SalesTech Star

3 Ways to Prove Revenue Operations ROI

By Camela Thompson, VP of Marketing at CaliberMind

For decades, information technology (IT) battled against the “cost center” label. IT was ignored until something broke and then was blamed for slowing everything down when the break happened. Moreover, the original “cost center” attitude ignored the competitive advantage the best IT departments afforded their companies. Savvy IT leaders saw this gap in perception versus reality and pioneered processes and calculations to prove how much revenue can be realized with increased efficiencies.

In 1991, the balanced scorecard was introduced by Harvard researchers and encouraged evaluating department contributions from multiple perspectives, including financial, customer-perspective, internal process, and learning and growth. By tying key performance indicators (KPIs) back to company objectives, even “cost centers” could achieve profit-center status. Revenue operations leaders must adopt more disciplined approaches to measuring impact to avoid repeating history, and the following three practices illustrate how to do that.

Tie every project to key business objectives

The day you begin a leadership position at a company, your chief objective should be to ferret out whether the ultimate goal is to sell the company or grow as quickly as possible. Once the main purpose of the company is known, align your revenue operations team’s goals with the company’s overall objectives.

Once you’ve properly aligned your team it’s easier to advocate for spending time on a project, investors will be happy with improved efficiency, and your department will become a fast favorite.

For example, if the board’s goal is to sell the company eventually, they will prioritize larger profit margins. That means I need to optimize for steady or slightly increased growth while keeping costs to a minimum. On the other hand, if the goal is to IPO, dominating market share is the North Star.

Prioritize your projects according to how well they align with the company’s key business objectives. Better yet, start thinking of ways to solve problems preventing those objectives from being realized. If you can impact the one, two, or three metrics investors care about, you’ll make revenue operations the darling of the organization.

Pro Tip:

Use a project management system to track your team’s requested projects and tie them to your company’s formal objectives. If you can’t link a project back to an objective–even creatively through time savings–push it to the bottom of the list. Added Bonus: Take the time to input the level of effort on projects that are aligned with objectives so you have a concrete number of hours on your backlog to argue for additional headcount.

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Take a baseline, do the project, compare your data

The goals of every project should be to improve efficiency and uncover more revenue. For example, enhancing visibility into engaged prospects will probably directly increase pipeline. Another example is reducing the time salespeople spend filling out CRM fields. You’re not only giving them time back (saving money on expensive resources)–you’re also increasing their time to focus on selling or bookings.

Sometimes the projected benefits are apparent, but more often than not, you’ll find surprising wins. Take a snapshot of all of the metrics touching the teams your change impacts at the beginning of your project as a benchmark. As you make changes, take more snapshots. Continue taking measurements one, three, and six months after the project and report wins.

Pro Tip:

Not sure what to measure? Before kicking off the project, meet with the impacted departments’ management teams and determine which KPIs they watch and how much the needle will need to move for the project to be considered impactful.

Get familiar with time trials

If you know your project will be challenging to tie to pipeline and booking results, fall back on time savings calculations. For example, if your inside sales team is complaining about how long it takes them to create an opportunity, those time savings may not intuitively lead to increased pipeline. In cases like these, get out the stopwatch, measure how much time a task takes a sample set of people, and use the law of averages.

The first part of the formula will look like the following:

($ per hour the average employee is paid) / 60) x (average number of minutes to complete a task) = Td

The second part of the formula is:

Td x (number of times the task is done per year) x (number of employees in the role) = Dollars spent on the task

If you can cut the time to do a task in half after completing your project, your company will save 50% of the dollars usually spent on the task. In other words:

(Dollars spent on the task) x (percent of original time the new task takes) = Savings

Pro Tip:

Time trials can be done for nearly any project, but don’t forget to take a baseline by snapshotting all of your metrics before you start the project. Make periodic comparisons and see if your new numbers are better. You may find a surprising uptick in pipeline or a reduction in churn you didn’t expect. At a previous employer, we made opportunity creation more efficient and then discovered that we uncovered one million dollars in additional pipeline by giving the inside team time back to prospect.

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Revenue operations as a profit center

Your revenue operations team can go from perceived ticket-takers to strategic business partners with a little extra effort. Align with your executive team, measure everything, communicate your wins, and watch your department thrive. As a bonus, arguing for more budget gets easier when you can prove your team is impacting the bottom line.

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