This is a 5 minute read.
Recently, I’ve seen a few articles, whitepapers and blog posts about the nature of Revenue Operations and the newly created executive role called the ‘Chief Revenue Officer’ or CRO.
I’m writing post to describe the framework from which I view the future of this emerging business unit. I intended to dig deep into my thoughts and research on the matter and will be sharing them with you over the next few months in the form of a weekly post.
While the role appears to be “new” it is in fact a mash-up of a bunch of functional responsibilities within organizations over the last two generations. That being said, the availability of sales, marketing, customer success and accounting data that, when combined, create an entire picture of an organization’s revenue cycle is completely new.
Revenue Operations. Really?
Despite what we read every day about successful capital raises, acquisitions or exits by start-up companies, Revenues are the life blood of the organization. If companies cannot turn their ideas into revenues (that hit their bank account), then they’ll eventually die a slow, painful and ugly death. The deal sheets and databases are littered with the carcasses of dead startups that were successful in achieve product market-fit, but failed to convert this to an ongoing business case.
In most corporations, traditional business functions (Marketing, Sales, HR, Accounting) are slotted into separate department Silos. Inter-departmental communication only occurs between the most senior of the corporate leadership and it becomes the CEO’s role to align these functional teams around a common mission and purpose.
In reality, most CEOs spend most of their time fighting fires or attempting to mitigate internal and external matters and have little time to align their functional departments (which could be one or two people). So the coordinating job never really gets done.
In my view, any function that touches revenue is part of the Revenue Operations attack.
The Revenue Levers for any enterprise are found in Marketing, Sales, Customer Service/Success, and Accounting. Each is, in some way or form, responsible for Revenue being converted into bank deposits. To drive Revenue, your team needs to apply focus to the salient tasks, jobs and processes in each of these four levers.
This is a dramatically different thinking from the Sales-heavy method that has been predominant in the previous decades. A company doesn’t need to just hire a “Rockstar” VP of Sales to drive revenue or a killer marketing campaign; they need a team of specialists with a highly skilled leader to focus on driving sustainable revenue.
Friction exists without a Revenue Operations Conductor
The existence of friction in any part of your business slows the ability to convert prospects and opportunities into deposits in your bank account. I call the speed at which a prospective client converts into cash Revenue Velocity and the rate of change in speed Revenue Acceleration (I’ll discuss each in more detail in a future post).
In some cases, friction provides for checks and balance. But from my experience, friction is created when you haven’t fully formulated what is required to make it easy for prospects to do business with you.
In today’s multi-channel, multi-media business environment, your prospects and customers are bombarded by messaging to entice them to allocate their budgets elsewhere, so if you make it hard to do business with your company (eg. friction), you can expect that someone who’s more been frictionless will be taking that customer’s budget from you (despite your hard work).
Processes, technology and people are the reason why friction continues to exist. If you can’t convert new prospects into cash, you likely have misaligned processes, poor technology solutions or personnel challenges.
The purpose of a Revenue Operations team is to reduce the friction in your business and to increase Revenue Velocity and Acceleration. So if you care about the amount and speed of which your bank account gets filled then you’ll care about Revenue Operations.
The Revenue Operations Business Levers
A lever is defined as “a rigid bar that pivots about one point and that is used to move an object at a second point by a force applied at a third” (dictionary.com).
For Revenue Operations, the levers that are used to influence and build Revenues are the following:
- Marketing Operations
- Sales Operations
- Customer Success and Service Operations
While these appear to be straightforward, I’ll spend much of the next few months developing each of these in later posts, but in order to introduce the topics, I’ll summarize each below.
These tools, processes and programs will accurately describe and position your market offering, attract prospective customers to inquire and complete a purchase. In general, marketing operations include market strategy and business analysis, demand generation, and message/brand management.
In describing your go to market strategy as warfare, marketing operations does the work that takes place before going to the market (Strategic battle preparations) and then iterates while you’re in the firefight (Tactical battle preparations).
Functionally, you’ll find brand and market analysts, graphic and web designers, strategists, writers and product specialists that will support Sales Operations.
