Revenue Operations Software

What is Revenue Operations Software?

Revenue operations software (often abbreviated to RevOps software) is a comprehensive suite of tools that help businesses manage the entire revenue lifecycle. It centralizes sales, marketing, and customer success initiatives from lead generation to customer retention to hold every department accountable for its revenue contribution.

Key features of RevOps software include:

• Lead generation and management
• Sales automation
• Deal scoring
• Market intelligence
• Customer churn and retention management
• Customer success enablement
• Process automation and workflow management
• Revenue attribution
• Revenue reporting and forecasting
• AI-powered analytics and reporting

In a way, RevOps software does a little bit of everything. Since its focus is on revenue, it has a range of features and tools designed to optimize every step of the revenue lifecycle.

Essentially, it integrates everything into the same platform so businesses can get a 360-degree view of their revenue performance without switching between different apps and technologies.

Synonyms

• Revenue Operations platform
• Revenue Operations solution
• RevOps software

Why Revenue Teams Rely on RevOps Software

Revenue teams are groups of cross-functional experts responsible for generating and growing their company’s top-line revenue. They monitor every aspect of their company’s revenue performance.

Unfortunately, that’s easier said than done. With multiple departments, stakeholders, goals, and processes thrown into the mix, it can be difficult to keep track of everything without a single source of truth.

Briefly, revenue operations teams use RevOps software to carry out the following business functions:

• Developing and executing sales and marketing strategies. Everything from account-based marketing to setting quotas for sales teams can be managed and tracked with RevOps software.
• Identifying revenue growth and expansion opportunities. Data from a revenue operations platform helps RevOps leaders identify promising markets and customers, develop new products, and expand their businesses into new geographic areas.
• Creating demand. Every marketer and sales rep plays a role in developing and managing demand for their products or services. RevOps software helps them track, evaluate, and optimize their lead and demand generation efforts.
• Lead nurturing. With a revenue operations platform, revenue team members have visibility into everything from email drip campaigns to web content engagement. They use these insights to keep the conversation going with their leads who aren’t ready to buy.
• Optimizing the buying process and customer journey. From acquisition to retention, RevOps makes it easy to understand customer behavior at every stage of the lifecycle. It also helps identify roadblocks that could be holding a seller back from Closed Won.
• Closing deals. Customer insights from RevOps software show sellers where each deal stands and how they can make the most of it.
• Post-purchase satisfaction. RevOps software offers a range of features that help customer success teams keep their customers are happy and engaged with their product or service. It also helps with upselling and cross-selling — two critical activities for extending customer lifetime value.

Benefits of Revenue Operations Software

As the RevOps tool of all RevOps tools, revenue operations software offers businesses several critical benefits. Thanks to advanced analytics and automated processes, businesses can enjoy:

Synchronized Marketing, Sales, Billing, and Customer Success Data

Nearly half of all sellers say their biggest challenge is incomplete data, according to LinkedIn’s 2022 Global State of Sales report.

CRM, CPQ, and other elements of the sales tech stack are fantastic data sources, but they fail to paint the complete picture a sales team needs to accelerate their deals (i.e., revenue) to the fullest extent.

There’s so much happening with customers before and after sales — marketing often comprises the first touchpoints for a new prospect, and customer success sets the precedent for an ongoing customer experience.

RevOps software bridges the gaps between what happens before, during, and after the sale by bringing together all revenue-related data in a single location.

Accurate Revenue Forecasting

It’s not uncommon for companies with seven or eight figures in MRR to have no idea what to do with it or where it’s headed.

Knowing how much money a business can expect to make in the coming days, weeks, and months is essential for budgeting resources, planning campaigns, and understanding market trends. Investors also want to see a credible revenue forecast when they vet new startups and assess their portfolio companies.

RevOps software offers businesses an up-to-date view of their current pipelines so they can evaluate potential earnings from existing deals. It also provides insights into the overall health of their revenue streams.

360-Degree View of the Revenue Funnel

Revenue leaders and execs aren’t the only ones who can make data-driven decisions. Throughout the entire revenue funnel, individual contributors rely on the insights revenue operations software provides to do their jobs better.

• Marketers use RevOps data for customer segmentation, lead scoring, and content personalization.
• Sales reps use it to prioritize prospects, accelerate deals, and identify upsell opportunities.
• Customer success teams gain insights into customer usage and engagement, optimize onboarding experiences, and prevent churn.

Enhanced Cross-Departmental Collaboration

When everyone has access to on-demand revenue data and AI-driven insights, alignment is within reach.

When a company’s sales teams are aligned with their marketing counterparts, they’re 67% better at closing deals. And B2B businesses lose about 10% of their total revenue to misalignment between departments.

Although each segment of revenue operations uses RevOps software differently, the actionable insights it provides (and their accessibility) make it easier for every team member to understand what’s going on across the board.

When everyone shares the same data, there are no discrepancies, miscommunications, or delays. Just multiple departments working together toward the same goal.

