Businesses often put RevOps in one of two categories – cost or revenue. Unfortunately in these uncertain times many organizations are viewing RevOps as a cost and it is one of the first functions to be cut. But what they fail to realize is the immense value that RevOps provides. Here’s how RevOps leaders can reposition and communicate RevOps value as an important strategic lever for the business.
Adopt a Wartime Mindset
RevOps leaders need to think differently depending on the market context and economic environment. For many years, RevOps has been operating in a plentiful “peacetime” environment. We’ve gotten used to the luxury of time and resources. When there are no winds rocking the business, it is okay to maintain the status quo. Inbound leads may be plentiful so the focus is on keeping the trains running smoothly. There is a budget to hire, time to add tools, and resources available to manage system integration projects.
Unfortunately in today’s tough economic environment, most companies, especially technology companies, are now at war. Resources are limited and RevOps teams are being asked to do more with less. The volume of work has not changed but the expectations remain the same or higher. As a result, the wartime RevOps leader needs to challenge the status quo and demonstrate how RevOps can drive efficient growth. Successful wartime RevOps leaders assume an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) mindset and constantly assess the impact of their work on the bottom line of the business.
Wartime RevOps leaders should be asking and answering key questions like:
- Are we in the right market?
- Has our ICP changed?
- Do we enter new markets or new market segments?
- And how do we maximize the productivity of our team and anticipate GTM investment?
The Status Quo is Expensive
The status quo in RevOps is essentially keeping the baseline operational processes moving. Perhaps routing gets tweaked or a new CPQ system is introduced. But few companies have ever truly addressed key strategic problems like unfair territories and quotas. As a result, this unfairness also becomes a part of the status quo.
Because your sellers are only concerned about two things – their territories and their quotas – continuing with the status quo is expensive and will drag a company down during wartime. Good territories and quotas keep reps motivated and productive, but unfair territories will lead to a whole slew of downstream problems and costs – staff attrition, higher ramp time, lower rep attainment, higher cost of sales, and so on (Figure 1). This is true for Sales as well as Customer Success where poorly designed books of business can lead to staff and customer churn.
RevOps holds the key to making improvements in these areas and that’s why continued wartime RevOps investment is so important. It’s not surprising that recent HBR research found that optimizing territory design can increase sales by 2-7% without any change in total resources or sales strategy.
The Evolution of RevOps
Historically, RevOps evolved from Salesforce administrators and SalesOps roles, and this is why the role is so often focused on tactical operations. The good news is that in the last five years, much progress has been made on streamlining these activities. For example, now we have an ecosystem of sales operational tools, like CPQ, forecasting, and incentive compensation tools. Many operations problems have, for the most part, been solved.
At the same time, there has been a lack of focus on strategy and planning activities like territory management, quota and target setting, and capacity planning (Figure 2). These activities are still largely excel driven and manual. Moreover, many of those carrying out these activities have never carried a bag or worked toward a quota.
A good wartime RevOps leader will first focus on automating strategy and planning and making it more agile. Then, to drive alignment it is important to tie strategy to operations. Although an MBA strategy person will never carry a quota, this approach enables them to work hand in hand with sellers on the street. When this is done effectively, that’s where you see the 2-7% improvement in sales performance. By driving these efficiencies, RevOps has the opportunity to make a huge positive impact on the business.
RevOps Impact on ROI
The wartime RevOps leader needs to think like and speak the language of the CFO and CRO. Instead of the mindset that ‘I work for the CRO,’ they need to think ‘I work with the CRO.” Luckily, RevOps has a unique vantage point within the organization to make a significant strategic impact on important areas of the business.
Instead of the mindset that ‘I work for the CRO,’ they need to think ‘I work with the CRO.’
Cost of Sales
One of the CRO’s primary concerns is the cost of sales. A responsible wartime RevOps leader needs to be able to evaluate the current cost of sales as a percentage of revenue and how it has changed over time.
The CRO also wants to know the net effective capacity of the sales team. They don’t care about the number of AE’s, but about who’s fully ramped and where they are today. RevOps needs to be able to show how this net capacity impacts quotaand have a plan for increasing productivity and decreasing ramp time.
