TMW #121 | The rise of Revenue Operations
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Revenue Operations is the most confusing category in marketing technology – and there are a lot of confusing categories. One of the main reasons why I think this is because it can take the form of a technology category, a business department, a job, and a corporate philosophy – and all at the same time. And while it takes many formats, there’s a lot of confusion over where it sits in the context of all the other marketing, sales, product and analytics business functions.
One example is a recent post from former senior marketing operations manager at Slack, Sara McNamara, which sparked quite a discussion over what exactly Revenue Operations is. And some of the comments are about as clear as mud:
“Most of the Revenue Operations openings I'm seeing posted currently are very Sales-centric, which, I agree, is a rough path to build comprehensive agility, efficiency, and value for a company's GTM effort.”
“Customer-facing ops along with back end ops...that's why it is not JUST "REVENUE" ops and should be called "Growth Ops" ...and now I come down off my soapbox!”
“To me, the whole point of "revenue operations" is that it should focus on the entire sales process from demand gen through to closed one and back-to-base/cross product marketing.”
“I'm bullish on revenue operations, but ONLY if it becomes less sales-focused. It needs to truly become the hub of all GTM operations, and need to feel equally passionate about each section of GTM.”
From the standpoint of someone on the outside looking in, it seems like Revenue Operations could be all these things these commenters are describing. Which leads to an interesting question – how can you have a tech category, a role in a company, or even an entire team not know what their actual work is?
Despite this confusion, the job of Revenue Operations is attracting more people than ever along with a growing category of technologies that “solve on revenue.” This year, LinkedIn named the head of Revenue Operations as the fastest-growing role in 2023, but what’s also interesting is how many other roles in the top 10 are aligned to a Revenue Operations function. If anything, this tells me that the growing appetite for Revenue Operations is representative of the changing nature of how marketing and sales leadership sees their priorities. In other words, it’s time to make money.
How do you make sense of a bewildering tech category where no one can agree on what its fundamental purpose is? That is the task of this essay. After all, we already have salespeople (that bring in revenue) and marketers (that drive demand); why do we need this new concept? Are we just reinventing wheels here? Let’s find out.
The best way to think about Revenue Operations and its importance is its role as the wedge between marketing and sales. Jeff McKittrick, MD of The Revenue Enablement Institute, describes it like this:
“What is the difference between Sales Enablement, Sales Operations, Go to Market Operations, Sales Engineering and Partner Operations? – in two years these will cease to be standalone functions and they'll be combined into Revenue Operations functions that support the overall revenue operations holistically,”
At a conceptual level, this is the clearest way to think about Revenue Operations: it’s a wedge between marketing, sales, and product with an operational and analytics focus on managing all the variables that impact the bottom line of company revenue. And that’s precisely why it’s so hard to pin down; each company has its own understanding of how these functions work, and there are variances between industry type and B2B vs B2C. Unlike working in just marketing, the role of Revenue Operations is to unify a variety of highly complex functions to influence the purchasing experience for consumers.
You might be asking yourself why would any company want to invest time, talent, and resources in Revenue Operations? Outreach, a Revenue Operations platform, suggests that since the pandemic, 58% of B2B companies from a recent survey with Forrester expect to have less or the same salespeople to meet similar or exceeding goals for the upcoming fiscal year, with 68% of them looking to replace sales headcount with automated technologies.
I think part of this shift has to do with more than how companies are thinking about commercial growth; instead, it represents the blending of marketing and sales in a post-covid world where much more of the sales activity is happening online. In B2B, sales were the money-making function, but now Revenue Operations has come in as a methodology to increase the efficiency and scalability of sales with Martech.
One of the reasons Revenue Operations makes sense is that the gap between marketing and sales is usually filled with dated processes, junked tech and missing analytics. And while we’ve had sales engineers for a long time, and people that implement and build CRM systems that manage those sales, Revenue Operations has an interesting role to play in pushing CRM functions to their limits across the sales pipeline.
One example of this playing out is Affirm hiring a Revenue Operations VP to work with their Chief Commercial Officer. This person manages analytics, sales, program, field marketing, and selling platforms and influences incentives for the sales team. The conceptual mapping of this is to better influence revenue outcomes across people, technology platforms and analytics. Affirm sees that what matters is not just demand, brand awareness, or even customer success (although that’s important); what matters is being able to confidently answer the question: where’s all the money coming from?
Revenue Operations exist as an alignment concept for various teams and departments, with a focus on revenue generation. But there’s one major piece of this puzzle that’s missing if you don’t look at it from the perspective of analytics.
That’s why calling the Revenue Operations function just another form of accounting for marketing. The role of Revenue Operations is to align teams with the financial reality of a business. And this is what’s really exciting about growth in this sector. For as long as marketing has been around, the language of growth has been in reach, clicks, and conversions – stuff that doesn’t matter to a CFO that’s trying to balance a profit and loss statement and asses the real commercial situation of a business.
