- RevOps is a revenue-optimizing machine that can help you to generate predictable revenue and improve customer experience.
- RevOps must optimize the entire revenue generation process from start to finish. To achieve success, you need a solid RevOps strategy, which involves aligning sales, marketing, and customer success strategies, optimizing cost structures, refining customer success programs, and creating a killer sales enablement strategy.
- To build a successful RevOps team, you need strategic thinkers, multi-disciplinary geniuses, data-driven decision-makers, cross-functional collaborators, and tech-savvy innovators. It may sound like a tall order, but with the right team and processes in place, you'll be well on your way to RevOps stardom.
What is RevOps (revenue operations), and why should you care?
RevOps, short for Revenue Operations, is a relatively new business function that drives revenue growth or retention and improves overall customer experience. RevOps is a highly collaborative function that aligns with sales, marketing, product, and customer success teams.
RevOps aims to optimize the entire revenue generation process, from lead generation to customer retention. It has core data analysis, process improvement, and technology implementation skills.
RevOps team is responsible for identifying and implementing best practices, strategies, processes, and tools/technologies that streamline revenue operations, boost sales productivity and improve customer engagement. RevOps typically intersects with sales, marketing, and customer success teams in a modern enterprise. It works closely with other essential business functions such as product management/development, finance, and IT.
As base use cases, a RevOps team analyzes data and develops and manages dashboards and reports. Modern RevOps teams also work with data engineers and scientists to define requirements and analyze customer and sales data to uncover insights to optimize revenue generation and retention activities. With the help of advanced tech and AI, they can forecast revenue and identify growth opportunities as more advanced use cases.
In 2023, RevOps will remain a critical function for modern enterprises, focusing on driving revenue goals efficiently and improving customer retention & experience. A business can gain a competitive edge in turbulent economic times by optimizing revenue operations.
What is the best practice RevOps strategy?
The best practice RevOps strategy definition considers sales, marketing, and customer success strategies as part of the process.
Sales strategy: "We need to grow 2022 total bookings ($50M) by 10% in 2023. It could be a challenging goal due to the economic outlook. Of this goal, retention revenue will be $40M (80% retention rate), and the remaining $15M will be 50% cross-sell and 50% new customer acquisition."
Marketing strategy: "To generate $7.5M in new bookings in 2023, we need to acquire 50 new customers at an overall CAC of 20% lower than in 2022. We will achieve this by acquiring customers from markets A and B through account-based marketing (ABM), affiliate marketing, and partnership programs."
Customer success strategy: "We will invest in improving NPS by 10% to improve retention rate to > 80% and generate cross-sell revenue of $7.5M. Our strategy to improve NPS includes new product launches and faster customer service."
Leveraging the strategy examples above, the best practice RevOps strategy for 2023 may have the following:
Optimize Cost Structure:
- Analyze the current CAC, cost of sales, and cross-selling.
- Identify areas of inefficiency and re-design processes to improve efficiency and reduce costs.
Refine customer success:
- Refine and implement a customer success program that improves customer satisfaction and retention to support revenue growth.
- Analyze pricing strategies
- Adjust pricing based on market conditions
- Communicate product value to customers.
Create a sales enablement strategy:
- Develop and launch sales enablement (processes, tools, and training), ensuring success for the sales teams to engage with customers effectively.
Create revenue stack within sales stack:
- A Revenue Stack is a collection of tools and technologies that work together to optimize revenue operations.
- Identify areas where technology can automate processes, improve productivity, and enhance RevOps capabilities.
This revenue stack is most likely a direct extension of the existing mar-tech or sales-tech stack with a greater focus on RevOps goals.
What are the required capabilities of a successful RevOps team?
For the strategies highlighted above, a successful RevOps team must have the following capabilities:
- Aligning revenue operations strategy and goals with sales, marketing, and customer success strategies.
- Defining a long-term vision for revenue growth.
- Ability to plan & implement and identify opportunities for continuous improvement.
- A deep understanding of sales, marketing, customer service/success, pricing, competitive analysis, and other functions, functional strategies, processes, and KPIs.
- Quickly convert business requirements into functional requirements to create practical solutions (processes, tools, and data flows)
- Proficient in analyzing several data sets: customers, marketing interactions, sales, and customer experience.
- Identification of trends, opportunities, and areas for improvement from the data.
- Working collaboratively with other teams, such as sales, marketing, and customer success, and ensuring alignment.
Digitally savvy and technology innovation:
- Solid understanding of new technology offerings, leveraging the best tools, implementing and managing RevOps tools (CRM, marketing automation, and sales enablement tools)
- Data management and implementation of artificial intelligence (AI) tools/techniques.
Leveraging digital technologies and innovating with the latest tech and data is the most critical capability differentiating a level A or A+ RevOps team from a level B or lower capability team.
How to build the right team and processes?
The RevOps team must build and leverage the capabilities suggested above. Regardless of the size of an organization, a RevOps team needs a RevOps business manager/leader, a technical product manager or a systems architect, and a small development team of 2+ backend engineers/full stack developers. Depending on the strategic priorities and goals, there could be additional requirements for data engineers and data scientists.
The RevOps leader must balance the long-term requirements and the short-term needs of revenue operations. The long-term requirements include a vision for the RevOps function and a roadmap spanning the next 2-3 years.
The short-term needs are more immediate needs established by the RevOps team. For 2023, the most common themes we have heard from our customers are:
- Optimize Cost Structure: Analyze the current CAC, and cost of sales/cross-selling, identify areas of inefficiency, and re-design processes to improve efficiency and reduce costs.
- Developing a data-driven lead scoring and forecasting model: Prioritize leads based on their level of engagement and the likelihood of becoming a customer. Ensuring the sales team focuses on the most promising leads, improving their efficiency and effectiveness.
- Analysis of customer insights: Generate customer insights before, during, and after purchasing products/services. Leverage innovative tech/tools to aggregate and analyze customer touch points. Deliver customer insights to sales, marketing, customer success, and finance teams.
- Over or under-development of sales-tech and martech tools: Avoid the common problem of over-development of a sales tech tool (e.g., Salesforce) or under-utilization of a tool (e.g., customer data platform). Continuous evaluation, consolidation, and additional implementation of use cases on these tools can save cost, generate efficiencies, and make broader teams more productive.
- Customer journey mapping and analysis with a retention focus: Customer retention to meet the sales bookings goals and maintain the competitive advantage remains one of the key priorities in 2023.
- Refine Pricing Strategy: Analyze pricing strategies, identify opportunities to optimize pricing based on market conditions, and communicate product value to customers.
To build the right team, enterprises have the option of staffing the team through full-time hires. This option provides the highest control. The key challenges with this approach are finding and retaining level A or B+ talent and high cost. Some well-funded companies aiming to scale fast tend to hire full-time people.
A more common approach is hiring a full-time head of RevOps and supporting them through sourced tech PM or system architect resources and development teams. This approach ensures that the RevOps strategy and vision have an in-house owner and that the rest of the implementation is scaled up or down as needed. This option is more cost-efficient as compared to hiring the whole team. Although a head of RevOps remains a unicorn hire, hiring and retaining a B+ or A talent can be challenging.
Finally, a frequently used approach is to source a team of RevOps strategists, a system architect/tech PM, and a small development team. This option offers the benefits of quick to the market and has the highest ROI. The key challenge with this approach is more control of the RevOps strategy. Later, a RevOps leader hired at the right time (organization's growth and a better economic outlook) can bring the RevOps strategy in-house to deliver continued success.