May 31, 2023
12 Key Performance Indicators for Measuring Revenue Operations Metrics
Over the years, sales teams have become increasingly integrated with those that can help them thrive. Under the umbrella of Revenue Operations (RevOps), sales work closely with product, marketing, and customer experience to create a hivemind of continual improvement and reiteration, whose purpose is to optimize revenue growth.
Key Performance Indicators (KPIs) play a vital role in measuring the success of RevOps. KPIs provide actionable insights to help RevOps leaders make data-driven decisions to drive revenue growth.
Sales data is vital in tracking sales team performance and should be included in the KPIs measured. Sales data can reveal trends and patterns in revenue, products sold, and top-performing sales reps. Analyzing this data helps optimize sales strategies, refine targets and tactics, and allocate resources, leading to increased profitability.
One critical metric companies should consider tracking is the agency profitability KPI, which measures the profitability of the agency or service teams involved in the customer journey, providing insights into the effectiveness of their processes and overall contribution to revenue growth.
And so it follows that your business-winning teams should be highly integrated with those that can deliver the powerful analytics required to see the full view across the customer journey.
In this article, we’ll discuss 12 key performance indicators for measuring revenue operations metrics and why they’re so important.
How to get the most from your RevOps data
If you want to level up your RevOps reporting, here’s a list of 12 essential RevOps KPIs you can start tracking immediately.
1. Revenue growth rate (RGR)
This KPI underpins all the other KPIs in this list. It can provide a definitive indication as to whether your strategic RevOps initiatives are working or not.
Revenue growth rate (RGR) is the percentage increase or decrease in revenue over a specific period. It is calculated by dividing the current period's revenue by the previous period's revenue minus 1, multiplied by 100. A positive RGR indicates revenue growth, while a negative RGR indicates a decline in revenue.
2. Sales conversion rate (SCR)
Sales conversion rate measures the percentage of leads that convert into paying customers. Ensuring a good rhythm of analyzing and interpreting your SCR can lead to understanding how effectively the sales and marketing teams generate qualified leads. SCR is calculated by dividing the number of leads that convert into paying customers by the total number of leads generated, multiplied by 100.
If your SCR is low, it might be time to assess how your lead generation process works and if there’s a better way to get leads who are primed for the taking. This list of Salesforce integrations might come in handy.
3. Average deal size (ADS)
Average deal size (ADS) is the average revenue generated per deal closed. It helps to measure the effectiveness of the sales team in closing deals. ADS is calculated by dividing the total revenue generated by the number of deals closed.
Drilling down into the ADS over different periods/by industry can provide beneficial data on where the big-ticket items are coming from and when. That, in turn, allows for developing specific campaigns to eke out the most value possible in a given period.
4. Renewals and upgrades
Any respectable business leader will give you an earful if you aren’t tracking how much you’re upgrading and cross-selling to your existing customers.
The longer your great products have been supporting your clients, the more likely it is that their business will be growing too. Business growth equals more money in the budget for niceties, which means your RevOps team should be hunting for opportunities to upsell.
Tracking how many additional products your clients have taken since getting their first is a great way of understanding if you’re pushing for every penny.
One easy add-on, for example, is allowing your clients to tap into your product dashboards from a mobile device via a VNC viewer. It’s always great to have immediate access to your analytics, and mobile data can be a dependable emergency solution when the WiFi cuts out.
5. Customer lifetime value
Customer lifetime value (CLV) measures the total revenue generated by a customer over their entire relationship with the company. It supports identifying the most valuable customers and determines the overall profitability of the customer base.
CLV is calculated by multiplying the average revenue per customer by the average customer lifespan.
6. Customer churn rate (CCR)
Customer churn rate (CCR) measures the percentage of customers that stop using a company's products or services. It helps to identify the effectiveness of the customer success team in retaining customers.
Making it super easy for your clients end-to-end can make all the difference in retaining their business. Admin-heavy tasks like invoice management should be kept as simple as possible.