But to do this takes deep analytics and commercial expertise, and there’s a lot of misalignment between groups and fuzzy ideas of what leads to what. But there’s change happening here. Research from Syncari suggests that companies that don’t have a Revenue Operations function have highly complex analytics setups with siloed reporting roles that are complicating business intelligence. But it’s a very different picture when a company brings in a Revenue Operations role.
In a prolonged economic downturn, where investors are pulling back and customers are harder to find, a practical business function focused on bringing in revenue, and creating greater clarity between marketing and sales efforts on the bottom line is critical. We’re in a season where VCs and tech investors are shifting from growth-oriented outcomes (being the biggest in a category) to companies that can drive a lot of revenue profitably.
Revenue Operations is one of these concepts that has been embraced the most by technology companies. And that’s the interesting thing about this movement - if you’re able to connect marketing and sales data with business finances, what you have on your hands is the holy grail of all Martech reporting.
The way that Revenue Operations loos at how marketing and sales impact revenue and growth is by assessing each variable for revenue opportunities across the customer journey. Things like contract payment terms to execution of campaigns and initiatives, and external elements such as seasonality and lifecycle stages of the customers, are all calculations that lead to an eventual sale. To the Revenue Operations master, all of these things are levers that can be pulled to improve business outcomes, but when tied back to financial reporting it becomes a powerful tool of visibility and a foundation for strategic thinking on where to invest next.
Sure, calling Revenue Operations folks “marketers with calculators” is a bit silly, but when you look under the hood, there’s something very compelling here about the alignment of teams under a commercial framework from an analytics standpoint. It’s a real sore point for most B2B companies that they have endless dashboards, but no sense of commercial impact. Revenue Operations, if successful, will play a big role in changing that.
Money, money, money
The challenge with revenue operations is that it’s a role that can be constrained by a singular focus on driving revenue. If Revenue Operations is the squishy middle part between marketing and sales, then there’s a specific focus on making marketing activities more efficient and targeted, while driving a better pipeline for sales folks. But that’s not the only thing that moves a company forward.
The concept leads to an overemphasis on data – specifically financial data – to make decisions on marketing and sales activity. However, some of the biggest business unlocks often come from our own intuition and relationships – things that would be hard to see the value of from a pure profit and loss perspective. If companies only focus on revenue activities, what happens is that long-term growth opportunities are sacrificed for revenue opportunities in the here and now.
I think an assumption that most folks in the “Ops” realm (Marketing Ops, Sales Ops, Growth Ops, Dev Ops) carry with them is that the way a business grows is through utilizing data to extreme ends. For example, here’s an opening paragraph from a recent report on Revenue Operations that argues that the key to company survival is through tapping into customer data:
“The tech industry has recently been shaken to its core: a looming recession, rampant layoffs, and mounting efforts to buckle down and find ways to be increasingly efficient. What organizations are starting to realize more is that data — especially the mountains of data they collect on their customers — is the key to their survival.”
Money is of course important – it’s why we’re all in business right? But if every decision is funneled into a revenue outcome, the Revenue Operations function can turn everything into a tactical exercise to squeeze more juice out of your customers’ wallets, stemming from a belief that to grow a brand, all that matters is data, which is a dull and potentially disastrous worldview to bring into marketing.
A technological movement
Revenue Operations is also filled with new technology solutions that are focused on the ideas of connecting financial reporting with marketing, sales, and product. But for the life of me, I struggle to figure out what they do. So much of the technology talks about their product like this:
“Our company is the only complete platform that empowers the entire sales organization — from sellers to front-line managers, sales leadership, and ops — to create and close more pipeline”
What can you derive from this sentence about what this technology actually looks like? Not much. Because the purpose of most of the technologies relies on aligning other tools. If it’s either sending data downstream, collecting data from customers, or integrating a variety of technologies together, then Revenue Operations plays a role across a large swath of the Martech stack across marketing automation, sales technology, customer success and analytics.
Perhaps that’s the right way to think about Revenue Operations technology. It follows that if the job is about the alignment of people, strategies, tech and data, then the software should be about that too. If you break it down, there are always going to be technologies that work in each of these four quadrants, but some are more focused on Revenue Operations than others.
Sit this in the context of the trend towards deeper technology integration in companies, and things start to make sense. We’ve got infrastructure change (CRM, MAPs and CDPs coming closer together) which is causing the differences between the marketing and sales technology to disappear. First-party customer data from websites need to be merged with account data in CRM and customer inquiries from the customer success team. Revenue Operations is one potential conceptual business practice to manage the merge.
But also business model change where point in time transactions are replaced with subscriptions. The entire notion of a sales transaction has changed as businesses go from selling individual products to streams of consumable services and subscriptions. Revenue is becoming more complex as business models change to digital-first pathways to a sale (or recurring sales) resulting in a specific focus on strategically analyzing opportunities to grow it.
Despite the high degree of mystery surrounding the concept of Revenue Operations, there’s a lot going for this emerging bundle of job descriptions, new technologies and conceptual ideas. It looks like Revenue Operations is here to stay as a popular new category. But let’s be clear – not everything is about revenue, and marketers will riot if everything in strategy becomes a tactical search for more.
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