What Is Revenue Operations (RevOps)? A Complete Guide

By: Meredith Schmidt
EVP and GM, Salesforce Essentials and SMB
August 10, 2021 | 8 min read

When I joined Salesforce, my first big challenge was to make sales and finance love each other. Sixteen years later, I’m still working on it. This challenge didn’t have a name when I started, but now it does: RevOps.

Eighty-six percent of executives told Forrester Consulting that revenue operations is important to meet their goals, but just 41% are very confident they understand what it is, according to a 2021 study commissioned by Salesforce. These executives — like you — are trying to sort through the hype and make RevOps a reality.

That’s why I created this guide, to share what Salesforce has learned in our RevOps and revenue lifecycle management journey, and equip you with the four steps you can take to get started.

What you'll learn:

• What is RevOps?
• Why is RevOps important?
• What's the difference between RevOps and sales ops?
• What does successful revenue operations look like?
• What are the most important revenue operations metrics?
• How can I implement RevOps at my company?

RevOps (or “revenue operations’) is a B2B function that uses automation to help teams make decisions that grow the business. RevOps brings everyone together — from marketing, sales, service, customer success, and finance — around three shared goals: price for better conversion and margin, reduce revenue leakage, and use customer data to identify new revenue opportunities.

Revenue operations keeps sales and finance connected and humming as you grow your revenue. That’s important, because businesses everywhere are becoming more complicated.

First, you’re adding new channels and letting customers buy across them.

Businesses use an average of three different sales channels:

• Service
• Ecommerce
• Direct sales
• Channel sales
• In-product selling
• Retail
• Third-party marketplace

Second, you’re innovating on new revenue models and letting customers pick and choose for themselves.

Businesses use an average of two different revenue models:

• One-time sales
• Subscriptions
• Usage and consumption pricing
• Milestone-based pricing

Buying, selling, and billing means sending customers through a revenue lifecycle. They go from product (setting up your product catalog) to quote (configuring these products and sending quotes for customers to purchase them) to cash (sending and collecting bills for payment).

The old approach is to shape this process around the channel and the revenue model. Maybe this worked when you only had a couple different offerings, but it gets messier as you scale.

In the animated graphic below, you’ll see that as you add more channels and revenue models, your revenue lifecycles will multiply, creating silos across the business.

As offerings multiply, so do disconnected revenue processes.

The problem: Disconnected quote-to-cash processes create tension between sales and finance.

Traditionally, sales and finance work in different systems that are single-purpose — for example, a billing system that works for subscriptions but not for one-time purchases, or an order management tool that plugs into your ecommerce site but not your physical store.

Data doesn’t flow automatically between these systems, so your teams have to spend time every day taking data from over here, and reentering it over there.

Sales and finance see incomplete customer data when they make decisions. For example, sales may be trying to upsell a customer without knowing they’re behind on payments.

The solution: Bring sales and finance together around one revenue process, and shape it around what that matters the most — not a channel or a product, but the customer.

One revenue process — shaped around the customer — gives way to automation, visibility, and intelligence.

Sales operations makes sales reps more efficient and more productive, driving revenue (and making revenue more predictable). This team plays a critical role in constantly improving the sales process.

But as the graphic below shows, sales ops is just a piece of the puzzle, because revenue data starts at the product. For example, the way SKUs are organised in the catalog will affect how you quote and how you bill.

RevOps needs to start with the product, too. At Salesforce, we call it product-to-cash.

Finally, a function (RevOps) that looks at the whole journey from product to-cash.

RevOps involves everyone who touches a part of the product-to-cash lifecycle. That’s a lot of people.

Some departments might report to the new RevOps team, and others will stay where they are — for example, in legal — but with an added commitment to support revenue success.

What functions are included in revenue operations?

• Product Operations
• Sales Operations
• Digital/Ecommerce Operations
• Partner Operations
• Quoting & Entitlements
• Order Management & Fulfilment
• Provisioning
• Billing
• Compensation Design & Strategy
• Compensation Operations
• Strategy & Process Enablement
• SOX Compliance Process Design

Let’s begin at the end, with the vision of what a great RevOps team can do.

💖 Love

Sales loves finance because they use technology to take deals and speed them up — not slow them down. For example, technology can accelerate negotiated sales by routing pricing for quick approval and making it easy to document the terms of an agreement. The CRO gets visibility into transactional customer data that used to be locked away in the accounting systems (the ERP).

Finance loves sales because reps can move fast and be compliant at the same time. The CFO can rest easy knowing that defined business rules can automatically validate transactions and ensure compliance (and protect margins) across all channels.

🔌 Automation

At Salesforce, we set out to automate 90% of the order-to-cash process. We began by automating the easier tasks first, like high-volume, low-touch transactions for self-service offerings.

Then, we took on the hard tasks, like automating direct sales. For example, we can automatically convert qualified leads into opportunities. We can automatically generate quotes and send them to the customer for electronic signature. And when the customer returns the signed quote, we auto-generate everything from the order to the contract to the invoice.

