For SaaS companies to grow and win in today's market, it is crucial for them to build and optimize their revenue operations teams. It is fundamentally transforming how SaaS organizations align their internal go-to-market operations teams to drive growth. Some of the fastest-growing B2B organizations have embraced revenue operations to boost their planning and productivity, but it is still a new way of doing things and businesses are working on how to get it right.
A 2021 report by Forrester found that 57% of organizations planned to invest in a revenue operations function within a year. Although a majority of decision-makers were confident about their understanding of RevOps, only 41% said they were "very confident."
Revenue operations can benefit your organization in many ways, from increasing efficiency to boosting profitability. If you're wondering how revenue operations can help your business, this article will give you a better understanding of what it is and how to start implementing it.
What is revenue operations?
Revenue operations is about consistency in an organization's approach to interfacing with the customer and running its go-to-market operational teams. Here's an analogy. Think of your organization as an orchestra or a machine. To create the best symphony for the audience, every artist in an orchestra has to work harmoniously with each other. Similarly, each part in a machine has to work flawlessly on its own as well as with others. The revenue operations model works in a similar manner.
It can be defined as a management system that streamlines and aligns goals across various revenue-impacting teams, like marketing operations, sales, and customer success to drive revenue growth. The idea behind using RevOps is to break the silos between revenue-focused teams in an organization. RevOps is a relatively new term, but the concept has been around for quite some time. In fact, many organizations have been using RevOps without even realizing it.
Even though these teams now have access to more sophisticated tools, but often poor integration, data inconsistency, a lack of communication, and inadequate cross-functional collaboration holds them back. All this adds up to an organization being unable to unlock its full revenue potential. This is where revenue operations come in. It provides better collaboration and visibility across the consumer lifecycle and helps in closing gaps, better use of technology, generating better-quality leads, and driving operational efficiency
Why do you need revenue operations?
The manner in which companies make purchase decisions has fundamentally changed. In the past two decades, buyer behavior and expectations have changed dramatically as a result of the capability to conduct more independent study. Consider this -- according to Gartner, buyers spend a mere 17% of their time meeting with potential suppliers. About 27% of their time is spent on independent learning online, and 18% on independent learning offline (18%). About one-fifth of their time is spent in meeting buying groups. This calls for a serious rethink in how organizations plan and measure the customer journey. They cannot rely on traditional sales and marketing approaches, and obsolete management systems and still expect exceptional revenue growth.
Traditionally, the sales team would be focused on closing deals and building relationships with buyers, marketing would focus on campaigns, advertising and content, and the work for customer success operations would typically begin after a sale is completed. Each of these teams' responsibilities are clearly delineated. This is what RevOps changes. It opens up communications between all of these teams and benefits each one of them, as well as the organization as a whole. This results in more accurate revenue forecasting, higher win rates, and shorter sales cycles.
Additionally, RevOps is also responsible for sales enablement, and managing customer churn or the percentage of customers that stop using a product or service. Analyzing churn data can help in putting preemptive measures in place.
The building blocks
There are three main building blocks for a RevOps function which include people, process, and technology.
People are the center of revenue operations. Depending on the size of your organization and availability of resources, you may hire a new team or distribute responsibilities amongst your existing teams. Revenue operations should typically include resources with skills in sales operations, marketing operations, customer success operations, financial planning, and data analysis.
Revenue operations is all about streamlining processes to enhance collaboration between previously siloed departments. But that doesn't mean you have to forgo everything you have built so far, instead you should refine it. You can use data from different departments to identify gaps in current processes and streamline them. This will also help you align your goals and objectives, and enhance customer experience.
To deliver a single view for action across all revenue-generating teams, your company needs a centralized data source, such as a data warehouse, for analysis. RevOps teams need a variety of tools in addition to customer relationship management (CRM) systems and marketing automation software to maximize revenue operations impact. To provide a clear and accurate picture around your revenue pipeline, it's important to start with building a single source of truth that can provide insight into the entire customer journey.
What is the difference between revenue operations and sales operations?
These terms are often confusing for people and are even used interchangeably. But they are very different. Sales operations is an important subset of RevOps. Sales operations' main focus is to lessen the administrative workload on sales professionals and enable a more efficient sales process. Sales operations enables sales representatives to do the actual selling and closing deals in order to gather revenue without distraction.