Improved Pipeline Visibility

CRM gives sales leaders a decent understanding of what’s going on in the sales pipeline, but it isn’t enough to really understand what’s going on beneath the surface.

• How long are deals taking to close?
• What exactly are the top reps doing to close more deals?
• How many deals actually have a chance of closing?

The main problem with most leads in the pipeline is reps tend to think they’re going to close. But they aren’t.

With the sales AI tools integral to a RevOps system, that isn’t a problem anymore. Sellers (and leaders) can know exactly where each deal stands, which ones are likely to convert, and which ones aren’t worth their time.

Data Security

Security is a lesser-known benefit of revenue operations software — since it doesn’t directly have anything to do with revenue, it’s often overlooked. But data is worth money (which is exactly why people try to steal it).

Currently, the average cost of a data breach sits at $3.68 million and about $1 million more for companies with remote employees. The vast majority of companies report more than one per year.

Revenue operations software offers an extra layer of defense against data breaches with built-in security protocols. It’s especially important for organizations with multiple customer databases or sensitive personal info to keep safe (for instance, healthcare providers).

Better Customer Experience

Since RevOps tools streamline internal operations and give sellers more information about their buyers, the end result is a more personalized customer experience that hits the mark.

With data-driven insights, sales teams can better understand customer needs and cater to them in a way that leads to more conversions and better overall satisfaction.

Customer success teams can also leverage RevOps data to provide a higher level of support through personalized onboarding packages, tailored usage recommendations, and timely follow-ups.

RevOps KPIs Tracked by RevOps Software

In addition to companywide visibility into marketing and sales activities, RevOps software looks at dozens of KPIs that underscore business growth outlook and financial health.

MRR and ARR

Monthly and annual recurring revenue (ARR and MRR) are the primary metrics used to show your business’ financial standing and illustrate growth trends over time. On their own, they don’t indicate anything more than the amount of money a business is bringing in each month (or year), but they’re the basis for most other RevOps KPIs.

Since it also houses customer data and marketing KPIs, the backend of revenue operations software also uses MRR and ARR for revenue attribution. When the team wants to evaluate the success of a particular campaign (which is tough when the average deal cycle has almost 30 touchpoints between buyer intent and an actual sale), RevOps software can quantify the specific contributions each campaign made. That way, team members can continuously measure them without data getting convoluted.

Revenue Growth Rate

To measure revenue generation over a certain period of time (e.g., quarterly, yearly, over a decade), businesses take their recurring revenue at the end of the period and subtract their recurring revenue at the start. The difference is divided by the starting number to give a growth rate expressed as a percentage.

RevOps team members use the revenue growth rate to cross-reference growth with stability and sustainability. It isn’t always sustainable to grow revenue as much as possible, so comparing it with current company dynamics and goals helps to determine the right angle.

Customer Lifetime Value (CLV)

Customer lifetime value (CLV) tells RevOps managers how much each customer is worth to the company over time. It takes into account a customer’s entire spending history and shows you which customers are more valuable than others, helping you prioritize sales targets.

A high CLV is generally better because it indicates the average individual customer is buying more from the company. Assuming the customer acquisition cost (CAC) remains nearly the same, improving CLV means generating more revenue from a single customer for the same input cost.

Average Deal Size

When someone from the revenue team looks at the average value of a deal, what they really want to know is how many deals they need to close in order to reach their revenue goals. The average deal size is also a good indication of the quality of leads coming through the pipeline.

That said, average deal size is relative — a high figure here isn’t as valuable if the cost of customer acquisition is high or the lifetime value of these customers is comparatively low. Plenty of sustainable businesses have low average deal sizes, so it’s important to pay attention to other metrics as well.

Customer Acquisition Cost (CAC)

Revenue ≠ profitability. To get the full picture of the company’s financial health, RevOps team members need to keep track of how much it costs to generate the revenue they’re concerned about.

Using revenue operations software, they can track the acquisition cost of each customer (by source) and attribute the cost to each individual sale. Using this data, there is a clear relationship between capital input (investment in sales and marketing campaigns) and financial output (revenue).

Retention Rate

Customer retention is considerably more sustainable than acquisition because it doesn’t require a business to continuously search for new customers. Rather than spending all its resources on prospecting, a business with a steady customer base (and, therefore, a healthy MRR) can focus on delivering more value and improving its service.

Retention rate measures how many customers maintained their subscription over a certain period of time, usually expressed as a percentage. The higher the retention rate, the less effort companies need to spend on onboarding new customers.

Another added benefit to higher retention is that with higher customer engagement, a company can launch an advocacy program. Incentivizing long-term customers with referral payouts (which they should be happy to give if they like the product) is a great way to scale up customer acquisition further.

Sales Cycle Length

More than three-quarters of B2B buyers say their last sale was either “difficult” or “very complex.” Part of the reason for this complexity is that B2B purchases involve up to 10 decision-makers (on average) and take over two months to complete.

