Explainer: What is RevOps and why marketers should care

New service and subscription models have led to the creation of yet another process improvement companies need to worry about; Revenue operations

The emergence of service-based delivery models in what were previously product sales categories has been one of the key sales trends of the 2010s.

What commenced a decade earlier in the technology sector with the ‘software-as-a-service’ model leapt across into other categories as brands noted the benefit of building recurring revenue and closer customer relationships through subscription services, spawning companies such as Dollar Shave Club.

But as traditional brands move to follow suit, an obvious problem has emerged as they seek to wean themselves off upfront payment and accept they may not see the full cost of their goods and sales efforts recouped for months, or possibly years. And with much of the power in the relationship now shifted back to the buyer, the rhetoric many brands have spouted about the need to invest in long-term customer relationships has taken on a greater sense of urgency.

This, in turn, has renewed the focus on customer journeys, not just from initial upper funnel prospecting through to conversion, but all the way through onboarding and long-term customer service. As a result, the siloed nature of marketing, sales and service teams has proven to be less than ideal in an ‘everything-as-a-service’ world.

But the sales and marketing sector is never short of an inventive solution. In this instance, the proposal for aligning all aspects of the organisation to the customer relationship comes in the form of RevOps.

A contraction of the words ‘revenue operations’, RevOps describes the alignment of marketing, sales and customer service around the customer journey. Surprisingly, unlike other sales and marketing trends, it doesn’t call for a massive investment in new technology. Instead, it’s about integration of existing tools into a more seamless set of processes, from prospecting through to billing, to provide a single location for managing the entire relationship.

According to director of sales improvement consultancy Sales Director Central, Paul Sargeant, the increasing popularity of RevOps is very much due to the lag in revenue recognition some brands are now experiencing as they transition to everything-as-a-service models.

“You need to make sure that you are really on top of the whole customer journey, because you don’t get the return on that acquisition cost until a couple of years down the track,” Sargeant tells CMO. “They have to understand it is a connected customer journey, all the way through, and that journey is very important now. You need to be really conscious of where your handovers are around critical points.”

In the first instance, that means altering sales compensation from recognising upfront sales to repeat sales and lifetime customer value. That also means ensuring functional processes such as onboarding and billing are working effectively, and that service teams are properly aligned to customer retention goals. In addition, ensuring all tools in the process can manage the customer journey seamlessly is vital.

“You need to have a repeatable process that takes you from lead generation all the way through to repeat business and customer success,” Sargeant says. “And the tools you put in place need to match that.”

Leadership reshuffle

This changes some of the responsibilities within an organisation and increases the pressure to ensure silos aren’t building up around specific tasks. Sargeant says many firms moving to this model are implementing the role of chief revenue officer, with responsibility for managing the customer from acquisition to servicing and repeat sale. Often, this position sits around  traditional functional leads in marketing, sales and service.

The role of CROs is seen most commonly in software-as-a-service companies. But they are also appearing at other types of subscription businesses, such as news and magazine publishing. Sargeant says they can also be found increasingly within education businesses that are intent on maximising the lifetime value of students.

“The companies that get it right will maintain a focus on the fact that upfront they are solving the customers problem,” he adds. “And then they will get repeat business because they will get those outcomes they said they would get, which is all about customer success.”

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