The 8 Most Important Revenue Operations Metrics

RevOps teams increase company revenue growth by improving performance in sales, marketing, and customer service operations. They rely on key performance indicators (KPI) to measure progress and surface variances that need swift course corrections.

However, there is a near endless number of revenue operations metrics. And just about any RevOps consultant can share that most don't gain user adoption. In fact, they are downright ignored. They fail for two reasons. They are not the most important measures, and they don't induce action.

Research performed for the Business Growth Report revealed that KPI-rich dashboards achieve 30 percent utilization following a go-live event. But within 3 weeks utilization falls to 9 percent. Over time it falls further. The decline is due to KPIs that do not provide real help to staff.

The key to successful analytics is to measure the few metrics that most matter. Too many metrics cloud what's most important.

The research also found that the most important metrics were financial measures that linked to the organization's most important objectives.

The table below shows the Revenue Operations metrics that most matter.

RevOps Metrics

01. Revenue Growth Rate

In the most recent RevOps Trends report, survey data revealed that 72% of RevOps teams identified revenue growth as their primary metric for success.

This figure measures the percentage increase or decrease in a company's sales between two stated periods. Most often those periods are prior period and the same period for the prior year.

Revenue Growth Rate

The four factors that most improve this all-important measure are volume (number of sale opportunities), value (average deal size), velocity (sales cycle duration) and sales conversion rate. These supporting measures are covered below.

02. Pipeline Growth Rate

Most companies that are not achieving their revenue goals are also not achieving their sales pipeline goals. The two are often inextricably linked.

This figure measures the percentage change in the company's sales pipeline between two periods. Most often those periods are the current period and prior. However, they can be for the current period and the same period for the prior year.

Pipeline Growth Rate

Some common methods to improve the sales pipeline include the following:

  • Sales & Marketing alignment. The shift of sales and marketing from standalone departments to integrated partners pursuing shared goals and a Service Level Agreement improves lead acquisitions and grows the pipeline by double digits.
  • Campaign portfolio optimization. Many companies run campaigns one at a time. Stepping up to run multiple campaigns at the same time will grow the pipeline. But to avoid diminishing returns you also need to apply optimization. This will ensure you are acquiring the right leads at the right cost per lead. Optimization measures sales lead costs and conversions and adjusts campaigns in near real-time.
  • Lead management automation. Sales lead management processes get more sales leads through the pipeline in less time. Because they occur early in the sales funnel even small improvements deliver significant increases in the volume of qualified leads sent to the salesforce. And that delivers a big revenue uplift.

03. Sales Velocity

This measure reveals the amount of revenue realized during the sales cycle.

Or put a different way, it's the average time it takes and revenue generated for a customer to go from lead to close.

It's a speed of revenue generation figure that is calculated as shown below.

Sales Velocity

It's stated in terms of revenue, not time.

A high velocity indicates close prospect fit, an effective sale methodology and a streamlined selling process.

Some methods to improve this measure include the following.

  • Increase your MQL to SQL conversion rate. This is best achieved by better targeting your Ideal Customer Profile and improving your lead score calculation.
  • Streamline your sales process. Every company has a sales process. Most are not data driven. Bringing measurability to the process will identify where leads stall and surface the bottlenecks so they can be resolved.

04. Sales Win Rate

The sales win rate, also referred to as the sales conversion rate or sale opportunity close rate, demonstrates the percentage of sale opportunities that are won.

The calculation is shown below.

Sales Win Rate

RevOps projects to improve the sales win rate include the following.

  • Adopt an enterprise sale methodology. Sales methods research shows that sellers with optimized sales methodologies achieve 11% higher win rates than those with informal methods.
  • Create a predictable selling process. This will also enable you to pinpoint the biggest problems by measuring the duration and conversions between each step of the sales process.
  • Configure guided selling. Use CRM workflow or AI tools to suggest next best plays, actions or other recommendations that will improve speed and results.
  • Leverage a playbook. A sales playbook will improve staff productivity and performance results.

05. Cost Per Lead (CPL)

A lead is a contact that shows some intent to suggest they may make a purchase from your company.

This measure divides the number of leads acquired from a campaign or similar marketing event by the total cost to acquire them.

Cost Per Lead

Cost per lead is an efficiency metric. It also provides the first view of campaign effectiveness. However, it needs to be followed with some additional measures.

To know which leads are your best leads, and the sources that provide your best leads, you will need to track the cost per customer acquisition and lead-to-customer conversions.

Also recognize leads that fit your Ideal Customer Profile (ICP) will achieve the highest conversion rate and the lowest CPL.

06. Customer Acquisition Cost (CAC)

CAC measures how much it costs to acquire a customer.

It consists of the marketing and sales costs attributable to the customer acquisition cycle.

Customer Acquisition Cost

It shows the effectiveness of marketing spend and is used to compare different types of campaigns.

It also measures the salesforce's ability to effectively convert leads into paying customers.

So, what's a good CAC? That depends on your industry, payback period and customer lifetime value.

For example, a good CAC for a SaaS industry is 3:1, meaning CLV is three times the CAC.

07. Customer Lifetime Value (CLV)

CLV is a leading indicator of increased purchases and customer retention. This predictive analytic is influential because even a small increase multiplied by the number of customers creates large revenue growth.

It's equal to the present value of the future cash flows attributed to the customer during the entire relationship with the company. Some companies calculate it as a revenue figure. Others will deduct customer-related expenses, such as acquisition costs and cost to serve, and present it as a profit figure. We generally recommend the later. But either way, it is a projection of what each customer is worth to the company.

CLV = Average purchase value * average number of purchases for average lifespan

Its valuation also helps recognize customer relationships as assets. It helps reposition customer focus from short-term profits to long-term lifetime relationship value. It complements other customer-centric measures such as customer satisfaction or Net Promoter Score.

Selling to existing customers offers the fastest sales conversions, highest close rates, and lowest cost of sales. Programs such as up-sell, cross-sell and bundles to existing customers will boost lifetime value.

Also recognize that customers may be worth more than just their purchase dollars. For example, referrals which result in new sales should be reflected in the customer value.

Unless you know how much a customer is worth to the company, you do not know how much the company should spend to acquire that customer.

08. Customer Churn Rate

Whether referred to as customer churn, turnover or attrition, it is the enemy of sustained growth and company profits.

Churn rate shows the percentage of customers that stop doing business with the company during a period.

Customer Churn Rate

The best way to reduce customer churn is to prevent it from happening in the first place.

For example, advancing from a static report that predicts which customers will defect to a predictive model that shows not just who, but why those customers are churning surfaces the root causes that can be resolved before they create customer attrition.

This type of reporting is often called an early warning system. It creates a shift in reporting from delivering bad news too late, to delivering an operating model to prevent bad news.

The Point is This

You can't manage what you can't measure.

That's why defining the right measures to track progress and prompt real-time corrective action is an essential RevOps best practice for improving performance.

When implementing performance analytics, I often get asked how many KPIs should be tracked. The answer is always the same, as many as will get acted upon.

An interesting thing happens when you track the most important measures. Marketing and sales staff spend less time accessing information reporting and more time improving or making changes to revenue processes. That's the sign of successful revenue operations metrics. If they are causing operational changes to be made, they are working.