Joel Arnold is the VP Revenue Operations Strategy at Union Square Consulting.
The ROI of RevOps hinges on one critical thing:
Visibility into where you’re leaking revenue.
Every single organization will inevitably deal with revenue leakage. Any time there’s an optimal solution and you’re not achieving an optimal outcome, the difference between the solution and the outcome is lost revenue.
And if you don’t have someone strategically tending to every moving part of your revenue process, you’ll likely never know where you’re losing money from – or by how much.
Since leaks can happen throughout your entire revenue engine, the topic is vast. It would take a catalog of content (something we’re working on here at USC) to go over every revenue leak we’ve seen.
Instead, here are three of the most common leaks we regularly find in B2B SaaS businesses between $1M-$30M ARR.
Customer Success can be an incredibly leaky department, simply because they’re almost always under-resourced while having the weight of renewals on their shoulders. With CS teams so overwhelmed, they don’t have the time to make contact with all of their accounts.
For businesses that rely on recurring revenue, this is a big issue.
We’ve seen companies give their CS people books of hundreds of customers to care for. The same thing happens every time: CS focuses on putting out fires for the responsive accounts and the quiet ones get put on the backburner.
Unfortunately, it’s usually those quiet customers who are most likely to churn, and no one notices until it’s too late.
This is lost revenue that could be prevented with proper capacity planning, so that Customer Success isn’t forced into neglecting hundreds of accounts.
Step One: List out all of the things you expect a CS person to do with each and every customer in order to maximize their success with your product.
Another way of saying this is; what are all the things we expect from CS people that will have an impact on retention and growth?
This list should include:
I expect most people will be amazed at the number of these items. Add in an expected prep/execute/follow-up for each item and suddenly there’s a lot to do.
Step Two: Map the time required to complete all of these tasks for each customer to the number of working hours in a year for a CS person. Working hours should also take into account internal meetings and administrative tasks such as sending emails, filing internal reports, etc.
Step Three: Et voila – you have a capacity in terms of the number of accounts a CS person can effectively manage.
Step Four: Compare this capacity to the number of accounts your CS people are currently working. You’re likely going to discover that you’re due for some hiring.
I’ve found that this exercise is always an “Aha!” moment for leadership.
They suddenly realize how understaffed the most important role in the revenue team is.
Unfortunately, as other executives and the board get involved, CS is the first place where cuts are made. Stick to your guns here and you’ll be rewarded with a high-performing, high-retention business… the bedrock of any SaaS company’s success.
Are your SDRs and salespeople updating the CRM accurately, consistently, and uniformly for every single opportunity? Are there processes in place for advancing opportunities, updating information, and closing out opportunities?
If the answer is “no” or you’re unsure, you’re more than likely losing money due to poor pipeline management.
A disorganized CRM can be the root cause of multiple revenue leaks, such as:
Reps wasting time on deals that will never close
Reps losing deals because they lacked needed information
Inaccurate data that shows bloated win rates, masking problems
Fixing these problems comes down to awareness. Preventing them comes down to process.
First, ensure your sales process is baked into your CRM and that your salespeople are following it (and your overall sales best practices). For example, the sales stages in your CRM should align with the stages of your process, providing reps with both checkpoints and guardrails to keep their data and their activities consistent.
Second, watch out for opportunities that are showing red flags such as:
If a sales manager discovers a red flag, they should work with the sales rep to help either push things along or make the decision to close it out and move on.
Continuing to push dead-end opportunities like these out the next quarter leads to what we like to call, “Zombie Pipeline.” We wrote a whole article on this issue and trust us when we say, it’s not a problem you want to have!
This is an incredibly common problem and it’s an easy one for companies to fall into.
A lot of the time, marketing teams are given an MQL quota and not much else to go on. Even if they have a clear definition of their ICP and a segment and channel to target (many companies don’t even have this), there usually aren’t clear criteria for what counts as an MQL. Or enforcement of that criteria if it does exist.
Lines tend to get more blurry when the quota is high and Marketing is under pressure.
This leads to a domino-effect of problems such as:
Between marketing budget, payroll hours, and discounts, the customers that do come from this usually end up costing the company money.
Increasing the quality of MQLs so that they lead back to revenue is the first step in solving this waterfall of problems.
Having MQLs that “lead back to revenue” means:
Marketing and Sales should have an open path of communication, so that Sales can inform them of what kinds of leads turn into customers. This is largely going to be different from industry to industry and from business to business.
To get you started, here are some universal boxes that every MQL should tick:
The last box often gets overlooked – don’t do that!
If for whatever reason you must target leads that don’t have the authority to start a sales conversation, the CTA should be related to an action that gets your company noticed higher up on the totem pole.
If you’re interested in learning more about some of the topics brought up in this article, here’s a list of relevant past newsletters we’ve written at Union Square Consulting.
Make Customer Success Your Golden Goose: A deeper look at the importance of CS.
Generative AI Part Three: Customer Success: A look at how AI can relieve the pressure on CS capacity planning.
Zombie Pipeline: How it decimates your ability to see your pipeline and how to fix it.
The Consequences of Undefined Metrics: In case you were thinking to yourself “We don’t have a defined ICP…”