Revenue Operations
Revenue Operations

A Brief History of Revenue Operations

The last few years have seen a sea-change in B2B buyer behavior. As a result, companies have had to quickly change the way they engage with these potential customers at a rapid pace.

The “funnel” that defines how a potential customer goes through their buying journey has turned on its head.

Literally.

Hubspot

This new reality has caused many companies to reassess how they interact with their sales processes. Many have realized that a siloed approach is no longer sustainable.

Bringing Marketing, Sales, Customer Success, and other teams into a unified organization helps companies focus on what is most important.

Operations has been deeply impacted by this as well.

This transition has been the catalyst for the introduction of a new function within companies:

Revenue Operations.

What is Revenue Operations

Revenue Operations is the unification of operations across Sales, Marketing, Finance, and Customer Success. Depending on an organization’s structure, other business units may be involved as well such as product, accounting, legal, and others.

Revenue Operations’ aim is to drive growth throughout the customer life cycle by creating operational efficiency and make all teams accountable for a single metric – revenue.

Revenue Operations is all about breaking down the silos between departments, focusing on maximizing the performance of each business department to ultimately drive revenue growth.

There are 4 Building Blocks of Revenue Operations:

  1. Data: Define KPIs and store them in a centralized location via systems integration
  2. Tools: Responsibility for the entire stack of tools across the revenue organization
  3. Process: Document messaging and processes to enable consistent messaging and strategy company-wide.
  4. Strategy: Define strategy and suggest the tools need to continue company growth.

Why is Revenue Operations Growing

In the “traditional” sales model, a sales rep will talk to a prospect and guide them through their sales journey, answering questions they may have and helping them make their buying decision.

However, the way a B2B buyer decides on a purchase has changed significantly. In fact, over half of B2B buyers have already made their decision prior to speaking with a salesperson.

In addition, a recurring revenue model means that functions such as customer success and product are equally responsible for revenue as sales and marketing.

As companies have moved into these new models, having siloed organizational structures that separated these revenue-impacting functions negatively impacted company growth.

Ultimately, having teams with disparate goals, metrics, and reporting that can often be at odds with each other is inefficient and negatively impacts revenue.

Revenue Operations vs Sales Operations

For some, there may be confusion as to what the difference between Revenue Operations and Sales Operations is.

There is certainly overlap between the two, and often-times someone with Sales Operations in their title ends up performing the functions of a Revenue Operations person, but these functions differ in fundamental ways.

Sales Operations is focused on managed operational aspects across the sales organization, it does not venture into departments. Sales Operations is about creating efficiencies within sales and sales alone.

Revenue Operations, on the other hand, is a cross-departmental organization, with a major focus on Go-To-Market. RevOps breaks down the walls between organizations that impact company revenue.

Why Companies Need Revenue Operations

As startups have grown, many have realized that one of the biggest killers of growth was the walls that were built around departments within a company.

When sales, marketing, and customer success all had different goals and KPIs, disagreements, and miscommunication were inevitable.

How many times have sales and marketing argued over the qualification criteria of a lead?

As companies, especially SaaS businesses, have begun to embrace the Product-Led Growth model in which the end-user of a product becomes the focus and they qualify themselves within the product, metrics such as “Marketing Qualified Lead” have lost their importance.

Historically, companies that begin with a Product-Led model, will eventually begin to move upmarket into the enterprise market.

The hybrid model of including both the “bottoms up” and “top down” sales approach makes Revenue Operations an even more important function.

We do not live in a “one size fits all” world. While Revenue Operations has significant benefits for some companies, others may have greater success with a more “traditional” model of siloed organizations.

The subscription model for SaaS products has exploded. The goal of predictable, recurring revenue has delighted founders and investors alike.

Revenue Operations enables companies to have greater predictability over their growth and revenue by providing accurate measurements that are consistent across all teams that impact revenue.

As companies scale into new markets, Revenue Operations is crucial to enabling a smooth transition.

If your company plans on introducing new and more complex pricing options for your product, Revenue Operations will be crucial to smoothly transition into that new sales motion.

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