New research highlights the need to transform the commercial model in response to pressures to align sales, marketing and customer success teams and improve the performance of commercial operations, processes, and assets
WESTPORT, CT, July 12, 2021 —A newly released research study reveals the growing complexity of technology enabled selling systems – amplified by business model transformation to the cloud and changing customer buying behavior– has changed the basis for generating revenue growth in B2B businesses. The research reveals the commercial model has evolved to the point where traditional structures for managing the people, processes, and technologies that support revenue growth are inadequate.
This analysis of over 100 organizations found that businesses that continue to use outdated functional approaches to managing sales, marketing, and customer success resources and the enterprise customer journey are struggling to become more digital, data driven, and dynamic. The failure to align commercial teams, operations, processes, and systems around the customer has significant financial consequences:
- The fragmented management of revenue generating commercial assets – which include customer data, digital technology, digital channel infrastructure, and customer relationship equity – has resulted in lower than acceptable returns on the technology, data and digital infrastructure assets that underpin firm value and future revenue streams.
- The fractured management of the enterprise commercial process causes revenue and margin to leak through “air gaps” and handoffs in the customer journey.
- The uncoordinated leadership of customer facing revenue teams leads to coverage gaps, suboptimal resource allocation, higher selling costs, customer churn, and missed opportunity.
To better define Revenue Operations in a 21st Century Commercial Model, the expert faculty of the Revenue Enablement Institute engaged hundreds of business leaders, as well as the leading academics and experts in the science of revenue growth. The research defines and documents a Revenue Operations management model that can help leadership teams to unlock the growth potential of their businesses. The Revenue Operations model draws upon the successful efforts of leading B2B organizations to transform their commercial models. It documents how they have been able to better align the commercial teams, assets, systems, and processes around a coherent set of customer and company goals to accelerate revenue, profit, and value growth.
“Revenue operations has emerged as a board level issue for a simple reason – it directly impacts their primary fiduciary responsibility to protect and grow firm value,” reports Howard Brown, CEO of ringDNA, and a co-author of the report. “This is because organic growth, and the commercial assets that create it, have become essential to value creation in every business – whether you run a hyper-growth SaaS business, a Fortune 1000 enterprise, or are attempting business transformation to a cloud based recurring revenue model.”
This growing relationship between revenue growth and firm value has made Revenue Operations a critical issue with Private Equity investors who need faster organic revenue growth to justify purchase price multiples that exceed 13 times EBITDA. Aligning sales, marketing, and customer success teams has also become fundamental to generating the growth, customer experience, and net recurring revenues needed to scale or transition to a cloud business model with limited capital.
The research shows that businesses that deploy revenue operations can generate significantly more revenue and profits by better managing, measuring, and monetizing their revenue generating commercial assets and the growing operations that support front line sellers – which now represent a quarter of the revenue team. “Moving to a Revenue Operations Model that aligns revenue teams and optimizes the commercial architecture to reflect the new economics of selling can contribute five to ten points of bottom line profit contribution in the short term, or if reinvested, can improve long term growth prospects by over 50%,” according to Corey Torrence, Managing Director at Blue Ridge Partners who has led a dozen Revenue Operations transformations in the past year. “This report helps growth leaders address the biggest headwinds to revenue operations – a financially valid business case for changing the commercial model and playbook for creating cultural incentives to break down the organizational, budget and technology silos that divide people.”
The trend towards a Revenue Operations model is evidenced by significant changes in commercial leadership, operations, and architecture. Over 80% of the executives interviewed were redefining their commercial architecture, consolidating the operations that support selling, and reconfiguring the roles on their revenue teams. 85% were actively adding development reps (SDRs, BDRs, MDRs, and ADRs) to manage engagement at scale at the front of the funnel, specialists to add value in the middle, or Customer Success Managers (CSM) at the end to manage retention, usage and upsell. To lead Revenue Operations, thousands of organizations have introduced expanded “CXO” roles with titles like the Chief Growth Officer, Chief Commercial Officer, Chief Customer Officer, and Chief Revenue Officer with a broader scope and remit to better manage commercial assets, the operations and enablement infrastructure, and the customer journey across the enterprise. The number of Chief Revenue Officers (CRO) jobs have more than doubled to over 9,000 in the last three years.
To help this new generation of growth leaders transform their commercial models in the face of these obstacles, a team of the world’s leading academics, executive practitioners, and experts in sales and marketing at the Revenue Enablement Institute has published an in-depth 115-page analysis which:
- Identifies a “perfect storm” of six demographic, economic and business mega-trends that are transforming sales, marketing, and customer success and redefining how business-to-business firms manage the people, processes, technology, and operations that support revenue growth.
- Rigorously breaks the Revenue Operations model down into six specific operational components that growth leaders need to deploy to align their revenue teams, commercial assets, systems, and processes to achieve scalable and consistent revenues and customer lifetime value.
- Provides a detailed 72-point Revenue Operations Model designed to help business owners, CEOs and growth leaders align their sales, marketing, and customer success teams and lay out concrete steps to optimize the performance of their commercial operations, processes, and assets.
- Arms the senior growth leader with a financially valid basis for allocating growth capital expenditures, reconfiguring the operations and technology portfolio that support growth to realize higher returns on growth investment, and aligning all customer facing employees around the customer.
About the Revenue Operations in a 21st Century Commercial Model Study
To help growth leaders find practical ways to transform their commercial models to adapt to the new buying reality, a team of leading academics, experts, and practitioners in the field of Revenue Enablement and sales management in collaboration with over 45 industry practitioners and experts, conducted interviews with 106 CEOs, growth leaders and sales effectiveness professionals and experts in the first and second quarter of 2021. In parallel, our research team surveyed 622 sales professionals and evaluated the top 100 technologies that are converging to define and enable the 21st Century Commercial Model. This exhaustive 115 page analysis provides and actionable blueprint with specific guidance to help growth leaders stairstep their organization to a more unified approach to managing commercial revenue teams, assets, and processes. It will also isolate the clear financial benefits of making those incremental changes from a revenue, margin and cost and value perspective. Owners, CEOs, and growth leaders can get full access to the full research report and get a Revenue Operations benchmark maturity assessment to guide their commercial transformation at the Revenue Enablement Institute web site at www.revenueenablement.com
About the Revenue Enablement Institute
The mission of the Revenue Enablement Institute™ is to educate and arm CXOs – a new generation of growth leaders – with the state-of-the-art management tools, skills, capabilities, and practices they will need to accelerate revenue growth and adapt to the new buying reality. Our faculty of academics and experts are actively working with owners, CEOs, and their growth leadership teams to develop research, education, and solutions to help them to blend their sales, marketing, and service teams into a high-octane growth machine. You can learn more about The Revenue Enablement Institute at www.revenueenablement.com
Contact: Stephen Diorio, (203) 912-8172, [email protected]