How to demonstrate the ROI of Revenue Operations
One of the top questions I see in RevOps communities is how to make your role, and indeed the entire function, more strategic and seen as a critical enabler of the company’s future growth.
In this article I’ll look at why this is a problem and propose some suggestions to help you prove the strategic value of RevOps.
Why does RevOps struggle to demonstrate its value?
Last year I was sat in a breakfast networking event filled with sales enablement professionals.
I was somewhat surprised that the conversation focused entirely on how each attendee was justifying not just their role, but the entire enablement function in their business.
The maths was quite simple - one speaker had provided an estimate that sales enablement (just one leg of the RevOps chair) cost around 4% of revenue.
If they couldn’t demonstrate a clear line of sight to at least three times that in increased revenue, then it just didn’t make financial sense for the team to exist - the capital could be deployed more effectively elsewhere.
The speaker brought the issue to life by highlighting a number of “top influencers” in the sales enablement space who had seen their teams downsized, or entirely laid off - including the ‘influencer’ themselves.
Efficiency doesn’t sell
I’ll tell you another story - I was in a sales coaching class focused on selling to senior executives.
We talked about the reasons why executives sign things off:
Strategic/Risk avoidance - making an acquisition, complying with regulations
Hard benefits - immediate revenue increase, immediate cost savings
Soft benefits - productivity gains, more with less, efficient operations
If you can tie what you sell to the top two you get an executive’s interest.
But if your pitch is about being more efficient, doing more with less - it is very hard to demonstrate how that drops immediately to the bottom line.
If people make 50 calls instead of 40 - do we see a 20% increase in revenues? Unlikely.
Cost control only gets you so far
The majority of Revenue Operations professionals have come from an operational background - with a focus on systems, data, process.
Since 2021 VCs and SaaS CEO’s have had to refocus from growth at all costs to efficient growth.
We can see in this chart how these 81 public companies have turned the tide on their Sales and Marketing costs as a percent of revenues, gently lifting their Free Cash Flow margin from 0% in September 2022 to a more sustainable 11% in September 2023.
Much of this has come about through significant layoffs in the tech sector and a slowdown or complete halt in new hiring.
But cost control can only get you so far.
As with our own personal finances - you can’t cut your way to wealth. Cancelling your Netflix, your Disney+ and your gym membership can provide a welcome breather in the short term - but ultimately you have to figure out how to increase your income.
And this is the challenge that Revenue Operations faces.
You can help your CRO, your CFO and your CEO to cut out poor performing areas of the business, to improve poorly performing processes and to consolidate unused or duplicate SaaS applications.
But once you’ve done that - what else can we cut - probably our bloated Revenue Operations team.
Revenue Operations has two words in it - focus on the first one.
So my advice is to attach yourself and your team to revenue growth., to demonstrate that Revenue Operations is more than an efficiency engine with a short time horizon, but a central part of scaling the company’s growth.
And my advice to RevOps professionals is much the same as it is to sales leaders and Account Executives - there are only a few levers you can pull.
More new pipeline in at the top - four out of five companies with a revenue challenge have a lack of quality pipeline. “When we get in front of a customer we’re pretty good at converting - we just aren’t in front of enough of them”.
If everything else stays the same and you double the number of leads coming in at the top - you double your revenue - the maths can’t lie.
Increase the conversion of opps in the pipeline - this is harder to do. You must assume that you hired great reps, that your managers know what they are doing, that your enablement team are providing the right tools and coaching. Could you double the conversion rate? Unlikely - maybe into double digit improvements at best.
Increase the size of the opportunities - can you help your buyers to buy more out of the gate? Depending on your product this may mean going up into the Enterprise, selling more strategically, selling in additional products. But this is countered by the desire for customers to reduce their risk, to test and learn, to start with a lower level product tier and upgrade if needed, and to sign shorter contracts rather than longer.
A quick note: Deal velocity is not a lever in my book - if we bring all our deals in 30 days faster then we see one bump before the actual new revenue line goes back to as it was - bar some deals closing that might not have with a longer deal cycle it doesn’t increase the overall amount of revenue.
Considering these three levers, more pipeline, higher conversion, bigger deals - I would focus your efforts on more pipeline.
It is the number one predictor of increasing sales, it is the area most companies are challenged with today, and it perfectly fits with the RevOps mantra of aligning marketing, sales and customer success.
How can Revenue Operations increase pipeline?
This is a topic for another post - 10 things that quickly grow pipeline every time.
But let me give you three suggestions
Go and see customers now!
B2B sales is not a computer game. You cannot win it with a spreadsheet. You have to get in front of real human beings, in person, in their offices and factories.
You want to see how they work, how they collaborate with colleagues, how they engage with their partners, where they get frustrated and what costs them money.
Many RevOps professionals I’ve met with in my career proudly declare “I’m not customer facing.”
You don’t need a licence. You just need to speak with some of your AEs, “Hey Emily, I see you have a site visit with Glencore next week - can I tag along?”
(and listening to Gong recordings of AE’s meetings is not the same - you have to be there in person)
Bring customers together
No doubt marketing will be trying to organise some round tables and breakfast briefings and badgering the AEs to convince their prospects to come and attend a thinly veiled pitch about the new product release.
Instead offer to host a tour of your own roundtables focused on execs at key customers or in key industries.
“I head up RevOps at ACME, we want to improve the experience our buyers have and in exchange for a fancy meal - would you be open to sharing your experiences good and bad alongside customers X, Y and Z”
Many senior execs are in their HQ cities on a Wednesday and happy to find a nice dinner to attend!
Walk the buyer’s journey
The third suggestion is to get into your buyer’s mind. A good 60% of their buying journey happened before the replied to your SDRs email or attended that marketing webinar.
So figure out what that journey is:
Which networks are they part of?
Which newsletters do they read?
Which podcasts do they listen to?
Which influencers do they trust?
What problems are they trying to solve
As a side note: you might want to explore how you can enable your buyers during this phase of their research
Marketing should be doing this. Sales should be doing this. But they aren’t.
This is your opportunity for RevOps to lead the way and own a significant slide of the pipeline creation.
Once you have “RevOps” as a picklist item in your lead source field you’ll find yourself in a very solid position.
How do you calculate the ROI of RevOps in your team?
What are you doing to ensure Revenue Operations is seen as strategic in your company?
Get started
Whenever you are ready, there are three ways that I can help you accelerate your revenue.
Buyer Enablement Assessment - Answer nine questions in five minutes and receive your free personalised report to help your SDRs and AEs generate pipeline.
Revenue 360 Assessments - inspire and lead your revenue teams with revenue specific 360 reports designed for marketing, sales and customer success teams.
Buyer Enablement Platform - We’ll design, build and manage your buyer enablement platform on your behalf - generating quality pipeline in under 90 days.