Sales operations also provides strategic guidance. The main responsibilities of sales ops teams include:
- Sales forecasting
- Sales process optimization
- Data management and reporting
- Technology management
- Product and sales training
- Hiring and onboarding talent
- Handling operations management so sales teams can focus on closing deals
Revenue operations is a broader business function that aligns and empowers marketing, sales, and customer success functions to work together to drive predictable revenue for an organization.
The main responsibilities of RevOps teams include:
- Fostering collaboration between sales, marketing and customer success teams
- Leveraging technology tools used by sales, sales ops, marketing, marketing ops, and customer success teams for valuable insights
- Providing meaningful analysis, insights, and forecast accuracy that can drive predictable revenue and guide business strategy
How do you structure a rev ops or revenue operations team?
Every organization has a different approach to building and structuring its RevOps team. Typically, the revenue operations department reports to the Chief Revenue Officer (CRO). A more recent trend has been to create an exec level position titled Chief Revenue Operations Officer (CROO). Your organization does not have to follow a particular revenue operations reporting structure, however the only prerequisite is that it should have representation from each go-to-market operations team in the customer lifecycle.
The size of the organization is a crucial factor when it comes to structuring a RevOps team. While big organizations can appoint someone exclusively to manage RevOps at the director or VP-level, smaller organizations with limited resources can designate current operations managers for the responsibility
Here is a simple structure for RevOps teams, including their responsibilities:
The main responsibility of the team lead is to help various teams in aligning their goals.
This includes sales forecasting, sales process management, deals desk, and opportunity management.
Using tech tools to streamline processes and automate workflows.
Overseeing financial functions like budget analysis
Data, analytics, and insights
This includes responsibilities like data analysis, database development, and monitoring sales across the customer lifecycle.
How do customer success teams fit into revenue operations?
Customer success teams play an important role in revenue operations by ensuring that customers are able to use and get the most value from a company's products or services. In many cases, customer success teams work closely with sales, marketing, and support teams to ensure that customers have a positive experience and continue to do business with the company. By aligning their goals and objectives with the company's overall revenue goals, customer success teams can help to drive revenue growth and improve bottom-line results.
In order for customer success teams to be effective, they must have a deep understanding of the company's products or services and how customers use them. They must also be able to identify customer needs and pain points, and have a plan for addressing them. Additionally, customer success teams must be able to track customer engagement and usage data to identify trends and areas of improvement.
When done well, customer success teams can have a significant impact on a company's revenue growth. The most obvious way that customer success teams can help to increase revenue growth is by improving customer retention rates. Satisfied customers are less likely to churn, and so retaining more customers will lead to increased revenue growth over time. In addition to improving customer retention and satisfaction, they can also help to drive upsell.
Implementing revenue operations
Once again, implementation depends on the size, scale, and make up of an individual organization. Here is how you can begin:
Always begin with a diagnosis. You may conduct a gap analysis to evaluate the current state of systems, processes, people, and technologies. It's important to identify problem areas that are stopping your organization from achieving its full revenue potential. This information will help you build a roadmap for setting up revenue operations.
Aligning teams and functions
Each of the revenue operational functions -- sales ops, marketing ops, and customer success ops -- should be aligned under RevOps. This does not imply that they merge and everyone works together as one team. RevOps is for better collaboration between teams while maintaining their unique responsibilities. In a smaller organization, each of these functions might have a single individual contributor. In a scaled up organization, these functions might have a manager or director-level leader. The goal for RevOps will be to align data, resources, and technology from all revenue-impacting departments and to help them work together to achieve common objectives.
When an organization sets up revenue operations, it is also important to foster the need for team work. One way to do this is by introducing both shared and individual performance goals. This will help the team to work together to improve performance and reach their targets. In addition to enabling Revenue operations is also responsible for creating efficient processes that enable the sales team to close deals faster. By automating repetitive tasks and providing the sales team with the tools they need to be successful, revenue operations can help speed up the sales cycle and increase win rates.
An important part of implementing revenue operations is centralizing customer data which will empower your organization to make real-time data-driven decisions. This begins with equipping each team with technology for setting up data-sharing processes and building a feedback loop to help marketing and sales.
Key revenue operations metrics
RevOps will help your organization forecast predictable revenue which can be measured using key performance indicators (KPIs). KPIs are important metrics to gauge the success of your revenue operations strategy like they are for individual departments. Here are the key metrics that you can use to measure the performance of the overarching RevOps function:
- Monthly recurring revenue (MRR)
MRR is a metric to measure the predictable total revenue that your business generates from active subscriptions in a month.
