one to you here in a second, but just to kind of cap that off, it makes the concept of selling to your customers' outcomes even more important because it's not necessarily about educating them on your product or your service or what you're doing. It's how do you take that, how do you take what they think they know or they don't know or the absence or the void and convert that into something that's important to them, which is the outcome that they're trying to achieve.

Sabrina Parsons (08:50)

Exactly.

Mark Petruzzi (08:50)

Excellent. So Sabrina, at AGS, we talk about a two-sale mentality. The first sale is just why change. The second sale is why you and why now. If you're not accomplishing both of these processes within a selling model, then you're not winning the deal.

You know, there are companies that are really good in understanding clients, understanding why they want to change, but they're not as good on the, you know, differentiating themselves in the market. There are even more companies that are the other way around that really just don't spend enough time understanding, you know, what are the risks here? Why change it all? And their pipelines get bloated and then get very, very lean quickly.

because they have a lot of clients that just say, or prospects that just say, I don't need to change and I'd rather not write out another $3 million check. So where does AI driven buyer behavior disrupt that first sale the most in your opinion?

Sabrina Parsons (09:56)

You know, I think number one, it's disrupting in terms of what that client thinks they need help with, right? It was very clear. think there's now, it used to be very clear, this is what my tool might do. And I very much understand how I can help the client. And the client...

for the most part understands what they need and how you can help them. And I think AI has blurred all the edges, right? As we're all learning how to use it, it's blurred all of that where it's like, well, do I need that tool? What can AI do for me instead? Should I change my process and adopt this new tool or do I just need to get better at prompts for AI or should somebody in my organization vibe code something and do

something that's more internal and specific to us. And so it's almost like the buy birth versus build is a much murkier, muddier question, right? Because, and it doesn't always mean that the tool isn't actually the best thing for them. It's just that your buyer is now.

confused and wondering like, maybe I don't need the tool, maybe AI can just do it for me. And so I think we've just that clarity that used to be a little bit easier with those two things like, you know, what do I need and how does your tool help me? Like that's just muddy now. It's now like, I don't know what I need. Do I need your tool or do I just need, you know?

some internal AI expert or maybe I need both. And so I think that

it's just made things muddier. And so the salesperson has to help that prospect understand that and see and clarify and then show them those benefits of like, you don't want the pain of learning all of this. We've got you. We have done it and we've integrated this into our tools. So you get the best of all the worlds without having to figure it out.

KK Anderson (12:00)

really insightful. You are spot on with that. so you and you've kind of seen this from both the market. I know the world is changing every day, every month. It's different than it was yesterday with every recording and every time we publish a podcast, something else has changed, right? But you've seen this from both the marketing head of marketing seat and the head of sales seat, know, at LivePerson. So in this new world,

that we're in, like how did these two function, sales and marketing? how, I mean alignment between the two has always been a problem, right? And so what are some ways that you're seeing like that overlap, that handshake to happen more effectively in this new era? Like talk to me about that.

Sabrina Parsons (12:38)

that's a really good question because I think you you're right. There's always a little bit of headbutting, and sales is sometimes out selling things. I mean even headbutting with product as well, right? Where sales will sometimes sell things the product doesn't have yet and sales will say well marketing you're not keeping up. We need these materials you don't have. So I think that's always been a little bit more, you know, that's always been something that

departments have butted heads against. think right now marketing and sales have an opportunity ⁓ to really understand when you have this much gray area and fuzziness around, what is it that the client actually thinks they need? You can very much...

be in a space where you believe you have the best tool and they actually need you, but now the client's not sure they need you. So marketing has to help make that case, right? Marketing has to be playing this new AEO game. Marketing has to also understand

What are the things that these clients think they might be able to do without us and address those, right? It's all about answering those questions, answer forward, give that information and address. And then I think even more so that trust of really truly we are the right organization with the right expertise that you can trust because we all know and the clients constantly worried about

If I just use AI, is it real? Is it true? Is it hallucinating? And so marketing teams, think, really have to help lead the path to clear away the maybe misgivings people have between, do I use AI without the tool? If I use the tool, do I use it with AI?

