In our previous blog post, What is Revenue Operations?, we explored how the Revenue Operations (RevOps) framework can align B2B go-to-market teams with goal responsibility to drive revenue growth. While driving revenue is the ultimate goal, Revenue Operations Ops is also responsible for measuring other factors contributing to revenue growth. In this guide we reveal the nine key Revenue Operations metrics that are crucial for B2B revenue growth.
Revenue Operations Key Metrics
1. Customer Acquisition Cost (CAC)
First and foremost, you need to know how much you are spending to acquire new customers. In the last few years, B2B customer acquisition costs have increased by nearly 50% because businesses don’t know who their customers are or how much to spend to acquire them.
Revenue Operations addresses this by pinpointing the amount spent on marketing tactics to acquire new customers – the Customer Acquisition Cost or CAC. Once the CAC is established, RevOps aligns your business’ acquisition channel, model, product, and market to increase bottom-line revenue and instil value along the customer journey.
Increasing customer acquisition by 1% results in a 3.32% rise in bottom-line revenue, while simultaneously keeping the customer churn rate low (another metric essential to the Revenue Operations framework as we’ll see later in this article).
2. Annual Recurring Revenue
Annual Recurring Revenue is the overall annual revenue generated from your existing customers through their various purchases with your business.
ARR, or more particularly the momentum around the components of your ARR, is particularly useful for measuring your Revenue Operations activity and how well your go-to-market teams are working together:
- ARR from new customers;
- ARR from existing customers who renew;
- Incremental increases or expansion in ARR from upgrades and add-ons;
- Incremental decreases or contraction in ARR from downgrades;
- ARR losses, or revenue churn.
3. Renewals, Up-sells and Cross-sells
Did you know that a 5% increase in customer retention can increase profits by up to 90%? This happens when customer satisfaction is guaranteed.
The Revenue Operations framework creates Lifetime Value (LTV) because it focuses on understanding customers at every stage of the journey. It finds honest, functional ways to maintain customer satisfaction by using data shared across your go-to-market teams. When customers are satisfied, they are more likely to renew, upgrade, or buy more.
4. Customer Churn
Customer churn is the percentage of customers that stop using your product or service within a specific period.
By analysing churn rate as it occurs you get data to help you put into place pre-emptive measures across your go-to-market teams and the customer journey.
In their ‘Future of CX’ report, PwC found that 1 in 3 customers leave a favoured brand after just one poor experience.
Revenue Operations addresses this risk. Your churn rate is likely to be lower when customer challenges or questions are addressed at all stages of the customer journey. Providing solutions and answers proactively supports customer retention, which in turn increases revenue. Your client base is also more likely to remain loyal and advocate on your behalf.
5. Customer Lifetime Value (CLV)
Customer Lifetime Value CLV measures how valuable a customer is to your company across your relationship with them – and is a way to determine RevOps customer success performance.
Qualtrics found that it costs less to keep existing customers than it costs to find and acquire new customers. In other words, increasing the value of your current customers is a way to drive growth and more revenue in the long run.
Customer success is a crucial component in Revenue Operations that must also play a key part in generating revenue. You need a deep understanding of the customer experience (CX) you provide and should measure every ounce of feedback at every possible touchpoint. When you understand your key drivers of CLV, you can adjust or continue your processes to align with the RevOps framework.
6. Forecast Accuracy
According to HubSpot, "a sales forecast predicts what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually." Forecasts support better decisions regarding planning, budgeting, and risk management that allow your business to grow.
"The forecasting process is so much more than just calling a number. It represents the entire operating rhythm of the whole company."
Kevin Knieriem, CRO at Clari
Revenue Operations functions to connect business and activity data across your marketing, sales, and customer success teams to avoid dropping the sales forecasting task into the lap of the sales department. With RevOps acting as the glue between your go-to-market teams, your business can enjoy sales forecasting that is no longer inaccurate and avoid revenue mistakes with strategic confidence.
7. Pipeline Velocity
50% of high-performing sales organisations have a structured sales process in place.
A structured sales process, or sales pipeline, can shorten the sales cycle. This increases the velocity of deals running through your sales team, which in turn boosts the odds of converting more prospects into customers.
Revenue Operations focuses on the customer as they pass through the pipeline, understanding their needs, wants, and problems at each stage. This enables your go-to-market teams to frame solutions and answers accordingly, supporting your prospects efficiently through to purchase.
8. Sales Cycle Length
The Sales cycle length measures the amount of time from the first touchpoint with a prospect to closing the deal. The shorter the sales cycle time, the more revenue your company generates.
The efficiencies that Revenue Operations creates across your go-to-market teams removes barriers and reduces friction in the customer journey, resulting in faster sales cycles.
When teams are aligned in a Revenue Operations structure, they generate 38% more revenue in 27 % less time.
A sales cycle time is important because it introduces predictability into your business’ sales forecasting and the process of estimating future sales. You’re able to make informed, comfortable business decisions while predicting both short-term and long-term performance.
9. Win Rates
Of the many sales metrics that businesses track, none is scrutinized more closely than the win rate. The sales win rate is the percentage of final stage prospects that closed and became customers divided by the total number of deals in the pipeline.
This commonly used metric measures the efficiency of sales teams and is a crucial insight into a company’s sales process. It is important to Revenue Operations because teams measure their performance through benchmarking, forecasting, and their pipeline, allowing them to identify weak links and turn around underperforming processes.
The Revenue Operations metrics you choose to track should align with your current company goals. However, you must also keep growth potential on your radar and look at your up-sells, renewals, and churn.
Metrics are important to Revenue Operations because they provide insights. RevOps is closest to the data, the systems, and the day-to-day operations, both customer-facing and behind the scenes. The data Revenue Operations has at its fingertips shows what trends are occurring and what business decisions the company should be making moving forward.
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