Over the last forty years, generating organic revenue growth has become a technology intensive, digital, and data-driven team sport. To adapt to this new reality, millions of organizations are pursuing commercial transformation – often called Revenue Operations (or RevOps) - in one form or another. Revenue Operations is now one of the fastest growing jobs in North America. CEOs, boards and growth leaders are pursuing RevOps strategies because organic revenue growth is the primary way the value of a firm can grow. And connecting the dots across the teams, processes, systems, operations, and datasets that support the revenue cycle is a very profitable way to grow firm value.
To lead RevOps initiatives, a new generation of growth leaders has emerged with a mandate to transform the commercial processes, systems and teams in the business. John Bell is such an agent of commercial transformation. As a Director of Digital Seller Experience at Schneider Electric, John’s part of a team tasked with transforming the end-to-end digital relationship for millions of customers, hundreds of thousands of partners, and over fifteen thousand front-line sellers.
Commercial transformation is worth the effort. It holds the promise of stair step improvements in corporate performance and profitability just like Total Quality Management (TQM) in the 1980s, Enterprise Resource Planning (ERP) in the 1990s, and Digitization in the new millennium. But just like TQM, ERP and Digitization efforts – nothing impactful will happen without truly making a commitment to change. For many organizations, that reality has stalled or slowed down their efforts to get different teams and functions working together towards generating more profitable growth in any meaningful way. Or at all.
“We limit the potential impact Revenue Operations can have when we do not truly make a fundamental, top-down, cross-functional commitment to transform from the start,” says Bell. “I suspect many leaders don’t fully commit to the necessary level of change, because let’s face it, it can be terrifying, highly difficult and time-consuming. And it’s certainly not without risk. So as a practical matter, it’s tempting to settle for ‘talking the talk’ and changing just enough to show progress,” Bell continues. “For example by putting in place band-aids that may be cosmetically appealing but are operationally limited. Or taking near-term focused actions that might show some form of ‘progress,’ without truly moving the ball downfield. As a result, ambitious leaders who want to drive real impact from the middle of the organization, may experience limited success without the top-down aircover necessary to take on comprehensive change.”
According to Bell, and hundreds of other leaders like him I’ve interviewed, most Revenue Operations leaders start by wading into the pool. They take ‘baby steps’ that are not really difficult from an organizational change, skill building, or teamwork perspective. Creating a mission statement. Hiring a consultant to develop a strategy. Or purchasing a technology solution to automate symptoms rather than solve core problems.
But when it comes time to execute, they very quickly have to jump into the “deep end of the pool’ by taking on actions and initiatives that involve a lot of pain, maturity and change. If they do this without a business case, consensus across functional heads, and the investment, incentives and equipment required to “swim” in the deep end – then RevOps initiatives will ‘sink.’ Or at best, their leaders will paddle back to the shallow end of the pool. This really frustrates the operations teams who are tasked with making real change happen. And dampens the enthusiasm of the front line teams for change. So it’s no surprise that almost two thirds (62%) of RevOps leaders believe the cultural and change management challenges are severely understated and gate the organizations' ability to implement, adopt and act on RevOps strategies.
“Growth leaders grossly underestimate the role of change management in RevOps,” asserts John Bell. “One thing I’ve come to appreciate after 2+ decades deploying sales enablement and commercial redesign strategies is the importance of change management, and what a true investment in healthy change management can yield. Putting a Change Management structure in place from the beginning has proven to be essential to being effective,” he adds. “It helps define the stakeholder model, how a CXO needs to work across revenue functions to effect performance, levels of accountability to support and drive the changes from inside the various geos and functions top to bottom, and the up-front groundwork needs to happen before you make too many changes.”
A common problem is that growth leaders often take on RevOps with little more than a mission statement. “People confuse baby steps with making progress,” according to Bell. “But in reality they are doing things that are relatively easy from a change management and impact standpoint.” When they do jump into the deep end of the pool, they’re not ready. They expect their operations teams to jump right to actions and initiatives that involve a significant amount of change management, business maturity, and cross functional cooperation. The core problem is they’ve skipped several important steps of the change management process.
John advises leaders to first decide to change. This involves agreeing on the value of changing and defining the structures, priorities and metrics to make that change possible. Inspirational leaders will occasionally get people to follow them. But dollars and cents incentives and outcomes are a more practical and probable way to motivate change.
