What is Revenue Operations?
Gartner predicts that 75% of the highest growth companies in the world will deploy a revenue operations model by 2025. With the increasing rise in innovation and the urgency in breaking down company silos, we are currently moving towards a new reality where marketing, sales, and customer success operations must work together as one.
Combining online and offline work is more important than ever. The way we communicate and align departments is under scrutiny. What is revenue operations and can it help? Yes it can.
Revenue Operations Defined
Revenue operations (or RevOps), is the alignment of marketing, sales, and customer success operations across the full customer life cycle or funnel, to drive growth through operational efficiency. This includes increased communication between areas, more access to data, better data flow between departments, and a holistic approach in looking at organizational objectives.
RevOps works by centralizing four previously separate departments: sales operations, marketing operations, customer success operations and systems. The old approach of siloed operational teams isn’t working anymore and that is why centralized revenue operations functions will have a large effect on sales teams in the upcoming years. Well-run, high-quality RevOps departments will give early-adopter companies an immense competitive advantage.
When all teams are kept accountable to revenue, it frees up departments to focus on the customer and how to deliver value. This is a holistic approach designed to break down silos between the customer-facing areas.
So you might wonder, how is revenue operations different from sales operations?
Revenue Operations vs. Sales Operations
When a company incorporates revenue operations, the sales team can focus on sales, while the RevOps team can perform the behind-the-scenes work of collecting and handling data. Think about a backend and a frontend of operations.
So, the main difference between revenue operations and sales operations is that sales operations primarily focuses on sales, while revenue operations focuses on multiple functions, such as finance, marketing, sales and customer service.
If sales operations is about facilitating sales team functions so they can spend more time selling, revenue operations is about making the entire revenue-generating side of the business more effective at what they do.
This strategy aims to connect data from sales, marketing and customer service departments, providing the business with a complete view of the customer at all points of the customer journey. It is not only about meeting revenue goals but providing a positive customer experience.
On the other hand, sales operations is primarily responsible for supporting the operations of the sales department. Some of the tasks that a sales operations team focuses on to improve the sales process include: sales recruitment, onboarding and training, communication and collaboration channels within the team and contract lifecycle management.
The goal of sales operations is to improve sales performance by taking on sales enablement, sales data and strategic planning responsibilities and supporting sales representatives so they can focus more on selling.
Who Does Revenue Operations Report to?
There are strong opinions about this topic. Ideally, Revenue Operations should report to the Chief Revenue Officer (CRO). The CRO also oversees marketing, sales, and customer success leadership teams.
Some other RevOps reporting models are:
1) Sales and Marketing under one roof led by either a General Manager or Chief Experience Officer. This makes the conversation easier. Revenue Operations can simply report into that leader.
2) A more common scenario is sales under a sales leader and marketing under a marketing leader. To break down the silos, revenue operations can be placed under the Chief Financial Officer. Essentially, all the operational functions (sales, marketing, customer success, analytics) go under finance to create an “ops hub.”
3) Key functions including revenue operations , enablement, strategy, etc. reporting to the CEO directly.
At the end of the day, it’s about aligning the processes, platforms, and people. Let’s take a look at the RevOps three fundamental pillars.
The Three Pillars of Revenue Operations
Revenue operations is a collaborative, customer-centric approach to maximizing the revenue potential of a business. What is revenue operations founded around? Three integral pillars: Process, Platform, and People.
RevOps activates uniform processes as teams start to work together to convert prospects. Additional benefits are shorter sales cycles, improved retention and a higher upsell volume.
Within your organization, you must connect and align your technology to provide a clear and accurate story around your revenue pipeline. By providing a single source of truth, people can identify how they, directly and indirectly, impact sales.
Who is responsible for bringing together and managing your process and platforms? Depending on your company’s size, RevOps will create a specific team or distribute the responsibilities among existing team members (as mentioned above).
The Revenue Operations Team
The people in the Revenue Operations department require skills in sales, marketing, customer experience, technical skills, and change management. A RevOps department could consists of:
Operations management team. Works on the collaboration between departments and the process of working.
Enablement team. Concentrates on removing friction from the marketing, sales, and customer support departments, freeing up their time to work faster and with more focus on the customer.
Insights team. Provides customer insights and supports data-driven decision making.
Tools team. Responsible for the technology used in departments, including training tools and being a tools administrator.
In general, a Revenue Operations team will focus on delivering the following tasks:
1. Assessing company policies and business processes, with the goal of updating procedures and improving performance.
2. Removing obstacles that prevent sales, marketing and customer success teams from interacting with customers and generating revenue.
3. Producing short and long-term reports drawn from a wide range of data sources, with the goal of enhancing workflows and cross-departmental engagement.
4. Procuring, implementing and maintaining the software across all revenue-generating departments.
5. Providing continuous training to employees in how to use new tools or follow new processes.
6. Ensuring that every new workflow or system meets company, national/international standards, and legislation.
Revenue Operations Alignment Best Practices
Forrester´s Revenue Operations survey found that: “Centralized revenue operations has gone from 15% to 40%, while centers of expertise or excellence have similarly seen considerable growth from 18% to 37%.”
