Growing revenue has always been the top priority of all business leaders, so it should be no surprise that more companies are trying to implement revenue operations. Forrester’s 2021 revenue operations survey of 316 respondents even discovered a significant shift towards driving the value and promise of revenue operations from within either centralized operations or selective centers of excellence.
So what is revenue operations, and why should you care? If it’s critical for business growth, how can you start adopting it? All the answers to these questions will be covered in this post.
What is Revenue Operations?
Revenue operations (RevOps) refer to bringing sales, marketing, and customer service together to drive revenue growth for a business. It ensures all of these teams work towards the same goals and gives managerial stakeholders a complete view of revenue streams.
What Problems Does Revenue Operations Solve?
Based on revenue operations’ definition, it’s easy to understand why it can help solve problems that hinder growth and impede success. Here’s a list of common problems RevOps can solve:
- The gap between marketing and sales: In most organizations, there is a gap between marketing and sales departments, resulting in strained relationships and conflict. A RevOps approach can address this issue by creating a unified strategy for Sales and Marketing departments, aligning goals and revenue targets where possible. This strategy promotes collaboration instead of competition, getting both departments on the same page in terms of customer journeys.
- Disorganized business functions: Organizations often face challenges in effectively managing critical functions such as lead management, customer data management, and pipeline management. These challenges can hinder overall performance and impede the achievement of growth objectives. The revenue operations model is a solution to optimize and streamline these processes.
- Inefficiencies in revenue cycles: Organizations struggle to identify and address inefficiencies within their revenue cycle, leading to missed growth opportunities. The revenue operations model provides a holistic view of the revenue cycle, enabling organizations to identify areas for improvement and implement solutions to address them. By overcoming these inefficiencies, organizations can unlock significant value and ensure that their growth efforts yield positive results.
How Does RevOps Work?
The rise of revenue operations has been driven by the need for companies to better align their sales, marketing, and customer success efforts. By aligning these key functions with a common goal of driving revenue growth, RevOps provides a clear path to success in today’s competitive marketplace.
But how does RevOps actually work? In a nutshell, RevOps is all about alignment. This covers setting a clear business goal, creating aligned plans across all functions to support that goal, and streamlining current processes for better results.
For example, in sales, alignment might mean designing processes and systems that focus on the customer lifecycle rather than individual transactions. In marketing, alignment might mean developing tailored campaigns and programs to generate qualified leads that sales can close. And in customer success, alignment might mean providing the best service experience for every customer.
Revenue Operations Benefits
Running revenue operations successfully can bring a competitive advantage to your business.
- Better alignment
- Long-term strategic planning
- Higher customer retention
Think about everyone across your revenue-generating teams sharing the same goal, focus, priorities, systems, and processes. They work in sync with each other without any miscommunication, and even when a problem arises, they can still quickly come up with the best solution.
All things considered, you’ll achieve cost savings and more efficiency across your company. You’ll also see an increase in your team’s productivity and acquire more happy customers, which eventually leads to an acceleration in your revenue growth.
Revenue Operations Metrics
The followings are five revenue operations KPIs you want to include in your implementation plan:
1. Cost Per Acquisition
Cost per acquisition (or customer acquisition cost – CAC) is the cost required to acquire a new customer over a specific period. By tracking your CPA, you can make informed decisions about your marketing and sales efforts and allocate your resources more effectively.
2. Annual Recurring Revenue
Annual recurring revenue (ARR) is the yearly revenue you can expect to generate from subscriptions, contracts, and other recurring billing cycles. It represents the total value of all recurring revenue from customers in a given year and can be used to track growth and progress over time.
3. Customer Lifetime Value
Customer lifetime value (CLV) is the amount of revenue you can plan to earn from the average customer throughout their relationship with your business. CLV is important because it allows you to decide about acquisition, retention, and pricing strategies. It also helps you predict future cash flows and revenues.
4. Win Rate
Win rate is the percentage of opportunities you turned into won deals, divided by the total opportunities (both won and lost) you created over a timeframe. Win rate indicates how effective your sales team is at closing deals. A high win rate means your team is good at converting opportunities into customers, which leads to more revenue.
5. Customer Churn
Customer churn is the percentage of customers who stop doing business with you over a specific period. A high churn rate can be due to poor customer service, changes in needs or requirements, or simply because customers have found a better alternative. Whatever the reason, it’s important to keep track of your churn rate so you can identify trends and take steps to address them.
Who is Recommended to Switch to the RevOps Model?
The RevOps model is designed for organizations that are looking to optimize their revenue operations and achieve the following goals:
- improve their sales and marketing effectiveness
- streamline their finance and accounting processes
- improve customer retention or expand into new markets
- optimize its operations and improve its bottom line
Revenue Operations vs Sales Operations
Sales operations (or Sales Ops) is designed for supporting sales reps to do their job effectively and efficiently. It creates structures, processes, best practices, and guidance on how sales reps can spend more time selling and less on non-revenue-generating, labor-intensive tasks.
Both revenue operations and sales operations teams are tasked with driving revenue for an organization. But there are two key differences between them:
- Sales Ops is all about sales reps-related activities and limits to one element of your total revenue strategy. Meanwhile, RevOps is about the holistic picture of business practices across every revenue-generating team. RevOps can include Sales Ops, Marketing Ops, and Customer Success Ops.