Or does the tool have everything I need? If marketing does a good job of helping someone understand that, why you shouldn't be an AI by yourself, why we've brought AI into our tool and it's going to be even better, then the salesperson can take it from there and do some personalization for that client when they're selling to say, let's actually have specific examples of why our tool is going to be better off for you than if you

are off on your own trying to be an AI prompt writer all of a sudden.

KK Anderson (15:00)

and moving into sort of this next topic around trust and story and the human advantage, you know, we all, it seems like what was super cool, ChatGVT, Claude, prompts, generative AI, six months ago is now just table stakes, right? And so we're all getting, it's almost like we're using, now we're using these tools that are very quickly table stakes.

the same outreach sequences, the same content generators, you see the same, you know, M dashes and hope your hope to see male funds you doing well. Like you, can just spot it immediately. You know, you know, immediately when you're looking at something that's AI generated, right? So, so talk to me a little bit about how you can lever for sales specifically, right? How you can leverage AI, but still actually create differentiation. Like what are, what are some of the things you guys do with your team?

Sabrina Parsons (15:48)

that's a

great question. I I think that there's an appropriate use of AI even when people recognize it, right? And I think that's important. I think that AI should be used to make some jobs easier. I think there are some writing that AI can do that is appropriate and AI does it faster and it streamlines it and that's okay. But I think it's really important to recognize

sort of where a client does not want to see that, where a client does not want to feel that. If a salesperson is trying to sell and part of what they're saying is, we're going to bring personalized account management to you and that.

client is like, really? Because I just had a horrible chat bot interaction with your website and there was no person and it was a robot and I don't believe you. And so that's where like we have to define.

where it's okay to use AI, where you're hurting yourself when people know it's AI, and you need to be very careful. And then using AI appropriately internally to be very prepared for your sales calls. AI can prepare you.

at a speed at which we haven't seen. And so you have no excuse not to be prepared, understand the exact situation your client is in, have researched their company, have researched them. I mean, it's easy to do now. And so it's almost like we can't get away with not doing that because that's how you prove that we're real people and we're taking the time to be real people. But it does have to flow all the way through. You don't want...

that person to have had some interaction with a pre-sales chat bot that was terrible. And you're to have to fight that because there's a lot of people out there who are like, don't, there's going to be some negative connotations because people have had bad interactions. And so how do you address them? And interestingly, if you can get marketing to play ball with you and you do some of these,

some of these interactions better than everybody else, that's right now at least, know, God knows in six months, but right now that's gonna make you stand out. ⁓ I was talking to someone who had an aura ring and had an issue with the aura ring, went to the website and was super annoyed that they could not get a real person. Just so annoyed.

And it was a chat bot and said, I spent 10 minutes fighting the stupid chat just to try to get a person. And then finally said, forget it. Fine. I'll interact with the chat bot. And they said, in three minutes, the chat bot had looked up my data, knew that my battery wasn't working, and told me that they were sending me a new aura ring the next day. Right? And so all of a sudden, he's like, I felt like such an idiot.

Mark Petruzzi (18:36)

Ha ha ha.

KK Anderson (18:39)

This is awesome!

Sabrina Parsons (18:40)

Yeah, he's like, I push back on it so much because I've had such terrible experiences and I really didn't want to use it. And then it turns out if I had just embraced it, I would have been better off. But that's the opportunity, particularly for marketing and sales to work really well together, because there are people who are doing it terribly. So don't be those people.

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In this episode of Selling the Cloud, Mark Petruzzi and KK Anderson continue their conversation with Sunil Rao, founder and CEO of Tribble, diving deeper into SaaS fatigue, agentic execution, and the challenge of scaling institutional knowledge in enterprise sales.

Sunil breaks down how AI agents are reshaping the way work gets done by becoming the interface across systems, eliminating the need for constant tool-switching, and enabling teams to operate from a single layer of intelligence. He also shares how modern GTM teams can capture and scale expertise across conversations, documents, and internal knowledge to improve performance over time.

The discussion closes with a look at the human side of selling, where trust, collaboration, and real customer engagement remain irreplaceable even as AI automates more of the workflow. 

