What is Revenue Operations (RevOps)?
When sales, marketing, and customer service align for end-to-end customer connection, the payoff is streamlined operations and more revenue.
One of the biggest business trends of the last decade is probably in your email inbox right now. Or on your cable bill or credit card statement. Like many consumers, sometime in 2020 you probably added some online subscriptions to avoid unnecessary ventures outside – to premium cable services, meal kits, or something as mundane as regular shipments of toilet paper and dog food.
Along with the invoices for those recurring charges, you’re probably getting lots of solicitous emails: Were your dinners delicious? Please rate your shopping experience. Coming up on Netflix! In fact, any substantial purchase you made in the last couple of years is reaching out now, from car dealerships to airlines and department stores, offering discounts, service appointments, helpful tips, and enticing visions of travel or entertainment. They want to keep you engaged, in hopes that you’ll buy again and encourage others’ purchases.
That kind of end-to-end customer connection may not seem very novel to consumers. But in the B2B world, it’s the hallmark of a growing business approach called Revenue Operations, or RevOps.
What is RevOps?
RevOps is a business philosophy that closely aligns sales, marketing, and customer success to focus on a single goal: maximizing revenue. They coordinate in order to guide prospective customers through the so-called “buyer journey” or “customer funnel” – not just from the first inklings of an unfilled need until purchase, but through every stage of interacting with the product, then closing the loop with a new purchase.
A closed-loop approach to sales
Instead of considering revenue generation as a string of individual sales wins, the RevOps approach sees it as a systematic process spanning multiple lines of business, like the supply chain. And like supply chain planning, revenue generation can be optimized through connected business processes and technology platforms.
“The idea is that everybody is responsible for helping to drive revenue,” says Kevin Markl, senior product marketing manager for sales solutions at Anaplan. Even product development, QA, logistics, and similar functions could fall into the broadest definition of RevOps, he says.
“When your go-to-market teams are siloed, each function ends up focusing on their own initiatives – and that’s when cross-functional collaboration decreases,” adds Nida Chughtai, head of marketing for predictive insights at Anaplan. “The only way to ensure everyone is focused on a shared revenue goal is to have a holistic view of all customer-facing operations and ensure they work together.”
Not just cooperation but a shared focus
This approach is more than just casual collaboration, Chughtai adds. RevOps aligns the customer-focused departments through a defined set of expectations and actions, working off shared information for greater transparency and accountability. Sales, marketing, and customer success will work together to set revenue goals, then build strategies to reach those goals and work processes that support them.
A single source of the truth for planning purposes is the key to successful RevOps adoption. From a technical standpoint, this is typically a data lake or data warehouse that maintains unified views of the customer, from which various sales, marketing, or customer service applications draw.
From an organizational standpoint, this requires the various stakeholders to agree on how to structure their data records to reflect a 360-degree view. They need a flexible, multi-dimensional structure that can capture all the information needed to answer questions as wide-ranging as:
- How often have we reached out to prospects of a specific size and type? What do we know about their pain points, budgets, and buying propensity?
- Which accounts will be targeted by our new marketing campaign focused on the healthcare industry?
- Does customer X’s history of support requests indicate growing dissatisfaction? How accurately can we forecast their likelihood of renewing their contract next year?
- How much revenue did each sales rep bring in last quarter, and how much of that is recurring? Looking at the results, should we tweak the sales incentive plan? Or do we need to refocus our marketing?
Changing buyer behavior drives RevOps rise
The term “RevOps” started appearing in the latter 2010s, although the approach had been evolving for years before that. On top of the ever-present need to boost profits and stay competitive, other factors driving businesses to consider this new approach to revenue include:
- Changing buyer behavior. More widely available information, including user reviews, now allows customers to do extensive research in private. So they tend not to reach out to potential vendors until later in the buying journey, shrinking the window for traditional sales operations.
- Subscription models overtaking license sales. This trend includes not just “software as a service” (SaaS), but “everything as a service” (XaaS) integration platforms, storage, containers, and more.
- Vendor preferences for predictable, recurring revenue over one-off sales.
- Easier, cheaper data collection giving vendors more information on prospect and customer behavior…
- …and new-generation CRM applications allowing better analytics of that customer data and more channels to support and engage them, including call centers, AI-generated chat, mobile apps, and web-based self-service.
- Rising expectations in the B2B world for better user experiences and more responsive support, paralleling high-touch consumer products and applications. That means what happens after a sale is just as important as what happens before it.
After being championed by Gartner, Forrester, and other influential analyst firms around 2018, the RevOps term spread widely. LinkedIn sees sizable growth in recent years for relevant job titles, including Director of Revenue Operations, VP – Revenue Operations, and Chief Revenue Officer. (However, adopting RevOps doesn’t require creating a CRO role, Markl says. The aligned operations may report to a VP of Sales, Chief Customer Officer, CMO, or similar position.)
The numbers add up: RevOps pays off
The benefits of the RevOps platform approach are measurable. A 2019 study by SiriusDecisions found that companies that commit to it saw their revenue grow nearly three times faster than their counterparts. Publicly traded companies that adopted RevOps saw 71% higher stock performance.
It’s clear why it pays off. With a complete, closed-loop view of the customer, knowledge gained by one team can be leveraged in other contexts – for example, to more accurately analyze and target various market segments; direct sales resources to the highest-propensity or most profitable buyers (or the ones at highest risk of churn); or take buying history and overall ROI into account when considering customer service options. That leads to greater customer satisfaction, better reviews, more renewals leading to more reliable revenue streams, and greater success all around.
To learn more, check out our on-demand discussion on the power of aligning finance, sales, marketing, product, and customer success to streamline revenue operations and drive growth.