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Are your revenue team spending more than the value created

Saahil Dhaka
Saahil Dhaka,CEO at Clientell
5 mins read
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Do you have a complete picture of how a dollar spent on your revenue-generating efforts moves through the funnel?

For most leaders, the answer is a combination of marketing spends, software products, and salaries. But what about the opportunity cost of wasted efforts, sales lost due to negligence, and missing data?

On your road to profitable growth, macro indicators or high-level KPIs such as CAC or Net dollar retention may misguide you. Your overall numbers may be great, but as we just saw the story unfold at Twitter, you may have overhired or over-invested in certain channels. If your goal is to understand exactly where each dollar is spent, follow the steps undermentioned.

The famous Pareto principle highlights how just 20% of your efforts may be generating 80% of your pipeline. But as a business leader, your objective is to de-risk your GTM and increase the spread so that you are still competitive when certain channels stop working. In this blog, we explore how to set up a working RevOps model by understanding where your Pipeline Leakage lies or where you are losing revenue.

Spending beyond just sales and marketing

For most RevOps leaders and CROs, the challenge with increasing pipeline begins with having too many data silos across teams. These can be due to multiple spreadsheets, too many software tools, or incomplete CRMs. The next obvious challenge lies in looking at the wrong or surface metric instead of more granular leading indicators.

One example that comes to mind is evaluating trying to optimize MQL to SQL conversion rate without looking at the qualification process in depth. You may be following MEDDICC, BANT, or any other sales methodology but say you only qualify leads successfully 20% of the time. Even if your MQL to SQL conversion rate is 30%, you’re still missing out on 80% of MQL that never made it to later stages due to poor qualification. Or, say if 40% of the SQLs come from a particular channel, is it better to double down on spending on this channel versus optimizing a channel that only brings 10% of the leads?

Questions like these need to be answered by going both Top down and Bottom up in your analysis. These metrics need to be evaluated separately for each team, geography, and maybe even product. The first step to the solution is setting up a RevOps process and team-which most leaders understand. What’s not obvious is that RevOps is a broad term and needs to be strategically built as a function for your business.

What everyone gets wrong about RevOps

RevOps is not a quick solution, so don't use it in response to symptoms. Nothing will be resolved or improved by merely handing over control of your marketing automation platform, CRM, territory management, etc., to a "dedicated revenue operations division." Nobody hates to admit that, but it is much more probable that doing something and doing it incorrectly would make matters worse. Operations involving income are not miraculous. The structure, strategy, and disciplines that RevOps may provide are what make them magical. Looking at RevOps through the lens of just “operations” and not revenue can lead to wasted efforts. The focus must be on increasing revenue by optimizing parts of the funnel, preventing revenue leakage, and boosting the speed of GTM execution.

RevOps beyond the tech stack

Enabling the tech stack is the first step to making RevOps efforts successful. Having more data in the CRM is not the end goal here, but to derive actionable insights that are intuitive to your team. This can be achieved by leveraging a combination of AI and manual yet robust processes.

The second step to an efficient RevOps process is ensuring all teams are aligned with the data or having everyone on the same platform. Once you’ve integrated your entire tech stack, you have a complete picture of how every opportunity moves through the funnel. You can identify areas of focus, your teams’ strengths, and your road to reducing unnecessary spending.

Finding your Revenue Leakage

Now that you have a RevOps process, it's important to start bottom-up, whether you’ve hired the right people or bought the right software. Start with identifying the most common traits amongst the deal you lose. Is it because you’re not following up with prospects, or because you don’t have an objection handling at the consideration phase, etc.?

Using these Revenue Leakage points, you can benchmark against your competitors to understand whether it’s only your problem or whether the overall market is facing the same. Look at the email and call transcripts in deals you’ve won to identify how you handled objections and what made the opportunity go faster than average. You can go on for hours just listening to call recordings, but the objective is not to get busy.

Avoiding getting busy is the toughest job for a RevOps leader. There’s just so much data and tools and dashboards to look at. Start by prioritizing focus areas in the funnel and get granular insights into each. Not only will this help you focus on immediate actions, but it will also keep you focused on the long-term objective. A good starting point in the sea of information could be a simple yet effective calculator to calculate “Revenue Leakage.” You can use this one or build something similar.

A major concern for the spendingscan be the structure of your RevOps team. RevOps teams are desined to increae the efficiency of the sales and marketing teams, but what's the point if they themselves are not efficient. Th structure will be diffrent for every organization depending on the requirements of the sales pipeline and coversion rates. If you want to design your RevOps dream team, you an use Clientell's RevOps Team Creator or hire few experts to do the same. Regardless of what you choose, get started today.

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