CCR is calculated by dividing the number of customers lost during a specific period by the total number of customers at the beginning of the period, multiplied by 100.
7. Net promoter score (NPS)
One for the customer experience team, the net promoter score (NPS) measures the likelihood of customers recommending a company's products or services to others.
NPS is a leading indicator of growth, and because it’s used by so many companies worldwide, it can be an excellent tool for comparing brand perception with other companies in your industry.
NPS is calculated by subtracting the percentage of detractors (customers who would not recommend the company) from the percentage of promoters (customers who would recommend the company).
A surefire way to make sure your product gets a positive NPS is by avoiding any unsolvable issues. That’s not always possible, of course, so integrating secure remote access into your product is a great way of being able to help your customers through any issues they can’t solve themselves.
8. Customer acquisition cost
Customer acquisition cost (CAC) measures the cost of acquiring a new customer. It helps to identify the efficiency of the sales and marketing teams in generating new business. Costs down equal revenue up. Simple.
CAC is calculated by dividing the total sales and marketing expenses by the number of new customers acquired.
9. Net revenue retention (NRR)
NRR is a metric that looks at how much revenue was earned when a customer signed, compared to the revenue earned from a customer in the current period.
NRR will give you a great indication as to whether the client account has gone through any attrition, for example, from product downgrades or negotiating lower pricing.
It will also tell you if a customer’s account is worth more now than it was at the opening which, when combined with looking at your renewals and upgrades metric, will let you know how well your RevOps team is getting value out of existing customers. If a client looks like it hasn’t upgraded anything in a while, it could be time for a proactive domain check and a technical audit to let them know what you can do for them.
NRR is calculated by dividing the recurring revenue for a given period for a specific group of customers, by the recurring revenue for that same group in a previous period of the same length.
10. Pipeline velocity
Pipeline velocity measures the speed at which deals move through the sales pipeline. You can use this KPI to identify bottlenecks in the sales process and determine the overall efficiency of the sales team. Pipeline velocity is calculated by dividing the total value of deals closed by the average time it takes to close a deal.
If your pipeline velocity is low, you should work out where the bottlenecks are and how the processes you currently have in place are causing them. Even changing up small things, like how your RevOps teams collaborate on documents, can have a big effect.
11. Lead response time
Lead response time is calculated by measuring the time it takes for a sales representative to respond to a lead. It helps to identify the effectiveness of the sales team in following up with leads and determining the overall efficiency of the sales process.
Research has shown that being the first vendor to respond to a business need can lead to a 50% success rate. That’s why it’s so important in jam-packed marketplaces for you to have a good handle on how good your RevOps team is at reaching out.
And not just reaching for the first time, either. Only 2% of sales deals are closed at the first meeting, meaning 98% of deals will require follow-up.
These statistics show that putting in place powerful initiatives to decrease your response time will have a clear and measurable effect on your lead win rate.
12. Sales forecasting
All good RevOps leaders will be providing sales forecasts to the senior leadership team. It’s essential to understand how to manage the performance expectations of others in the business over a period of time.
Several of the KPIs listed above will filter into the sales forecasting report, with the aim being to provide as accurate a picture as possible of how the company might perform sales-wise in the coming months.
The best sales forecast reports will not only use generalized MI around company performance but will also use a plethora of client dashboard information from the ground up. This is done not only to build a picture of what new sales might be achieved but also how existing clients might act in the coming months.
Your RevOps reporting will grow with the needs of the business
This list is just a starter for ten, well, 12. RevOps is such a huge hub of customer activity that you can find dozens and dozens of KPIs that will help you dig under the surface of your team’s performance.
If you’re a numbers type, you could find yourself late at night sifting through fields and fields of data to get you that juicy bit of MI you need to back up an observation you had. If you’re planning to pull an all-nighter, make sure you have a remote desktop file transfer facility in case your work servers time out!
As the business grows, you’ll find yourself asking more and more questions about how different teams interact based on the processes you’ve put in place.
Don’t worry—there’s definitely an analytical basis with which to answer.
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