The RevOps Metrics that Matter Most
RevOps Metrics That Accelerate Company Growth
The best way to define the best RevOps metrics is to start with the customer journey.
Customer journey maps vary by industry and company. But their goals are pretty consistent. They enable companies to measure performance and implement actions that improve engagement, reduce friction and increase conversions.
As illustrated in the below diagram, the first step is to align the buyer's purchase journey with the seller's sales process.
It's pretty easy to map the customer journey.
It's not as easy to align, automate and measure your success. Fortunately, there is a three-step process that can help.
First, focus on the Revenue Operations metrics that induce action.
Second, organize performance measures into the four categories of Volume, Conversions, Time and Value.
And third, bring real-time visibility to these performance measures with Revenue Operations dashboards.
Here's how our Revenue Operations consulting specialists perform this process when helping clients.
Revenue Operations Metrics That Induce Action
Volume Measures
Most clients want to increase leads, opportunities and customer acquisitions. So, we start with the Volume measures. Below are some examples.
- Lead acquisitions. For B2B companies we measure things like marketing campaign effectiveness and website conversions. Campaigns should be reviewed holistically. You need to architect a campaign portfolio so you can quickly adjust spend from low to high performing campaigns. We find most companies convert 1 to 2% of website visitors into leads. Improving this figure creates a linear impact to lead volume.
- Marketing qualified leads. Best practices to increase the volume of MQLs include automated lead scoring, lead routing and nurture marketing campaigns.
- Win rate. This is another area where small improvements deliver big revenue gains. Best practices to improve the sales win rate include guided selling, sale opportunity win plans and using a sale methodology. You can also use industry benchmarks, like the one below, to identify uplift opportunities.
Conversion Measures
Many times, you can actually reduce volume metrics and grow the business. For example, directing marketing campaigns to only your Ideal Customer Profile (ICP) may acquire fewer leads than a much broader campaign. However, those leads will convert much faster and at a significantly higher rate.
Below are some key Conversion measures.
- Marketing qualified leads. The best way to improve MQLs is with nurture marketing campaigns. For most B2B companies, about 30% of new leads are sales-ready when received. These leads can be quickly routed to the sales force. But about half of new leads are not sales-ready when received. These are prospects in the early stages doing their research. Sending these leads to salespeople annoys the buyers and wastes time for sellers. These leads should be nurtured until they show buy-ready signals.
- Sales qualified leads. If the SQL conversion rate is too low, it means one of two things. The leads do not fit the company’s ICP or the MQL lead score is inaccurate.
- Time to value. TTV is the first post-conversion metric. While it is also a time-based metric, this conversion is the percentage of customers that achieve a slated value in a targeted time frame.
Time Measures
- Lead to Revenue. This measure calculates both the ratio and time required for leads to convert into customers. Some companies start the calculation with unqualified leads. That's helpful in analyzing an end-to-end L2R funnel. Other companies begin the calculation with MQLs. That puts more emphasis on sales performance and largely ignores marketing results. We usually advise our clients to measure the entire L2R funnel beginning with unqualified leads. You can then make performance improvements by analyzing the conversion and duration at any stage in the funnel.
- Time to impact. This may be measured as the time required for the customer to achieve the first value realization from your solution or the total impact from your solution.
- Time to expand. The duration of time from initial purchase to subsequent purchase.
Value Measures
- Cost per lead. CPL is important because even small improvements multiplied by the large volume of leads create a significant financial impact.
- Customer Acquisition Cost. CAC measures the company's customer acquisition efficiency. It should be compared to Customer Lifetime Value (CLV or LTV) to ensure the combined marketing and sales processes are financially viable. A common rule of thumb is that the CLV to CAC ratio should be at least 3 to 1. If your CAC is too high, focus on the conversions in the prior steps.
- Customer lifetime value. Companies use CLV to segment customers. A high-value segment may receive more resources to promote expansion and ensure retention. CLV-based segments may be used to prioritize resources for certain campaign target audiences or customer support services. This post conversion measure can be improved with techniques such as Strategic Account Management (SAM) and account plans. You will improve it even further with a clear Customer Experience Management (CXM) program.
- Customer Retention Rate. If CRR is too low, review your customer services processes and measure customer satisfaction (CSAT). You may also want to consider adopting a Net Promoter Score (NPS) program. Sometimes a more formal customer experience management (CXM) program is needed. Also consider using your CRM system to predict customers at risk of churn.
Dashboard Visualization
One last point.
You need to make your revenue operations metrics easily accessible.
That's best done with a RevOps dashboard like the one below.
Good dashboards deliver the right information to the right person at the right time. They focus on the most essential KPIs and prioritize information based on what's most important to each user. They display what should be done, in a sequenced order, to aid time management, create a work rhythm and maximize productivity.
Some revenue operations dashboards go further. They include comparison points, such as industry benchmarks, to provide a relative ranking of what's working and what needs improvement.
Some even permit real-time predictive modeling to show how changes in behaviors or actions impact business results. These forward-looking analytics can show the financial impact of both action and inaction. It's this level of reporting that shifts information visibility from hindsight to foresight.
The Point is This
You cannot manage what you cannot measure.
That's why defining the right performance measures and categories is critical. These KPIs track progress and highlight variances for swift corrective action.
When identifying the right RevOps metrics with clients, our Revenue Operations consultants often get asked how many metrics should be tracked. The answer is as many as will get acted upon.
An interesting thing happens when you focus on the most important KPIs. Staff spend less time accessing information and more time improving or making changes to their actions and processes. That's the sign of a successful analytics program. If it is causing operational changes to be made, it's working.