Maximize Revenue Efficiency: The Role of RevOps and How to Build a Successful Team
Growing a successful business is like a game of football, and the departments are the team players. To win the game, all team players must present a unified front and communicate with each other throughout the game. If the team players are at loggerheads with one another, the game is lost before it starts.
In business, revenue operations aims to foster communication between customer-facing departments, namely marketing operations, sales operations, and customer success operations. When these separate departments are unified, the business will be able to serve its customers better and generate more income.
This guide explains what revenue operations is, how it works, the benefits, and the challenges of setting up a successful revenue operations team.
What Is Revenue Operations?
RevOps doesn’t include internal teams like Human Resources (HR) or the finance department because, while they’re important, they don’t have a direct effect on the organization’s revenue.
Apart from the marketing, sales, and customer success teams, the RevOps team is made up of the following key roles:
- Chief Revenue Officer (CRO)
- RevOps manager
- RevOps product manager
- RevOps project manager
- RevOps data analyst
The more customer experience (CX) evolves, the greater the need for customer-facing departments to share data with one another. RevOps is what brings these teams together—it acts as a centralized hub for customer data, focusing on customer-centric metrics like win rates, forecast accuracy, customer acquisition cost, and customer churn (more on this below).
A well-implemented revenue operations team aims to:
- Break down silos between the marketing, sales, and customer success departments by encouraging them to share customer data across teams.
- Give managerial stakeholders an end-to-end view of the business's revenue streams.
- Make it easier to accurately predict revenue and growth.
- Help customer-facing teams find trends and opportunities that’ll drive revenue for the business.
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How Does RevOps Work?
Many businesses have found teams that operate in silos do nothing good for the organization’s bottom line. To solve that challenge, a RevOps team aims to align the sales, marketing, and customer success teams, with the ultimate goal of driving revenue growth.
For example, in the marketing team, alignment might mean creating marketing campaigns to generate qualified leads that the sales team will nurture and close. For sales operations, alignment might mean designing systems that prioritize the customer lifecycle, instead of singular transactions. And for the customer success team, alignment might mean relaying customers’ questions, complaints, likes, and dislikes to both the marketing and sales teams.
By aligning these teams, RevOps eliminates internal inefficiencies across previously siloed departments, operations, and tech stacks, and ensures all three teams are working toward a common goal. This gives the company an edge in this competitive business climate.
Value/Benefits of Revenue Operations
Companies that implement well-run RevOps processes often report seeing quicker growth in revenue and profitability. LSA Global reports that aligned companies experience 58 percent faster revenue growth and 72 percent more profitability than siloed companies. And Gartner predicts that 75 percent of the highest-growth companies worldwide will implement a revenue operations business model by 2025.
Beyond driving more revenue for a business, here are other benefits of having a RevOps team:
1. Shared Operational Objectives
In a siloed system, each department measures and tracks separate data sets with little to no flow of data across teams. But with RevOps, the departments share data with one another and track all metrics in one place, so they all work toward the same objectives. The result of this is greater accountability, transparency, and unity among team members.
2. Data-driven Decision-Making
Because RevOps centralizes data from all three departments, you can get insights into which processes and/or campaigns are working well and what needs to be improved. This enables you to make data-driven decisions on how to allocate resources to get the best results for the business.
3. Predictable Business Growth
When all your customer-facing teams are making data-driven decisions to achieve a common goal, it becomes much easier to predict your business’ growth. You’ll be able to ascertain which strategies are working (and which aren’t), and will confidently invest in better strategies and untapped markets.
4. Better Customer Experience
Aligning the teams that directly communicate with customers—the marketing, sales, and customer support teams—with synchronized messaging and strategy results in a better customer experience.
RevOps ensures all the marketing assets, sales presentations, and customer service responses are coordinated and can adapt according to the ever-evolving needs of customers throughout the buyer journey.
5. Increased Productivity
Implementing a RevOps process removes silos and roadblocks within departments, allowing for a better flow of data. This gets rid of unnecessary complexities and inefficiencies, which improves simplicity and increases the levels of productivity across the company.
Top Revenue Operations Metrics to Track Impact
At the center of every good RevOps framework are customer-centric key metrics, or key performance indicators (KPIs), that tell your team how your campaigns are performing and where they can improve. These metrics include:
1. Customer Acquisition Cost
Customer acquisition cost (CTA) is the amount of money you need to invest to acquire a new customer. This includes the lead generation budget, salaries, and equipment, among other things.
A high CAC shows that either your ad placements are incorrect or you’re targeting the wrong audience. By tracking your CAC, you’ll know if your marketing team is on the right track and make informed decisions about the allocation of resources to your teams.
2. Forecast Accuracy
Forecast accuracy is a calculation of how predictable your revenue is (expressed as a percentage). This metric is key for a RevOps team because it shows if they’re predicting growth accurately and hitting their intended growth targets. And if they aren’t, the metric will help them identify the factors that are stopping them from achieving those goals.
3. Pipeline Velocity
Pipeline velocity shows the speed at which prospects move through your sales funnel. This metric is important when building revenue forecasts because it helps the RevOps team measure sales success against time, identify any slow points, and make changes to hasten the sales process.
