Foundational architecture for sustainable progression
Guest post brought to you by Zach Thigpen, Revenue Operations at Cobalt
With the dawn of cross-functional tools, GTM-wide metrics and deeper account management, companies are embracing Revenue Operations now more than ever. They realize that modern business requires a greater degree of alignment between Marketing, Sales, Customer Success and Finance in order to rise above the competition.
The main purpose of Revenue Operations initially was to pool resources and create some horizontal alignment between the various GTM departments. However, people have realized the cross-functional nature of Revenue Operations has provided unique insights and capabilities within planning, analysis, and strategy.
Revenue Operations helps lay the blueprint for business growth and builds the scaffolding to help Sales, Marketing and Customer Success get there.
The 4 Building Blocks of Revenue Operations
- Data and Analytics — Monitor performance, predict growth
- Tools and Enablement — Supercharge employees, power analytics
- Operations, Systems, and Processes — Ensure consistency, create foundation
- Strategy and Planning — Prepare scaffolding, identify opportunities
Follow along for an in-depth look into each building block.
1. Data and Analytics
We live in a data-driven world. The beauty of Revenue Operations is being able to record, report, and understand all KPIs for the departments that work from a business’s GTM strategy. Seeing the whole revenue funnel means businesses can pinpoint and then drill into problems across the GTM engine.
Quality data and analytics are the backbone of Revenue Operations, and should be the first action you take when setting up a Revenue Operations function. A great resource for discovering the right metrics to track is David Skok’s SaaS Metrics 2.0. In summary, these are the bellwether metrics that everything should flow up to:
- LTV / CAC
- Pipeline Velocity
- Net Dollar Retention
The specific data sources and structure depends on your stage. Most early-stage startups can survive on Excel and Google Sheets for reporting, but more mature companies need a true Business Intelligence solution. You should always have one system that is the source of truth (usually a CRM such as Salesforce), with as many other data sources as possible integrated into the system of record including accounting, marketing and sales automation, internal, etc.
2. Tools and Enablement
Revenue Operations owns the entire GTM tool stack, facilitating consistency, smooth handoffs, and clarity of responsibility. Additionally, it is Revenue Operations’ job to oversee procurement, make the business case for a new or replacement software, and ensure the proposed new tool integrates properly.
Given the oversight and understanding of Revenue Operations, they are the natural System Admins for Salesforce and other software. These tools require a business understanding for creating fields and processes, and giving Revenue Operations ownership ensures that necessary data for the GTM and Finance teams is properly collected for analysis.
Additionally, Revenue Operations should own tech support and enablement. There are always bugs to fix, questions to answer, and licenses to assign or remove. On the enablement side, it is critical that there are clear training materials and documentation to establish a consistent process and to maximize the capabilities of the tools. Finally, Revenue Operations owns bonuses and commissions, which makes sense as the team that acts as the bridge between finance and the GTM functions.
3. Operations, Systems, and Processes
As a company grows, the processes and operations must grow alongside it and act as scaffolding to support a larger and more complex team. The reality is that you shouldn’t set up too much bureaucracy early in the company — it will slow the team down and you’re still evolving — but these roles naturally grow with the organization.
It’s important that corporate documentation such as onboarding, playbooks, handoffs, SLAs, and Q&As for the GTM team are owned by Revenue Operations. This provides the same level of support and knowledge for all new and existing employees to protect against tribal knowledge, inconsistent processes, and slow ramp-up times. Plus, Revenue Operations can help maintain a consistent experience and messaging for the prospect.
Any new GTM strategy or initiative brings new needs for support, data analysis, and harmony with existing systems and processes. The tricky part of this section is maintaining and updating the living and breathing documentation while completing necessary one-time projects.
4. Strategy and Planning
Revenue Operations comes to the table armed with data, knowledge, and understanding that can guide upcoming strategic initiatives for the company. Revenue Operations is instrumental in annual planning for GTM, finance, and leadership. This includes revenue, headcount, leads, books of business, quotas and salaries (particularly variable).
Based on the data owned by Revenue Operations, it is easy to see what goals are attainable, and what is needed in order to reach those targets. Given the understanding of the “engine room” Revenue Operations can also help determine what new tools, processes, functions, etc. are needed to support the growth.
More importantly, Revenue Operations should use the information at their disposal be able to preempt and predict other strategic initiatives. For instance, Revenue Operations might have visibility that certain segments are churning at a higher level than others, or that one marketing channel seems to convert at a higher rate. Revenue Operations then builds the business case and executes on a project.
You may look at this and say, “well what doesn’t Revenue Operations do?” It’s a fair question, and the reality is that more departments and organizations are going to become more cross-functional. This allows companies to be more integrated, data driven, and make decisions faster. We might soon see a world where you don’t have, “Marketing, Sales, and Customer Success,” but instead might have “GTM Engage, Educate, and Expand.” Every organization is different, but investing in Revenue Operations can accelerate your growth and maturity, allowing you to invest elsewhere and reduce growing pains. Think of it as a “Revenue Operations Multiplier” that comes from building a strong foundation on data, tools, operations, and strategy.