A revenue operations model sees sales, marketing and customer services come under one leader to harmonise growth efforts. Where will this leave the CMO?
Growing revenue is often seen as a dark art, with few businesses holding a recipe for success. Revenue operations (RevOps) aims to change all that.
RevOps brings the operational side of sales, marketing and customer service together in a way that harmonises processes, technology and data to drive growth. It has been driven by a revolution in data analytics and the emergence of digital selling technology, which have yielded unprecedented visibility and control of the full revenue cycle.
The concept is the focus of a new book, Revenue Operations: A New Way to Align Sales & Marketing, Monetize Data and Ignite Growth, from Stephen G Diorio, executive director of the Revenue Enablement Institute, and Chris K Hummel, the institute’s managing director, who has previously held global CMO roles with Schneider Electric, United Rentals and Unify. It highlights three RevOps organisational structures that are becoming popular.
The ‘tsar model’ sees the entire sales, marketing and customer service organisations unite under a single chief revenue or growth officer. The ‘federation’ approach is an alliance between the leadership functions with rules of engagement, in which they manage growth initiatives and work together to remove obstacles. And finally, there’s the ‘chief of staff’ approach, where the sales and marketing operations, sales enablement and customer analytics are merged into a unit under a single leader, rather than the sales, marketing and service functions as a whole.
Proponents of RevOps says it provides business owners and CEOs with a practical and proven system for growing their business, based on technology and systematic and repeatable processes. It can also drive greater and faster revenue generation. When teams are aligned in a RevOps structure, they can generate 38% more revenue in 27% less time, according to sales management platform Varicent.
A growing number of major companies are now adopting the approach. Gartner has forecast that by 2025, 75% of the highest growth companies in the world will deploy a RevOps model.
Business leaders are starting to recognise that functional silos are a barrier to revenue growth, said Doug Bushée, a senior director in the company’s sales practice, who revealed the research in 2021. Under this siloed approach, clients are handed from one function to another, using different technologies, people, and processes.
“As a result, progressive organisations are beginning to align sales, marketing and customer success technology, data and KPIs to provide an end-to-end view of the revenue-generating engine,” Bushée said.
The new book by Diorio and Hummel says that a systematic approach to revenue and growth is long overdue.
“Every part of the business has been systematised in the corporate world – back office, finance, HR, logistics and supply chain – but growth and revenue, the lifeblood of the company, has not,” says Diorio.
The new publication is a recipe book for companies that want to introduce a RevOps structure, according to the authors. The book offers a “periodic table” of bitesize elements that can change the way companies operate and improve revenue prospects, rather than outlining a wholesale corporate transformation that could take years to implement.
RevOps is vital because companies have lost control of the buyer journey, says Hummel. “So many people are focused on the funnel and acquiring a customer that they forget what happens afterwards,” he says.
The revenue cycle now looks like a bowtie. Activities to drive demand are on the left, those aimed at driving purchase are the knot in the centre, and activities to deepen relationships with customers are on the right. The right-hand side is becoming increasingly important as more than half of all purchases are now repeats or based on a subscription model, says Diorio.
“The CMO job is a transitory lifeform built on media and promotion [things like television, radio, print and out of home] and these amount to around a third of the pie,” Diorio says. “All of the money has moved into what we called owned digital channels: email, blogs, apps, ecommerce and the voice of the customer.”
Challenges and opportunities
But for senior marketing people who have worked hard to carve out the role of the CMO and win a seat at the top table, the idea of handing over their newly found power to a chief revenue officer is worrying. Some fear that any new revenue-focused leader will come from the sales organisation, sending marketing back into the wilderness.
Hummel thinks CMOs won’t have to go back to the traditional role of managing media and building brand in this new organisational structure. They have an opportunity to become this new growth leader instead.
“Anyone who can foster collaboration and who can influence things they don’t own is really important. CMOs tend to have that,” says Hummel. CMOs often understand the customer, not just how to sell to them, he adds. They also know how to use data and understand what data-driven selling is all about, he notes.
“That is why RevOps often falls to the CMO; they are more naturally comfortable with the data, comfortable with the holistic customer point of view and are good at driving collaboration.”
There’s a danger that sales teams believe they own the last mile of revenue and come to see RevOps as a natural addition to their own silo. “The CMO has all these skills, but they don’t own the revenue and struggle with financial justifications for what they do,” says Hummel. “A sales rep can say they sold $1m of product but they wouldn’t have sold that without all the branding and support from the finance and product teams.”
Diorio says that without change, CMOs may be doomed. At its most impactful, marketing can play an orchestrating role, engaging with all other parts of the company, providing holistic views of the customer perspective and amplifying the rest of the organisation. It can create a whole that is greater than the sum of its individual parts, he says.
“Otherwise, like a decaying satellite, the marketing function will continue to appear quite sophisticated and even cool from outside, as it inexorably heads toward its own demise.”