In the end, we achieved our goal: 90% of our contracts auto-book, and by the time these contracts reach our ERP for revenue recognition, no human hands touch those contracts again.

The automated lifecycle in action:

• Product is set up
• Customer signs quote
• Provisioning is auto-triggered
• Order is auto-delivered
• Order is auto-billed
• Sales compensation is auto-calculated
• Deal is auto-counted as a closed-deal booking

💡 Intelligence

As much as 40% of our time at work can be reduced with automation and behaviour change, according to PwC. When we automate our way out of manual tasks, we have free time to focus on the big picture, and study revenue data for insights that help us grow the business.

For example, at Salesforce we’ve built a “propensity to grow” model. It looks at customer behaviour (like who’s buying what and when) and makes predictions about when they’ll be ready for cross-sells and upsells, so we can target them effectively with new offers.

How can you tell if your newly minted revenue operations team is doing its job? In a world where products are sold as one-time charges, the most important metric is margin (how much profit is generated by each sale).

But now we live in a subscription world, and this shift to recurring revenue models brings shiny new metrics into focus:

• Cost Per Acquisition: the cost to acquire a new customer
• Annual Recurring Revenue: the money coming in every year for the life of a contract
• Total Contract Value: how much a contract is worth
• Churn Rate: how many customers stop doing business with you
• Renewal Rate: how many customers who renew
• Customer Lifetime Value: how much a customer is worth over their lifetime
• Average Revenue per User: how much each active customer is worth
• Days Sales Outstanding: how many days on average it takes to collect payment for a sale
• Revenue Backlog: how much contracted revenue that hasn’t been recognised yet

Recurring revenue comes with a mindset shift: Instead of viewing customers as “won and done,” you begin to realise they need to be “won and won again.” Your attention turns to customer adoption, not just customer acquisition, using metrics like:

• Customer Adoption Rate: the number of new users compared to the total
• CSAT: a customer satisfaction score that describes loyalty

One way is to build connections between all the different systems, but that can make it difficult to keep everything synchronised in real time. Another way (and what we do at Salesforce) is to bring every system onto one platform — a CRM — and integrate that CRM with your ERP.

Step 1: Gather all your revenue data in one place.

Track down every kind of data (or “data element”) that has to do with revenue. This will include data that begins all the way upstream, when you create products, and ends all the way downstream, when you recognise revenue in your ERP.

Key data elements include:

• Product data
• Account data
• Quotes
• Orders
• Contracts
• Invoices
• Payments

Step 2: Bring your product-to-cash process onto one platform — and integrate it.

You have many different systems: your product catalog, forecasting, CPQ, contracts, incentives, orders, billing, and everything that’s inside your ERP. RevOps depends on bringing all these systems together.

One way is to build connections between all the different systems, but that can make it difficult to keep everything synchronised in real time. Another way (and what we do at Salesforce) is to bring every system onto one platform — a CRM — and integrate that CRM with your ERP.

We need to take all these back-office touchpoints and reimagine them as customer touchpoints. Billing? That’s customer-facing. Collections? Yup. Customer-facing. RevOps brings these functions to the same place where you do everything else that touches the customer, so every team can access the same customer view — what we call the Customer 360 — and act on it.

Revenue operations encourages finance to support sales.

• Before RevOps: Anita the collector only sees finance data: What the customer owes.
• After RevOps: Anita also sees marketing data (are we targeting the account?), sales data (are there open opportunities there?), and success data (are they adopting the product?). She can see the big picture when she calls and make decisions that support other teams.

Step 3: Automate yourself into a better job.

Take a close look at that manual task you’re working on. Odds are, it involves replicating data: reentering or recoding data from one system to another.

RevOps captures data once (where it’s captured the first time) and sends it to the next touchpoint automatically, with validations and rules to guide its path. Data is integrated, never replicated, as it flows downstream.

As your teams spend less time on manual tasks, they get upskilled. They can sharpen their focus on the important questions. Like: What else can I automate today?

Step 4: Learn from revenue to grow revenue.

RevOps teams can take this wealth of information about customer behaviour and make decisions that grow the business. Use revenue data to find new leads, create new opportunities, and build models for the next best action — when to reach out to who and with what.

What’s this customer’s appetite for an upsell? Would they prefer to pay by fixed subscription or flexible usage? What product should we recommend next in the app?

RevOps gives teams a control room to answer these questions even as customers cross channels. When you understand cross-channel behaviour, you can create marketing and sales journeys that reach the customer in the channel where they’re most likely to buy, even as they move from self-service to direct sales to buying through partners.

Selling the right product to the right customer in the right channel at the right time: This is true personalisation and RevOps makes it possible.

Yes, sales and finance have had a rocky start. Finance scolds sales for operating in a “wild, wild west” without controls. Then, sales reacts by calling finance a naysayer who just wants to slow down the deal.

RevOps brings sales and finance together on the same platform and around the same goal. Take all this customer information and use it to grow the business.

Revenue data takes on an air of romance when you’re using it to drive new sales!