There’s a good chance the term Revenue Operations, or RevOps for short, has crossed your path recently. LeanData’s “The State of Revenue Operations” report shows that between 2018-2019, the number of companies using a dedicated RevOps team increased from 20% to 31%, which is a 55% year-over-year increase. The number of companies actively building a RevOps team jumped from 15% to 27%, which is an 80% year-over-year increase. So it makes sense that this term is popping up online more frequently.
RevOps is also a term included in some of the fastest-growing job titles in tech. If you’re looking to increase knowledge and gain relevant skills right now, including pivoting your career or helping your company during the pandemic, RevOps may be a good bet.
But what exactly is RevOps?
What is RevOps?
- A single team streamlining all your company’s efforts to focus on a shared goal of maximizing revenue, instead of having siloed individual marketing, sales, and service departments focused on their own individual KPIs.
- True to the 'ops' in operations, optimizing and gaining operational efficiency across the entire customer journey/cycle is a key component of this philosophy or mindset, a goal which many SaaS companies obsess about due to their recurring revenue cycle.
- Not just having Sales Ops and Marketing Ops and Service Ops talk to each other, it’s a cultural framework for an organization.
- Responsible for the everyday processes, systems, and data that revenue-focused departments use, including tool implementation, tool ownership, administration, change management, process design, and documentation to keep everyone aligned around the customer.
- An ally to the sales, marketing, and customer service/success teams...not a threat to their existence. It runs parallel and frees up these departments to dive deeper into customer relationships by having RevOps focus on internal company operations needs.
- Described in the excellent RevOps Framework guide as using sales and marketing alignment, focus, and simplification to drive revenue growth, help you invest in growth, and respond to market changes faster.
So you see, while there isn’t one accepted definition of RevOps, breaking down silos between teams and focusing on operational efficiency to maximize revenue are common themes across all interpretations.
The experts at subscription billing company Chargebee have a lot to say about RevOps.
“When you bring all the drivers of revenue together, you notice some pieces that cut across functions – the underlying platform of infrastructure, tools, processes, and practices. And this backbone system is what embodies your ideas and strategy into revenue opportunities.
Sure, Sales would like to experiment with a new pricing option. But who owns the systems and processes to it?”
And the answer is...RevOps!
With siloed departments, one department’s experiments with shared data could cause severe problems to other departments’ reporting and goals, especially if the departments share a CRM (which they should! That’s just operational efficiency 101).
You don’t want your teams to spend more time cleaning up messes, caused by miscommunication about shared tools and intertwined processes, compared to the time spent making progress towards earning revenue.
Think about this: Does anyone at your company know about all the tools, systems, and processes these three teams use and how they affect each other? Wouldn’t it be helpful if that knowledge was easily available, simplified, and maintained?
Having a view of all processes throughout sales, marketing, and customer service/success/support (whichever 'S' you prefer) and a view of how changes in these processes affect each other is a big part of revenue operations.
A Chargebee and GoNimbly virtual conference, “The RevOps Intervention,” mentioned they are tired of the word 'alignment' and that the word isn’t accurate anymore...so please excuse us for using the word for clarity in this article.
Where did RevOps come from? Why did it arise now?
The short answer is: an increase in available tech and data.
Technology (such as the internet and always-on mobile devices) has fundamentally changed the buyer’s journey. Most of the buyer’s journey is now complete before potential customers contact anyone in sales departments. So improving only the sales department’s efforts won’t increase your company’s bottom line the way it used to.
Technology has also changed how companies operate internally. Saleshacker reports that the increase in cross-functional software available for sales, marketing, and service teams is one of the reasons behind the rise of RevOps. Companies are using more tools than ever before, with access to more data than ever before, and a lot of these tools are used across all three go-to-market departments: sales, marketing, and customer service. (Shameless plug for HubSpot here.)
Workato’s VP of Growth, Bhakshar Roy, writes in Forbes that organizational restructuring into RevOps was invented to “address the app bloat that is happening across marketing and sales, and [RevOps is] the new operational force needed to tame it.” He also attributes the reason RevOps emerged now to the increased availability of enterprise automation platforms make it so everyone in the company no longer has to rely on IT for integrations and reporting needs (cough, HubSpot, cough. OK, and to be fair, Workato.).
As mentioned previously, when teams share tools containing customer and prospect data, setting up and maintaining the integrity of these tools requires a clear strategy that is transparent throughout the whole company. When one team owns a system used by many teams, power struggles and inadvertent catastrophes can happen at a moment’s notice. One team could easily erase another team's progress.
Bob Thompson of Customer Think says RevOps evolved from the term “Revenue Performance Management” or RPM, a technology-enabled strategy to increase total revenue productivity. He also cites Forrester’s role in revamping its Selling System in 2014 as “all activities that are performed by employees in your company to generate revenue,” which “cuts across organizational silos and is not limited to the sales organization.”
Evan Liang, CEO of LeanData, said in Forbes that revenue operations is still a very new concept and made its debut in 2018, “as market analysts such as SiriusDecisions (Forrester) and TOPO (Gartner) introduced this new go-to-market methodology to clients—and began centering many of their existing sales and marketing research practices around this model.”
