What is Revenue Operations & Why RevOps is Crucial for Subscription Businesses
Feb 23 2020
We’ve been talking a lot about revenue operations here at ProfitWell. We even released a whole show about it,RevOps and Hops,which you can subscribe tohere.While we joined forces with Chargifyto sip on some hops and break down revenue operations, I think it’s time to take a step back for a moment. Let’s pause and revisit the basics. What is revenue operations?
SaaS growth is no longer a funnel—it’s a flywheel. The flywheel consists of setting people up, activating them, engaging them, and then referring them to restart the entire process. The rise of a more cyclical process could be why revenue operations is gaining traction.
After reading this article, which includes plenty ofRevOps and Hops, you’ll have a deeper understanding of what RevOps is, why it’s on the rise, and best practices.
Revenue operations, or RevOps for short, is the combining and aligning of sales and revenue goals throughout marketing, sales, and success teams within a business. With these three teams working together, a business is able to optimize its sales funnel, collect more high-quality leads, and make more money.
It’s important to note, though, RevOps isn’t some new phenomenon that fell from the sky. RevOps has always existed in some regard, just without the formal title. Now, it’s becoming one of the fastest-growing job titles in the SaaS space.
The crucial players in RevOps
RevOps is all about alignment, so who’s involved? RevOps typically includes people from marketing, sales, customer success, and a leader. I’ll break down each specialty.
1. The Marketing team
In RevOps, the marketing team focuses on getting advertisements and marketing efforts to potential customers. We have an entire episode ofRevOps and Hopsdedicated to marketing. The main point we touched upon is authenticity. You can’t have a relationship without authenticity. This comes into play with marketing because a team must market past the conversion. The work doesn’t end once a customer commits.
Honesty and accuracy are essential when building a long-term business. The marketing team must take this into consideration, especially in terms of personalization.
2. Sales and Customer Success
While sales and customer success are totally different specialties, they workextremelyclose together in revenue operations.
The sales team focuses on closing the deal, but it’s intertwined with customer success. Here’s why: customer success needs to get involved before the sale is complete. Customer success in RevOps needs to be proactive. What’s more proactive than getting involved before a buyer even commits?
Once the sale is made, customer success continues to focus on keeping customers happy and successful while using the product. Delighting the customer is what leads to success and that success is seen via retention and expansion.
3. The leader
Finally, the glue that holds the RevOps team together: the leader. An up-and-coming job title for this leader isChief Revenue Officeror the CRO. It can also be the CEO and CMO—essentially any higher up who can unite the teams together.
A RevOps leader manages the entire revenue process and constantly thinks about how to monetize products. This requires a leader to be well-rounded and have the skillset to tackle the challenges of each internal organization. It’s all about ensuring the teams understand applicable metrics and are aligned to achieve a common outcome.
The outcome of united RevOps
When you have a strong revenue operations team, you operate like a well-oiled machine. This has a positive domino effect—consistent tech stacks, clear expectations from customers, happier customers, more sales, and predictable growth.
Let’s go through each one.
1. Consistent tech stacks
A tech stack is a set of different tools and platforms to automate your job. With RevOps, since different teams are united, they can use the same tech stack. Tech stacks are more fluid throughout the teams, so the sales team knows how a customer was marketed to, and the success team knows what customers were sold on. Everyone can refer to different platforms within their synchronous tech stacks.
2. Clear expectations from customers
Oftentimes, different departments within a company don’t communicate fluidly. Marketers may say one thing while sales reps outreach to customers saying something contradictory. This is not the case with RevOps. Everyone is on the same page and communication is consistent. When RevOps are put in place properly, there are clear expectations from customers. Which brings me to my next point…
3. Happier customers
When there are clear expectations, customers are happier. When different departments are working harmoniously with one another, they are more attuned to a customer’s needs. This will undoubtedly make for happier customers because they feel that their needs are heard throughout the company.
Happy customers are a strong indicator of customer outcomes. Customer outcomes are the successes your customers are having because your product is having an impact on their business and in turn, providing revenue.
4. More sales and more revenue
Revenue operations turn the sales funnel into a well-oiled machine, getting more customers to convert. Sales operations (which we will dive into a bit) is a siloed process. With RevOps, sales members are not the whole machine, they make up one part. When things go wrong, it’s easier to isolate the issue at the source and make quick fixes. When things run smoothly, customers recognize it and trust the company with their money, ultimately increasing sales and revenue.
5. Predictable growth
With a data-driven, fluid machine, you can predict growth and revenue far easier than before. RevOps results in predictable growth through consistent, accurate measurement, and/or new strategies. Furthermore, since RevOps is a more synchronous process, teams can respond to market changes more efficiently, therefore resulting in predictable growth even in unpredictable situations.