In the absence of a business case and structure for change, RevOps initiatives risk devolving into deploying silos of technology and random acts of innovation rather than true, impactful and systemic change. Over time, it leads to frustration and paralysis. “You can’t ‘hack’ your way to commercial transformation,” says Bell.
To that end, Bell suggests growth leaders pause to take several practical intermediate steps that will significantly improve the impact of their efforts.
“You have to start with the question – what is the motivation to change?” says Bell. You need a shared financial goal, vocabulary, and purpose in order to get different stakeholders to overcome their individual (siloed) goals to work together. So the first questions you need to answer are what exactly is the primary goal of RevOps?, and how will achieving that goal pay off in terms of dollars and cents and paychecks? It sounds simple. But it’s not. Different executives in the same business will give different answers about the primary growth goal. Some say expanding customer relationships, others will say multiply returns on selling effort, and another will say maximizing margins. And few execs, including CFOs and CROs, are good at quantifying the size of the opportunity to improve in terms of their contribution to firm profits, revenues and value. A big reason for this is most executives do not truly understand the “math of growth” in their business. Without this math, they cannot translate the core commercial competencies, assets and investments in the business to firm value and financial performance. So they revert to dated notions of funnel economics or productivity metrics rather than factor in all of the ways an organization generates growth.
The next big question is what are the biggest ways your revenue team needs to work together to realize the goal? The tricky part is to identify the three to five big levers that will make an impact, not thirty to forty smart ways to improve performance. “You have to zero in on what are the specific levers, enablers and force multipliers that will make a real impact” says Bell. Isolating the three or four points of leverage in your commercial model is not particularly easy. This is because there are 46 specific growth levers and force multipliers that have proven to be causal of future revenue and cash flow, according to our Revenue Operations Benchmark report. Most are never reported, considered, or incorporated into the business case for growth.
Conducting a Revenue Operations Benchmark analysis is a fast, smart and comprehensive way for leadership teams to build a common understanding and consensus about the ways they can work together to affect changes that generate the most scalable and consistent growth. “It can be a bit scary for commercial leaders to ‘look in the mirror” by benchmarking their commercial operations because it reveals just how disconnected and complex your commercial processes actually are,” says Bell. “It may show that you are “leaking” people, opportunities, margins, and revenues all across your customer and commercial processes.”
Define the roles and structures needed to realize value from RevOps. The third question is how do you organize the team to best pull the levers that will create the most value? “From the top down, leaders need to provide a frame of reference – the structures, strategies, and ‘tentpole’ infrastructure needed for the army to succeed,” says John Bell. “From the bottom up, they need to develop the tactics, skills and formations the soldiers in the army must use to win the battle. For example, having eight different business units call on the same customer is not a selling strategy – it’s a formula for channel conflict and making customers annoyed and confused. So the real focus in the near term needs to be on establishing a structure for unification across marketing, sales and success,” Bell continues. “This means getting the ‘scaffolding’ of the modern commercial model right.”
Someone is going to have to lead this new organization. Typically organizations will stand up a Chief ‘Revenue’ Officer (or Chief ‘Customer’ Officer, Chief Commercial Officer) with a very broad remit to manage all the points of failure, delight, leakage, leverage, opportunity, and friction across the entire revenue cycle. From demand to renewal. But without a meaningful ‘teeth” in terms of common incentives, resource allocation models, and investments across functions – they will have as much chance of making realizing their goals as King Arthur in Monty Python’s quest for the holy grail. “Making a figurehead commercial operations leader the ‘one throat to choke’ for the points of failure, friction and leakage in the sales journey will obviously not work,” asserts Bell. “Companies must arm that individual with a meaningful remit, incentives, and infrastructure required to succeed. You also have to give them the accountability and the power to make or influence the cross-business decisions about what dots to connect and what efforts to prioritize to create value from RevOps,” he adds.
RevOps leaders often find themselves overwhelmed by the sheer volume of potential growth initiatives and operational challenges to fix. The list of potential priorities can feel almost endless. All this choice can lead to “analysis paralysis” where it is hard to choose where to start. It also makes it easy to get caught up playing a game of ‘whack a mole’ where the problems that pop up in front of management get all the attention. This leaves little time for focusing on the levers that will have the greatest revenue impact. “In order to execute, the leadership team needs to agree upon and prioritize the long and short ‘tent poles” that are going to hold up the commercial structure,” advises Bell. “For most companies, those key pillars will include optimizing the selling process (or lead-to-cash cycle), allocating seller effort and actions along the process (territory and quota planning), and enabling sales with the technology, systems, insights, and training to better execute.”
