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:
Key Topics:
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:
🎧 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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