What You’ll Learn:

• SaaS Fatigue and the Shift to Agents: Why the future interface is not more tools, but a single AI layer that connects everything.
• Agentic Execution in Practice: How AI can capture context across calls, RFIs, and RFPs to generate smarter, more personalized responses.
• Scaling Institutional Knowledge: How to turn tribal knowledge, conversations, and documents into a usable system of intelligence.
• The Failure of Static Content Systems: Why traditional enablement platforms fall behind the speed of modern business.
• Human + AI Collaboration: Where automation should take over and where human judgment, trust, and relationships still win.

Key Topics:

• “Kiss your apps goodbye” and the rise of agents as the new interface
• Eliminating tool-switching and browser tab overload for GTM teams
• Capturing context across the full sales lifecycle, not just at the RFP stage
• Using AI to coach reps in real time during customer interactions
• Building knowledge graphs from calls, documents, and internal conversations
• Denoising and validating data from sources like Slack, Gong, and CRM systems
• Why knowledge bottlenecks exist due to limited subject matter experts
• The limits of traditional enablement programs and static content libraries
• Designing AI systems with humans in the loop for approval and quality control
• Reallocating 30% of seller time from admin work to customer engagement

Guest Spotlight: Sunil Rao

Sunil Rao is the founder and CEO of Tribble, an AI-native platform that helps enterprise sales teams automate and optimize go-to-market workflows. With a background as an engineer at SAP and a leader at Salesforce, Sunil brings a unique perspective on both the technical and human sides of enterprise selling. At Tribble, he focuses on building systems that scale knowledge, improve response quality, and enable teams to operate more efficiently with AI. 

Resources & Mentions:

• Tribble
• Concept: Agentic workflows in go-to-market
• Knowledge graphs for sales and GTM intelligence
• SaaS consolidation and interface shift to AI
• The Hard Thing About Hard Things by Ben Horowitz
• Superintelligence by Nick Bostrom
• Concepts: “SaaS fatigue” and “tribal knowledge” in enterprise organizations

🎧 Listen now and follow Selling the Cloud for more insights on AI-driven GTM strategy, enterprise sales transformation, and the future of work.

Mark Petruzzi (00:31)

So Sunil, let's talk about the SaaS fatigue problem. Companies are drowning in tools, licenses, and unused platforms. If you built a company in the enterprise software space going right at all of that overflow, how did you design Tribble to be part of the solution rather than be another product out there that's part of the problem and the challenges?

Sunil Rao (00:54)

I think from the very early days, one of the things we thought about deeply was, hey, where is this all going? If I think for two, three, five years, what do we think happens? And it was very clear to us that there's a consolidation that's going to take place across where people want to go to get their information.

when we see what was happening with ChatGPT and you think about how this kind of AI can be pervasive across systems, this is one of the things I was telling someone recently. If you go back on the internet, you go to the Wayback Machine, which is a website that allows you to go back in time, you can go see the 2023 December page for Tripple. It says, kiss your apps goodbye at the very top. Say hello to agents. And that, I think, was very indicative of, this is what's going to happen. We probably did that message too early because no one knew what an agent was in 2023.

But I think that's where we are right now, right? It's like, hey, there's this new interface, right? I can talk to an agent or I can talk to software and I can give it access to all the other systems I work with. So I kind of don't need to go to all those systems again, right? I can do the work through this proxy.

And the way that we always describe it is like in the future, you know, when you onboard a new employee, what do you do? You say, here's your license to system one, system two, system three, system four. And they're sitting on their chair and their browser tabs and they're swiveling from one to another, to another, to another.

That kind of all goes away. So I think when I think about SaaS fatigue, think agents actually are going to change and become the interface. And Trivel, for us, when we think about go-to-market technology, we want that to be the interface when we think about the respond process and the engage process. That's our bet. And underneath the hood, we have many systems we integrate with. But I had a prospect ask me this the other day. They're like, hey, if we're using your tool, do I need to go to these other systems? And the short answer is no, you don't.

Get everything you need right over here.

KK Anderson (02:35)

So walk us through like what an agentic execution actually looks like in practice. So like when a sales team sends triple an RFP, what's happening behind the scenes? Like how much is automated versus augmented, if you will.