We’re seeing this term more and more lately because of XaaS (anything-as-a-service) companies’ dependencies on recurring revenue cycles. More on that next.
What types of companies use RevOps?
Subscription-based companies, known as XaaS, are early adopters of RevOps since their lifeblood depends on maximizing efficiency of their recurring revenue cycles. They can’t afford to have one department’s efforts thwarting another department’s goals (see erasing gif above). Profits for these often-early-stage companies are sometimes slim to none, so aligning all teams to a shared revenue goal is crucial for the company’s success and profitability.
Recurring revenue can make retaining and expanding the customer base more important than acquiring new customers, which was the traditional main duty of marketing and sales departments at many companies. So a new framework, RevOps, was introduced.
As more and more XaaS companies are founded and/or look for ways to grow, especially when new clients may be sparse and retaining current clients is more important than ever, RevOps may play a key role in competitive advantage.
“Using technology and data, RevOps aim to centralize and turbo-charge revenue generation, so that what you get is a revenue engine on steroids,” Saleshacker’s State of Revenue Operations report states. Who wouldn’t want a revenue engine on steroids?
What types of work does RevOps do?
Most companies can group RevOps functions into the categories of Operations or Strategy, Enablement, Insights, and Tools.
The Guide to RevOps by Role says that Strategy does alignment, process, and planning such as identifying ways to close the gaps in processes and prioritize based on projected revenue impact: Enablement makes sure each go-to-market team (sales, success, marketing) has the training they need; Insights provides analysis and actionability; and Tools manages the tech stack.
Saleshacker gives a nice list of examples of work RevOps does, including:
- Measuring & reducing friction across acquisition, sales, and the upselling of current customers.
- Getting real-time visibility into where your revenue is leaking.
- Identifying, predicting, and reducing churn of customers.
- Squeezing the most value out of every deal in your sales funnel.
- Easing the finance processes so you spend less time on metrics and more time planning for the future.
- Asking hard questions about your pricing strategy, such as: how much money are you leaving on the table? And when was the last time you rethought your pricing?
- Streamlining your A/R collections and tightening your revenue recovery process.
- Constantly looking for opportunities in each part of your revenue cycle.
For a visual of the scope of revenue ops, check out page 4 of “The Ultimate Guide to Revenue Operations for a High-growth SaaS.”
Funnelcake, software for lead and pipeline management, breaks down some of the RevOps responsibilities as: strategy, business process innovation, project and change management, cross-functional collaboration, sales planning and compensation, onboarding, coaching, continuous training, professional development, content access and utilization, data management, data access, operational insights, strategic insights, system administration, technical solution design, evaluation, procurement, vision of the tech stack, and integration.
They also listed some of the roles within RevOps, which could include: Sales Operations, Marketing Operations, Project Management, Business Analyst, Sales Enablement, Learning Management, Performance Management, Business Analyst, Data Scientist, Database Developer, Systems Administrator, and Software Developer.
Who leads the RevOps department or who does it report to?
Depending on the organization, RevOps usually reports to, or is led by, a CRO. This chief revenue officer leads all efforts directly related to revenue generation.
Saleshacker reports that before we saw a rise of RevOps, we saw a surge of companies hiring CROs. At that time, a LinkedIn search for 'CRO' gave more than 12,000 results, proving the title’s adoption.
CROs are usually found in their native habitat of SaaS or XaaS companies, since these companies rely on recurring revenue models that intertwine sales, marketing, and customer success moreso than many other types of companies, as we’ve mentioned a few times before! It's not so much breaking down the silo model as blowing it up.
RevOps also depends on relationships with Finance, Product, and the Executive team in order to get buy-in to complete their work efficiently.
If your company doesn’t have a CRO, RevOps could temporarily live under the Operations umbrella, though be careful since unlike traditional operations teams, RevOps is usually intentionally separated from the teams they serve. Clearly stating that RevOps will eventually be its own department may help your change management process if you choose to first implement RevOps under Operations, or choose to use another organizational structure.
What kinds of metrics does RevOps report on?
A few of the reporting metrics suggested by our RevOps research include:
- Customer acquisition - numbers of customers per time period, and cost to acquire (CAC)
- Number of bookings
- Annual recurring revenue (ARR)
- Monthly recurring revenue (MRR)
- Cash collections
- Carry capacity
- Ramp time
- Customer lifetime value (CLV)
- Customer lifetime value compared to customer acquisition cost (LTV:CAC)
- Customer churn
- Customer satisfaction
- Net new revenue
- Gross profit
Why would my company want to use RevOps?
Wouldn’t it be amazing to have processes, tools, and data you trust in order to predict your company’s future growth? To end the constant power struggles between the sales, customer service, and marketing teams? To all work together toward a common goal? To know if your current efforts are working or not, and why? To know when and how much to invest in growth? To respond to market changes faster (hello, COVID-19)?