Since there’s no real way to reduce the number of decision-makers involved, reducing sales cycle length is the only way to simplify the process. Knowing exactly where each buyer is in their decision-making process and how long they’ve been there helps reps prioritize their efforts and close deals faster.

Revenue operations software collects data across the buyer’s journey, so RevOps team members can easily identify which sales processes are taking too long and need streamlining. Coupled with a powerful analytics engine, this information can help sellers understand exactly where deals are falling through and what the team can potentially do about it.

Renewals, Upgrages, and Net Revenue Retention (NRR)

RevOps teams measure net revenue retention (NRR) because it shows them how stable their current customer base is. If they don’t have a solid foundation of predictable revenue, it’s less feasible to invest in expansion initiatives and long-term projects.

Customers who renew are more than just an improvement to CLV and retention metrics. Renewals and upgrades are also ways to grow the business without investing anything else in customer acquisition. And they’re among the few ways to grow NRR over time.

RevOps Platform Features

Because of how loosely-defined the RevOps function is, every revenue operations platform works a little different. They all, however, include intelligence, forecasting, and attribution modules.

Revenue Intelligence

Revenue intelligence is what team members use when they want to delve into the nitty-gritty of their data. It allows them to drill down into individual customer records, discover trends in the sales process, and identify deal-breaking bottlenecks. Revenue intelligence turns numbers and individual datapoints into patterns and visualizations that everyone from sales reps to board members can understand them the same.

Suppose a revenue leader is considering expanding their efforts in a market they’re already somewhat familiar with. Using revenue intelligence, they can assess whether or not the market is large and profitable enough to be worth their while.

Revenue Forecasting

Revenue forecasting is similar to sales forecasting, but it covers the entire customer life cycle. It isn’t just about predicting the future — it’s also for understanding what happened in the past and how all those disparate pieces fit together to form the picture of a company’s current performance.

Simply forecasting revenue isn’t enough, though. Accuracy is a requirement for revenue projections to be useful. Since revenue operations software has an abundance of data to train itself on and market intelligence to fill the gaps, it’s able to generate forecasts that are both comprehensive and accurate.

Revenue Attribution

Revenue attribution — connecting the dots between cash flow and its respective revenue drivers — is the cornerstone of RevOps. It allows team members to understand which channels are generating revenue and why, so they can allocate capital to the areas that will bring them the most bang for their buck.

It might seem easy to attribute a sale to a specific revenue source. In reality, it’s anything but.

Picture this: The marketing team runs a campaign that aims to garner newsletter signups. Customer X signs up for the newsletter, engages it a few times, then does nothing else.

Weeks later, Customer X reads product documentation, saves a few blog posts, and shares them with their team. In the weeks following, they also go to the pricing page, book a demo, and bail at the last minute.

Weeks later, a sales rep reaches out via email to follow up about the demo they were assigned with Customer X. They respond, book a demo, carry through with it, and begin negotiation that ultimately leads to a sale.

What marketing and sales efforts specifically contributed to securing this deal? And how much did each channel cost versus its proportional contribution? RevOps software knows.

Revenue Operations Software Integrations

Integrating revenue operations software with the rest of the tech stack is the only way to create a truly unified view of customer data. Revenue operations software can integrate with existing CRM, sales tools, and billing to streamline the entire sales process.

Customer Relationship Management (CRM)

CRM software is the heart of any business’s technology ecosystem — it houses all the customer data that drives decision-making. Integrating a CRM with revenue operations software allows teams to measure customer health and forecast customer churn.

Pipeline Management

Pipeline management is usually a feature of CRM, but is also characteristic for marketing automation platforms and sales tools.

Integrating these with RevOps software enables teams to measure their sales progress and performance against KPIs, understand where they are in the sales cycle, how long it’s taking to close deals, and what factors influence whether or not buyers complete a purchase.

Analytics & BI

Revenue operations software also integrates with analytics and business intelligence (BI) platforms, which makes it easier for sales reps to understand where leads are in the pipeline and how long they’ve been there. This information is already available in RevOps platforms, but other BI tools improve the data quality and readability for high volumes of complex data.

Sales Engagement

Sales engagement platforms like DealRoom streamline customer communication, which makes it easy for cross-functional RevOps team members to collaborate on deals, transfer content, and understand customer preferences.

Configure, Price, Quote (CPQ)

CPQ software streamlines the sales process by enabling product configuration during customer interactions (or through online self-service), automatically generating quotes, pricing estimates, and proposals, and turning them into legally binding contracts and invoices.

Integrating CPQ with revenue operations software makes it easier for teams to forecast revenue, keep an eye on product performance, and improve key RevOps KPIs.

Billing and Financial Accounting

Integrating billing gives RevOps software more data to work with — it’s better to collect customer payment data directly from the source. Finance and accounting are also critical to the success of revenue operations because they quantify company financial health and ensure compliant bookkeeping practices.

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