For Australian companies transforming themselves to become more agile or maximise growth, a revenue operations model is about to become a must.
In a recent press release, Gartner predicted that 75 per cent of the highest growth companies in the world will deploy a revenue operations (RevOps) model by 2025.
The idea of RevOps has collectively grown out of B2B businesses over the past ten years and has now helped businesses of all types manage the adoption of new revenue streams, such as the rising popularity of subscription-based services.
So what do we mean by a revenue operations model and how can you make sure your business is keeping up?
What is RevOps, exactly?
In its simplest definition, revenue operations are the people, processes, and systems that allow revenue to flow through your business — from the moment something is quoted to the moment it’s captured on a financial report.
RevOps is about adopting a mindset and methodology across the business that sets aside some of the traditional approaches to business operations. Instead of flowing through the business by product or function, this model follows the flow of revenue through a business from a customer point of view, aligned with the backend processes that support it.
Seeing your business through this lens often reveals how messy the revenue landscape can be. It tends to be fragmented across different people, systems and processes, often operating in silos.
You might have direct sales, phone sales, channel sales, field sales, partners, ecommerce or door to door. During each interaction, you can upsell or cross-sell services, but to do that you need to understand quite a lot about the business. Once you’ve sold something, how do you manage the contracts, logistics, and manage orders — and how are changes to any of these handled? What triggers revenue, what triggers tax rules, how do you collect revenue and turn it into cash. Then, how and when do you report it in your general ledger?
Simplifying the RevOps journey
It’s easy to get lost in the detail, but it’s possible to unpack and repack those processes into a more streamlined model. For instance, the Simplus methodology looks at processes and moments around how revenue is booked, delivered and captured. Have a listen to Kyle Hanagarne, our VP of Communications, Media and Technology as he shares a quick overview of the Simplus approach to RevOps.
Basically, the end goal of revenue operations is to break down the siloed functions of passing customer data from department to department and system to system. This transforms the buying experience into one go-to-market model providing a faster, more personalised customer experience. It accelerates new revenue streams and provides a single source of truth for customer data to all revenue-producing roles in your organisation.
Three principles for optimising revenue operations
When adopting a revenue operations model, there are three principles to keep in mind to ensure you achieve favourable outcomes.
1. Take a catalogue-driven approach to your revenue operations processes
This approach requires looking at the revenue operations chain by each product type that your company sells and understanding every single process behind them. It includes clarifying all the options and configurations, how each is costed, as well as how quotes and contracts are developed and handled. Subscription or usage-based products can look very different from transactional or manufactured products. These might include elements of monitoring, verification of measurement or subscription renewal processes to them.
Once you have your processes mapped out for each product type, then you can deep dive into each individual process and optimise it. That way, you can work piece by piece towards optimising the entire revenue flow throughout your business.
If you do want to introduce a new product or service later on, the framework helps to plan each step of the revenue operations process and assign owners to the process, what system needs to be involved and how to redo it for greater efficiency.
2. Take a minimalist approach to your systems
If you’ve taken the time to map out processes with a catalogue-approach, this next principle makes a lot of sense. The more systems you have, the more opportunities there are across each process for incorrect or mismatched data to be entered. Many finance teams don’t look forward to months-end, largely because of the errors that have flowed down to them from earlier flawed business processes.
Each of the systems in place is probably owned by different groups across the business — for example, CRM with sales, Logistics with operations, ERP with finance and middleware with the IT team. As they each hand over information to the next, this increases the opportunity for incorrect data, mismatched information and errors to enter into the chain.
The fewer systems in place, the easier it is to smooth out the processes from a revenue perspective and keep data clean throughout its entire journey of the revenue chain.
3. Preserve the revenue chain with the right integrations
Now that you’ve mapped out your processes and consolidated your systems down to the essentials, you can begin thinking about how to integrate and connect these together so that the revenue chain is never broken. If you’re applying the first two principles, you’ll likely save on maintenance costs with fewer integration points to connect.
While every company is different and no one solution fits all, the underlying benefits of applying these three principles are the same. Simplifying the journey your revenue takes, saves time and resources, letting revenue flow through your business better.
To learn more about how a revenue operations model can help your business achieve the growth it deserves. Watch our latest webinar, Making the Revenue Connection: Best Practices for Growth.