Revenue operations (RevOps) is the total alignment of people, processes, and technologies that impact revenue. In 2022, it’s taking the business world by storm. A recent Forrester survey found that 86% of global business decision makers report that RevOps is an important priority for meeting organizational goals. The overwhelming majority (89%) said they have plans to add a role specifically responsible for the success of revenue growth in the next two years.
But the Forrester report also found a significant gap between the number of organizations that consider RevOps a priority and those that are able to implement it successfully.
We wrote this guide to help you bridge that gap.
There’s no doubt that launching RevOps at your company can be challenging. It requires a sharp shift away from “the way things have always been done” toward a strategy that prioritizes collaboration, accountability, and visibility at every level. It involves the adoption of new tools and processes as well as changes to your organizational structure.
But the ROI of revenue operations far surpasses the time, effort, and resources required to make it happen. Today, companies with an aligned, end-to-end revenue engine are growing nearly 20% faster and are 15% more profitable than those without one.
You can achieve this same success, and you don’t have to wait to get started. In the sections that follow, we’ll cover everything you need to know about revenue operations. Then, we’ll walk through the step-by-step process for launching your RevOps journey right away.
Let’s dive in.
Quick Takeaways
- Revenue operations (RevOps) looks at revenue holistically, aligning people, processes, and teams to achieve intelligent revenue growth.
- Adoption of revenue ops is growing in response to market uncertainty and changing customer expectations.
- Benefits of RevOps include higher marketing and sales ROI, reduced costs, and higher growth rates.
- Hiring a visionary CRO and conducting a maturity assessment are important first steps to launching a RevOps strategy.
- Important RevOps metrics to track include revenue, customer lifetime value, length of sales cycle, and retention.
What is Revenue Operations (RevOps)?
RevOps is a new and transformative way for companies to approach revenue management. By taking a holistic view of the relationship between revenue-driving functions within an organization — finance, marketing, sales, and customer success — company leaders can drive high levels of revenue visibility and predictable revenue growth.
In practice, RevOps is characterized by:
- Informed and collaborative teams
- Lean, agile, efficient processes
- Data-driven decision making and reporting
- Optimized technology tools
- Seamless customer experiences across the lifecycle
To achieve these goals, RevOps organizations are revamping their organizational structure to place go-to-market teams under one unifying leader, which is usually the Chief Revenue Officer (CRO). CROs are executive leaders responsible for the revenue strategy of their organization.
A RevOps-driven team structure allows CROs to optimize three important factors contributing to revenue growth:
- People - Align revenue goals across GTM teams with a focus on growth.
- Processes - Streamline workflows and communication channels.
- Systems - Leverage technology tools to achieve organizational goals.
The result is revenue intelligence — a data-driven, end-to-end, predictable understanding of revenue that accelerates company growth.
What are the drivers of RevOps adoption?
Gartner predicts that by 2025, 75% of the highest growth companies around the world will have implemented a RevOps model to accelerate growth.
There are three key factors behind the trend. First, the way customers interact with companies is changing. Their experience begins with independent brand research, a stage during which engagement depends largely on effective marketing messaging — messaging that’s aligned with your sales team’s value propositions.
Second, business models are evolving. Subscriptions businesses have grown nearly 6X faster than the S&P 500 over the past decade. Because subscription-based business models rely on renewals and upgrades to drive revenue, post-purchase stages of the buyer journey are now just as critical as those that come before it.
Finally, business operations are becoming more complex than ever. According to Statista, enterprises now utilize an average of 110 SaaS applications. A centralized strategy is essential, then, to maintain the single source of truth and high level of data visibility needed to make informed decisions.
To succeed in the future and achieve continued revenue growth, companies will need:
- High levels of visibility into their revenue pipeline
- Accurate forecasting and data analytics capabilities
- Organizational agility and innovation
- Strong customer relationship management across the entire pipeline
All of these (and more) are powered by a successful RevOps strategy with a capable CRO at the helm.
The Road to RevOps
How is RevOps transforming go-to-market teams?
Marketing, sales, finance, and customer success must all undergo transformation to align with RevOps principles. Siloed efforts must be traded for collaborative strategies, and tactics once seen as core to a single department may now cross functional boundaries.
Let’s consider how RevOps impacts each of the four primary go-to-market teams and how it affects organizations at large.
Marketing
Marketing is responsible for the first touch points that customers have with a company. This has traditionally meant they’re also often somewhat removed from end revenue goals, focused mainly on top-of-the-funnel strategies. Disconnects often exist between what marketing deems a success and what actually contributes to revenue growth.
