The term “Revenue Operations” is soaring in popularity these days. In fact, Chief Revenue Officer, VP of Revenue Operations, and Director of Revenue Operations are among the fastest growing job titles right now on LinkedIn.
But what is Revenue Operations?
Does your business need it?
And, if you do, how do you establish a Revenue Operations framework?
Revenue Operations (or RevOps for short) is an approach that aims to align sales, marketing, and customer service teams to give them the tools and resources needed to drive predictable revenue. As Bhaskar Roy explains in an article on the rise of Revenue Operations, “RevOps treats revenue not as a fortunate outcome of a quality product, but like a mirror of the supply chain — a pipeline that needs to be powered by optimized business processes.”
Effective Revenue Operations is achieved by sharing data and encouraging communication between these core teams to help them understand the role they play in the sales funnel to provide a seamless purchasing journey. The right Revenue Operations framework puts the customer first to increase overall revenue and improve profitability, accelerating growth.
Today’s Need for Revenue Operations
Over the last decade, everything about the way consumers and businesses make purchases has changed.
Online informational resources have augmented online buying, allowing buyers to do their own research before ever interacting with a salesperson. Furthermore, digitalization across all verticals has led consumers to demand personalized and customized content across all channels.
The increase in subscription-based products and services have businesses reevaluating how they treat the post-purchase component of the buying journey, placing added emphasis on customer lifetime value. Regardless of the terms of the purchase though, buyer expectations have continued to evolve, with consumers and businesses alike expecting a more seamless purchase journey across all channels.
As a result, sales, marketing, and customer service must be closely aligned to succeed in today’s business environment. A Forbes article on creating value through Revenue Operations explains,
“Information velocity and visibility increasingly determine selling effectiveness. The speed of engagement and the velocity at which information needs to be commercialized and shared across the organization has accelerated to the point where revenue teams and the executives that direct them need real time. Visibility into customer engagement, seller effectiveness, account and pipeline health are the four top drivers of the performance of distributed, diverse, digital, and dynamic revenue teams.”
Added touchpoints means more data to manage, necessitating automation, AI, and other sophisticated technology shared among all teams to derive actionable insights. A Revenue Operations approach achieves this throughout the entirety of the sales funnel.
Revenue Operations Advantages
According to recent revenue data, “Businesses can generate 38% more revenue in 27% less time by ensuring that every initiative has a direct and measurable impact on the end-to-end process,” which is a resounding reason to prioritize taking a Revenue Operations approach instead of sticking with an inherited revenue strategy.
Implementing Revenue Operations also improves communication and focus, which combine to increase employee satisfaction (in turn driving up productivity and retention). These HR benefits have a definite correlation with the organization’s revenue potential.
Lastly, Revenue Operations allows businesses to respond more quickly to market changes, whether in the form of threats or opportunities, to build a more resilient organization. The result is more predictable revenue and more manageable cash flow, especially in the B2B space.
In fact, research on Revenue Operations and marketing strategy indicates that “B2B organizations that embrace aligned revenue operations and the strategic role of marketing will be best positioned to thrive in the next three to five years” This is likely due in part to the cost savings associated with go-to-market strategies. The Boston Consulting Group estimates a 30% reduction in expenses for B2B companies utilizing a centralized Revenue Operations model as well as a 10-20% increase in sales productivity.
3 Pillars of Revenue Operations
The three components of Revenue Operations are people, process, and platform (technology).
- The people are the teams and individual team members responsible for overseeing the organization’s processes and platforms. Formerly siloed teams become aligned around shared targets to focus organizational assets around a single business goal.
- The processes are the actions, steps, and workflows (both internally and externally) that combine to acquire, convert, and retain customers. Ideally, Revenue Operations creates a seamless buyer journey that unifies and optimizes every step of the process to achieve business goals efficiently.
- The platform is the technology stack that the organization uses to manage the buying journey and customer lifecycle. Accurate data and the reliability of its subsequent analysis will depend on the effectiveness of the platform being used to collect and manage it.
The Keys to Successful Revenue Operations
To be effective, someone needs to be responsible for overseeing the breadth of Revenue Operations. This leadership cannot come from sales or marketing or customer service alone because each is biased in favor of their own needs, perspectives, and objectives.
Establishing a Chief Revenue Officer (CRO) role is the best way ensure your Revenue Operations will fairly take each of these teams’ unique positions into account and unite them around strategic revenue growth. However, Stephen Diorio is quick to caution that an unsupported CRO cannot successfully develop Revenue Operations independently:
“But a title alone will not empower an executive to make the changes required for Revenue Operations to succeed. Over 80% of the growth leaders interviewed in the analysis emphasized that top down leadership from the CEO is essential to empowering and endorsing the transformation of the commercial model to unify sales, marketing, and service into one revenue team and become more digital, data-driven, and accountable.”
Once a CRO has been brought in and is receiving the necessary support from their CEO, teams need to agree on which KPIs (key performance indicators) to track and define what success will look like for the organization. This alignment should facilitate collaboration and establish trust across teams that improves credibility across the entire organization.
Revenue Operations success manifests itself through closed deals, pipeline growth, and customer retention across sales, marketing, and customer service respectively. Key metrics can include, but are not limited to, any of the following:
- Sales cycle time
- Win rates
- Renewal rates
- Customer churn
- Customer acquisition cost
- Customer lifetime value
- Annual recurring revenue
- Forecast accuracy
Within each team, individual employees should be given ownership over different areas of Revenue Operations, like data analysis and technology to assign responsibility for its most critical components.
Does Your Company Need Revenue Operations?
Now that you understand what Revenue Operations entails and what kinds of advantages it can provide for the companies that invest in it, how can you tell if a Revenue Operations focus is for you?
Ask yourself the following questions:
- “Are your sales, marketing, and customer service priorities aligned?”
- “Are revenue targets shared between teams?”
- “Is data collection streamlined?”
- “Is your data dependable?”
- “Are business insights readily communicated between teams?”
- “Is there a willingness to collaborate transparently on business objectives?”
- “Are trust and respect demonstrated between teams?”
If you answered “No” to any of those questions, your company could benefit from Revenue Operations to generate more predictable revenue and scale processes to drive growth.
Ready to get started implementing a Revenue Operations framework? Hire a fractional CRO to oversee your revenue strategy.