Even the most unconventional, trailblazing, and earth-shattering ideas are not really overnight epiphanies. Backtrack a little, and you’ll realize that these ideas have been slowly and organically seething up against the status quo and towards a paradigm shift.
Revenue Operations might seem like one such overnight sensation.
But let’s backtrack. The pursuit of growth led business teams to scale, scale necessitated specialization within those functions and soon individuals and functions were optimizing for their KPIs. But as Goodhart’s law states, ‘when a measure becomes the target, it ceases to be a good measure’. In the long run, such dogged alignment to micro-KPIs inevitably left business functions misaligned with the one true metric that started it all – revenue. Fast forward to today, the consequences of poor operations infrastructure – incompatible systems, conflicting decisions, lost potential – have gotten more and more businesses to acknowledge this elephant in the room.
Growing businesses, especially in the SaaS space, lose 20-30% of their revenue to operational inefficiencies. There simply had to be a way to practically align business functions and their operations to the north star – revenue.
Thanks to early adopters and their efforts, the challenge of revenue inefficiency has a solution that we can put a name to – Revenue Operations. They’ve likely tried and tested hundreds of strategies with no playbook to refer to. And under the pile of their doings and misdoings must lie lessons that you can immediately apply at your organization.
We decided to pick the brains of some early RevOps practitioners from fast-growing SaaS companies to uncover some under-the-hood insights. This post covers some important (and unexpected) lessons that we picked up during our conversations with Siva, former Director of Revenue Operations at Freshworks, Sylvia, ex-VP of Revenue Operations at EventBrite and Chloe, Director of Revenue Operations at Button.
In particular, three ideas stood out in our conversations.
“We need to align operational excellence around the customer experience.”
“So, essentially, Finance and Go-To-Market teams are tied. So, it’s very important for them to work seamlessly.”
“We’ll just be a little bit more qualitative and look at different ways to analyze time or cost savings.”
Each conversation opened up a distinctly new way to think about Revenue Operations. Let’s dive in to understand what led each one of them to these aha moments.
1. Focus Not Just on Revenue, But on Seamless Customer Experience
Focusing on Customer Experience can improve your revenue by at least 10% according to this Mckinsey report. After 2 decades of SaaS, this statistic should be far from surprising. Why then has Customer Experience surprisingly not been considered the pillar for a function that’s responsible for driving “revenue”? Sylvia, former VP of Revenue Operations at EventBrite, had similar thoughts.
“The thinking really was around, how can we align all the operational resources within the company so that we can enable the go-to-market teams, and ultimately, the prospect and customer to have this great experience as they get to know our product and then use our product and, hopefully then upsell in the future. So that’s why Revenue Operations at Eventbrite was founded,” says Sylvia.
“A customer or potential prospect can’t be approached by five different people from the organization. So if marketing sends an email out, and then the next time they talk with somebody, it’s somebody else, and then the rep calls. And so it’s very confusing for the customer and it’s not a good experience,” says Sylvia.
It’s one thing to optimize internal GTM processes and another to do that while focussing on the customer experience. Her team prioritized their operational excellence in making user’s interaction with their company unified. “So really what it’s all about in a way, is giving the buyer this experience of one touchpoint,” says Sylvia. “And part of that is because our buyer or purchasing cycle is very different nowadays. It’s not a linear function anymore. I’m sure you’ve heard of this statistic which says that before somebody reaches out to you, they have already done like 70% of their research on it, on the Internet.”
Do what every Ops team does – bridge dataflow, facilitate smooth hand-offs between GTM teams, and align roadmaps – all the while focusing not on more revenue, but seamless customer experience. The former is inevitable when you nail the latter.
Brian Halligan, CEO of Hubspot, believes the “lighter experience” model has taken over the “better product” model and it is no longer what you sell but how you sell that matters. “Any tactical change to reduce friction, or organizational alignment of forces that optimize for customer delight, will have a measurable impact on customer experience,” he says. Revenue Operations is that “organizational alignment of forces that optimize for customer delight”.
Read more about the other side of revenue operations – customer experience.