- Sales Ops focuses on deal management, territory planning, sales forecasting, CRM, training and development, and Salesforce. Meanwhile, RevOps looks at the entire customer journey, revenue funnels, go-to-market execution, and customer experience.
Previously, revenue operations and sales operations were used interchangeably. But today, RevOps has evolved to become its own core function and a critical part of the revenue growth of all businesses.
How Do You Implement Revenue Operations?
Step 1: Determine Your Goals and Objectives
In other words, understand clearly why you need revenue operations and what you want to achieve from it.
For example, you may see a disconnection across your sales, marketing, and customer service teams. Sales reps get inaccurate data from marketers; customer information isn’t updated in real-time; workflows are misaligned or overlapped between marketing and customer support, etc.
All of these problems can happen when you don’t have revenue operations in place.
Step 2: Decide the Tools Needed
Once everyone is convinced, you can start looking for revenue operations tools that help you make your plan possible.
When doing that, remember to choose the platforms that give you a centralized place to store data across departments. It should also synchronize data automatically across channels in real-time and allow your teams to update easily whenever they want.
Best Solutions from Revenue Grid
Step 3: Build the Right Revenue Operations Team Structure
When it comes to revenue operations, there is no one-size-fits-all team structure. The right team structure for your business will depend on a number of factors, including the size of your company, the complexity of your sales process, and the nature of your product.
However, there are some common elements that all successful RevOps teams share.
- A clear and concise mission statement. This statement should identify a team’s goals and objectives and provide guidance on how they should be achieved.
- A focus on process. They should have well-defined processes in place for sales, marketing, and customer success.
- A commitment to data-driven decision-making. They should have access to the data they need to make informed decisions about sales, marketing, and customer success strategies.
- Strong communication. They should be able to effectively communicate with each other and other departments in the company. They should also have a system in place to share information and report progress.
- Continuous improvement. They should constantly be looking for ways to improve their processes and be willing to experiment with new ideas and approaches.
Try Revenue Grid: Revenue Operations platform
Example of Successful RevOps implementation
Let’s look at a business providing IT services with over 100 employees. The company had been struggling with the following issues:
- Lack of alignment between the different teams (sales, marketing, product, engineering, etc.), which led to silos and inefficiencies
- Long sales cycles
- Inadequate visibility into the entire go-to-market process
To solve these issues, the company decided to implement a RevOps approach. They created a cross-functional team to handle the entire go-to-market process, from idea generation to revenue realization. This team comprised representatives from all relevant departments, including sales, marketing, product, engineering, and finance.
Next, they defined what they wanted to achieve and how to measure success. They also deployed tools and processes that would help them work more efficiently and effectively. For example, they used data analytics to track progress against KPIs and identify areas of improvement. They also established a regular cadence of communication and reporting to keep everyone on the same page.
As a result of these efforts, they shortened their sales cycles, improved alignment between teams, and increased the performance of their expansion strategy.
Potential Issues When Implementing Revenue Operations
Revenue operations is well worth the effort required to implement it fully, but it can be a complicated process. This shouldn’t come as a surprise after all as it relies on the full support of one’s company and also includes several complex technical aspects. As is the issue with sales everywhere, the trick to success is patience and determination.
It’s crucial that you invest in high-quality training for the entire company, designed to educate your team about the benefits of revenue operations and how they work with it. This also means that you have to invest heavily in the quality of the software you use to guide your revenue operations. There’s no point in educated hands using poor-quality tools after all.
Don’t assume you can copy and paste a new revenue operations department onto your company’s structure either. In some companies, there is little to no difference between sales and marketing, but under a revenue operations guided system, these departments need to be clearly marked and separate. The same applies to every other department at your business; everyone needs to know their specific task.
Revenue Operations Manager Job Description
Typically, a revenue operations manager job description includes the following responsibilities and requirements:
Revenue Operations Responsibilities:
- Lead a team of revenue operations specialists and oversee sales funnel and operational metrics.
- Provide analytical thought leadership for go-to-market plans, sales plans, and marketing activities, delivering actionable insights to establish strategic operational priorities.
- Develop processes, workflows, and incentive programs to help motivate teams and boost business performance.
- Work closely with sales operations manager, marketing manager, customer service manager, and other relevant departments to monitor business strategies, revenue growth, and KPIs.
- Participate in company programs and initiatives, including webinars, sales coaching workshops, and other educational activities.
Revenue Operations Requirements:
- At least 5 years working in business management, sales operations, sales planning, or revenue operations.
- Expert-level knowledge of Salesforce and CRM.
- Strong analytical, operational, problem-solving, planning, time management, and project management foundation.
- Highly proficient in financial modeling, revenue modeling, sales approaches, and reporting.
- Excellent written and verbal communication, interpersonal, and negotiation skills.
- Strong ability to work collaboratively and independently.
So You’ve Implemented Revenue Operations – What Comes Next?
If you successfully implement revenue operations, two things will quickly become apparent. Firstly, your other metrics will improve considerably. Secondly, you’ll realize you’re now handling more significant amounts of data.
Therefore your next prudent step will be to invest in tools specifically designed to allow you to handle data to the maximum level possible. These tools should provide integration to your CRM system, organize and optimize your email, and guide your selling based on analytics. The Revenue Grid will help you do this.