Sunil Rao (02:49)

Yeah, so I'll give you two examples, KK. I think one, let's think about a company that responds heavily to RFPs and that's a big portion of their business. The RFP coming to you isn't the first point of contact with the customer, right? And depending on the size of the organization and how big this engagement is, it might be something more like, hey, we've had an initial call with the team and they shared with us that they're going to issue an RFP. So there's some discovery being done. We learned some requirements. We learned some players at the table, the different business units that are relevant here.

Fast forward a week, another call takes place. Different team members at both organizations are on a call. Information is shared. Then you get to another call and then they issue an RFI, which is the precursor to the RFP.

So it's one document that gets sent over and then you got to answer a bunch of questions. Then you finally get to the RFP, which then ends up becoming a bigger proposal. But we think about the journey across all these touch points as opportunities to collect context. So one of the things we do is we show up on the call for each of these touch points. We collect context. We coach the folks live on the call on what data to collect.

and how to think about this so that when it comes time to build the response, it's contextual on all the data we've collected for this specific prospect, but every other conversation we've had and where we've won bids and where we've lost them. And that way we can see, historically, when you've answered no to this question for this type of company, you've lost the deal. So one of two things, either explain you can do it because it's on your roadmap or actually put it on your roadmap. Right. And these are the kinds of insights we can glean because we're integrated to the

the systems behind the scene, as we come across these insights, we can go write the data back directly. The agent will go and update a ticket in JIRA, or it'll go make an update in Salesforce directly. And it's done throughout the journey, throughout the process. So that's kind how we think about it across the lifecycle.

Mark Petruzzi (04:30)

that's excellent. Excellent. So let's go to topic three here, scaling institutional knowledge. We use this, the term kind of tribal knowledge and a lot of the work we do in engendric space ourselves. So yeah, let's dive into that. One of the most interesting things about Tribble, that it's not just about speed, it's about scaling the...

the expertise, scaling the process, making those processes better over time as well. You've described the problem of a limited number of experts having the necessary knowledge. In your experience at Salesforce and now at Tribble, why is knowledge scaling such a massive bottleneck in most enterprise organizations, particularly within their sales function?

Sunil Rao (05:15)

Depending on how big the organization is and what products you sell, historically for me, one of the things that I've experienced firsthand, when you're selling a complex product or you're selling into a vertical where the business processes are very specific and non-standard and it's not something everyone knows, you usually will have a gap in terms of the understanding of the field team and what it is that the customer wants. So how do you speak the language of the customer is always a term that we used a lot in my career.

And whether you're in financial services, health, whether you're in CPG, retail, manufacturing.

There are processes that are very specific to that industry. So how do you enable the field teams to know what it is the customer's pains are and what they need? And how do you build the right software to meet those needs? So I think that ends up in, thinking back five, 10 years ago, how do you scale that within a company? Well, you create these enablement organizations. You create enablement programs. You take everyone to Vegas for kickoff, and you show them 800 bajillion PowerPoint presentations and hope they remember it for the year. And of course they do, because that works every single time.

Right? And when you show up, you've now enabled everyone and they're talking about the product. I think that that kernel, it.

The one consistent theme that we've seen and I've experienced it firsthand is you still need to leverage these SMEs during the sales process and you tap them on the shoulder and bring them in. And whether they're sales engineers, they're industry experts, technical architects, program architects, whatever you call them, they all have some level of knowledge and there's too few of them in the organization. So that's what I think about when I think about the scarcity of that type of resource and how do you scale it? So for us, we've always thought of, you've got data in docs.

Those documents will inform a certain amount of the business process. You've got knowledge now in these large language models that we can tap into.

And there's tribal knowledge, right? We know that Mark actually is really, really good at this one feature in that product that no one else in the company knows, but it's not written down anywhere. It's in Mark's brain, right? So like, has Mark mentioned that on a call? Is that something that's come out in calls with customers? How do you tap into that kernel, right? So we take that data from the calls. We take the data from the documents and everything we're observing across all the calls in the company. And we create a graph of the experts in the company and who has what tribal knowledge and what documents.

have what knowledge. So we're trying to solve it in that way Mark of how do you scale the expert? Will you create a backup of them and you try to understand in the organization where you can go to for what.

KK Anderson (07:36)

And so that's, does that one explain why you're, you're ingesting all kinds of secondary information like Slack conversations or conversations between engineering or product or sales teams? That is that part of how you do that?

