The Revenue Operations Benchmark Model
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A comprehensive, practical, and actionable framework to help investors, managers, and accountants to better assess, quantify, measure, and manage the future organic growth potential of a privately held B2B business.
In an increasingly complex and intangible business landscape, private equity investors and portfolio company managers face significant challenges in valuing, protecting, and growing the assets of privately held firms. Traditional financial and management reporting systems often fall short in capturing the true drivers of revenue growth, primarily because these drivers are intangible, interdisciplinary, and largely invisible in standard financial analyses. The "Revenue Operations Benchmark Model" whitepaper by Slate Point Partners addresses these challenges by introducing a comprehensive and empirically backed framework designed to revolutionize the way firms assess and enhance their growth potential.
This whitepaper outlines the pressing need for a shift from conventional financial metrics towards a more robust and holistic approach to understanding revenue operations. The document presents the Revenue Operations Benchmark (ROBTM) framework, an innovative model that integrates sixteen operational value levers and forty-six specific growth drivers identified as critical to future revenue enhancement. These elements are categorized into intangible assets, interdisciplinary value levers, and foundational value levers, each playing a pivotal role in shaping a firm's financial future.
Our meta-analysis of 96 academic, commercial, and market research studies reveals that a significant portion of future revenue growth can be attributed to assets and strategies that traditional models overlook. For instance, digital selling infrastructure, brand equity, customer equity, and organizational knowledge sharing represent core components that are often undervalued or invisible in conventional financial statements.
The Revenue Operations Benchmark framework serves not only as a diagnostic tool but also as a strategic guide for investors and managers aiming to enhance their firms' valuation through targeted improvements in revenue operations. By adopting this framework, stakeholders can gain deeper insights into the true value drivers within their businesses, leading to more informed decision-making and strategic alignment.
In summary, the "Revenue Operations Benchmark Model" whitepaper equips private investors and business managers with a groundbreaking approach to understanding and leveraging the intangible, interdisciplinary, and invisible assets that are increasingly becoming the cornerstone of modern business valuation. Through this comprehensive framework, Slate Point Partners aims to set a new standard in revenue operations assessment, enabling stakeholders to unlock the full growth potential of their investments in a precise and actionable manner.
Table of Contents
Abstract: An Empirical Analysis of the Intangible, Interdisciplinary, and Invisible Drivers of Revenue Growth
This analysis seeks to provide the large audience of investors and managers that buy, own and manage privately held business assets a more financially valid and actionable means for valuing, measuring, protecting and growing the value of small, privately held firms.
The problem is that private equity investors and portfolio company managers are largely unable to take advantage of the vast and growing body of academic research on the marketing-finance interface. These allocators and manager of capital lack exposure to the research, find it difficult to put into practice, and need a way to reconcile how marketing assets and actions interact with other functions, stakeholder, systems and assets within the business to create firm value.
This paper presents a practical and actionable framework – the Revenue Operations Benchmark Model – which can help investors, owners, accountants, and managers leverage research on the marketing-finance interface to understand the sixteen operational levers and forty six specific drivers of firm value in their business to improve their ability to value business assets, report performance, allocate capital and resources, and govern commercial assets, processes and fiduciary risks.
A primary outcome we seek is to significantly expand the adoption and impact of the vast body of research created on the marketing-finance interface to a much larger and vested audience private investors and analyst and the management and accounting teams within the businesses they invest in. In addition, we hope this framework will help scholars, accountants and practitioners to contribute or direct new research that fill key gaps in knowledge and practice, develop operational benchmarks, and structure “test and learn” experiments that continuously improve the return on commercial assets and investments. This analysis does not seek to recommend better ways to value commercial assets or advocate for changes in financial, managerial and acquisition accounting standards.
The objective of this analysis is to provide a comprehensive, practical and actionable framework to help investors, owners, boards and managers better forecast, predict, quantify, assess, benchmark the future growth potential of a privately held business and direct and inform future research that connects commercial assets, investments and actions to firm value and financial performance. The research seeks to build upon and communicate the growing body of academic and commercial research in the field and increases the use of more accurate models and methods of assessing in industry. This research paper:
- Aggregates, affirms and builds on the increasingly intangible nature of commercial assets over the last forty years – and the gaps in management and accounting practices across financial, managerial and post transaction accounting in quantifying the true value of a business assets (brand, internal software development, R&D, New Product Development, Design, Training, Process know how).
- Incorporates new research on the increasingly interdisciplinary (marketing, sales, success and finance) and asset intensive (commercial data, brand, and digital channel assets) nature of revenue growth from research conducted in the book Revenue Operations.
- Informs investors, owners and managers of the gaps in accounting, due diligence, management reporting, and governance practices currently in use in quantifying the true value of the commercial assets and growth capabilities (brand, internal software development, R&D, New Product Development, Design, Training, Process know how) within the firms they are buying, governing, protecting or growing - particularly given the lagging nature of traditional due diligence (quality of earnings) and the inadequacies of current accounting (GAAP and FASB) practices and reporting standards.
- Catalogs and contextualizes the different approaches, models and methods developed in academic and commercial research for better assessing the impact of commercial actions, assets and investments on firm value in the proper context (value based, customer equity based, asset based and revenue attribution based).
- It suggests a practical and actionable (conceptual, theoretical) framework (The Revenue Operations Benchmark Assessment) - that will allow (private company) investors, boards, and owners of businesses to use the growing body of academic research on the impacts of commercial actions and assets on firm value in their investment, fiduciary and capital allocation decisions. (Other options are too slow, expensive, theoretical, and subjective)
The ultimate goal of this analysis is to provide private company owners, investors and boards an alternative evaluation model - the Revenue Operations Benchmark framework - that better reflects the true drivers of value and growth after decades of an entrenched reliance on Financial Engineering and Quality of Earnings analysis in firm valuation. And it seizes on the rising focus on revenue engineering in the private equity and investment field, as the traditional financial engineering playbook used by Private Equity for decades has run out of steam as interest rates rise, and markets start to finally understand that organic revenue growth is the primary driver of firm value.
Operational Value Levers
About The Research
This research initiative was developed in collaboration with over 25 academics and experts in science of growth. To define and execute this meta-analysis, our research team examined 96 academic and commercial research papers that quantify the causal impact of market based intangible assets and interdisciplinary commercial competencies on future revenue growth, cash flow and firm value. These experts lent their research and decades of research and practical experience to make the key operational driver future revenue growth and the math of that makes those value drivers more visible and understandable to the investors, owners and leaders of growth oriented businesses. The authors of this analysis include:
Stephen Diorio, Stephen Diorio is a Board Advisor to Slate Point Partners, and a Senior Fellow at the Wharton Customer Analytics Initiative. A leading authority in go-to-market transformation, sales and marketing performance management, and revenue operations, Stephen has helped over 100 organizations to reengineer their revenue operations to accelerate growth and become more data-driven, digital, and accountable. He has authored several books on commercial transformation including Revenue Operations: A New Way to Align Sales & Marketing, Monetize Data.
Steven Busby, Steven Busby is the Managing Director and Founder of Slate Point Partners. Steve has over 30 years of experience operating and advising small and mid-sized companies to help them achieve transformational growth. Before founding Slate Point Advisors, Steve was CEO & President of Greenwich Associates, a $90 million analytics and advisory firm that pioneered the concept of quantifying and benchmarking relationship quality in B2B financial services.
This steering committee was supported by contributions from academics and subject matter experts in the marketing-finance interface including Professor Domnique Hanssens of UCLA, Professor David Reibstein of Wharton, Professor Neil Bendle at the University of Georgia, and Bob Kelly the CEO of the Sales Management Association.