How divine would the music be if every member of the orchestra played their instrument with headphones on, staring solely at their own sheet music? This is precisely how many companies try to increase their revenue.
RevOps is a term that has been popping up increasingly often in job postings lately. We interviewed Mikko Honkanen – a RevOps veteran – about the topic. We wanted to understand what’s behind the popularity of RevOps and how it relates to revenue growth.
As a teaser, let us reveal that the purpose of RevOps is metaphorically to make the revenue machinery of organizations operate like an orchestra. Now, onto the matter at hand.
Could you introduce yourself?
I’m Mikko Honkanen, one of the founders of Vainu, a company specializing in business data. Currently, I’m in charge of product development here.
I’ve also been hosting a podcast related to RevOps.
What does RevOps (Revenue Operations) actually mean?
At its core, it’s about orchestrating and optimizing all revenue-generating activities to ensure they function as cohesively as possible.
The functions included in RevOps are sales, customer success management, marketing, and financial management. For software companies, we can also add the product side to the mix.
What is the purpose of RevOps?
One of the main goals is to bring functions that were previously largely in their own silos together to ensure that everyone in the organization is moving in the same direction.
Additionally, RevOps aims for more open information flow and tighter collaboration between different departments. Often, it’s also targeted at enhancing a company’s ability to respond to rapid changes in the market.
With a common direction and a unified playbook, we achieve faster growth – and often more profitably too.
Looking at it from a practical standpoint, in RevOps the focus is on pondering:
- Who should we sell to and how?
- Who are the best customers for the company?
- How should the customer relationships be managed?
- How to align sales and marketing?
- How to increase revenue in a profitable way?
Who should be responsible for running RevOps?
There probably isn’t one correct answer to this, but when I interviewed dozens of RevOps professionals for my podcast, surprisingly many of them mentioned reporting to the financial leadership – like the CFO, for example.
I personally like this modern approach because usually when a CFO sends out a report, it catches the interest of the top brass, right up to the CEO.
When the RevOps team reports to the financial management, matters related to revenue development end up in the reports that eventually find their way to the desks of the executive team, the board, and the owners.
Alongside financial management, another logical place for RevOps is within the domain of the commercial director. If such a role does not exist in the company, RevOps can also fall under the leadership of sales.
Practices vary greatly.
Who should learn more about the topic?
Personally, I’ve worked in the B2B sector and RevOps is definitely a perfect fit there. Especially in the software industry, we’re quite advanced in utilizing data, and there’s plenty of quality data available.
In this case, implementing RevOps is a breeze.
Here’s one concrete example. Many companies in the software industry strive for a Product-led Growth approach, where one of the goals is to gather as many free users as possible and convert them into paying customers. Such a company would significantly benefit from implementing RevOps.
RevOps is generally suitable for industries that have long utilized data or have a high transaction volume.
Such industries include banking, insurance, logistics, and telecommunications. These fields have a lot of room for optimization and opportunities to leverage machine learning.
If you’re in the business of selling cruise ships, then RevOps might not be the right approach for you. After all, success hinges on whether you sell one ship or two.
What changes after adopting a RevOps approach? How does it for example affect people’s roles?
The most significant impact is that people from different functions start working together and become part of the same team. You’re no longer just focusing on optimizing sales or solely thinking about new customer acquisition; instead, you’re considering the bigger picture.
RevOps forces you to think about costs in a whole new way. You have to consider the most efficient methods for sales or marketing, for instance, or what the most cost-effective way to acquire new customers is. You also need to evaluate which customers are profitable for your business and which are not.
Other changes may occur too. Frequently, the CFO moves closer to the core business and becomes an even more crucial player, tasked with bringing insights to the management on business development.
RevOps often means that the use of a CRM system becomes more systematic, instituting stricter rules for its application. RevOps demands discipline and shared regulations, such as for logging data across team and functional boundaries. As a result, some might feel that a certain freedom in their operations is lost.
The extent of the changes largely depends on the company’s initial state. If there hasn’t been an Operations culture in the company, then we’re talking about a major cultural shift. However, if the company already has Sales Operations or Marketing Operations teams in place, moving to RevOps might even feel like a relief for many. It brings clarity to their workflow.