Sunil Rao (07:49)

that you before something becomes a document people are usually talking about it on slack or on calls

KK Anderson (07:54)

So how do you, like a couple of things come to mind. Number one, like how do you ingest that much information without just having a lot of junk? know, like 80 % of gong conversations are junk and there's a maybe a golden nugget in there. you, mean, it seems like a lot of memory, a lot of space.

Sunil Rao (08:11)

You have

to compress it. You have to de-noise it, and then you have to compress it. So we actually have, it's funny, when I was geeking out with the engineers on this, we were thinking, look, and I've done sales as well. Sometimes people say things on calls that are not necessarily factual, right? So we have to attribute for the fact that it happens, and especially with gone calls, you have a lot of salespeople saying a lot of stuff on calls.

But then you have this idea of ground truth, which pertains to your product information that we're connected to systems of record that we pull data. So we'll look at the data that's coming in and the really noisy stuff, which is gone calls call transcripts, and we'll cross check it. We'll almost fact check it with what we know is in the main store. And if there's anything new gleaned, we will pull that out and denoise and get rid of all the back and forth that's not necessary to store. But we try to pull out the key facts. We try to understand, hey, who was on this call? What were they discussing?

which people were saying which things, what regions, locations, product lines, segments were discussed. So anything that pertains to go to market is what we try to pull out of this and then we store it in what we call our knowledge graph. And that allows us to like pull out the signal from the noise if you will, KK. And then we will fact check some of that.

And we'll also use the folks using the product to actually validate if information is correct or not. So that way we move from this vast ocean of noise to a usable data set that's otherwise really hard to get to.

KK Anderson (09:28)

it's really, really

Mark Petruzzi (09:29)

most companies, as we all know here, have invested heavily in content libraries, knowledge bases, sales enablement platforms. Yet somehow the right answer is not there when the rep needs it. Why do traditional knowledge management systems fail in high-velocity sales environments? And again, how does Tribble and

the things that you do overcome some of those challenges.

Sunil Rao (09:55)

It's almost like a short circuit cheat code, right? Because I remember the Russian December.

to get high spot loaded with all of our content. When I was at Salesforce working with marketing and it was like the stretch going into Christmas and we're all building the 40 different variations of first call decks and second call decks and these subvertical plays and you'd create and it's this one moment in time where all the content gets created gets uploaded to these systems and it's not any one system. It's just the way it was done, right? You have to have a central place where people can download this content.

But the problem with that is you do it at some frequency that's not fast enough for the speed of the business. Information is changing at the rate at which product is being released at the company. And there are just new pieces of information that are coming out. So tapping into the higher velocity data sources, like conversational data, whether it's coming from Slack, whether it's come from Teams, or it's coming from call transcripts, and corroborating that with data that's being created by organizations like product marketing, I think you can move a lot faster.

then you can also provide information that's based on new information as opposed to information from six months ago. And you can also use the human in the loop to validate the new stuff.

And AI obviously gives you a lot of leverage to do that. So I think that's why it's just a different way of thinking. Think about the lifetime of the asset and how long it's relevant and how quickly we can distribute the load of people validating that it's still correct instead of it being one poor person that's responsible for updating this repository every six months, which tends to be the bottleneck in a lot of orgs.

KK Anderson (11:25)

Wow. So moving on to our last topic here around the human element, right? And where AI should take over and we're at must step back. So you started your career as an engineer who would look at the sales leader and be like, no, heck no, absolutely not. Can't do it. Not going to do it. Right. And now you're a CEO who's deeply embedded in the go-to-market strategy. So,

What did you learn about the human side of selling that you could not have understood when you were on the engineering side of the business?

Sunil Rao (11:56)

I appreciate the sales side of it so much more now. even think back.

⁓ to like my initial days as an engineer, I just never understood this side of the house because it was just, it was, it was illogical to me. It would be like, why are you positioning something that, know, how, how are you positioning what's real versus not? And not to say salespeople don't do that, but I think you tend to think more now as a consultant that's helping your customer solve a problem and you see the paths and the opportunities. And it's a very different way of thinking than the very rigid way of like.

the logical way of like, this is true now or not true now and therefore we can't do it. So I think the change for me really was more, hey, how do you build trust with people? How do you kind of show up and actually bring value and meet them where they are, but then also work with them to build the future together? And I think that opens up.

a much more collaborative kind of trust-based relationship. And ultimately, that's what this whole thing is. It's, hey, do you trust me to help you solve the problem? I might not be there 100 % at this moment, but I will get there with you. And I think that that mentality allows you to both portray a vision that you can go on together, but also attack problems with the reality of what you have now. So it was just a mindset shift, would say, KK.