- Annual recurring revenue (ARR)
ARR is the predictable and recurring revenue generated in a year.
- Net revenue retention (NRR)
Net revenue retention (NRR) or net dollar retention (NDR) is a SaaS metric used to measure the percentage of recurring revenue over a specific period of time.
- Customer lifetime value (CLV)
CLV is a measure of the total revenue expected to be generated from a customer during their entire relationship with an organization
- Customer acquisition cost (CAC)
CAC is the the cost associated with acquiring a new customer.
- CAC payback period
CAC payback period is the amount of time taken by an organization to earn back the money invested in acquiring a customer.
LTV:CAC is a measure of the relationship between average customer lifetime value and customer acquisition cost. It helps subscription businesses determine the amount of money they should spend on customer acquisition.
Benefits of revenue operations
Here are the most important ways in which RevOps will benefit your organization:
Drives efficient collaboration
Traditionally marketing teams would generate leads that sales representatives would follow up on. That was the extent of their relationship. But things have changed remarkably with the advent of digital. With social selling, content, email, and social media marketing, or pay per click (PPC) ads, there is a need for better collaboration between sales, marketing, and customer success departments. RevOps enhances collaboration between these teams and improves communication. It also saves time and costs which would be otherwise lost on duplication of work or gathering different sets of data. Increased collaboration means all revenue generating teams can work cohesively towards shared goals and objectives using the same data and technology.
A common problem that organizations face when teams come together is that each team is only concerned about their own individual functions and goals. For example, sales teams will focus on closing deals, marketing will only concern themselves with brand management or campaigns, whereas customer feedback is the main forte of customer success teams. This can create a lot of inefficiencies because each team barely knows what the other is doing or how close they are to achieving their targets. An organization where teams don't work towards common goals is holding itself back. By making processes more collaborative and opening channels of communication, RevOps make the revenue process highly efficient. For example, high-quality CRM data shared by sales can help marketing build sharp customer insights and target their campaigns better.
With the help of RevOps, many organizations are also adopting a unified system for maintaining customer relationship management software, content management system, marketing automation, and account management capabilities. An all-in-one system can help make sales and marketing processes more efficient.
Helps in data-driven decision making
One of the main advantages of having a RevOps function is that it is instrumental in centralizing data. This ensures that teams across the organization have access to the same information. This data is used to accurately forecast trends and preferences, which help an organization gain a competitive edge.
Builds resilient, future-ready organizations
In uncertain times like the ones we live in, organizations need to build operational resilience so they can sustain and grow even when there are external disruptions. RevOps helps with that. It can equip organizations with macro and micro perspectives (team or department-specific) so they can act fast and make quick but well-thought out decisions.
What is revenue operations in SaaS?
Revenue operations helps SAAS organizations align marketing, sales, finance, customer success, and any other revenue-impacting teams, and drive rapid growth and great customer experience.
Why are companies adopting RevOps?
Think of RevOps as a small democratic setup within an organization wherein representatives from various teams can come together to make the best decisions for an organization in order to generate better revenue. They leverage teamwork, data, and tech tools to do so. The chief objective of a RevOps team is to streamline the customer journey, break down silos between various teams and allow them to work together on common objectives and metrics. Companies benefit with this cross-functional collaboration and it boosts better exchange of data, meaningful data analysis, and more aligned customer engagement.
What does the head of revenue operations do?
The chief revenue officer or the role of the leader of RevOps can be subjective, depending on the needs, size, and goals of an organization. Broadly the RevOps manager manages revenue forecasts, identifies revenue opportunities, strategizes, and works with sales, marketing, product, and business operations to share insights, and centralize information. The role also includes overseeing data administration, managing dashboards, and finding ways to improve data reporting and analysis.
Despite the fact that the phrase "Revenue Operations" has been gaining popularity in recent years, it is not an entirely new function. Revenue operations, or RevOps for short, is a relatively new but increasingly important function in organizations that are looking to achieve predictable revenue and improve their customer experience. This cross-functional collaboration allows for better data sharing and analysis which leads to more aligned customer engagement. Some benefits of having a RevOps team in place include reaching forecasts more predictably, faster decision making based on data-driven insights, and streamlined customer journeys. If you're looking to improve your organization's revenue, adopting a RevOps function is a great place to start.