Business leaders can have a wonderful revenue process and still end up a bankrupt company. Much of the problem happens because the understanding of revenue operations versus cash flow versus net income was missed. Revenue operations (RevOps) helps make a big difference by identifying where revenue is occurring now as well as how it can be increased elsewhere.
What Is Revenue Operations Responsible For and Why Is It on the Rise?
By definition, revenue operations teams and revenue operations titles involve understanding how every aspect of a business generates revenue and how it can be made visible and increased over time. While this statement seems straightforward, implementing it can involve quite a bit of work and interacting with multiple aspects of a business, from sales to accounting to manufacturing to the executive team. Everyone has a stake in revenue being sustained and growing in a company. Revenue operations opens up the window to understand marketing and customer success better.
More importantly, revenue operations strategy forces an alignment of activities that might have competed in the past. Everything is value-driven now, and with very visible metrics, no one has an excuse to say that their operation is delayed or pending a report.
Revenue operations replace old reporting methods that were highly inaccurate and late, incorporate artificial intelligence in data capture, map the customer’s activities and impacts extensively, and increase visibility. In short, revenue operations teams are incredibly busy and valuable.
Sales Operations vs. Revenue Operations
Sales ops and RevOps are frequently confused, but there is a very distinct difference between the two in operations management. Sales focuses on initiating and executing the actual customer purchase. At that point, sales activity ends until initiating another sale.
However, RevOps looks at the entire picture of income generation, from sales to customer support to marketing to cost control and accounting. Combined, RevOps produces a far greater perspective on how to increase a company’s income than just straight sales alone.
Who Does RevOps Report To?
Interestingly, revenue operations do not report to the finance side of things. It typically reports either to a Chief Revenue Officer or a Chief Marketing Officer to integrate and tie in the value of sales reps’ revenue generation with the marketing operations teams and the sales process programs that actively contribute to income (i.e., sales marketing and customer support). The revenue engine structure is still fairly new, and many companies are trying to find a comfort zone with exactly where RevOps is placed for their needs versus sales reps.
How Does a RevOps Team Make Sales Teams Better?
For a sales team, in particular, revenue operations lets people see far deeper into sales operations and related. Previously, salespeople were measured by how many dollars they generated. Then, those dollars folded into a bigger income picture and disappeared.
Now, RevOps shows the direct connection of the sales operations’ effort all the way through to completion in customer satisfaction and account retention by a sales team.
Develops a More Efficient Sales Process
RevOps clearly points out where sales operations under a sales operations manager are successful and where there is room for improvement. That, in turn, creates efficiencies by highlighting what should be changed or eliminated to maximize high revenue generation versus efforts lost on low-income sources.
Breaks Down Organizational Silos
Because of the ability to show the entire relationship between sales operations, marketing, and research, folks can’t point their fingers anymore at the other office. Everyone is connected, and they win or lose as a combined team in a revenue operations view.
Builds More Accurate Sales Quotas and Forecasts
The problem with pipe dreams and unrealistic projections for a customer success team is that they can suck up a lot of resources that end up wasted. Revenue operations eliminate much of the guesswork out of sales operations and refines accurate estimates of what will likely occur with a proposed revenue strategy.
Boosts Team Morale
Teams integrate better, they see their involvement in the bigger picture, and sales operations work better together based on RevOps information. That boosts morale, which is well-known to boost productivity.
When Should You Add a RevOps Role or Team?
There are key indicators common among companies of different sizes that can be used as signs at RevOps team would be a significant benefit. These include:
The need to push transparency in sales operations for accountability
RevOps is tied to accountability visibility. The approach it takes to analyzing data follows a simple methodology for displaying where revenue is produced, who does it, and why it performs at the level it does.
Revenue targets don’t seem to be aligned across internal departments
If sales, marketing, and customer support want to go left, but sales reps want to go right, and production is off in a third different direction, revenue leakage happens. RevOps displays how each is tied to the other and how their alignment can be improved for better revenue performance.
Key metrics are not consistent
Along the same lines as above, key metrics are essentially strategic insights and data analysis. Bad results can signal serious issues brewing. The RevOps function explains the metrics, how they relate to the entire company, and how they can be improved with coordination between responsible parties.
Lots of internal bickering between service departments
RevOps removes the anecdotal stories in more than sales operations and focuses on why the team as a whole is performing the way it does. With alignment and coordination of the sales funnel, nobody gets left out, and the management has to succeed collectively as a primary focus.
The Sooner You Build a Revenue Operations Team, the Better.