Mark Petruzzi (13:08)

So Sunil, there seems like there's a bit of attention in the ⁓ product philosophy from the perspective of, know, one of the things you guys do and do so well is automating the RP process, something very specific, very process oriented and some of the info sec ⁓ questionnaires, which are all pretty.

technical and repetitive. But I love and get very impressed by the way that you talk about the human side of all this and as you just described, like the things you've learned along the way about the human side of selling. So where's the line? right now, it's gonna change like in about 12 hours, but it's right now, like where's the line? You know, what should AI own?

And in your mind, like what should really remain human, at least for now?

Sunil Rao (14:00)

You know, if you asked me this question like 10 years ago, I think a lot of people will say the same thing. I wouldn't have guessed that sales, enterprise sales, heavily relationship based sales would be one of the last things to go. I would not have guessed that. And I think that that intuition comes from the fact that this is very much a very trust-based human-based business where you're going in and helping these companies transform and helping build relationships to do that.

So I think from that perspective, it's where it's disrupting and changing things.

There are a couple of implications of that, right? Like how do you bring folks along for the ride? And you mentioned product tension. Like we think deeply about, you automate the thing end to end or do you make the surface area where the AI does the work that's really rote and repetitive, but you still have the human in the loop to go in and have the knobs and dials to finalize what needs to go out. So I think our product philosophy has been that, right? Because we've been selling to these teams that are operating where they have to do a lot of the manual repetitive work, but also be the

approvers and now it's can we give you the tooling to remove some of the manual repetitive work? You still maintain the approver status, but now you can handle a lot more throughput as an organization, right? So that impacts UX decisions and product philosophy. Humans aren't going anywhere for a little while. I mean, this stuff will move and you're right, in 12, 24 hours, 48 hours, it's probably gonna jump even further. But I think the rate with which it goes into the company is still gonna be slower than we think.

KK Anderson (15:21)

And it goes back to this idea of AI is becoming table stakes. So you're giving sales teams the gift of time with your technology. And so it becomes a question of what are sellers going to do with that time? And that's where they get their edge. That's where they can increase the strength of their relationships and their networks and how they can bring value and help individuals, help others, help their customers.

Tell me your kind of philosophy around that. What do you want your sales team doing with their time that you're giving them back?

Sunil Rao (15:53)

go meet more customers, go out in the field, go take them out to dinner, like understand.

KK Anderson (15:57)

Do the

Sunil Rao (15:57)

Show up, go do a ride along, understand how they sell to their customers and what are they trying to achieve. If you're stuck trying to update fields in a document at your desk and you're not out there, then you're not really doing the job that you can have the highest leverage doing. So I think, I feel KK, I could have said the same thing selling cloud CRM software 10 years ago and probably 20 years before that selling it. Ultimately, there's always a percentage of the job that is stuff that's getting in the way. And I think I look at this not

as replacing the role, it's if you look at the role and you see the jobs to be done of the role, there's probably about 30 % of the jobs that they're doing that you can just take out. And when you take that out across an org of like 500 people, you're not replacing those people, but you're kind of changing the role and making it better suited for the best outcome for that individual. And that's the way I look at the re kind of composition of the work.

KK Anderson (16:47)

And for a salesperson who's working on a commission, being able to take 30 % of redundant admin BS that they don't want to do and giving them that time back to be able to grow and expand accounts, that puts more money in their wallet.

Sunil Rao (17:02)

It's like reducing your tax rate.

KK Anderson (17:04)

Reducing your tax rate. love it.

Mark Petruzzi (17:06)

I like that a lot. Okay, let's move to one of our most fun parts of this and finish up with some rapid fire questions. This is an interesting one for you because you've been, you you've come from the engineering side. You're a CEO now. You've done some really great years of sales and sales leadership along the way. But what was the first thing you ever sold?

either professionally or as a kid.