But more than organizing a RevOps model, a cultural change is fundamental so that operations function and work together with their stakeholders. As we now know, revenue operations is mainly about the alignment of departments across the customer life cycle. These alignment best practices are:
1. Agreement on metrics among departments.
In silos, each department has its own metrics, creating misalignment and different definitions of the same measurements. Revenue Operations takes control of the metrics from the beginning to the end of the customer life cycle, making sure everyone is on the same page and understands the core metrics.
2. Credibility and trust.
RevOps help the business understand metrics, thus make data-driven and credible decisions.
3. Defined ownership of the tech stack.
Revenue Operations takes control of this tech stack, aligning it between marketing, sales, and customer success operations. While doing this, they collaborate with IT in order to keep privacy and security needs up to standard.
4. Change management.
When aligning the marketing, sales, and customer success operations departments, more people in your company become dependent on maintaining this alignment.
Related: 3 Steps You Should Take in Your New RevOps Role.
Revenue Operations Metrics
Revenue operations is a numbers game, and as part of the credibility and trust of this department, defining the metrics and their desired results is a must. These are the living proof of the revenue potential and business function maximization.
Here are some of the metrics you should know:
Forecast accuracy. A calculation of how predictable your revenue is, usually expressed as a percentage.
Annual recurring revenue (ARR) The revenue coming into your business from subscriptions or contracts, calculated over the course of a year.
Sales cycle time. Time it takes from the first touch with a prospect to closing the deal.
Pipeline velocity. The speed that leads move through each stage of your revenue pipeline.
Win rate. The proportion of sales opportunities that are converted into customers.
Customer acquisition cost (CAC) The total cost of winning a new customer (this metric can include marketing costs, salaries, equipment and more).
Customer lifetime value (CLV) The amount of revenue you can expect from a customer during the entirety of your relationship with them.
Upsells and renewals. The amount of revenue you make from selling new products to existing customers, or getting them to commit to a new contract or subscription.
Customer churn. The proportion of customers you lose across a specific time period.
RevOps Software and Automation
We have covered the question what is revenue operations and its basics, concerning people and processes. Now it is time for the platforms. With the sheer number of software and apps available for revenue-related and customer-facing functions, choosing the best tools to include in your RevOps technology stack can be confusing.
The number one tool in revenue operations is your company’s CRM. You need to make sure that your CRM provides all the capabilities you need to make your revenue operations strategy a success, including:
Contact and activity tracking – to know where each prospect and customer is in the funnel.
Revenue forecasting – have the ability to tackle current and historical data to estimate what will happen in the future.
Revenue analytics – be able to gather information by observing workflows, then reporting on their pros and cons.
AI-powered analytics and insights – use AI tools to manage and manipulate large datasets.
Individual account dashboards – ensure every lead and customer has their own section within your CRM, with full visibility for all revenue-generating departments.
Data aggregation from third-parties – integrate with other software in your company, ensuring your reps can have all the essential info they need at their fingertips.
Most likely, your CRM is not the only platform in your organization, which means that you might require software automation and integration. When applications integrate, they share information, which saves you time and reduces errors by automatically updating data in the linked applications.
For automation technology to achieve successes like increasing sales velocity in the revenue operations context, it must be strategically and precisely implemented. Certain software might allow you to manage all revenue apps from one central location and then deliver revenue impact analytics to your teams so they can defend marketing spend and prove revenue impact.
Related: Generating Revenue is a Team Sport
One fundamental misinterpretation about automation platforms is that they only exist to replace people or automate individual tasks. To improve the efficiency or accelerate the speed at which deals are closed, any and all improvements made must be holistic in scope.
It’s never enough to just automate individual tasks, or even empower individual employees with some new powerful software. Therefore, it’s crucial to use automation to improve your processes.
Lastly, for automation to be used most effectively, it must be guided by something automation technology on its own can’t provide: the human approach. Give the most strategic people responsibility to implement it; approach the implementation process with an appreciation of thinking holistically; and keep it human-centric in day-to-day platform use.
Benefits of Revenue Operations Implementation
Now that you know more about what revenue operations entails, what are some of its benefits? Since RevOps has compounding effects on every area of your business, you will notice several improvements once it’s implemented. Here are a few of the benefits you can look forward to:
Predictable Business Growth
Being able to predict your business’s growth is empowering, as it allows you to confidently invest in new strategies and new markets. RevOps brings this predictability to your growth through accurate and consistent measurements.
Reduction in costs through elimination of redundancies
Your company will experience faster cycle times, reduced costs, and decreased error rates.
Shared operational objectives and priorities.
All stakeholders will have a shared outlook on what is important to the business and what is necessary.
More strategic use of technology.
Technology should be a strategic enabler. Revenue operations can help a company be more strategic with its technology overall.
As a function gaining traction in companies, don’t miss the opportunity to unlock additional growth opportunities. It is your time to devise a plan to implement a revenue operations approach for your business. RevOptics gives you the ability to manage all revenue apps from one central location and then delivers revenue impact analytics to your teams so they can defend marketing spend and prove revenue impact. Request a demo and see how it was built to be the system of record for RevOps.