These tools, process and programs are used by your frontline team that interface directly with prospective customers. This includes playbooks, scripts, cadences, dashboards and methods that your sales team will use in order to find, educate and convert prospects into first time customers.
Functionally, you’ll have business analysts, researchers, sales development reps, account executives, key account executives and data scientists in your Sales Operations team.
Customer Success and Service Operations
These are the tools, processes and programs that are used by your team with your new and existing customers. Customer Success and Service relates directly to creating sustainable revenue. Moreover, as the majority of the Customer Acquisition Costs are borne by the initial acquisition, the Customer Success team has the ability to create the most profitable Revenues in your Revenue Mix. As such, the functional focus of these operations are on customer enablement, satisfaction and retention.
Functionally, you’ll have inside Customer Service Reps, Technical leaders, Onboarding Trainers and Product Support team members in your Customer Success team.
Data Drives Revenue Operations
During my time as an active investor in companies, I often heard that from the founders that they intended to hire a “Rockstar” VP of Sales to kickstart their nw market sales efforts. Often these statements were met with skepticism because our investment committee felt that the hiring of one individual would not be the catalyst to launch an entire enterprise forward. Rather it was a series of hires and execution of a business plan that would likely move the mountain.
The primary difference between how sales, marketing and customer service were run a decade ago and today is the availability of data.
In the same way that the marketing leader can determine which marketing campaigns are the most impact in developing business, today’s sales leader can pull statistical data from their Customer Relationship Management (“CRM”) or sales enablement system and easily understand the challenges that the sales team is having in their sales process. Thus the prevalence of data creates a mosaic of insight that allows thoughtful and caring executives to move the business forward.
Unfortunately this abundance of data has left some leaders unclear of their focus. It seems to me that the main challenge amongst today’s Sales, Marketing and Success leaders is that they are either measuring the wrong metrics or don’t know which measurements are meaningful to driving their revenues so they’re measuring everything. Thus this ocean of data has created situation where leaders are drowning and they don’t even know how to catch the life preserver.
One way to ensure that data becomes a servant to the leader is to use a systematic approach. For many, the scientific method of creating hypotheses, developing and executing tests for these hypotheses provides comfort to manage the reams of data that result from standard operations. For others, the scientific approach seems cold and unkind and is inconsiderate of the human relations and reactions involved in a real person to person activity like sales.
Who will coordinate all of these efforts and manage this data?: the CRO
Today’s Chief Revenue Officer is more than just the Rockstar salesperson who closes big deals and inspires other to do the same. Today’s CRO understands how to use data to advance the company’s interests via a coordinated attack from Sales, Marketing and Customer Success Operations. The CRO is the master strategist who launches the campaigns and battle plans to drive the Revenue Attack.
In addition, the CRO is the internal leader who relentlessly reduces organization friction. As a result, the CRO makes it easy for prospects to work with and buy from their organization at every step in the customer acquisition and success process.
In smaller companies (less than 30 employees), the CEO acts as the CRO, but as the business grows in either complexity or scope, someone must be tasked with the role of coordinating the go to market attack.
A quick search on LinkedIn Sales Navigator for the terms CRO or Chief Revenue Officer results in 17,996 names. Drill down a bit by selecting for companies with more than 50 employees and seniority (Director, VP, CXO) and you find that throughout the globe there are 3,566 names.
What do most of these senior CROs have in common? They’ve been in their role for less than 5 years (most less than 2 years) and that they’ve acquired experience in all forms of sales transactions and teams (SMB, Enterprise, Licensing, etc.) and they’ve got an analytical background (either Engineering, Economics or Finance).
Why is this?
As a CRO you need a combination of the social sciences of psychology and behavioural economics and the deep analytical framework to appreciate the power of data. They are essentially a “people-person” who loves to spend time looking at puzzles in numbers and figuring out what’s really going on.
There’s a lot to unpack here and I intend to do so over the ensuing few months. I hope that you’ll join me on the journey through your comments, please follow me here and you’ll get all of my latest thoughts and ideas.
Blair Carey is passionate about using data to help companies meet their mission and purpose. He is the creator the new site insidecro.com where CROs can collaborate on anything they’re thinking about. You can follow him here or find him on his LinkedIn profile here.