Why Revenue Operations should be a priority for B2B Tech CEOs

Firstly, lets align on what revenue operations is.  Here is the definition we at TekStack work from:

Revenue operations (RevOps) aligns the processes, tools, and teams involved in generating revenue within a company. It brings together different functions, such as sales, marketing, customer success, and finance, to work collaboratively towards achieving revenue goals.

RevOps is a term that is becoming hijacked  , um, adopted by software vendors to seem more relevant to the “C” suite.  Many vendors are conflating the term to be solely focused on things like customer acquisition, reporting, or forecasting.  These are important elements of revenue operations, but they are just parts of the process.  For the sake of this article, we have a much broader definition.

Why is Revenue Operations important to B2B Tech companies?

The pressure is on for B2B technology companies to reduce operating expenses and to see a positive return on their sales and marketing investment. Access to infinite cash is no longer an option.  A recent RBC Capital Markets analysis estimates the median sales efficiency as 0.8X. This is often referred to as the Sales Magic Number, answering the question, “How far does a dollar of sales and marketing spend get you?” This means that companies are spending more in sales & marketing to add a new customer than what they are getting back in first years’ ARR.  So, in order to run cash flow positive, it’s critical to keep that newly acquired customer for multiple years because that revenue needs to cover the operating expenses of other parts of the company like R&D, support, and G&A.

What should RevOps include:

• Tools to support Sales Channels including marketing automation, outbound sequencing, and partner deal tracking.
• CRM
• Deal desk tools like quoting, orders, invoicing, and renewal management
• Customer onboarding like professional services automation or project management
• Help desk
• Customer success
• Reporting

Three areas CEOs should focus on

To run smart, B2B Tech companies need to focus on the following:

Becoming Sales Efficient

Getting the most from sales and marketing investments.  This means focusing on market segments, products, and marketing channels that drive opportunity creation at lower cost.  This also means getting your win rate up, which is a combination of product/market fit, and sales execution.

Stopping the Revenue Leakage

This is the boring deal desk functions like:

• Reviewing discounts, payment terms, and subscription start dates.
• Making sure software and service invoices are accurate. So many companies forget to invoice change requests, project completion milestones, or just plain miss hourly service billings.  But they add up.
• Calculating renewals correctly. Its easy to miss the mid-term upsells that are co-termed, or lose track of negotiated price increases.

These are the obvious examples.  With most software companies it’s not uncommon to lose 10-12% of revenue just through poor processing because systems and departments are disconnected.

Throttling Net Retention

This is a combination of keeping customers retained, and getting them to spend more money with you each year.  If you can keep 90%+ of your renewal revenue (gross retention), you are in a great spot to get net retention up to 110-115%.  Do that, and you’ve got a great business.

To achieve this, your business needs to:

• Get customers live quickly so they have the max amount of time to realize value before the first renewal.
• Make sure to take care of customer support issues to put out any burning fires
• Easily assess customer sentiment through NPS or CSAT surveys
• Maximize automated communication and playbooks, providing self-service educational information like webinars on existing and new features
• Put your top customers into a special segment that provides a more engaged approach to customer success.

A true revenue operations platform will give you the tools to achieve this.

What is the most important criteria in a RevOps platform?

Integrate the entire Customer Journey across departments.  A true RevOps platform should also provide Customer 360 visibility.  That is, every employee in the company should be able to see the status of every customer in terms of communication, marketing activity, project status, what they own, renewal dates, invoice status, help desk tickets, and customer health.  Data should be in one database, not seven.

Easy to Use.  The platform should be intuitive, easy to use, and accessible from any device with a single login.

Industry specific process guidance.  Providing best practice guidance on key processes like marketing to sales handoff, ticketing, customer onboarding, or customer success.  An average B2B Tech company has over 100 business processes, most are not documented or consistently applied.

Enable productivity.  Fully connected to your email system, as well as productivity tools such as Excel, Word, and Teams.

Low cost.  You shouldn’t have to spend a fortune on your tech stack.  As a guideline, the tools to run marketing, sales, services, support, and invoicing should be around 0.5% of your ARR.  You have better things to spend money on in the business.

Easy to implement.  To achieve an efficient business, every company will have to deal with business transformation, but the process should make the data, and change management as easy as possible.

Great Support.  Ideally one throat to choke, a vendor that gets your business, and doesn’t bill you for every interaction.

Scalable Platform.  A platform that will handle your scale as you grow, something built from modern tools and supported by a large community of developers.

Conclusion

B2B Tech companies need to get sales efficient.  A focus on Revenue Operations will achieve this.  Revenue Operations is more than just focusing on customer acquisition.  In fact, to run an efficient business, you need to maximize the lifetime value of a customer.  To do that needs to involve all the steps post acquisition.  Because of manual processes, most companies leak revenue they worked hard to get. These leaks are easy to fill with good process supporting tools.  A revenue operations platform like TekStack will do this, and it should cost less than a hobbled approach to technology stacks you are likely dealing with today.

If you are interested in a conversation about how TekStack can help your business drive more revenue, get in touch.