In a RevOps organization, marketing efforts are directly tied to revenue, and revenue strategies are informed by key marketing KPIs like cost per lead and marketing qualified leads. Marketing tactics are intentional, targeted, and designed to maximize revenue earned. As a result, RevOps organizations are seeing an amazing 100-200% increase in digital marketing ROI.
RevOps also connects marketing to sales, aligning the two teams on qualifying leads and moving prospects through the pipeline in a seamless way that optimizes the customer experience.
Sales
As mentioned, an important component of RevOps is perfecting the lead handoff between marketing and sales. Companies that do this successfully see a 10% increase in lead acceptance.
A RevOps environment gives sales teams clear visibility into performance metrics and has the right tools for smart sales forecasting. Sales teams are able to set the right targets and achieve them more predictably.
Ultimately, RevOps allows sales to set goals that position them for success and to see how their achievements impact the overall financial health of their company. Considering more than 60% of sales employees feel undervalued in their work, this is one area where RevOps presents an opportunity to improve talent retention and employee engagement.
Finance
Finance plays the important role of assessing financial risk and conducting revenue forecasting. RevOps significantly levels-up their ability to do this by creating hypervisibility into financial data and access to sophisticated and centralized analytics tools. As a result, finance teams can make better revenue projections and effectively manage the overall financial health of their company.
Customer Success
Customer success teams are critical to revenue-generating activities like retention programs, customer support, and upselling. In traditional business models, customer success teams often act as a troubleshooting team, helping customers primarily when they encounter problems.
In a RevOps organization, customer success teams ensure that customer relationships don’t end after initial purchase. They communicate with customers to gather feedback, offer ongoing support, share success stories, and drive further sales revenue by upselling and cross-selling.
The Five Tools that Unleash Intelligent Revenue
What are the benefits of RevOps adoption?
Engaged Employees
RevOps environments encourage the creation of clear, collaborative goals that align with larger organizational objectives. When employees have clear expectations and can see how their effort contributes to company success, they’re more engaged and motivated to perform.
Collaborative culture
Collaboration drives innovation and new revenue opportunities across an organization. When cross-functional teams work together, perspectives are expanded, new ideas are generated, problems are more easily solved, and goals can be achieved more quickly and effectively at all levels.
Data transparency and shared source of truth
Revenue ops centralizes data systems and creates a single shared source of truth. By eliminating data gaps and inconsistencies, companies can execute more confidently on data-driven activities like performance measurement and sales forecasting. Centralized data also drives higher levels of organization-wide visibility and accountability.
Reduced costs
The Boston Consulting Group reports that companies implementing RevOps strategies see a 30% reduction in go-to-market costs. This is driven by RevOps-powered capabilities like process efficiencies, accurate forecasting, better resource allocation, and aligned execution teams.
Increased customer satisfaction
Customers expect a seamless experience along every step of their buyer journey. When RevOps aligns teams internally, customers reap the benefits through faster response times, personalized engagement, customized offerings, and high levels of support.
How do you launch RevOps at your company?
You know the principles of RevOps, how a CRO leads the charge, how RevOps transforms GTM teams, and its organizational benefits. But how do you actually implement a RevOps strategy at your company?
Let’s walk through the process step by step.
Hire a CRO
Hiring a new executive leader might feel like a counterintuitive first step. After all, your RevOps strategy isn’t even in place yet.
The thing is, especially when you’re implementing RevOps for the very first time, your CRO is an important champion who will drive the RevOps initiative forward. A RevOps strategy needs to be implemented gradually, and hiring your CRO first allows them to build a strategy founded in their extensive knowledge and experience.
They’re also getting to know your executive and management teams, gaining buy-in from internal stakeholders, and acquiring important institutional knowledge to be a more informed leader.
Conduct a Maturity Assessment
To build an effective strategy, you must first know where your organization stands in relation to achieving RevOps functionality. Xactly’s RevOps Maturity Model provides a roadmap for this assessment:
- Level 1: Manual - Organization has manual, siloed operations and strategies.
- Level 2: Automation - Organization has begun investing in automation, starting with a core process, but many processes are still siloed.
- Level 3: Integration - Organization now has integrated sources of revenue data. Cross-functional teams work together and are somewhat aligned on strategic plans for revenue growth.
- Level 4: Optimization - The fully-optimized organization is predictable, profitable and resilient.
Document vision and goals
Help set your strategy on the right track by creating and documenting the vision and goals for your revenue growth strategy. This requires collaboration between the CRO and CEO, and could also include the Board of Directors and other executive leaders.