Some of the wartime RevOps leaders’ most important activities are sales territory planning and continuous territory management. They need to understand if territories are too big or too small. If they are too big, sellers are leaving money on the table. If they are too small, sellers are likely being underutilized and underpaid, opening yourself to the risk of attrition. You can gauge territory efficiency and any necessary changes by understanding your current revenue per territory and how it has changed over time.
RevOps includes Sales, Marketing, and Customer Success Operations. A wartime RevOps leader must consider how to eliminate duplication and enable collaboration between these different functions. Your customers don’t care about organizational charts. They are not talking to salesperson X but instead to company Y. That’s why team selling is so important. To support team selling there needs to be an integrated platform to orchestrate activities across GTM resources, like routing leads, cases, or opportunities to the right person at the right time.
The RevOps leader also needs to provide company leadership with a clear vision of the resources being used across the revenue teams. For example, territory planning is happening within the Sales team but it is also happening in the Customer Success and Renewals teams. These different functions are likely working in their own silos and using their own spreadsheets. As a result, it is hard for leadership to have an end-to-end view of resources across the organization and to understand whether they are allocated in the most efficient way. RevOps can bridge this gap.
RevOps is critical for understanding whether the organization’s current tools and technology allow it to respond to market changes with agility. Can the organization scale using a homegrown system? How much does it cost to maintain and what are the risks? For example, the risks are high if the company is dependent on one excel jock who owns the master spreadsheet, or Apex and python coders who own the workflows. Relying on ‘heros’ to make changes and fix things is problematic and even more so when those resources walk out the door.
Rules of Engagement
In wartime, your troops need clarity. Although every team member comes to the job with good intentions, good intentions don’t scale. That’s why it’s so important for RevOps to create processes and rules of engagement for the organization. Without the clarity provided by RevOps, operational efficiency suffers. Furthermore, in companies without strong RevOps, you’ll also generally find a poor culture: people doing whatever they want, opportunity grabs, and infighting.
It is equally important for RevOps to enforce the rules as it is to define them. In many companies, rules of engagement are defined, but they are not enforced. When the sales manager yells, many RevOps leaders capitulate and everything becomes an exception. If everything is an exception then there are essentially no rules. Enforcement of the rules, ideally through policy automation, drives revenue efficiency and enables performance management.
Once these systems are in place, many companies have the mistaken perception that everything is fine and they no longer need high paid RevOps leadership talent. Faced with wartime constraints, the role gets cut. Unfortunately, what inevitably happens in these organizations is that operations devolves into chaos. Without leadership clarity, the organization will be unprepared and unable to respond to market changes.
RevOps ROI Metrics
It’s RevOps job to explain to the CFO and CRO the ROI on their resources, programs, and tools. To do so, everything must be tied back to the bottom line business impact. ROI calculators can be useful, but can often be viewed with a hint of cynicism. It’s important to paint the before and after scenarios in a way that leadership understands (Figure 3). Some metrics to start with include RevOps’ impact on the following.
Rep Attainment – A great way to illustrate the importance of rep attainment is to ask your CFO to choose: 1) hire one additional rep or 2) get 2-7% incremental productivity on every single rep that you have today. When viewed from this perspective, this choice is a no-brainer, especially if the organization has 600 reps. Although you may still need to hire new reps, the point is that effective territory and quota planning driven by RevOps can get you more out of your existing resources and reduce your cost of sales.
Rep Attrition – There’s nothing worse than losing your best performing sales rep. The lost revenue as well as the cost to hire and ramp a replacement can be tremendous, reaching as high as $1M in some organizations. Effective territories and quotas can have a big impact on rep motivation and retention.
Ramp Time – It takes a long time for a new rep to become fully productive. If RevOps can assign new territories on day one (vs waiting 30 days), there is a positive ROI. Or if territories are automatically realigned in an attrition situation it reduces downtime and keeps the engine running efficiently.
Customer Renewals and CSM Productivity – During wartime, the attention shifts to customer renewals and upsells. Companies that take a strategic approach to optimizing Customer Success territories will drive a better customer experience and revenue growth. As a result, leadership cares about metrics on renewals, expansion and CSM productivity.
Focus on Efficient Growth
It’s easy for RevOps to get bogged down in tactical details. But in times of war, your company needs RevOps more than ever. RevOps is the secret weapon for getting more revenue per head and bringing down the overall operational cost of running the revenue engine. Companies that win during challenging economic times will be those that invest in RevOps and give them the bandwidth to deliver strategic value.