4. Sales Cycle Time/Length
Sales cycle time refers to the time it took from your first contact with prospects to closing deals (or getting them to subscribe to your product). This time is expressed in days, weeks, or months.
Slow sales cycle times show the RevOps team that the sales team is not connecting with customers as early in their journey as they should. This way, they can rectify the issue and speed up the sales cycle time.
5. Customer Churn
Customer churn is the percentage of customers who stop using your product over a specific period. High churn rates show the RevOps team that your customer retention efforts aren’t working. This could be due to poor customer service, bad features, changes in customer needs, or something else entirely. Low churn rates, on the flip side, suggest that customers love your product and like doing business with you.
6. Win Rate
Win rate refers to the percentage of closed deals your sales team has gotten, compared to the total opportunities (won and lost) they’ve had. This metric shows whether your team’s sales methods are effective or not.
A high win rate shows that your team is efficient at turning opportunities into paying customers, which drives more revenue to the business. A low win rate, however, indicates that your sales team is using ineffective closing methods and is probably targeting the wrong prospects.
7. Customer Lifetime Value
Customer Lifetime Value (CLV) is the amount of revenue you can expect to earn from a customer throughout their relationship with your business. This metric is important because it helps customer-facing teams make important decisions about their acquisition, retention, and pricing strategies. It also helps them predict how much money you can make per customer (including renewals and upsells).
8. Renewals and Upsells
Renewals and upsells refer to the amount of revenue you make from getting your existing customers to commit to a new subscription or to buy additional products from you. A high number of renewals and/or product upsells signifies that your customers are satisfied with your product and are looking for ways to get even more value from it.
9. Annual Recurring Revenue
Annual Recurring Revenue (ARR) is the revenue you can expect to make from subscriptions or contracts in a full year. ARR can show a RevOps team how effective your sales and customer success teams are by measuring the revenue growth year over year (YoY) and calculating what percentage of it is coming from returning customers.
Since ARR represents repeated revenue, you can use this metric to measure progress and predict future growth.
Note: A RevOps team can measure all these metrics via a customer relationship management (CRM) platform, like Salesforce and Close.
Explore 7 effective strategies where CRM drives revenue growth.
Challenges to Setting up Revenue Operations–and How to Overcome Them
Despite how valuable RevOps is, many businesses still face challenges when trying to implement this system. Below are some challenges you may face during implementation.
1. Lack of Buy-in from Business Leaders
Before a company can implement a huge change, like revenue operations, the organization’s decision-makers have to approve it first. The problem, however, is that change can be hard and uncomfortable, and this may scare stakeholders into objecting to the implementation of revenue operations.
Unfortunately, this means that RevOps leaders are left to define the value of RevOps and why the company will need it. If you're presenting RevOps to your senior executives, make your case through data reports and research on the benefits of revenue operations for SaaS companies. You should also pinpoint other companies in your industry that have a functioning RevOps team that works well for them.
2. Lack of Budget
Implementing RevOps costs money—and getting the funds to hire a new RevOps team and switch to new tech and processes is difficult. That's why RevOps leaders have to make a great case for why this model should be used.
The goal is to show that a well-run RevOps framework can guarantee results that are worth the investment needed to get started.
3. No Shared Goals and Objectives
In many organizations, the marketing, sales, and customer success teams are considered separate departments with different goals, objectives, and strategies. While RevOps aims to centralize these teams, it can be difficult to do so if each team has goals that are very different from the other teams.
In this case, the RevOps team might need to do a complete overhaul of each customer-facing team’s goals and create collaborative goals that all teams aim for. That's not to say each team won't have its own unique goals and objectives—but they must be in alignment with the overall goals the RevOps team has set for the company.
4. Fear of the Unknown
Implementing RevOps is a total adjustment of how teams collaborate. The prospect of drastic changes to the status quo can leave employees scared and wary.
A great way to solve this problem is to initiate team bonding exercises. Encourage employees across the marketing, sales, and customer success teams to introduce themselves to one another. Interacting amongst themselves will build trust, and make them feel more comfortable with sharing goals and working together to scale the company. For remote teams, this can be done via remote or in-person retreats, coffee chats, or collaborative projects.
5. An Incomplete Tech Stack
One of the first steps a good RevOps team will take is to run a tech audit to find pain points between teams that can be solved with the right tools. The problem is, there are thousands of CRMs, automation tools, and other applications in the market, and it can be difficult to know which ones will work great for all three teams.
A great way to fix this is to ask peers and colleagues who have extensive experience using marketing, sales, and customer success tools to help make a decision.
Ready to Implement RevOps in Your Business?
Revenue operations breaks down barriers between the marketing, sales, and customer success teams, and encourages them to work together toward a common goal—increasing the company's revenue.
The work of a RevOps team leads to better communication, better flow of data, and the unification of business strategies. When these elements seep into every part of the business, it becomes easier for companies to achieve success.
An integral part of RevOps is collecting customer and revenue data in one centralized hub. Usually, this is a CRM that displays all of this data on one dashboard.
This is where Close comes in.
Close is an all-in-one CRM that sales leaders and reps can use to manage their sales teams, analyze workflows and KPIs, and close more deals in less time. Close has built-in tools for calling, emailing, sending SMS, automating outreach, and getting actionable insights into your sales strategies.