Unlocking the Power of RevOps: The Revenue Engine Flywheel

Unlocking the Power of RevOps: The Revenue Engine Flywheel

Unlocking the Power of RevOps: The Revenue Engine Flywheel

Unlocking the Power of RevOps: The Revenue Engine Flywheel

Revenue operations, or RevOps, has emerged as a critical strategy for driving sustainable growth and profitability in B2B organizations. With the market in downturn, the call for revenue transparency gets louder. However, as CROs look for new ways to create revenue efficiency today, there is one core problem which impedes this. Being a former CRO myself made it abundantly clear to me:

The problem is the huge gap between revenue planning and execution.

There are 4 reasons for this:

  • Revenue planning is done once a year (often in Q4) and the revenue plan is pushed top-down by investors or the CEO, but isn’t created in a realistic, bottom-up manner. The plan is based on vague assumptions and dusts in the corner, so people realize too late, that they are far behind plan.

  • Observing revenue is too siloed as marketing, sales and customer support work in their own systems. Most times planning is not done in matching granularity to observing, which is why it’s tough to see where exactly your performance is off. Issues are realized too late.

  • Revenue simulation & forecasting is mostly done with gut-feeling instead of historical data, and taking into account the revenue impact of adding team members and projects into your projections feels overwhelming. What-if scenarios are rarely built because they are hard to trust.

  • When it comes to initiating changes and improvements, it’s tough to keep an overview, measure, evaluate and prioritize actions. There is no positive reinforcement cycle for your revenue engine.

The outcome: Unreasonable hiring (and firing), overspend on the wrong activities, and most importantly, companies constantly miss their targets.

At pyne, we believe it doesn’t have to be this way.

The Revenue Engine Flywheel: An Overview

At the core of the Revenue Engine Flywheel is the idea of continuous improvement and synergy between the four modules, with each module fueling the next. By connecting and optimizing these modules, organizations can create a self-sustaining cycle that powers their revenue growth and hit their targets.

1. Plan

Revenue planning sets the stage for the entire revenue engine. However, it should be conducted in a more agile way than today - the revenue plan is similar to your product management roadmap. As RevOps you (should) work in sprints, make decisions and administer changes based on what works and what doesn’t in your revenue engine, and hold people accountable.

This means, planning must be conducted in a realistic, bottom-up way instead of accepting your investor’s or CEO’s top-down $50m ARR goal. It includes taking into account budgets, current capacities (i.e. employees), hiring plans, and projects. So you need to set comprehensive revenue goals granularly across your full funnel for each segment, geography, and product (both on a volume and on a revenue basis) and know who will execute which project leading to how much revenue impact. This lays the basis for successful revenue execution.

Having one plan that is your team is aligned on is good - however, of course the CRO should be able to make adaptions to the plan. Thus, we recommend having multiple plans based on scenarios, e.g. a best case plan 2024, optimistic plan 2024, pessimistic plan 2024 - depending on which initiatives you will be able to execute and which additional budget you need to reach your ARR goal.

2. Execute & Observe

Once the revenue plan aka roadmap is clear, you start to execute and monitor your revenue engine performance. Here it’s key to find a simple, automated way to track your revenue across the full funnel from prospect to upsell/churn, observe your cohorts, and always measure your actuals against your plan.

But revenue observation goes beyond tracking. It means analyzing and gaining insights, understanding trends, funnel issues and threats deeply through root-cause analysis, so you can act before it’s too late. It means knowing the ROI on revenue and gaining transparency and clarity. Overall, revenue observation forms the basis for making data-driven decisions to optimize your revenue strategy and reiterate your revenue engine.

3. Forecast & Simulate

Accurate revenue forecasting is essential for decision-making and allocating budget and resources precisely. The best way to forecast is to extrapolate your current funnel data into the future, and combining the results with assumptions about the impact of projects and hires. By this you can anticipate market shifts before they have spread into the depth of your engine, manage risks, and capitalize on opportunities. Here again, your leadership and finance team ideally show flexibility to invest into the right resources at the right time.

Simulation is the superpower of RevOps, but it is underutilized at the moment. A leaner way to manage your revenue organization means simulating before you act. So, after observing your revenue in step 2, simulate your initiatives to make sure you can prioritize them correctly in step 4. Building hypotheses and scenarios for your markets, products and KPIs will increase the likelihood of making sound and impactful decisions. Make sure to cover multi-dimensionality (e.g. “what if X and Y occur”) when setting up scenarios.

4. Initiate

Finally, after simulating which actions generate most revenue impact, you execute those targeted initiatives to close your performance gaps and capitalize on opportunities. We recommend the SMART framework for initiatives (Specific, Measurable, Attainable, Relevant, Time-bound) so that they are connected to a concrete outcome, and evaluating, adapting and prioritizing initiatives is straightforward. Give your go-to-market teams visibility by tracking initiatives in a calendar-based view. We also recommend evaluating the progress on a weekly basis and in your MBRs/QBRs. For accountability, assign an owner to each initiative.

If you connect all four modules, you get a holistic and powerful approach for predictable revenue growth. The outcome is an engine that learns and improves with each iteration you take - so you can finally make data-driven decisions and confidently hit your targets.

P.S. While the Revenue Engine Flywheel is the ideal state in our opinion, we haven’t seen it work that way in any company we talked to (and we’ve talked to many). So at pyne, we decided to build it. Learn more about pyne here.

Interested to learn more?

Interested to learn more?

Interested to learn more?