If you have been tasked with tracking revenue operations metrics, you may be thinking where do I start?
You may relate to this person who sent us at SFB a message: “I was wondering if you would be up for doing a session on revenue operations and best practices around tracking SaaS metrics and the objects involved? I’m eager for some inspiration and best practices.”
So, we made it happen! This guide summarizes a LinkedIn Live session, hosted by Christina Anderson, Head of Content at SaaScend, with Craig Jordan, Founder and CEO of SaaScend, sharing his insights about SaaS metrics to determine the RevOps health.
Watch the session below, and/or read the guide that follows:
What Is RevOps?
RevOps is all about optimizing the entire customer experience – from prospect, to customer, through to retaining them as a customer – which means that sales, marketing, and customer success must all be aligned.
“Craig, how would you define revenue operations?”
“ I think everyone, especially in the Salesforce world, is familiar with the concept of sales operations. The way you can kind of frame revenue operations, is as a collective structure of marketing operations, sales operations, and then starting to mature customer success operations – those three operational arms funneled into a singular point that’s focused on:
- System management and architecture: The tools, technologies, etc. that go-to-market teams are using.
- Processes: As we’re transitioning from marketing to sales, sales to success, and even within inner teams like SDR to an account executive – all of those processes that your customers are going through on their journey fall within revenue operations.
- People: Who is involved, for example, ensuring sales and marketing are aligned with each other (and they actually get along with each other!)”
Once the RevOps machine has been started, how can alignment between these teams be maintained? The answer: Metrics!
What Isn’t RevOps?
No doubt you’ve heard many RevOps definitions. Without wanting to ‘reinvent the wheel’ and to provide a fresh perspective, perhaps it’s best we turn the concept on its head and instead, define what RevOps isn’t.
- RevOps isn’t marketing automation: Sure, the marketing team is a core part of successful RevOps execution, but marketing initiatives alone aren’t considered RevOps. There are many other people and processes that influence the customer’s experience and lead to retaining them as a customer.
- Purchasing software is not a strategy: Back to the machine analogy, the mechanisms (i.e. which people, in which team do what, and when). Software is the fuel that makes the machine go faster (i.e. automation). You can’t just have fuel without an engine – likewise, you can’t have software without a cohesive organizational structure.
- RevOps isn’t only for start-ups: The terms ‘RevOps’ and ‘growth’ have become synonymous. While RevOps is likely to be easier to establish in ‘younger’ organizations where there are no established practices in place, RevOps is for any organization, at any stage. Sure, a well-established, larger organization is a larger ship to steer in a different direction, but the correct approach to changing how people work means successful RevOps is possible.
- RevOps doesn’t require ALL the metrics: You may feel overwhelmed with the number of metrics one is supposedly meant to track. You can absolutely start with a handful (where you have the data readily available in Salesforce) while you work to build out your ‘RevOps cockpit’ (mega dashboards) whether just in Salesforce, or graduating to analytics tools such as Salesforce CRM Analytics.
Getting Started With RevOps Metrics
As I said, you may feel overwhelmed with the number of metrics you are supposedly meant to track (many of which we’ll explain in this guide). To narrow down your focus, I find it helpful to answer these questions in the context of your organization:
- How can sales connect with customers earlier in their lifecycle?
- How can marketing be more involved throughout that lifecycle?
- How can customer success meet expectations and better understand buying decisions?
The RevOps Maturity Scale
“When is the right time in a business that you typically see teams create a defined RevOps function? Why is it so important to bring teams in during that time?”
“It’s a difficult question to pin down exactly because every organization is different. There are multibillion-dollar organizations that we work with that don’t have a RevOps (or Sales Ops team). There are other startups that are doing a million dollars in ARR and they are already putting these RevOps structures in place.
“So, view revenue operations as a force multiplier, rather than a cost center, then invest in it early, and invest into it well. The sweet spot is if you’re looking to scale (I say anywhere between $1 and $5 mil range) you have product market fit, starting to flush out your go-to-market teams, and looking to go high-end as quickly as possible.
“An argument could be made that your next three hires would be two AEs/AEs and an SDR, and an ops person.”
Which of the following statements do you identify with when it comes to your sales, marketing, and service teams?
