What are Revenue Operations?
Revenue operations, also referred to as RevOps, is a strategy that aligns sales, marketing, and customer service teams to create a more holistic approach for generating revenue.
A single team cannot realistically do everything to nurture and close a sale from end-to-end; working together to achieve common goals is necessary. A successful RevOps model ensures that all teams within a company collaborate to achieve their objections.
Why is Revenue Operations Important?
Implementing a RevOps strategy is necessary for companies (especially those with B2B models) looking to adapt to changes in modern markets. The world of sales is bigger and faster than ever before, and potential customers want the process to be simple and straightforward when purchasing products.
It’s crucial that all teams within a company are aligned when it comes to external marketing and messaging, what qualities quantify an ideal customer profile, and steps within the sales funnel. If teams are focused on different details, prospecting and outreach becomes messy and unnecessarily difficult. If everyone is on the same page regarding who their audience is, conducting sales is infinitely easier.
Things can get out of hand quickly, especially if a company is scaling, so implementing a RevOps strategy helps. It allows for targeted focus on the customer lifecycle, and data gleaned from this is crucial for improving systems and inevitably boosting overall revenue.
Revenue Operations vs. Sales Operations
RevOps and sales operations are both focused on generating more revenue for a company, so what’s the difference?
It’s simple: sales operations is just one piece of the overall RevOps strategy. Sales operations focus specifically on improving the performance of individual sales reps and larger sales teams so they have the necessary tools and resources to close deals and boost revenue.
However, RevOps is a larger strategy that includes sale operations, and considers how it functions alongside other teams within a company. If you picture a venn diagram with separate circles for sales, marketing, product, finance, and customer success, RevOps would be the big circle surrounding them all.
Common Revenue Operations Metrics
To ensure your RevOps strategy is working, you need to pay attention to certain metrics. If improvements aren’t being made, then something’s not working.
Every company will focus on different metrics depending on their unique business model, but common ones include:
- Annual recurring revenue. This metric looks at how much recurring revenue a business can expect to generate each year. Remember, the main goal of RevOps is to create a more centralized system to boost revenue.
- Sales cycle length. How long does it take to complete a sale, from beginning to end?
- Win rates. Pay attention to the amount of overall success over a specific time. This can focus on qualified prospects generated, number of deals closed, renewals made, or other actions that contribute to revenue generation.
- Customer lifetime value. What is the total worth of a customer over the duration of their relationship with your business?
- Renewal rate. How many renewals are made within a specific time?
- Churn rate. This metric looks at how many customers are lost, or prospects who choose not to do business with you and fall out of the sales cycle.
- Total contract value. This metric measures how much a contract is worth, typically in terms of revenue.
Measuring and making improvements to these metrics is necessary to ensure your RevOps strategy is effective.