How optimized pricing can unlock revenue
Now that teams are aligned via RevOps, your business needs to show the value of its products through optimized pricing. With optimized pricing, your team will understand who aligns with certain pricing tiers and how to sell that tier to potential customers.
We believe in a value-based pricing strategy here at ProfitWell, which is pricing product based on what targeted customers believe it’s worth. Perceived product value increases when customers see and feel the company working toward one common goal, which is accomplished with RevOps.
SalesOps vs RevOps: What’s the difference?
Let’s not confuse SalesOps with RevOps. While they may look and seem somewhat similar, they are very different. I’ll explain.
1. SalesOps is siloed
SalesOps brings a system to selling. It refers to the unit, role, activities, and processes that support a sales team. SalesOps members handle a range of tactical and strategic responsibilities, such as compensation/incentive plans, territory structuring and alignment, lead management, process optimization, sales technology, et al.
With SalesOps, the leaders enable sales reps to focus more on selling in order to drive better results. As you can see, SalesOps is a siloed process when compared to RevOps because it is strictly focused on sales and converting a customer.
2. RevOps is inclusive
On the other hand, RevOps is more inclusive because you bring in members from sales, customer success, and marketing. Oftentimes, siloed operations cause small issues to spin out of control because they don’t have a clear view of how various systems work harmoniously. When different operations work together, they have a better grip on why an issue surfaced and how to resolve it.
It’s important to note—RevOps is intentionally separated from the teams they serve and RevOps teams report into an organization’s senior leadership. For instance, a RevOps marketer wouldn’t report to the company’s CMO; he or she would report to the CRO, or whoever other RevOps members are reporting to.
RevOps and retention
Revenue operations isn’t just about making a sale, it’s also about keeping those customers you worked so hard for. RevOps is as much a retention-based operation as a sales-based operation. Since customer success is involved throughout the entire process, customer success team members know the customers extremely well. This builds rapport and trust with customers, therefore enticing them to stay with your product.
4 ways to optimize your business with revenue operations
It’ll take some adjusting for all parties involved once a RevOps team is in place. To make the transition go smoother, here are four ways you can optimize your RevOps.
1. Get all teams in on the data
You need to be looking into certain metrics and asking the right questions. How long are customers staying on board? How often are they upgrading or downgrading? Which customers have the highest MRR, and which have the highest churn rates. We understand the SaaS world is flooded with metrics, making it hard to know where to start. (We happen to have a free tool—ProfitWell Metrics—to help you out.)
2. Align incentives
Don’t pin the sales team against the marketing, or vice versa. Instead, align incentives for the whole team. The marketing team must bring leads to the sales team. The Sales team must convert good potential customers. The Customer Success team must retain them. Since RevOps works to align different teams, you can sharpen that alignment by mapping out clear incentives.
3. Agree on the tech stack
What tech can Sales, Marketing, and Customer Success use to succeed? RevOps means these teams are relying on the same tech stack. You may have to cut back on tools/platforms that not everyone on RevOps has a use for. Or, you may need to add additional platforms in order to have everyone’s needs met. Either way, having everyone on board with the same tech stack will only make operations run smoother.
4. Get your CRO on board
The CRO is the captain of this ship. It is their job to get the team going. The CRO needs to be clear about the previous three points I just made because he or she is the one overseeing the process. The CRO needs to also act as a gatekeeper ensuring everyone is working toward the same common outcome.
In short, RevOps is a centralized function that helps recognize and align revenue from Sales, Marketing, and Customer Success. SaaS growth is no longer a funnel—it’s a flywheel. Adding RevOps to an organization makes growth even more fluid.
If you’re looking to add RevOps to your company, it requires aligning people from the following positions:
A leader (generally a CRO)
Everyone on these teams works in concert with one another. For instance, customer success is involved before a sale is made.
Finally, once you roll out RevOps, you may notice an influx of positive outcomes. A few direct ones we can almost guarantee you’ll experience are (1) consistent tech stacks (2) clear expectations from customers (3) happier customers (4) more sales and more revenue and (5) predictable growth.
If you’re curious to learn more about RevOps and hear from even more leaders in the space, you can subscribe to our show,RevOps and Hops,here.
By Patrick Campbell
Founder & CEO of ProfitWell, the software for helping subscription companies with their monetization and retention strategies, as well as providing free turnkey subscription financial metrics for over 20,000 companies. Prior to ProfitWell Patrick led Strategic Initiatives for Boston-based Gemvara and was an Economist at Google and the US Intelligence community.