- Minimal: No collaboration or shared goals exist. Marketing automation is in place. To proceed to the next stage, work towards putting effective lead assignment practices and making the Lead/Account/Opportunity fields that measure the basic metrics, required.
- Emerging: Working together infrequently, on an ad-hoc basis, with few shared goals. Ensuring that key data points are visible within the views that marketing, sales, and service look at daily. Put ways to handle renewal opportunities in place. Marketing and sales communication should be your focus.
- Practicing: Collaborate frequently following a basic process to optimize velocity, using several shared goals. Involve customer service teams and processes to drive customer lifetime value.
- Optimized: Consistently work together using a process that balances pre-sales and post-sales priorities. Most goals are shared. Now that you have been tracking the simpler metrics, it is time to measure more across all go-to-market teams.
- Leading: Tightly integrated throughout the strategy and planning process, with fully aligned goals and a strong consensus over the definition of the customer lifecycle velocity.
What Does a ‘Conversion’ Mean To You?
‘Conversion’ can be interpreted differently according to the team you ask. Look at the diagram below, and scan your eyes from left to right. It’s likely you’ll use some of these terms, however, some of you will use more than others depending on the complexity of your sales process, or how strict you qualify prospects before an Opportunity is raised.
You may have these conversion checkpoints, but refer to them with different names – or even arranged in a different order.
The diagram below shows where some of the metrics come into action:
Starting off by mapping a funnel gives you an idea of where you are healthy and where you are weak. For example, are you really top-of-funnel healthy with a ton of leads, but just not getting them over the line? Why could that be?
Now that you’re aware of the key conversion ‘crunch’ points in your end-to-end customer lifecycle, we can move on to defining and measuring these metrics.
The Key RevOps Metrics
“There’s really only one metric that truly matters at the end of the day, which is revenue.”
- Revenue growth vs churn: If your revenue, specifically top line revenue, is outpacing your rate of churn, then you’re healthy. Having a good pulse on your net revenue, which is either net monthly recurring revenue (MRR) or net annual recurring revenue (ARR). ARR is MRR, times 12.
- New logos and expansion revenue: How ARR and MRR is achieved is through new logos plus expansion revenue, minus contraction and churn. Depending on the percentage, if that number is positive, it’s typically healthy; if it’s a low percentage, depending on the maturity of the business, that still might be okay.
- Customer lifetime value: A simple one – the sum of all Opportunities won related to that Account. Here’s how you calculate customer lifetime value in Salesforce.
RevOps Metrics for Marketing Teams
“Starting at the top and working our way through the buyer’s cycle, marketing’s function is to generate leads for sales, commonly referred to as a marketing qualified lead (MQL). MQLs are a precursor, supplying prospective organizations that the sales team can book meetings with, e.g. demos.
“Arguably marketing is concerned about volume and quality, as in, how many MQLs are actually being accepted by sales, and what’s the speed in which they get to that secondary milestone? The speed at which that lead moves, as well as the rate at which that lead converts, ultimately yields fruit down the funnel.”
- Leads Generated: The number of leads created within a certain time period (use ‘created date in reporting’.
- Conversion Rate: Most commonly, leads reaching the marketing qualified leads (MQL) status. Again, a metric with no ‘one size fits all’, defined differently from one organization to the next. This tutorial will give you direction on how to get the data in place using time stamps. To find the rate, divide the number of successful outcomes with the total number of records that didn’t pass that specific stage.
- Pipeline generation and influence: How much (Opportunity amount) is added to the pipeline, thanks to marketing’s leads? What % (Opportunity amount) can marketing claim as a share, out of all activities?
- Cost of Acquisition: How much does it cost, on average, to acquire a customer? This will be a calculation of Campaign cost, divided by the number of Campaign Members, then summarized on the contact object using a roll-up field.
- Cost per Lead: How much does it cost, on average, to acquire a lead? This will be a calculation of Campaign cost, divided by the number of net new Campaign Members, then summarized on the contact object using a roll-up field. There are also third-party apps that make this much easier (and accurate!) to report on.
- Cost per Opportunity: Same as the above, related to Opportunities created.
