Are there any new or different metrics you should focus on as part of a RevOps strategy? If you’re just starting out, what should you prepare for your Head of Sales?
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I've noticed a similar trend of returning to the basics. We measure deal velocity and apply a RevOps lens to these basic metrics by analyzing them across different opportunity sources, such as marketing leads, SDR outreach, and inside sales. This helps us identify where to focus our efforts.<br><br>For example, we track pipeline health and gaps, and we monitor how different groups are progressing towards their targets. By breaking down these metrics, we can pinpoint areas that need improvement, such as marketing channels that are underperforming.<br><br>In customer success, metrics like churn and Net Promoter Score (NPS) are crucial. NPS, in particular, is vital as it indicates customer satisfaction and the likelihood of referrals. Sharing these metrics across the RevOps team ensures that everyone is aligned and can leverage this information to optimize marketing campaigns, sales outreach, and renewal strategies.<br>
When discussing new metrics, it's essential to recognize that some metrics, such as Net Revenue Retention (NRR) and Customer Lifetime Value (CLV), are no longer considered new. The Head of Sales should focus on traditional metrics like the number of deals booked, revenue, and booking numbers. However, they should also consider the customer lifetime value because the type of customers they work with can significantly impact the company's revenue over time. This focus benefits the company, the sales team, and everyone involved.
From a RevOps perspective, I look at Go-To-Market (GTM) efficiency, which measures how much ARR (Annual Recurring Revenue) is generated for every dollar spent on sales and marketing. This is a straightforward ratio of ARR divided by sales and marketing spend. Additionally, I examine revenue per seller, which can be broken down into revenue per Account Executive (AE) and revenue per Customer Success Manager (CSM). This helps assess productivity within the sales and customer success organizations.
Other important metrics include revenue per lead and revenue per opportunity. Marketing teams should be interested in these metrics as they provide insights into the effectiveness of their efforts once leads progress to become Sales Qualified Opportunities (SQOs).
Integrated metrics that shows impact and growth overall with contribution from each and from joint initiatives.
In the evolving landscape of Revenue Operations (RevOps), it's imperative to rethink traditional metrics and align them with a holistic approach to revenue generation. While foundational metrics like pipeline velocity and conversion rates remain essential, RevOps introduces additional dimensions to consider. Here are some nuanced metrics and considerations to focus on:
Customer Lifetime Value (CLV) to Customer Acquisition Cost (CAC) Ratio: This metric helps assess the efficiency and sustainability of your growth strategy. A robust RevOps strategy emphasizes maximizing CLV while optimizing CAC.
Revenue Predictability: Beyond forecasting accuracy, focus on the consistency and reliability of revenue streams. This involves analyzing the stability of recurring revenue and identifying variances in projected versus actual revenue performance.
Sales Cycle Efficiency: Evaluate not just the duration but the quality of customer touchpoints throughout the sales cycle. Analyze where prospects spend the most time and identify bottlenecks or friction points.
Cross-Team Collaboration Metrics: Measure the effectiveness of alignment between sales, marketing, and customer success teams. Key indicators include lead responsiveness, handoff efficiency, and shared target achievement.
Churn and Retention Rates: A RevOps approach requires a deeper understanding of churn predictors and the impact of retention strategies. Segment these metrics by customer profiles to develop targeted retention initiatives.
Customer Engagement Scores: Leverage data analytics to gauge customer engagement levels through interactions, feedback, and usage patterns. This can provide insights into potential upsell or cross-sell opportunities.
As you begin to integrate RevOps into your organizational strategy, prepare your Head of Sales with data-driven insights that emphasize these metrics. Equip them with dashboards that provide real-time visibility into these key areas, fostering a proactive management style. Additionally, cultivate a culture of continuous learning and adaptation, enabling the sales team to leverage these metrics efficiently for strategic decision-making.
~Kashish Keswani
We are focusing on simplifying our metrics. Our leaders are overwhelmed by the sheer number of metrics, and we need to improve our performance on basic ones like pipeline coverage and pipeline health. We are enhancing our approach by looking more critically at seller activities and insisting on greater transparency until we implement tools like Gong. Our goal is to master the basics before expanding to more complex metrics.