Revamp your organizational structure
Change is difficult in business at any time, but most of all when it entails changes in reporting structure and/or a perceived loss of control. While anticipated changes were likely shared at the time your CRO was hired, it’s still important to handle this part of the process with care. Be sure your leadership teams are communicating effectively. Be transparent with employees about what the expected changes entail and why they’re important.
Get your go-to-market teams on board
Once your strategy is built and documented, share it with your GTM teams. When you do, help them understand how their individual contributions — and collaboration with each other — will contribute to achieving revenue growth goals.
For CROs, employee buy-in is an ongoing process. Sharing successes, highlighting individual and company achievements, and maintaining transparency about changes in strategy are important to this end.
Streamline technology tools
If your employee teams were siloed prior to your RevOps implementation, it’s likely your technology tools are as well. Streamlining technology tools is an important task to handle once your initial strategy is in place.
Streamlined technology tools will contribute to important success indicators like data visibility, higher efficiency, more accurate sales forecasting, and better pipeline management.
The Insights-Driven Revenue Leader
Work to optimize workflows and processes
This step is ongoing but especially relevant at the start of your RevOps launch. Find opportunities to automate tasks, create process efficiency, and optimize workflows across GTM teams to achieve goals more quickly.
This step requires communication with and feedback from your employees. While CROs have a bird’s eye view of operations, individual employees have the firsthand experience to recognize improvement opportunities as they appear.
Measure performance frequently
Last but not least — frequent performance measurement is an effective guide and motivator as your team adopts new strategies and adjusts to the RevOps model. Long term, it allows you to see what’s working and what’s not in real time, anticipate future challenges, and maintain high levels of adaptability.
Metrics to Measure RevOps Success
Revenue
Revenue earned is the core RevOps metric, and should be the primary way you measure the success of your RevOps strategy. Put simply, revenue is the amount of money your business generates during a fixed period of time (usually monthly or annually). It’s typically measured using one (or more) of these three metrics:
- Monthly recurring revenue (MRR) - Used by many SaaS companies and other companies who use a subscription-based business model. By definition, MRR is the total predictable revenue your company earns monthly from active customers.
- Annual recurring revenue (ARR) - The same as MRR, but measured annually.
- Average revenue per user (ARPU) - Total revenue generated by each user. Used by many communications and digital media companies.
Qualified Leads in the Pipeline
The size of your pipeline is key to forecasting future revenue potential. Measuring it frequently as part of your RevOps strategy allows you to quickly identify and address pipeline issues before they start showing up in sales numbers.
Qualified leads have been vetted by the marketing and sales teams and determined to have buying readiness. They’re a good indicator of whether or not your marketing and sales efforts are being targeted to the right audiences and customer segments.
Lead to win rate
Lead to win rate measures the percentage of leads that entered the pipeline and converted to “closed won” customers, or customers whose deal has been closed. Measuring win rate is a way to understand marketing and sales performance and pinpoint where potential issues may exist.
For example, if your pipeline is full of qualified leads but your win rate is low, the sales team may need more training or resources. Conversely, if your win rate is high but qualified leads are sparse, your marketing may need better targeting or a pivot in strategy.
Length of sales cycle
The length of the sales cycle is the time between initial contact with a new prospect to when the deal is closed. Many B2B industries have longer sales cycles because the products require a large investment and/or the audience is slower to make a decision, but the goal is to make it as short as possible without sacrificing the quality of your customer experience. Doing so drives revenue growth by optimizing marketing and sales ROI.
Customer lifetime value
Studies have shown for years that acquiring a new customer is 5-25 times more expensive than retaining current customers. As subscription-based business models become more prevalent and customer retention more central to revenue growth, customer lifetime value is gaining more importance than ever as it relates to a company’s overall revenue potential.
Customer lifetime value is found by calculating the total average revenue generated by a customer over the entirety of their relationship with a company. When compared to customer acquisition cost, it indicates a company’s profitability and growth potential.
Retention
Retention is a key metric for understanding the health of your customer base. It heavily impacts CLV and indicates whether or not customers are satisfied with your products and services. Every GTM team — including marketing and sales — should have retention at the top of their priority list.
Get Started with RevOps
RevOps is fast proving to be the revenue model of the future. It has the power to transform your business to become a revenue-focused, high-growth organization. To achieve it, you need the right tools in place to support your strategy.
The Xactly Intelligent Revenue Platform brings Revenue Operation teams together to support salespeople with precise plans, better incentives and data-informed insights to give them more confidence in their pipeline.
Learn more about how we can help you transform your revenue strategy!