The Necessity of Revenue Performance Management

Ventana Research was the first market research firm to focus on the emerging area of sales performance management (SPM), which we define as a coordinated set of sales-related activities, processes and systems that enable organization. Over the past decade, SPM has become more science than art. Properly managing a sales organization requires effective planning, which in turn requires key performance and sales indicators built on a foundation of relevant metrics. But this is changing. As more organizations embrace the subscription business model and engage with additional selling channels over and above direct sales, the concept of the primacy of new sales is transforming to a more holistic view of revenue.

The sales department in many organizations is being superseded by the overall revenue-focused part of the organization, a super-set of traditional sales functions that includes not only gaining new customers, but also an increased focus on existing customer retention as well as expansion and cross sell aimed at/to existing customers. In addition, as organizations embrace additional sales channels, whether through more typical indirect sales through partners or via new digital selling channels like commerce, true revenue management will require an enhanced degree of alignment and coordination across different teams within the organizations. The economics of multichannel selling and newer business models require the need to expand focus and resources beyond new business. This will impact not just sales teams but also marketing, partner management and customer service. This is referred to as Revenue Management.

To achieve these aims, leadership and planning will be key. Any time an organization transitions to a new process, there will be resistance, missteps and potential disruption. A key step that needs to be taken is both a change in the approach of strategic leadership and in the planning, monitoring and real time adjustments via operation teams. As long as there is a shared common purpose and alignment, and standard ways to set targets and measure achievement, it does not really matter as to whether these are separate teams or unified under what is often referred to as Revenue Operations.

Delivering this is no easy task. Revenue organizations must manage toward performance demands and ensure consistent results every quarter and month in and month out. However, many revenue leaders struggle to implement processes that support overall strategy and growth, and efforts to optimize both sales talent and selling experience frequently fall short.

The next generation of revenue and sales leaders are embracing the need to focus on creating processes to generate and project predictable revenues. Revenue Performance Management (RPM) is a coordinated set of revenue-generating and related activities, processes and systems that enable organizations to plan, execute, monitor and adjust in real time to achieve customer, product and revenue targets. Our research finds that organizations that make smart investments in resources and applications have more effective revenue organizations and more predictable revenue flows. These are also the organizations that understand that misplaced expectations around sales force automation and CRM systems have led to an overdependency on reports and dashboards that summarize past performance and, in the absence of dedicated applications, a reliance on spreadsheets to plan for the future.

The modern organization requirements for an RPM approach supported by technology needs not only to address compensation, quotas, territories, and accounts, but also to plan the resources needed by the organization to achieve the expected performance. Also needed are pipeline analytics, coaching and guidance, revenue forecasting and performance metrics to support an effective feedback loop that allows for continuous planning adjustments in response to actual market conditions and target attainment. This broadened approach to planning and execution makes it possible to embrace a more strategic approach to recruiting talent, ensuring effective on-boarding and achieving targets. As part of this new imperative, applications supporting RPM also help organizations broaden the scope to all those who are involved with revenue-generating activities including marketing and customer service and success, as well as account management, partner management and business development.

In an effort to gain an edge in selling and customer retention, more organizations are looking to make use of intelligent applications that incorporate artificial intelligence and machine learning (AI/ML); for example, those that use performance metrics to provide guidance on planning, forecasting and “next best action.” Organizations must address their lack of analytics-based benchmarks using external as well as internal data to guide planning and execution. They also must provide effective collaborative tools to connect team members so they can immediately address critical performance issues and resolve questions. And in the evolving social climate of the workplace, business, HR and sales leaders must ensure equitable revenue compensation plans and deliver on the promise of a more diverse and inclusive workforce.

Our Benchmark Research into the area of Revenue Performance Management (RPM) is designed to elicit changing trends in how technology is being deployed to drive execution, predictability and transparency. You are welcome to participate in this research and learn more about our methodology and large body of research on sales and revenue including Digital Commerce, Price and Revenue Management, Sales Enablement, Sales Performance Management, Subscription Management and Partner Management.

Regards,

Stephen Hurrell