For example, to optimize the lead-to-cash cycle, most organizations will create Customer Journey Maps that illustrate the entire revenue cycle – from brand and demand through loyalty and expansion. A good map will identify all the points of failure, delight, leakage and leverage across functional silos. “Journey work can serve as a real foundational tent pole to for RevOps because when done well it shines a light on how disconnected your commercial processes are and quantifies how much revenue and margin are being lost as a result,” says Bell. “This can serve as a powerful catalyst to get everyone around the table to reflect upon a shared representation of your as-is ‘truth’.”
Another common tent pole is technology enablement. Here, Bell advises leaders to be very considered in terms of where and how technology can best improve growth, margins and customer lifetime value. “The commercial tech stack - if you include sales, marketing, and customer experience platforms - has grown to more than a $150 Billion market,” says Bell. “This creates both opportunity and challenge. There are hundreds of advanced platforms with the potential to accelerate a facet of sales and improve a particular aspect of the customer experience. But in practice these platforms are often deployed in silos (pockets of automation) as “point” solutions. To effectively deploy technology, you need to be focused on intentionally architecting technology into the end-to-end journey and experience in ways that actually serves your commercial activities and users comprehensively,” adds Bell. “The ‘north star’ for technology deployment is to connect them in ways that accelerate value over the long-term.”
RevOps initiatives generally don’t fail due to the lack of effort. More often, they go off the rails because they lack the performance measures and dashboards that separate ROI from activity. There are plenty of reasons for this. Analysts will measure what they can rather than what is important. Every member of the revenue team has their own measures. A surprisingly common issue is that managers cannot connect the KPI and incentives in their business to financial outcomes in terms of revenues, profits, return on investment and most importantly the return on commercial assets – which are the largest financial assets in the business.
This sounds like common sense. But having a clear financially valid goal and a focused set of initiatives and common incentives is critical to getting many different stakeholders working towards value creation. The lack of a common purpose is a big reason RevOps initiatives stall, operational teams get frustrated, and senior executives in sales, marketing, service executives will give up trying, do “just enough” to show action, or revert back to the comfort of their silos entirely. Occasionally you can get an inspired leader who can create that purpose and teamwork. But on a practical level using financial outcomes, dollars and cents metrics, and maximizing personal income is a far more reliable path to creating that common purpose for everyone. Which is why when you get the metrics that matter right, you should be comfortable linking them to financial incentives and reward systems.
The good news is that this is not as hard as it seems. Now that you understand what matters most, how much it matters, and can describe how that value gets created across the business. The other good news is you are not alone. Thousands of other companies have embarked on their RevOps journeys. We advise and benchmark many of these. And can share relevant ways that the best companies have successfully addressed the same issues, and you can leverage proven best practices to aid implementation.
We advise organizations leaders to take the time to define and enable the right KPI’s to create shared cross functional goals and measure performance against their North Star RevOps goal(s). This is generally no more than five to seven key metrics. And these metrics are best defined by the math of growth, not the systems, data sets and silos that contribute to that growth. Conducting a Revenue Operations benchmark shines a light on these drivers of value in the business. And provides comparative numbers and best in class performance to set a realistic bar for metrics. Further, our team shows you where to get the data to enable the metrics that matter, and how to assemble it quickly into an operational dashboard.
The Revenue Operations Benchmark (ROBTM) Self-Assessment is a practical starting point. In just 20 minutes, this free tool will help you evaluate the performance and capabilities of your commercial operations against peer benchmarks and RevOps best practices. This will help you identify, size, and focus your teams on the biggest opportunities to create value, plus help prioritize the highest impact steps to take first that ensure you can implement with existing resources, skills, and capabilities.
This will help you identify, size, and focus your teams on the biggest opportunities to create value. And prioritize the highest impact steps to take first that ensure you can implement with existing resources, skills, and capabilities.
If you’re interested in learning more about how to drive more revenue growth and value creation from operations or if you want to get access to the Revenue Operations Benchmark self-assessment, please feel free to reach out to me or any members of the Slate Point team. Book a meeting here.