3 surprising ways RevOps ROI contributes to the bottom line
About a year ago, we started to incorporate ROI analysis into our customer business review process. The effort began as a way to help a customer justify expanding the use of Openprise to her CFO, but we quickly realized that ROI analysis is truly lacking in the RevOps profession. RevOps folks are smart with data and technology, but they don’t always know how to quantify their work by dollar amount to a CxO.
Why is it so hard to express effort in terms of monetary value? First, this isn’t good for a RevOps professional’s career. Failing to demonstrate impact to the bottom line doesn’t bode well when it comes time for promotion. Because the expectation for operations teams is often to simply “keep the lights on,” CxOs only notice the Ops team when something is broken. They just don’t think of Ops teams as having a positive revenue impact. So RevOps teams have a hard time getting funding for the investments they champion. It’s almost impossible to prioritize requests and projects objectively without showing some direct financial results.
That’s why RevOps teams need to do a better job demonstrating the ROI of their work in dollars and cents. As we continue to expand and refine our RevOps ROI and business value projection models, we realized three not-so-obvious ways RevOps can show its monetary value.
1. There’s a cost for everything
When evaluating whether to invest in a new RevOps technology, people often compare the potential new investments to free options, the status quo. But nothing in RevOps is free. Every process has a cost to it. However, that cost is not often obvious. Let’s illustrate this with a lead routing example.
In lead routing, you’ve got five options:
- Do it manually.
- Use the routing capabilities built into CRMs like Salesforce.
- Write custom code.
- Use a point solution designed for lead routing.
- Use a general-purpose platform that can handle lead routing.
Let’s walk through a few of these options.
Option 1. If you’re doing lead routing manually, there’s a high human cost, even though the technology cost is negligible. Manual lead routing isn’t scalable, and it’s prone to errors.
Options 2 and 3. If you use the native lead routing feature in Salesforce or write custom code from scratch, your incremental technology cost can be zero. However, the human cost of defining, configuring, and maintaining a lead routing process in Salesforce is substantial. They include:
- Salesforce admins that must spend time gathering requirements and setting up and debugging routing rules.
- The RevOps team that spend time supporting the process.
- The sales team that needs to take time to sort out leads that are routed incorrectly.
Options one and two—and sometimes three—are considered “free” options, but that can’t be further from the truth. Every business process has a cost, and that cost has three primary components:
- Human cost
- Technology cost
- Compliance cost
Of all these, the human cost is usually the most expensive. A realistic estimate of time spent supporting lead routing reveals that the “zero-cost” option can be quite expensive.
Remember, too, the cost of delaying lead follow-up. As identified by Harvard Business Review research, “Firms that tried to contact potential customers within an hour of receiving a query were nearly seven times as likely to qualify the lead […] as those that tried to contact the customer even an hour later—and more than 60 times as likely as companies that waited 24 hours or longer.” In other words, every minute counts.
By switching to a purpose-made, agile technology, you can improve your team’s efficiency in managing the lead routing process and avoid wasting time dealing with unreliable operations.
Once you realize that no RevOps process is ever free, you can make sure your ROI model accurately accounts for those costs. Weigh the options by making a real apples-to-apples comparison, and show the CxO the actual impact of RevOps.
2. Cost avoided = money saved
Once you notice that every RevOps process has a cost associated with it, you realize you have to look beyond the existing spending you replaced if you want to account for cost savings accurately. You also have to account for costs you’re avoiding.
This is often the trap when evaluating a point solution vs. a platform. Let’s continue with lead routing as an example and look at the differences in RevOps ROI for the following two scenarios:
- Last year, you used two point solutions—one for lead routing and another one for attribution. This year you replaced both of these with a platform that can handle both and ensure good data quality.
- Last year, you bought a platform to improve the quality of your data. This year, you used the same platform to handle lead routing and attribution. To address the additional uses, you didn’t need to evaluate and bring in the previously considered tools.
You would include the cost of the point solutions removed as part of the ROI for the new platform you purchased. But in Scenario 2, you wouldn’t include the cost of the point solution you didn’t have to buy in the same ROI analysis for the platform.
Cost avoidance should be part of every solution’s ROI analysis. To calculate ROI correctly, you need to ask:
- What’s the total cost avoided for a different solution to address the use, including human, technology, and compliance costs? Consider this as cost avoidance, or cost-saving, during the ROI calculation.
- What’s the incremental cost of leveraging an existing platform and team to handle the additional use case?
Suppose you consider that a platform and a point solution alternative can satisfy the use equally well. In that case, you’ll see that the additional cost of using the platform is significantly less due to lower technology license fees and minimal training and staffing costs. When assessing the labor cost for using the platform, make sure you accurately account for the incremental cost. However low it may be, it’s never zero. The new process means additional work for the team that’s managing the platform.
3. Don’t overlook the opportunity cost
In addition to comparing a solution to free options, we often add the option to “do nothing.” We tend to ignore the opportunity cost and assign a zero cost to the “do nothing” option—and that’s a mistake.
Opportunity cost has two components:
- Additional business the new solution can generate.
- Reallocating resources the new solution frees up.
Let’s illustrate this with two real-life customer examples.
Customer A is a high-growth SaaS company. They grew so fast and their routing scheme became so complicated that they were having trouble finding an out-of-box lead routing solution to fit their needs. Instead of writing their own code, this company decided to do it manually, using offshore resources. It would take 40 hours to route a single lead to a sales rep. When they switched to Openprise, Customer A could customize and automate their lead routing processes, and they reduced the routing time to five minutes. They realized two significant opportunity costs:
- They could reallocate the offshore team from full-time manual routing to working on higher-value initiatives.
- The sales team could get new leads 320 times faster than before, and they started converting leads at a much higher rate.
Unlike many companies, Customer B only allows a few RevOps power users to access their Marketo system. As a result, the RevOps team needed to provide manual services to the sales and marketing team. That meant that RevOps had to load prospect lists from the demand gen team and content syndication partners, and they were then expected to pull campaign performance metrics for the campaign team.
The Marketo admin estimated that each team member spent 12-18 hours a week performing these manual duties. By automating and transforming these tasks into self-service applications using Openprise, they realized these opportunity cost savings:
- The Marketo admin team now has more time to work on new initiatives that have been on the roadmap for years.
- The sales and demand gen teams can now serve themselves and get results much faster—so they, too, shorten the time to execute campaigns.
For either of these customers, the opportunity costs did more than justify the costs of multi-functional technology. They were able to capture additional possibilities and value for the company.
Building an ROI model or business value proposition doesn’t come naturally to most RevOps professionals. However, it’s a skill you should develop so you can:
- Better quantify personal and team achievements to senior management.
- Make a business case to get the investment you need to advance your RevOps roadmap and vision.
- Have a quantifiable framework to help evaluate options and priorities.
Want to see how these RevOps ROI models work in the wild? Contact your Openprise account manager.