can better focus their selling time, resources, priorities, and the way they treat customers to make more money. The emergence of digital channels and advanced analytics offer tremendous potential to improve the performance of selling teams and channels. Businesses can realize these efficiencies by sharpening segmentation, focusing account priorities, shifting engagement to digital channels, and fine-tuning the emphasis and priorities of their sellers. We call the optimization of all these selling system design variables “the commercial architecture.” A properly designed and optimized commercial architecture that aligns selling roles, effort, and engagement with the right customers can contribute 5–10 points of profit contribution to the bottom line in the short term.6 Reallocate sales overhead from real estate and travel to more scalable investments in training and enablement. The average organization spends over $10,000 a year on “selling overhead” on a per rep basis. Up until the mass adoption of work-at-home and work-from-anywhere policies, most of this overhead was associated with real estate, travel, and market development funds to take clients out to dinner. Very little – less than a third – was spent on scalable investments in training and technology to enable sellers. Replacing some or all of this overhead with technologies and training offers the potential to double visibility, speed, productivity, and engagement while still yielding a net reduction in cost of sell. Eighty-one percent of growth leaders surveyed by Wharton are actively optimizing that mix by increasing investment in digital technologies to improve market coverage and client engagement, while cutting travel and selling overhead budget to generate much higher sales at much lower costs.5
7 Improve the economics of field selling by improving the speed of ramping sales reps, raising the overall level of readiness and skill across the entire revenue team, and reducing churn to retain top talent that performs at a high level. A 5% increase in sales rep attrition across your sales team can increase selling costs 4–6% and reduce total revenue attainment by 2–3% overall.137 For low-growth and low-margin companies, 10 points of salesforce attrition can wipe out revenue plans and margins if nobody picks up the slack. For instance, the difference between a 5% sales rep attrition rate and one of 25% means that your overall cost to sell increases by more than 50% and your revenue drops by 20%.
Eight Ways Revenue Operations Creates Financial Value
1 Monetize commercial assets. Putting your customer data, digital technology, and channel infrastructure assets to work in ways that create value – informing selling decisions, optimizing resource allocation, supporting higher prices, and better conversion rates – can grow revenues, profits, and firm value.
2 Manage the economics of selling. Simplifying the seller experience improves the economics of selling by streamlining and better supporting the day-to-day seller workflow. A less complex selling workflow will help you develop and retain talent, reduce selling costs, and improve the adoption of technology tools.
3 Differentiate the customer experience. Optimizing your commercial processes, portfolio of offerings, revenue team incentives, and enabling investments with a focus on differentiating the customer experience are fundamental to selling in a market where most buyers don't see a material difference between companies they buy from.
4 Enable scalable growth technologies. More centralized management and stewardship of enterprise data, technology, and content assets are essential to executing programs that multiply the efforts of every member of the revenue team, such as: one-to-one personalization, real-time coaching, response management, and account-based marketing capabilities.
5 Support recurring revenues. Creating a common purpose across the revenue team to grow customer lifetime value is essential to selling in a subscription, SaaS, and recurring revenue model.
6 Improve visibility into selling performance. Gaining access to real-time insights into account health, opportunity potential, and seller and pipeline performance is now essential to managing the performance of digital, displaced, diverse, and dynamic revenue teams.
7 Motivate team selling. All of the customer-facing employees across the sales, marketing, and customer-support teams need to be managed, measured, and incentivized as one revenue team focused on executing the corporate growth agenda and growing customer lifetime value.
8 Turn technology assets into force multipliers. Modern revenue teams have evolved to operate similar to an army that relies more on agile logistics and operational support infrastructure than individual heroics to be successful. One in four members of the revenue team are now in operations and enablement roles.
The Change Management Hurdle
A top concern among the executives we interviewed was whether the gains to be had are worth the pain. Will the growth and profits that result from deploying Revenue Operations justify the pain from organizational change and management time and attention?
The answer is yes. Deploying Revenue Operations will help your organization generate more growth, more consistently, and at lower cost. In fact, collectively and on paper, these economics suggest that current estimates of the impact Revenue Operations can have on firm value and financial performance are relatively low compared to what is achievable.
Moving to a Revenue Operations model may not be easy for many, yet the performance gains will make it worth the effort. The financial and business benefits of moving to a Revenue Operations model are clearly worth the pain of the change involved, especially by executing and stacking a series of small, incremental steps to achieve larger goals. Those improvements can also be sustained and scaled over time through rigorous, incremental process improvements.
Even greater gains await those who seek radical process improvement or full commercial transformation. Leaders from firms like Avaya, Konica Minolta, and Juniper Networks who have been willing to take on the political, cultural, and change management involved have successfully turned years of declining revenue into rapid growth. Growth leaders from hyper-growth firms like insightsoftware and Rev.com are also using these principles to scale their growth a hundredfold.
In the next chapter we will outline the discrete steps these organizations are taking to better align their revenue teams, operations, systems, and processes and to grow faster and at lower cost. At the end of this book (in the Appendix) we will provide tools you can use to systematically identify the three or four steps your organization can take today with the greatest short-term financial impact.
In the next section, we will detail the business practices underlying the Management System for Revenue Operations and provide examples of three leadership models you can choose from to deploy in your organization. We will rigorously discuss six specific pillars that span the people, process, and technology of revenue growth. These pillars provide executives and managers with a road map for aligning their revenue teams, commercial operations, automation, and processes to accelerate revenue growth and expand customer lifetime value.
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