“Should you focus on your enquiry to MQL conversion? Or should you instead focus on your MQL to sales accepted lead (SAL) conversion?”
“Some campaigns that you’re running might result in a faster velocity (higher rate of conversion) compared to other campaigns that you ran. Certain lead sources or lead magnets might generate a lower volume overall, but a much higher rate of conversion. So, having that visual lens to inspect your data, allows you to make better campaign decisions, rather than sticking your finger in the air and guessing where to put your marketing dollars.
“I generally consult organizations to focus on the bottom of the funnel and work their way up. If you have baselines in particular areas then grow the volume on top of that baseline, that healthy conversion rate means you’re gonna yield more at the end of your funnel.
A lot of people focus on the top of the funnel first, especially because that’s marketing’s domain. But if we’re only focused on MQLs, marketing and sales are not in the same boat. Again, the ultimate metric to hold everyone accountable to is net revenue growth. If that’s happening 95% from sales and 5% from marketing, we don’t need marketing, it looks like you’re purely outbound driven.”
RevOps Metrics for Sales Teams
“Which metrics are sales leaders paying attention to?”
“There are two sales ‘buckets’:
- Account executive: Pipeline generation, pipeline management, stalling pipeline, pipeline forecasting. They’re asking:
- How much pipeline are we generating? What’s our pipeline coverage ratio? For instance, if we close one in three deals, we need three times more, to be able to hit the target.
- How close are our forecasts? Do we have high forecasting accuracy, or do we have a lot of Opportunities we’re forecasting to close that keep getting kicked down the road?
- SDR: They’re asking: Who are we engaging with? What’s the rate of conversion from our cadences into conversations? What’s the velocity of those leads into conversations? And what’s the rate of conversion into Opportunities?”
Here’s a breakdown of how some of these sales metrics are measured:
- Average Sales Price: The average amount across won opportunities. The more add-ons, the more revenue. This is a simple opportunity report, but you may want to use a chart that reflects this number over time, e.g. are there seasons where the average sales price drops? Is the average sales price higher this quarter than it was in the same quarter last year?
- Win Rate: A simple, yet effective, metric to start with. The number of won opportunities out of all closed (won and lost) opportunities.
- Renewal Ratio: The number of accounts that have more than 2 won opportunities. Achieve this by creating a roll-up summary field on the account that counts how many opportunities are related to the account, adding a filter to include only ‘Closed Won’ opportunities.
- New Business vs. Expansion Selling: Ensure that salespeople are selecting a value for the Opportunity type field (out-of-the-box, this contains values for new and existing business). You can then compare the difference between the two.
- Sales Process Velocity: The duration opportunities stay in each stage. To calculate this, create date fields for each of the stages, and use automation to “stamp” these fields with today’s date when they move into that stage. You can apply the same logic to Opportunities that’s detailed in this tutorial.
RevOps Metrics for Customer Service Teams
Customer service metrics that ultimately drive revenue can be split into two categories: implementation and utilization.
- Speed of the Implementation Process: How long does it take for a new customer to be fully enabled to use your product/service? You may be tracking the customer onboarding process in a number of ways – using the Case object, a custom object, or a third-party project management tool, e.g. Taskray (which is specifically designed for customer onboarding processes).
- Time to Value: How long does it take for a new customer to gain value (revenue increase, productivity boost) from your product/service? There may not always be a science to measuring this metric, however, satisfaction scores, positive reviews, or customer success check-in calls can be how you gather this information.
- Usage frequency: How much is the customer using the product/service? Evidently, some products/services will enable you to track this – digital products or connected devices will be able to feed this information back to your internal systems.
- Support cases submitted: How many Cases have been submitted per account? How many of these Cases are resolved, and how many are outstanding? Again, use separate roll-up fields to calculate the total number of Cases, and the Cases that are open (currently unresolved).
- Time to resolution: How long does it take to resolve Cases? This information is tracked with standard Salesforce Case fields. When you report, you should filter out Cases that are open, and you may wish to slice the data by Case complexity to give a fairer perception of the customer service team’s work.
As revenue operations aligns sales, marketing, and customer success, we are going to dive into the SaaS metrics to determine the health of each one and then also discuss the overall picture from a leadership and RevOps perspective.