How RevOps applies 5 key metrics to measure revenue growth

In our previous blog post on Revenue Operations, I explained how the RevOps framework can align a B2B organization’s top line with goal responsibility to effectively drive revenue growth. While driving revenue is indeed the ultimate goal, RevOps is also responsible for measuring other factors contributing to revenue growth. Here are 5 key metrics RevOps is accountable for that are crucial for a B2B company’s revenue growth.

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1. Customer churn

Let’s face it. We hate to see customers leave but it would be impossible to retain 100% of customers even with the best strategy ever to exist. Customer churn is the percentage of customers that stop using an organization’s product or service within a specific period. While it is inevitable to stop people from choosing other brands, the best thing a business can do to retain the majority of customers is to prioritize customer retention with a RevOps strategy.

Customer churn is crucial in RevOps.

A whopping 33% of Americans say they’ll consider choosing another brand after one instance of poor customer service. This stat alone is a risk for any B2B company that is hoping to keep their churn rate less than 5%, the churn rate every company should aim for. Luckily, RevOps operates in a way that mitigates risks. Because a company’s marketing and sales departments aren’t enough to sustain growth, organizations cannot rely on contracts to keep customers locked in. A RevOps strategy incorporates customer successes with marketing and sales because they are principal owners of revenue generation. An organization’s churn rate is likely to be lower when customer challenges or questions are addressed at all stages of the customer journey. When solutions and answers are provided proactively, customer retention is ignited, revenue experiences growth and fan bases are more likely to remain loyal. Analyzing the churn rate as it occurs proves to be advantageous, giving the organization’s data that can put into place preemptive measures throughout all top lines of success.

 

2. Pipeline velocity

50% of high-performing sales organizations have a structured sales process in place. A structured sales process is one that speeds up the deals moving through the pipeline and increases the number of quality leads. This is known as pipeline velocity—how fast an organization can move leads through the pipeline to the closing stage. Because pipeline velocity is a crucial metric responsible for driving revenue, Revenue Operations supports sales, marketing, and customer success departments with sales enablement practices that have an effect on the whole business. Each of these enablement efforts has a positive impact on the business, and it’s coming from each top line of success.

Sales pipeline, RevOps, conversions.

One common problem siloed sales departments face is the discovery phase. Time and time again, sales teams avoid understanding a buyer’s true problems around the buying decision and instead shove their sales pitch down their throats and hurting the company’s pipeline velocity. This is the beauty of a RevOps framework. Revenue Operations stresses how important it is to focus on the customer at all stages of the buying process. When organizations are able to understand the needs, wants, and problems of customers, then sales, marketing, and customer teams are able to frame solutions and answers accordingly. Sales teams want to get customers through the pipeline as quickly as possible—but it is challenging when pipeline goals are sales-eccentric and not concentrated on the primary revenue drivers.

 

3. Sales forecasting

Sales forecast, HubSpot

HubSpot defines sales forecasting as “what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually.” It may sound like a number that can be reached by one person, but it is much more complex than you think. Sales forecasting is critical because an organization must make decisions based on honest numbers so that the business can grow. It is critical to identify mistakes early on, but difficult when it is only up to the sales team to deliver an efficient forecast. There are common sales forecasting problems that arise when organizations don’t have a strategy like RevOps to account for the metric. This may include no training, time-consuming processes, accidental inaccuracies, or having no clear sales process.

 

"The forecasting process is so much more than just calling a number. It represents the entire operating rhythm of the whole company."

Kevin Knieriem, CRO at Clari

 

Another crucial problem that can be detrimental to other departments if they’re not involved with sales is not looking at historical data. RevOps functions to connect business and activity data across marketing, sales, and customer success teams to avoid dropping the sales forecasting task into the lap of the sales department. As Clari boldly puts it, “the sales forecast isn’t just the responsibility of sales anymore.” With RevOps acting as the glue between the top line, organization’s can enjoy sales forecasting that is no longer inaccurate and avoid revenue mistakes with strategic confidence.

 

4. Cost of customer acquisition

In the last few years, customer acquisition costs have been steadily increasing for B2B companies by nearly 50%. B2B organizations find it challenging to acquire new customers because they don’t know how much to invest in their marketing efforts to attract the right audience. Remember when I mentioned that RevOps enabled data-sharing along all the top lines? This includes marketing.

Revenue Operations, customer acquisition cost

Companies are failing when it comes to acquiring new customers because they’re simply unable to understand who their customers are. RevOps accounts for this by pinpointing the customer acquisition cost (CAC), which is the dollar amount spent on marketing tactics to acquire new customers. Once this number is obtained, the RevOps strategy works to build a good customer acquisition strategy with the help of the rest of the top line. This strategy aligns a company’s acquisition channel, model, product, and market to increase bottom-line revenue and instill value along the customer journey. Improving customer acquisition by 1% will result in a 3.32% increase in bottom-line revenue, while simultaneously keeping the customer churn rate low—another metric essential to the RevOps framework as mentioned earlier.

 

5. Renewals, upgrades, and cross-sells

All Apple users have encountered a time where they renewed their Apple Music subscription, upgraded their iPhone to the latest model, and purchased a pair of Apple headphones with their upgrade—An example of renewal, upgrade, and cross-selling. Revenue Operations is responsible for ensuring the same seamless buying process across all B2B organizations by aligning customer success teams to top-line operations.

Upgrade, subscriptions, renewals, RevOps

Did you know that a 5% increase in customer retention can increase profits by up to 90%? This is possible when customer satisfaction is guaranteed. Luckily, because alignment between sales, marketing, and customer success is achieved, data-sharing across channels ensures accurate reporting on customer activity, honest sales predictions, and a better understanding of customer acquisition. With this in mind, teams operating a RevOps strategy are able to create lifetime value (LTV) because they understand their customers at every stage of the journey. The RevOps framework is built to find honest, functional ways to maintain customer satisfaction by using data that is shared across the top line. When customers are satisfied, they are more likely to renew, upgrade, or buy more depending on the company’s product or service. Anyone can throw bait at their customers and prospects, but it takes a real, efficient strategy to turn relationships into life-time valued fans.

 

Now that you have a better understanding of all 5 metrics, is your organization ready to shift towards RevOps? Stay tuned for our next blog post where I report on how to determine if your team’s technology stack is suited for the RevOps framework.

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