We know a few things about Revenue Operations.
- We know Revenue Operations, as a department, is growing at a rapid pace.
- We know Revenue Operations identifies the areas of improvement in our process that will have the biggest impact.
- We know Revenue Operations aligns, focuses, and simplifies things for our business.
But something we don’t know … how do we measure Revenue Operations?
It’s not as easy as an MQL target you might have for Marketing, a pipeline coverage number you might have for Sales, or a churn rate target you might have for Customer Success.
Revenue Operations helps all three departments be more efficient by identifying gaps in the process, streamlining operations, and improving alignment – but how do you measure that?
We’re talking about Revenue Operations, so does that mean revenue should be the first and only metric to look at? Or are there interdepartmental metrics we can use to help us see how RevOps is performing?
The Key Metrics of Revenue Operations
At the end of the day, Revenue Operations is focused on one thing: revenue. Duh, it’s in the name.
They do that by influencing and combining four key metrics: value, volume, velocity, and conversion rates. An increase or decrease in any one of these metrics results in a change to revenue.
Value
The value of the deals, also known as the average deal size, moving through the sales process and turning into revenue.
Volume
The total volume of deals moving through the sales process and turning into revenue.
Velocity
The speed at which deals are moving through the sales cycle and turning into revenue.
Conversion rates
The rate that deals are moving from stage-to-stage in the sales process from lead-to-revenue.
You might look at the four key metrics of Revenue Operations and just see levers that impact revenue. Which they are. But it’s important to know and understand how you got to that revenue and how it compares to previous months, quarters, or years, but what’s more important than value, volume, velocity, or conversion rates improving is revenue improving.
For example, you could have a year when your average deal size decreases from $20,000 to $15,000. That’s looks bad alone. But that’s because you decided to enter a new market so you were able to increase your volume from 250 deals to 450 deals and you were able to get your sales cycle length down from 9 months to 6.
It’s also important to track and compare these to the goals set out by the Revenue Operations team or the business as a whole. If at the start of a quarter, the Revenue Operations team has identified gaps in the process that will improve deal velocity as well as boost conversion in the funnel – does that line up with the results at the end of the quarter? Did they accomplish what they set out to do? Was there unexpected increases or decreases with the value or volume of deals?
More metrics to measure Revenue Operations
Beyond revenue, and the four main levers we have to increase or decrease it, there are a few metrics to focus on to see how Revenue Operations are performing in your business:
Sales Rep Efficiency
Carry capacity
Through efficiency gains you can grow the amount of revenue each rep can carry, increasing revenue growth with fewer resources.
Ramp time
Through better Enablement and onboarding, you can reduce ramp time for new hires, such as SDRs and AEs, scaling growth faster, and shortening your rep payback period.
Predictable growth
RevOps brings predictability to your growth through consistent, accurate measurement. You’ll have the confidence to invest in new markets, new headcount, or new strategies – and be able to know early when they’re working and when they’re not.
This could mean:
- Sales and Finance agree on how to use eARR to measure sales rep profitability, or the profit and loss required to support hiring a new rep.
- Customer Success and Product agree on how to identify revenue at risk due to product requirements.
- Sales and Marketing agree on a new market segment to enter, such as a new vertical.
Respond to market changes
As your business grows it requires some big changes, such as:
- CRM re-implementation
- Restructuring your teams, territories, and compensation models
- Introducing and launching new products
RevOps manages internal change by providing communication, training, and project management to make transitions seamless. This reduces your risk of losing deals, losing staff, and losing time.
Measuring Revenue Operations
Revenue Operations creates benefits for Marketing, Sales, and Customer Success – but more importantly, RevOps aligns, focuses, and simplifies the company around the needs of the customer. The trouble is, it’s hard to measure the alignment, focus, and simplicity that the Revenue Operations team is building.
The start is obvious … revenue. The Revenue Operations team is looking to increase revenue by streamlining operations and filling gaps that have the biggest impact. To get a little more granular than just revenue, we recommend looking at the 4 key metrics of revenue operations: value, volume, velocity, and conversion rates.
Beyond the main focus of revenue, there are a few areas to look at:
- Sales rep efficiency
- Predictable growth
- Response to market changes
The Revenue Operations Platform for Revenue Operations People to Answer Revenue Questions
Varicent Lift's Revenue Intelligence is designed for RevOps teams to measure and improve efficiency across the full funnel – like how SLAs in your lead hand-off impact pipeline generation.
Or how deals are getting stuck in Stage 3 with no next steps, impacting pipeline coverage.
Or how reps playing kick-the-can-down-the-road with bad deals impact your forecast.