2. Revenue Operations Extend Beyond Traditional GTM Functions
Having joined Freshworks first as a Program Manager at the CEO’s office three and a half years back, Siva says his job entailed “everything that the CEO didn’t want to do himself.” The transition from that vague description to the now clearly defined revenue-focused team that Siva has built, stemmed from an all too simple realization: Operating in silos doesn’t fly when you’re chasing “industry-leading revenue growth.”
More realizations followed during his time as RevOps – The revenue loop doesn’t begin and end with just the GTM teams. Finance’s involvement or rather, the lack of it, had the potential to make or break a RevOps team. “Especially when you look at the metrics,” says Siva. “The metrics that you monitor in a SaaS business – whether it be the payback period, LTV: CAC ratio, or Sales Quota: OTE (On-target earnings). Looking at all of these metrics – there’s no sales metrics, there’s no finance metrics. These are actually common metrics. It’s hard to differentiate Sales and Finance in a SaaS company or in a recurring revenue business.”
“With recurring revenue, you can’t draw a clear border of where Sales ends and Finance starts.”
To tackle most challenges you’ll face as a RevOps person, Siva believes that you will need both a deep contextual understanding of the GTM functions as well as some basic financial thinking. Siva goes over some questions whose answers you can only truly determine with the chops from both worlds:
What are you seeing in terms of revenue growth and where is that coming from?
What does it mean in terms of your budgets?
What happens as you keep expanding to new geographies?
What happens when you add new product lines?
What happens when your mature products have a certain different ACV vs. some of your newer products having lesser contract value?
“This needs deep contextual knowledge while at the same time managing what you want to do from a Finance standpoint, in terms of staying in line with your budgets, ensuring that you meet the revenue guidelines that you give to your board/public markets, etc.,” says Siva.
3. Be Qualitative When Quantitative Metrics Fail to Measure Success
SQLs. MQLs. Demos. Deals. Pipeline value. Expansion.
There are so many ways to tangibly measure the success of a GTM team’s experiment or strategy. But picture this: Your Ops team has done a complete audit of the sales systems, identified gaps, built a road-map for the quarter, handled low-hanging fruits, and documented processes end-to-end. How do you know the business impact of their job?
It’s funny how Ops indirectly affects every revenue metric out there without being able to directly take credit for a single one.
“If the project is about some stuff that is very manual and we’re trying to remove manual processes and create automation, we’re typically going to measure by time efficiency. So how long did it used to take a sales rep or a success manager to do something to complete a task? How long does it take today?” says Chloe, Director of Revenue Operations at Button.
“Because everything we do is around productivity and efficiency. We look at conversion rates, pipeline generation, average size of leads, time to ramp, and time to cross quota. So those are the more general productivity metrics,” says Chloe. But when these metrics fail to give the whole picture, they bend towards the qualitative side. “We look at the pain point the project was to solve and ask ourselves if this is complete. And we also very often, we do surveys. So we will send more qualitative survey to the team to validate, you know, like, hey, we implemented this thing. It’s hard for us to measure. We need to get more qualitative feedback from the team. Is this working, is this not working? And then gaining all this qualitative feedback and refining over time.”
But understanding if you’re doing the best work that you possibly can, goes far beyond measuring KPIs. For anybody who’s not in the top-tier management, it’s very hard to gauge their contribution to the company’s growth. It’s harder when you’re in Ops, picking up stray requests all the time. “And ultimately the way I look at it is, I’m very mindful of my team’s well being. I try to constantly tie back what we do to the company goal for the year,” says Chloe. “So I think it’s important to try to give your team signals on an ongoing basis as to how they influence the company’s success.”
What Does This All Mean For Your Revenue Operations?
What stands out from the experiences of these early adopters are three challenges that every revenue operations practitioner is sure to face – a) accounting for customer experience in revenue operations b) the need to bring together siloed business functions c) measuring the impact of revenue operations.
At Chargebee, we’ve built a revenue operations platform that a) keeps customer experience at the center of solving for revenue b) integrates and communicates with finance and GTM technologies to enable quicker actions c) deep analytics to reflect the truth about all revenue metrics
Are you a RevOps person who’s looking for a scalable revenue management infrastructure for your SaaS? Chargebee is a revenue ops platform that handles recurring billing and subscriptions on one hand, and integrates with each of your GTM and finance tools on the other to become the single source of truth for all revenue analytics. Check out our capabilities in this RevOps menu, and schedule a free personalized consulting session to learn more.