There’s no reason to wait at this point in modern business. A revenue operations team simply helps companies find and secure more of what they earn. Every company should seek to implement a RevOps team to maximize revenue.
What Should You Look For in a Revenue Operations Professional?
The ideal candidate in revenue operations provides a potpourri of hard skills, flexibility, communication fluidity, ad hoc problem-solving, and a knack for technical computation. Particular skills that make a person stand out in RevOp include:
- An ability to think big and strategically with job titles.
- An ability to drill down into business details and figures quickly as well.
- A knack for problem-solving without having all the operational insights available for a perfect sales solution.
- Communicates easily and effortlessly with mixed crowds and job titles.
- Can talk shop with the IT systems administration over a technology stack as well as be on the same page as the advertising office.
- Has a keen sense of customer information and sales value creation.
- Works well with other teams on cross-functional collaboration projects to drive revenue.
Ready to Invest in Revenue Operations?
Everybody is ready to invest in RevOps and improve efficiency. In most cases, the hesitation is not because the concept is a problem but rather because not enough is known about how RevOps actually works. Get past the perspective of “RevOps is unknown” and begin building your RevOps team. Your perspective will quickly change to wondering, “Why didn’t we do this sooner?”
Why was Revenue Operations created?
Marketing Technology has become increasingly important in the business landscape.
Again, as noted earlier, much of the driver for RevOps was the lack of accurate insight as to what was going on with revenue between a company’s programs and critical offices.
The management of operations across Marketing, Sales, and Service needed to be more efficient and unified.
Additionally, the demands of the Internet, with faster and greater data visibility, have put marketing into the spotlight with a greater degree of quantification via technology stacks than before.
The customer experience demanded more connectivity and more personalization at scale.
Customers began being vocal as well, creating communities around brands and products. Where they were unhappy, revenue dropped. Where the audience was engaged, sales enablement increased. The course of action became obvious for many companies.
What problems does Revenue Operations solve?
In particular, RevOps provides a detailed understanding of how a given customer comes into the sphere of a company, interacts, moves through the revenue process, and reaches completion. Based on this data, RevOps can also generate forecasting of what will likely be possible with the customer set assuming the same revenue going forward. RevOps teams then add in analytics to identify different scenarios to spell out in detail the results of what-if alternatives for project management.
The 3 Pillars of Revenue Operations
The key thing to remember about the success of Rev Ops is that it is built on three critical components. If an operations manager has these in place, and RevOps can consistently produce customer success for a company:
The methodology of how business processes data is collected, analyzed, and interpreted needs to be repeatable as well as accurate—otherwise, garbage-in, garbage-out.
The software used for customer success operations creates the means to collect the sales data, visualize sales enablement, and predict business growth.
The experienced and skillset of trained RevOps teams produce qualified leads for the entire revenue team and sales leaders.
How do I start implementing Revenue Operations?
The size and scope of a RevOps team is going to vary from one business to the next. The first step is to choose an effective leader candidate for the head of RevOps in the organization. From there, the program can be built out as resources permit or as the conversion is needed from existing elements. Ideally, the RevOps head should be integrated with sales, marketing, customer success, and marketing systems IT as well. Normally, the RevOps lead would have reports from customer success teams responding to him or her. The requisite analytical staff would be under each as well implementing marketing automation.
Is there a playbook for RevOps?
The first and foremost goal involves breaking down internal walls or silos and getting revenue players to connect with each other. Once revenue teams are speaking apples to apples, then the second goal is to initiate their coordinated action as marketing teams towards revenue improvement as well as data-sharing. Both happen extensively when synergies develop across silos for the greater benefit of the company as a whole.
Revenue Operations Key Metrics
Key performance indicators provided by RevOps focus on customer data, operational efficiency, and, no surprise, on performance tied to revenue production. These include:
Win rate refers to the percentage of deals that are won.
Customer acquisition cost
Reducing the cost to acquire one new customer adds to the bottom line net profit.
Customer churn rate refers to the percentage of customers who cancel their service.
Annual recurring revenue
Return customers help produce long-term income and fuel company growth.
Customer lifetime value
It’s easier to keep an existing customer than to get a new customer. You can increase your revenue by maximizing the amount of revenue earned from each customer throughout the total time they are a customer.
Better predictions of revenue growth help your organization’s decision-making day-to-day.
The speed through which a lead moves through the sales process to become a customer. Often, the faster the pipeline velocity, the fewer resources to be allocated to the sales process.