Practical Ways To Get More Traction and Business Impact From Revenue Operations
In today's highly competitive business environment, over 90% of organizations are restructuring their revenue teams, systems, and processes to drive higher growth and profitability. In other words, companies are trying to augment revenue growth from improved operational performance. This shift has catapulted Revenue Operations or “RevOps” to the forefront as one of the fastest-growing career paths in North America.
RevOps leaders are being asked to better align the teams, systems, operations and processes to generate more organic and profitable growth. Their role and remit spans every function that contributes to revenue growth, including marketing, sales, and service but also product, IT, finance, and HR. That’s a lot of moving parts to coordinate.
But when all those parts work together, they can create a lot of value. RevOps can double the performance, profitability, and capacity of your commercial investment through better resource allocation, less leakage, and monetization of growth assets, and utilization of growth technology.
Most RevOps leaders are trying to grow revenue, profits and firm value from their growth investments. They face two main challenges:
- How do they focus their efforts to create the most business value?
- How do they build consensus and change needed to create that value?
Every business we work with, regardless of size, industry or operational maturity faces these challenges. Surprisingly few have answered them. Our experience and industry standard benchmarks uncovered five critical factors that have emerged as “must-haves” for overcoming these challenges and achieving greater levels of success in Revenue Operations.
1: Agree on the primary way RevOps will create value – your “North Star”
Most Revenue Operations strategies have lofty high-level goals. But in practice, RevOps programs wind up having so many moving parts and stakeholders, they tend to devolve into many tactical initiatives that can become disconnected from that specific overarching business objective. Examples: Fixing the obvious broken problems in the funnel process; automating manual processes; deploying AI software, etc. Most companies have a long list of well-intended but random acts of sales and marketing enablement. But often, they are not all pointed in the same direction, nor do they collectively move the needle on value and business impact.
The root of the problem is that different functional leaders have different views of what the main business objective is for this activity. Marketing wants to generate more leads. Sales wants to increase revenues, customer success wants to improve customer experience, finance wants higher margins, etc. These are all noble and good, but not for driving cross functional change. RevOps needs to start with one thing – a clear value creation goal or “North Star” which will garner alignment across all the functions.
The overarching, universal goal of RevOps is to create firm value by generating faster, more profitable and scalable growth. But RevOps leaders need to be very clear specifically how their efforts will create that value - the “North Star” that will lead teams to the overarching universal goal. These “North Star” objectives can include:
- Achieving a specific revenue target or revenue growth rate;
- Achieving a specific profit or margin target;
- Improving Customer Experience and hitting target CX metrics – in terms of retention, product usage, or internally calculated customer health metrics.
- Achieving operational goals relating to speed, cycle time, revenue leakage or goal attainment;
- Facilitating business model transformation by enabling the transition to a subscription, recurring revenue or “as a service” model.
Effective RevOps leaders anchor cross-functional teams on their chosen North Star objective as the key first step.
2: Understand what levers you need to pull to create that value
Every executive wants to create value through organic growth. But few that we talk to have a clear understanding of the "math of growth" within their businesses. Why? Because there is no real financial vocabulary that describes how a business really grows beyond basic pipeline management measures. But there are so many other drivers to growing the business than the sales funnel. And most of those assets - brand preference, pricing power, process performance, customer insights and the customer experience - are “invisible”. They don’t show up in financial statements, management reporting, or operating dashboards. They are also managed in different and disconnected cultural silos that generally don’t cross share KPIs. All of this leads to a lack of understanding and consensus around the financial benefits of RevOps.
This lack of understanding and consensus makes it very hard for RevOps leaders to build a financially valid business case to quantify improved operations performance in terms of their ability to grow revenues, profits and firm value. So, it’s no surprise that without a financially sound business case, most struggle to secure additional funding, get full leadership buy-in, allocate resources, and prioritize initiatives. Seventy-two percent of growth leaders agree that a financially valid scorecard is essential for aligning actions, investments, and incentives. “Senior leadership need a shared understanding of the financial impact commercial transformation can deliver so they can align on priorities and effectively activate the required culture, compensation and resource allocation changes,” says Ashmi Pancholi, VP Revenue Operations and Analytics at Affirm.
There are many growth levers to pull. Our research has identified the 16 growth levers that have been proven to create the most value through organic revenue growth. From a financial perspective, only a few of these will make a big difference in your organization so the trick is to identify and focus on those that matter for your company. And on a practical level, there are only so many levers a manager can effectively pull on without causing too much disruption or diffusion of effort.
16 Growth Levers
To achieve the overall RevOps business goal, all companies have a handful of high priority “growth levers” where the math will be compelling, and improvement will have a direct, immediate and meaningful revenue impact. These levers are the opportunities waiting to be unlocked by better aligning teams and resources - or “connecting their commercial dots”. Enhanced sales performance, reduced churn, higher conversion rates, better monetization of customer data, and increased returns on marketing channel assets are just a few potential examples of levers that can be measured and reported to reinforce the value of RevOps.
By identifying and educating leadership on these growth levers and quantifying their impact, organizations can leverage the “math of growth” to pave the way for impactful RevOps investments and successful implementation.
3: Align the role and remit of Revenue Operations with how value gets created in your business
RevOps is growing rapidly and is in a bit of a ‘wild west’ expansion mode. At this early stage, definitions vary widely across industries and companies. So, defining what it is a challenge. Growth leaders are experimenting with the best way to define, organize, arm and empower their RevOps teams. Some empower a czar. Others build matrices, teams and coalitions. Still others build centers of excellence around software deployments, customer databases, digital channels or analytical competencies.
