With every CRM admin calling themselves "RevOps" these days, you can be forgiven for thinking this latest buzzwordy function is just a clever rebranding of Sales Operations.
Unbelievably, these two functions are in fact different. Or more precisely one is an evolution of the other.
A good way to think about the difference is this: Revenue Operations teams are responsible for the systems and processes supporting the entire customer account lifecycle, from acquisition to retention, all while linking and automating the financial processes involved with billing and accounting. Sales operations is more limited in its mandate, and tends to prioritize administration of sales workflows that enable sales reps to close deals more effectively and efficiently.
Every business that has more than one sales rep finds itself in need of some process to ensure customers have a signed contract, are invoiced correctly, and have their orders fulfilled. However, not every business has found the need to build out a full revenue operations function to support management of the customer life cycle.
If you're not sure which structure your business needs, don't worry – we're here to help. In this article, we'll explain the differences between revenue operations and sales operations, and we'll help you decide which one is right for your business.
What processes and systems does a Sale Ops team manage vs a Rev OPs team?
Sales Ops serves the needs of sales reps to do their jobs better. The mandate typically focuses on sales tools that connect to the Customer Resource Management (CRM) platform.
Their toolkit includes things like prospecting, sales enablement, lead routing, sales automation, and contract management software. Basically, all the software that helps sales reps manage sales opportunities and close deals.
Sales Operations managers typically don’t concern themselves with integrations or workflows that don’t support this goal of winning new business. This often results in a world where finance and sales constantly need to reconcile the data between the CRM and accounting platforms. Customer handoffs to success or product teams can also be a bit bumpy due to a lack of coordination in data sharing.
Revenue operations takes a broader view and looks at the whole lifecycle of a customer and the data associated with each stage. It works towards a world where this data flows seamlessly between systems (often with the CRM as the single source of truth for revenue and customer data).
RevOp takes a holistic view of the business strategy and a broad mandate to optimize for revenue growth via multiple strategies (marketing, sales, retention, and sometimes even pricing). Tool ownership can extend to cover the marketing automation stack, billing automation tools, customer support/success platforms, and even product data integrations for health scoring, etc.
What function should Sales or Revenue Operations report into?
This is key, but counterintuitive. In many startups, Sales or Marketing leadership are the first non-founder hires made and it’s tempting to have Sales or Revenue Ops team members report to this leader. After all, it’s right there in the name and focus of their department. Why the heck wouldn’t you?
Let’s start with Rev Ops: It may come as a surprise but It's generally accepted as best practice to have your rev ops function NOT report into the Sales leader. This is not a comment on the skills and experience of most Sales leaders, it is simply a matter of incentives and priorities.
I’ve seen companies where billing workflows have 5+ manual steps, departments function completely in isolation, not sharing data, and yet Sales has a Lamborghini tech stack with all the toys and automation they could wish for to make the reps' lives as easy as possible.
While Support, Success, and Finance teams scramble to duct-tape the business together, leadership can’t figure out why their massive investment into Rev Ops is not paying off in efficiencies across the business.
Basically, the reason is that when it comes to revenue, there are many stakeholders: Finance, Customer success, and even product teams are all managing processes and workflows that connect to the commercial activity of the business.
Investment and focus must be balanced based on the needs of the business as a whole to ensure energy is spent optimizing the parts of the business that will have the greatest impact. If Sales/Revenue Operations reports into Sales, it could fail to evolve beyond focusing on the quote-to-close stage of the customer lifecycle. This is, after all, the biggest stress and focus of any Sales Leader: making quota and closing deals.
A revenue or sales operations function that reports into a central operations leader (or even the CEO if it’s early enough) will ensure that resources are deployed where the impact is greatest.
When it comes to Sales Ops, there is far less alignment of opinion. Often it will boil down to risk management from a finance perspective in prioritizing the management of accurate bookings and contract data.
Ultimately there is a division of accountability that is best practice in finance. Having a Sales team holding the keys to the system that calculates their commissions could hold risk, but ultimately that is a judgment call for leadership. In many small businesses having Sales Ops report to Sales leadership just makes the most practical sense.
Are you ready for a revenue operations function?
First off, if you are working in SaaS and have a few hundred paying customers, it is worth it to prioritize getting this function launched ASAP. Chances are you won’t have the resources to hire individual Sales Ops, Marketing Ops, Support Ops, or CS Ops employees.
A well rounded RevOps leader can help prioritize the areas that need to be focused on first and get that CRM launched and configured appropriately to fit the needs of the business.
Assuming you're not in SaaS though, here’s a handy checklist to help you decide if you need to make that first rev ops hire. You're ready to start a revenue operations function when your company has:
1. A product or service with proven market demand (i.e. you are not an early stage startup)
2. A marketing process that collects data from prospective customers
3. A defined sales process with documented procedures
4. A customer account management process (subscriptions or recurring commercial relationship)
5. Enough financial resources to sustain a revenue operations function and invest in automating processes
If you can check all of these boxes, then congratulations – it's time to start building out your revenue operations function! Just make sure you have a solid plan in place to hire someone with the appropriate industry experience, and be prepared to allow them to iterate and adapt as they learn what works best for your company.
There's a lot of confusion about the difference between revenue operations and sales operations, but understanding what they are can help you decide what hires to make and how to structure your company.
Revenue operations is responsible for managing everything related to commercial activity in a company, while sales operations is simply responsible for selling products or services to customers. As technology becomes a central part of every business’s operations, the need for a holistic approach to revenue operations only increases.
Eventually, every industry will opt for building a Rev Ops function by default, and Sales Ops will likely just be a sub-team within this function. The only real consideration in my opinion, is the size of your business