Sunil Rao (17:33)

This takes me way back. I'm pretty sure the first thing I ever sold was a trading card.

And I used to collect a lot of trading cards like baseball, like Marvel Comics cards. And I remember having to sell some of these like in trades in order to buy more, right? It was always just to get more cards. So it's like, how do you find the right optimal thing? So I think the first selling aspect of it was like, hey, get someone to like really like this, right? Like, and then they buy from you.

KK Anderson (18:03)

Relationship Selling 101, right? With your buddy down the street. come for a sleepover and I'll give you this card or you give me your card or whatever. Okay, favorite business book that influenced how you think about go to market or AI or kind of where you are now.

Sunil Rao (18:18)

favorite business book. I've been reading, you know, there's been one of all time, I would say, The Hard Thing About Hard Things by Ben Horowitz. That was just like a classic, right? And I think it was like a very good eye-opening thing, walking into a storm. So that would be my rapid-fire answer, but there's a lot more.

KK Anderson (18:37)

Is there, I'm curious if there's one that's related to AI though, that specifically has helped shape the way you're thinking about things. I know it's probably not written yet.

Sunil Rao (18:44)

specifically, would say ⁓ there is a book called, so there are a there's a short paper ⁓ that was, I think it's called, gosh, I'm forgetting the name now.

I'll talk about the book instead. Superintelligence by Nick Bostrom. That was a really good read. That was probably 10 plus years ago. And I think that was the first time I heard this idea of like this, you know, when you, when you're building these superintelligence systems, you know, there's this thing called the paperclip problem, right? And if you like tell the thing to go build paperclips forever, you might find yourself in a world that has been completely converted into paperclip factories. And it's basically taken out all the humans in the world, but it's not doing it because it's malicious. It's like your instruction was not

precise enough, right? So anyway, that I would say is AI related, a little more of like critical thinking on where this could go.

KK Anderson (19:30)

wow.

Mark Petruzzi (19:31)

that was a great book and it was at the perfect time. It was late enough in the history of our world for him to have a really strong point of view and have some data behind it, but still so speculative versus what we're seeing just 10 years ago or 10 years later from there. So what's the best piece of advice you've received?

when you were transitioning from a corporate executive to a startup founder.

Sunil Rao (20:00)

best piece of advice is...

Mark Petruzzi (20:02)

And that could even

be from yourself, like something you just came up with and said, you know what, I gotta do this now.

Sunil Rao (20:08)

I would say it's actually the realization that a lot of people have advice and opinions. I think, especially when you're out and you're doing this for the first time, know, I, my personality is to seek advice and like really learn from the experience of so many others that have done tremendous things. but also keeping in mind that you need to carve in path, like your own path in your own way. so that's been, it's been, it's been good to keep in mind because

You realize very quickly that no one has all the answers and no one's really figured it out. There are people that have done amazing things, but you have to kind of take all of that and make your own path out of it. So that was a good realization for me.

KK Anderson (20:43)

so interesting. And even as an entrepreneur myself, sometimes the people that love you the most or they're closest to you are the ones giving you the worst advice. Like, are you crazy? Why are you doing this? You're quitting your job? You're doing what? ⁓ Okay, on the advice line here, what's some advice that you would give your 21 year old self?

Sunil Rao (21:02)

there's many things that I won't say here, but I think from ⁓ what was interesting to me is, the...

I've always wanted to build something and I've pursued endeavors in the past as well. So this is not the first time that I kind of thought about startups and building something. think taking the jump earlier and believing in yourself a lot sooner is something that, you know, it's just like, you can go make a dent in the world. doesn't like, you don't need permission. Go do it now.

Mark Petruzzi (21:29)

beautiful. All right, well, Sunil, thank you so much for taking the time with us. And this has been a great discussion. And I always like to thank our audience who we are so appreciative of, and we so enjoy connecting with you all every week.

So thanks again and then I always have to do a special thank you to KK, my partner and all this and yeah, it's ⁓ just too much fun for us to even have to say that we're doing work here. ⁓ And people like you make it really fun. So thanks so much, Sunil.

Sunil Rao (22:06)

Thank you for having me.

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