Revenue Operations is the new buzzword in the business world, and leading companies are shuffling to align their process with this new trend to boost profits and increase growth. What that essentially means is aligning your sales, marketing, and customer success teams to optimize revenues.
What RevOps does is strategically align these departments through data-driven insights for better business outcomes. It plays an essential role in the overall business strategy by helping the leadership make more informed decisions through insights drawn from data synchronized through the synchronization of different teams.
It is an ideal working arrangement for multiple departments, allowing them to harmonize their operations to minimize costs, integrate processes, and make things more scalable.
What Is Revenue Operations?
More popularly known as RevOps, revenue operations involve aligning revenue and sales goals through synchronized marketing strategies. It relies on optimizing the sales and marketing funnel to deliver visibility through the customer lifecycle, optimize and increase quality leads, and drive revenue. This isn't a new phenomenon and has been in practice in different forms. However, as of present, it's fast becoming a business trend among the larger companies.
Revenue operations rely on aligning goals between different organization segments and typically include marketing and sales team working cohesively for a common goal. It's not uncommon to have members of the customer success teams in the loop too. Let's break down each team's specialty in the RevOps process.
The marketing team works on increasing the visibility of advertisements and marketing campaigns to potential customers. It's essential to teach a personalized relationship, and the marketing team must foster this past the conversion. Their work isn't finished after a customer commits.
The sales team must aim towards closing deals, but their work closely intertwines with the customer success teams. The customer success team's involvement is necessary before the completion of the sales. After the sale process, the customer success team continues engaging with customers and ensuring their satisfaction.
The glue holding the teams together is the leader on top, also known as the revenue operations manager. This position can also be controlled by any other higher-up authority who glues the team together.
The Revenue Operations manager is tasked with overseeing the entire revenue process and strategizing how products are monetized. In addition, the person in charge must have the skillset to manage the challenges within the organization between different teams and ensuring their alignment towards a common goal.
Benefits Of Revenue Operations
With a solid RevOps team, you can expect steady business growth, happier customers, higher retention of customers, and consistent tech stacks.
What do we mean by tech stacks? These are automated tools and platforms intended to make business processes more streamlined. With the alignment of business goals in RevOps, different teams must work together and use the same tech stacks.
This means a certain fluidity in stacks, where the sales team knows how customers are marketed to, and the customer success teams know which points customers were sold on.
When there is a lack of communication between different departments, it can lead to contradictory information. With Revenue Operations, a synchronized communication model ensures that everyone is on the same page and has clear expectations from each team and customer.
Customer needs are also met more efficiently with a synchronized communication pattern. All the relevant departments within the RevOps team are clear on what the customer expects and wants, leading to happier customers, more business, and higher customer retention rates.
Revenue operations also streamline the sales and marketing funnel, boosting conversion rates. With RevOps, the sales team is just one part of the overall machine. If things go wrong, it is much easier to isolate the problem and fix it, leading to better experiences for the customer and increased revenue for the company.
Lastly, it is much easier to predict revenue and sales growth with revenue operations. In addition, it is easier to measure the parameters for development through data-driven strategies in RevOps. Also, teams can respond to market changes better, leading to controlled responses even in unpredictable market situations.
Difference Between Sales Operations And Revenue Operations
While the two may seem similar, there are many differences between sales operations and revenue operations. Let's have a look:
Sales operations have a definite system, referring to sales teams' units, roles, and processes. Each member handles specific activities, such as lead management, technology, territory structuring, etc.
In contrast, revenue operations are more fluid since they feature customer success, marketing, and sales teams members. Procedures that involve each member looking after a specific responsibility can spiral out of control rapidly since the members are not synchronized with the other systems within the organization. With different operations working in tandem, it is easier for members to control issues.
Revenue operations focus on aligning performances of different departments to boost overall revenue while converging the goals of the sales, customer success, and marketing teams strategically.
Sales operations are more focused on managing sales systems and processes, focusing on the technologies and structures that can optimize the sales team's potential and make them more productive. Sales operation aims to create efficiency in the sales process, while revenue operations expand to create efficiency throughout the organization.
While sales operation jobs require individuals to focus on territory mapping and forecasting processes, revenue operation jobs will focus more on strategy and analytics to improve the customer journey.
Optimizing Business Through Revenue Operations
The teams working on revenue operations must have an alignment of incentives. For example, the marketing team should not be working against the sales team and the customer success or vice versa. All teams' incentives and objectives must be aligned, with marketing teams passing their leads to the sales team, who pass on converted customers to the customer success team to retain.
The technology and tech stacks that the different teams use for Revenue Operations must be aligned. This might mean that specific tools and platforms must be weeded out, which cannot be utilized by every team, or other platforms must be brought on board that caters to all groups. The ultimate goal of having the same tech stack for RevOps is to have everyone on board and streamline the operations.
Lastly, the chief of revenue operations must be onboard and lead each team systematically and harmoniously. They need to be clear about what each group is doing and act as a steering wheel for the whole machine, where everyone is working towards the same goal.
RevOps is a centralized process that seeks to align the three sales teams and includes some key metrics that the teams must track at different stages of the business. These metrics must align with the current goals and be geared towards improving growth potential.
These metrics are valuable since they provide insight and show what decisions the teams should be making. Some of the key metrics include:
- Win rates — these are the number of closed opportunities won by the team and show the success rate of the sales team
- Annual recurring revenue — this shows the expected annual revenue generated by customers through sales of products and services by the company and is generally used for subscription-based businesses
- Customer acquisition cost — this is the total cost of the marketing and sales team to acquire a customer. It defines whether a company has a viable model for business that yields profits by minimizing the acquisition costs
- Customer lifetime value — this is the amount of value received from an average customer during the complete customer lifecycle, and it is vital to set sales and customer success goals for the business to profit
- Sales cycle time — this is the average time that a team takes to win a deal, and the sales cycle is determined by summing up the individual durations for each sale closing
- Forecast accuracy is a prediction of the sales made by the sales team, or an individual salesperson, over a duration of time, such as a week, month, four months, or year. These help with planning and predictions for the company's budgets, and the forecast accuracy should be close to the actual revenue generated by the company.
Revenue Operations utilize tools to maximize growth and ensure seamless operations throughout different systems. Choosing a platform that allows for seamless data flow through multiple systems is essential when selecting tools. Tools that are not compatible across various departments should be avoided as the goal is to integrate operations across multiple teams.
Revenue operations are changing how larger B2B companies align their processes to maximize growth. It is essential for any business that wants to optimize its growth and performance goals and requires both tactical and strategic understanding of the revenue optimization process. Although it is a relatively new term in the business world, it is achievable and will undoubtedly lead to a more synchronized operations model.