There is no right or wrong blueprint for building this system necessarily. In practice, the best way to lead, organize, arm and empower your RevOps effort is the way that makes it possible for them to pull the growth levers and drivers that create the greatest value. What is most important is defining, structuring and enabling a system that ensures it can sustainably, measurably and practically connect the dots to achieve your ‘North Star’ value creation objective.
To that end, the definition of RevOps actually matters. A fundamental problem we see is leaders don’t define Revenue Operations on a fundamental level. They confuse it with a capital investment (Software), a job function (a CRO, or EVP of RevOps), an org change (integrating sales & service operations) or even a strategy (Growth strategy). a strategy (Growth strategy). And they structure, measure and manage RevOps as such.
After benchmarking RevOps of all sizes, industries and maturity levels, it’s clear that RevOps is a system. A system for growth. One that involves managing a significant amount of complexity in terms of teams, data, processes and systems. Everything that is complex but worth doing has a system. Quality Control (TQM, Six Sigma). Manufacturing (Kanban, Lean manufacturing). Even operating computers (operating systems). It’s time for us to realize organic growth in a business is a system, not a project, program or banner on the wall.
This system needs to be set up in a way to cross functional commitment to better aligning teams, processes and resources around shared, customer oriented KPI’s and objectives. This system has to be repeatable to support the continuous process improvements over time. This system has to be durable to ensure it adapts to the inevitable changes in structure as the commercial model evolves to become more digital, data-driven and technology enabled. It must be durable to outlive the many structural changes to traditional roles and processes over time to achieve alignment. For example, the imperative to align data and processes along the revenue cycle is leading to the inevitable consolidation of the marketing and sales operations functions, according to Chris Thompson, VP of Global Marketing Operations at Conga. “What is the difference between Marketing Operations and Sales Operations? – in two years there will not be one,” says Thompson.
4: Define the first three steps on the path to value
There are almost too many ways to connect the dots to create value in your business. 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. They range from building cross-functional teams, unifying data, deploying the latest technologies, and improving core processes like funnel management or onboarding. And many more.
All these choices 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.
The key is using an objective, comprehensive process to build consensus on the top three to five initiatives that will yield significant impact with minimal investment or operational disruption (e.g. quick wins). “The opportunity for growth leaders and their operations teams is identifying the actions that deliver and realize value for the client,” says Mary Beth Donovan, Global Senior Vice President, Customer Success at EDB. Once the points from these quick wins are on the board for all to see, consensus support for RevOps will rapidly accelerate.
That is a big reason we developed our Revenue Operations Benchmark (ROBTM) analysis. It provides a financially valid, quantifiable and clear method for normalizing different initiatives and ranking them by both financial contribution and ease of execution. Unlike conventional ROI analysis based on productivity and performance savings within a silo or stage of the revenue cycle, the ROB considers every possible growth driver in the business. It leaves no stone unturned by evaluating every commercial asset, competency and process that can generate greater growth.
This robust but simple to use tool gives you an objective and fast way to build the business case for change and identify the priority focus areas with the highest ROI that are easiest to implement. This makes it easier to develop simple step by step action plans that start with “win-win’ initiatives that generate the most impact with the least change, cost and new skill development. It also gives RevOps leaders the vocabulary they need to communicate “why” and the action plans to align stakeholders ensure they’re engaged and on board. This alignment is critical because many stakeholders — particularly sales, marketing, customer success, and finance — are going to need to agree on a common math, vocabulary, and financial basis if they are going to understand and affect the operational variables driving customer experience, revenue generation and profitability.
5: Determine the metrics that matter to track value creation instead of activity and effort.
Most of the organizations dive into their RevOps efforts without a good roadmap to tell if they are making progress or just making noise. RevOps initiatives don’t fail due to the lack of will and effort. More often, they go off the rails because they lack the performance measures and dashboards that separate ROI from activity.
This is a common 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.
Why is something that seems so basic so difficult? Because most leaders don’t understand the few metrics that matter that track how value is created relative to the steps they are taking to unlock that value in their business. Conventional management dashboards, Financial Accounting standards, and funnel based KPIs fail to measure how organic growth gets created. To a large degree, most CFOs are ‘flying blind” when it comes to measuring growth.
Zeroing in on the metrics that matter is important because growth leaders committed to RevOps must be able to define and communicate what it RevOps to every stakeholder in the company who impacts the customer and the revenue cycle. Some good basic KPI’s to ensure common accepted definitions across functions and get RevOps rolling include:
- Lead to Cash: MQL's Generated / SQL’s Generated / MQL to SQL Conversion / Win Rates (SQL to Customer)
- Retain & Grow: Retention Rate / Churn Rate / Customer Health Score / Cross-Sell/Up-Sell Revenue
- Teamwork & Execution: Time-to-Market for Collaborative Initiatives / Cross Functional Communications / Cross Functional Execution / Data Quality & Availability / CRM Usage or Adoption Rates
And some examples of next level more advanced RevOps KPI’s include Customer Acquisition Cost (CAC), Revenue by Marketing Channel, Revenue Growth from New Product Features & Enhancements, Lead Response Time, and Onboarding Success Rate
Most companies are generating data on both these basic and more advanced KPI’s but very few are using them effectively to measure RevOps ROI and drive a process of continuous cross-functional improvement.
The good news is that if you’ve done steps 1-4 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.