I’ve also noticed distinct changes in how people in Operations are valued. Back in the day, those who ended up in the Sales Operations team were usually the ones who used the CRM system diligently and operated systematically but weren’t necessarily the top sellers. Now, the role of Operations has evolved, and members of the Ops team have become genuinely key players in companies.
Many companies recruit a lot of people for these roles from outside the company. These positions often attract former management consultants, which makes perfect sense. After all, in the consulting business, one is accustomed to examining a client’s business operations as a whole.
How does RevOps relate to Growth Hacking?
This is a jargon jungle. However, I perceive that growth hacking often relates to attracting new customers during the marketing phase. In growth hacking, the focus is on finding ways to attract as many new customers as possible, and it has traditionally been a strong part of the marketing domain.
RevOps brings together these growth hackers, Sales Operations, and finance wizards to brainstorm revenue growth.
How do you (at Vainu) run RevOps?
First off, our RevOps is led by an extremely experienced individual who has been with the company for quite some time and previously headed the Customer Success team. So it’s not someone who’s just good at crunching numbers in Excel or inputting data into CRM systems who’s running the team.
At our company, the RevOps leader is a major decision-maker who sits on the executive team. The role is incredibly diverse, but one significant area on their desk is how we leverage the CRM system.
The RevOps leader is a key decision-maker whenever we consider what tools and systems we use and how we use them. There’s no way to implement new software without going through him.
Whenever we’re planning campaigns, we always have a representative from our RevOps team on board. The RevOps team is also constantly in touch with customers, the product team, and marketing, and they collaborate closely with the CFO.
What is required to implement RevOps?
The first requirement is to agree on a few common metrics to assess success through. For example, do we want more profitable growth, or are we aiming to capture a larger market share in a particular customer segment?
Since there’s a ton of work with data and processes in RevOps, it’s absolutely essential to have robust data systems and a culture that’s driven by data. Does your company, for instance, have a CRM system? Is it being used effectively? Do the different systems communicate with each other?
Additionally, operations must be systematic. Are the processes clearly defined? Are they documented in the systems? Have the customer life cycles been outlined? I would start by fixing these issues immediately if they haven’t been addressed already.
A functional shared CRM system is an excellent starting point for RevOps. Once those basic requirements are in place, the next step I would take is to build a RevOps playbook.
Why does this topic attract to much attention right now?
Discussions in my own bubble can often be traced back to American companies. Over there, RevOps has been a hot topic for a while. Here in Europe, RevOps titles are still quite rare, but the subject has definitely sparked interest.
In recent years, many companies have been chasing growth at any cost, but now, in tougher times, the focus has shifted to profitable growth. From the perspective of this change, RevOps offers an attractive approach.
I’ve also noticed that the influence of RevOps professionals in companies has grown. These positions are more visible than before. As RevOps people generally receive more attention, it also sparks interest in the subject among many companies.
What are the most typical stumbling blocks when implementing RevOps?
I would anticipate that people naturally tend to think about things based on their own backgrounds and roles. Salespeople think about how to sell. Marketers consider things through their own metrics. In RevOps, one must be able to view things more broadly.
Another common stumbling block is not giving the RevOps individual or team enough decision-making power. Without it, making any changes is impossible.
One potential stumbling block I’d point out is that RevOps introduces perspectives that might not have been commonly heard on the commercial side before. For instance, the views of financial and product management might startle those who have been working in sales and marketing.
As I mentioned before, the role of a CRM system in RevOps is extremely crucial. If a company has failed in CRM initiatives or if the system’s usage rate is low, similar problems will be encountered when transitioning to RevOps.
I must emphasize the importance of change management. It can involve a major shift in people’s thinking, so it’s crucial to allocate enough resources for change management. It’s also important to remember that such changes rarely yield significant results immediately. Change needs time to take effect.
Do you want to build a seamlessly operating revenue machine? Are you interested in breaking down the barriers between sales, marketing, financial management, customer service, and product teams? Get in touch quickly!