Venture Capitalist David Skok said the success of SaaS startups is determined by three simple keys:
- Acquiring Customers
- Retaining Customers
- Monetizing Customers
Being successful with all three is not simple – thousands of speeches, books, blogs, and workshops attempt to solve the complex problems surrounding these keys.
Startup founders and entrepreneurs should educate themselves on a new way of thinking this is plotting its stake in the SaaS industry.
It’s called Revenue Operations or RevOps. And doing it well can help you acquire, retain and monetize.
What is RevOps?
We define RevOps like this:
RevOps is the opposite of functional silos. It’s the alignment of sales, marketing, and customer success.
This definition correlates closely with that of DevOps, which has broken down the traditional silos of software development and IT over the past decade.
The concept of RevOps is not entirely new. See account-based marketing, account-based sales development which merged into account-based everything.
RevOps builds on those ideas and factors in the modern challenges of SaaS. Here’s how this approach can support hyper and scalable growth.
One of the pillars of RevOps is maximizing the accuracy of contact and account information. This defends against bounced emails but also the awkward or inappropriate emails that plague so many email drip campaigns. Data quality assurance allows sales and marketing to target different contacts in the organization in various stages of the purchase funnel.
Once teams have data accuracy under control, they can spend less time tidying things up and put time into personalization and advanced tactics. This approach involves having rich information on prospects. For instance, knowing a company’s tech stack can be crucial when trying to personalize a drip campaign. Just ask this poor sales guy.
Dear John, I know your targeting algorithm was cheap and thus not perfect, but I suggest to ask for your money back from whoever sold it to you! pic.twitter.com/IYkiIqeAhM
— Werner Vogels (@Werner) November 17, 2016
Additionally, companies who embrace advanced analytics see a 131 percent increase in sales improvements, according to McKinsey. They consider advanced analytics to be investing in customer success (post-sale account management), relying on predictive instead of historical data and calculating metrics like profitability on potential deals.
A Customer-Centric Culture
DevOps gained popularity over the last decade due to the need for collaboration between software development and IT. The rising popularity of software put pressure on tech teams to increase the frequency of their releases, eventually leading to today’s standard of continuous delivery.
The SaaS industry is now bigger and badder with more customers than ever. A new need for collaboration between departments has emerged, this time between the customer-focused departments. Credit this to the growth of data and analytics which has put pressure on companies to maximize ROI on sales, marketing, and customer automation expenses.
As Tomasz Tunguz puts it, there’s one simple reason for bringing these teams closer together, maximizing the customer journey. Customer lifecycles can be tracked and optimized from the point of awareness to post-sale. This innovation was born out of necessity. CEB Global reported that B2B customers are 57 percent through the purchase process before they speak with someone.
If you’re able to build a customer-first approach, a focus on revenue naturally follows.
A Revenue-Centric Culture
Some say that RevOps requires the creation of an entire department – others disagree. But if there is a “RevOps hire” it would be a position that is already well-known around Silicon Valley, Chief Revenue Officer.
Bringing in a CRO and developing a culture of RevOps puts an importance on all things revenue – regardless of department. For instance, former CRO Jim Herbold detailed his cross-department responsibilities in a VentureBeat article:
- Sales deals and issues
- Marketing and the demand funnel
- Customer success and renewals
- Fluctuating amounts of time with product, business operations, finance, sales operations, business development, and people ops
But hiring a CRO isn’t a magic wand for RevOps success or creating a revenue culture. Head of Global RevOps at Vidyard and founder of the Revenue Engineer blog, Joe Gelata, points out that a CRO deciphers the best strategy, but you’ll still need resources for the execution. He described the following implementation steps during a presentation:
- Centralized Reporting – Bring your reporting processes and meetings into one system so teams can begin collaborating.
- System Administration – Empowering teams or individual employees so they can own the data and start developing processes.
- Solution Development – The final stage that should come naturally if systems are in place.
Fight Churn and Help Account Expansion
Every SaaS company knows how important churn is and how valuable account expansion (also known as negative churn) can be.
Adopting RevOps can reduce churn as customer success metrics become prominent across an organization. For instance, churned accounts can be analyzed so an Ideal Customer Profile can be developed. The ICP can be a framework for all sales and marketing efforts.
A more enticing idea is achieving negative churn, where revenue earned from upsells, cross-sells and upgrades, etc. exceeds the revenue lost from customers who cancel. RevOps helps here by arming sales and marketing teams to focus on customers in different stages of the journey and to use account-based development principles. A customer who downloads whitepapers or attends webinars can be flagged as an upsell opportunity or an advocate. These metrics have been available for ages but are only now being shared and discussed across departments.