Other than the normal struggles of change management when implementing a new structure or idea into your company, if you’ve been reading this blog up to this point, we’re not sure why you wouldn’t want to use RevOps.
Perhaps RevOps isn’t relevant if you are in an industry or company that is not concerned with recurring revenue...though the general concepts of alignment, efficiency, simplicity, and focusing on the customer seem helpful for any company in some shape or form.
Don’t just take our word for it. Here’s some data to whet your appetite. Thanks to Chargebee!
- SiriusDecisions data found companies that align their revenue operations grow 12-15 times faster than their peers and are 34% more profitable.
- SiriusDecisions data also suggests companies can attain a 19% growth in revenue using revenue operations.
- An IDC data report said growing businesses, especially in the SaaS space, lose 20-30% of their revenue to operational inefficiencies.
Focusing on processes and internal efficiency may not seem as exciting as chasing the next big, shiny sales opportunity, especially for fast-moving SaaS startups, but it is very important as this data shows!
Read on to find out when you know your company has reached the breaking point, so to say, and needs revenue operations to fix all the leaks in your revenue cycle so you’re not constantly adding more water (AKA investing money) in a bucket with a million growing leaks.
How do I know it’s time to start using RevOps?
Our soon-to-be friends at Funnelcake say that if you’re hearing a lot of these phrases around your company, then it is time for RevOps to come to the rescue:
- “Our process is broken.”
- “MQLs are BS.”
- “We don’t know what’s working and what’s not.”
- “I can’t find anything in HubSpot/Salesforce/other shared tools.”
- “We have too many tools.”
- “Our data is a mess”
Another telling sign is if you have duplicated roles across departments, such as someone in sales, marketing, and customer service with essentially the same role for their silo of work. This can lead to misalignment and unneeded complications, and possibly unneeded payroll costs compared to a streamlined RevOps department.
Back to the wisdom of Chargebee, we couldn’t yet say this better ourselves so get ready for another quote:
“There are two obvious reasons why you need a dedicated revenue operations function for your SaaS business yesterday:
#1: Inefficiency is the evil by-product of growth
#2: Inefficiency is usually invisible.
You can’t really notice it unless you’ve been explicitly looking for it in the first place. Or until it’s too late.”
If you’re not tired of that leaky bucket metaphor yet, have we got a treat for you!
At a certain point when your company is scaling (Funnelcake says it’s around 100 employees), you start to lose growth because of the leaky bucket of operational inefficiency. The duct tape to fix issues doesn't hold anymore.
Hiring more and more salespeople isn’t going to solve the problem at that point, especially since the sales team is no longer the closest to where the majority of revenue comes in: recurring revenue from existing subscription customers.
Marketing in SaaS is more responsible for not just marketing to new leads but implementing a bigger focus on marketing to customers. This can spread marketing’s efforts thinner so more value needs to occur from each activity.
Customer success faces more pressure in SaaS, to keep customers onboard so revenue keeps coming in.
At a certain point, adding more people to a broken process results in more payroll costs and is not likely to achieve company goals of increasing revenue.
Our advice from cleaning up lots of messes with processes (or lack thereof) and tech stacks: don’t wait until it’s too late and you already have a mess on your hands!
Fixing, untangling, and re-training behavior can be much harder than creating something from scratch.
How companies can get started with RevOps
There are a few ways your company can get started using RevOps, depending on your business model and company size.
Using the employee numbers from Funnelcake above, if your company has less than 100 employees, shifting to RevOps can happen by either distributing revenue operations capabilities throughout your current team, or adjusting a few people’s roles to have specialized roles for RevOps in each department. As mentioned previously, make it clear to employees that RevOps will eventually be its own department, to help the team members work together.
Then as you scale above 100 employees, these people can move under their own RevOps umbrella and additional RevOps team members can be hired. This is a good point to bring in your CRO leader as well, to lead this consolidation of Ops roles and redefine reporting relationships.
If your company has more than 100 employees, you probably already have siloed operations roles, so start by hiring a CRO or tasking your current CRO to bring these roles together under a new RevOps department framework.
For any size of company wanting to get a taste of RevOps before fully committing to reorganizing their team structure, or before hiring a new internal team, there are RevOps agencies who can help you start to build your systems and processes.
An agency can help you lay the foundational framework and start to see some initial RevOps successes, which could help you get the buy-in from stakeholders you need in order to change the way your company looks at sales, marketing and service teams, and fully commit to RevOps. That way, you can be set up for success when you scale up and need a dedicated internal RevOps team.
One more tip from our deep dive into RevOps research: SiriusDecisions created a revenue charter, which could be helpful to align all team members in your company if you’re considering starting up RevOps. It’s complicated-looking, but the text makes some good points about using it when forming a new revenue operations function in your company to make sure everyone is on the same page and clearly agrees to all the changes proposed.
Congrats on making it all the way through this lengthy blog post! In case you haven't had your fill of RevOps excitement for one day and want to learn more:
If you'd like a free consult about how to start or improve your RevOps team and meet your revenue goals using HubSpot, click below to book a chat with us! No strings attached, promise.