As organizations shift focus to a broader definition of sales that includes all sources of revenue, vendors are also pivoting to include “revenue” as part of promotional messaging. But it’s my view that just changing your message or description does not necessarily deliver the capabilities and product experiences customers need to successfully plan, execute and achieve revenue targets and objectives. The just-completed 2022 Ventana Research Value Index for Revenue Performance Management addressed this shift, focusing on available product capabilities that support customer needs as well as their overall experience.
In many organizations, the sales department is superseded by revenue teams supporting a super-set of traditional sales functions. This includes not only those involved in gaining new customers, but also those with an increased focus on retention, expansion and cross-sell aimed at existing customers. As organizations embrace additional sales channels — whether more typical indirect sales through partners or new digital selling channels like e-commerce — revenue management requires an enhanced degree of alignment and coordination. The economics of multichannel selling and newer business models require expanded focus and resources beyond new business. This will impact not just sales teams but also marketing, partner management and customer service.
Leadership and planning are key to achieving these goals. Resistance, missteps and potential disruption inevitably follow any organizational transition to new methods and processes. A new approach by strategic leadership — and in the planning, monitoring and real-time adjustments of sales or revenue operation teams — is essential. Revenue-driven organizations must manage operations with performance demands in mind, and ensure consistent results every quarter. Revenue leaders need to implement processes that support overall strategy and growth, and optimize both sales talent and the selling experience needed to achieve expectations.
The next generation of revenue and sales leaders are embracing processes that project and generate predictable revenues. Revenue performance management is a coordinated set of revenue-generating activities, processes and systems that enable organizations to plan, execute, monitor and adjust in real time to achieve customer, product and revenue targets. In every organization, the imperative is to maximize outcomes from all revenue channels and departments face many challenges. Key revenue responsibilities that generate new business and client relationships, retain buyers through potential subscription renewals or upselling, and expand relationships with existing customers are predicated on setting up revenue efforts in an effective manner. Territories that are balanced, quotas and compensation that are aligned with corporate objectives and reliable forecasts are crucial to achieving overall goals and outcomes. But despite these requirements to be successful, we believe that by 2024 only one in 10 organizations will have embraced a unified revenue performance management approach to guide leadership and operations; those that do not will fail to reach their revenue potential.
In my view, effective management across sales and revenue operations requires well-designed and continuously optimized territories and accounts aligned with quotas designed to achieve an organization’s full revenue potential. Territories can be based not only on geographies but on a variety of alternate drivers, leading to virtual territories more aligned with current needs. This is especially important as buyers are looking for a trusted partner who can understand their business needs, not just articulate product features. Vendors can best develop this consultative expertise by having customer-facing staff aligned with an industry or function rather than accounts determined by location. Quotas need to be linked to both overall organization objectives and product and service category targets. With the advent of self-service and digital channels — and as customers engage across multiple channels for a single purchase — both quotas and territories need to ensure individuals are not penalized or disincentivized. Moreover, organizations need to know whether compensation is competitive in the market, using benchmarks to compare to others in the industry. To optimize revenue performance, organizations must be able to design and apply incentives that motivate those supporting revenue generation to reach their targets. To remain flexible and responsive to market conditions, organizations should employ the concept of continuous revenue performance monitoring, and adjust based on data-driven insights and forecasts rather than a whim and gut feeling.
Using spreadsheets to manage revenue operations and performance is ineffective and problematic when trying to achieve optimal outcomes. Spreadsheets also cannot scale as an organization grows. The use of multiple spreadsheets, often stored on users’ local computer drives, contributes to scattered information, which most organizations cite as a major impediment to managing revenue performance.
Over the past two decades, Ventana Research has conducted market research in a broad spectrum of related areas including revenue and sales performance management, sales force automation, customer relationship management, sales and revenue analytics and planning that supports revenue intelligence and operations. The Value Index for Revenue Performance Management uses the Ventana Research framework that evaluates application vendors and related products in seven categories of requirements: Five are product-related (assessing Usability, Manageability, Reliability, Capability, and Adaptability), while two quantify the customer assurance issues of Vendor Validation and Total Cost of Ownership and Return on Investment.
The 2021 Value Index report evaluates 12 vendors that offer products for revenue performance management as we define it: Anaplan, beqom, Board International, Clari, Gong.io, InsightSquared (acquired by Mediafly), Oracle, Salesforce, SAP, SugarCRM, Varicent and Xactly. We urge organizations to thoroughly evaluate vendors that support RPM, and offer this Value Index as both the results of our in-depth analysis of these vendors and as an evaluation methodology. Apply the Value Index evaluation criteria to assess existing suppliers, and to new projects for reduced request for proposal cycle time.
Unlike many IT analyst firms that rank vendors from a product feature perspective or consider futures or vision over what is available in the products today, the Ventana Research Value Index is designed to provide a balanced perspective, rooted in an understanding of how vendors and systems should be assessed, evaluated and selected —including how products are utilized across roles and adapted and managed to meet business requirements. This approach not only reduces cost and time but also minimizes the risk of making a decision that is bad for the organization. Using the Value Index will enable your organization to achieve the levels of efficiency and effectiveness needed to support RPM. The results of our analysis are reported in our 2022 Ventana Research Value Index for Revenue Performance Management and consider how each of these vendors can support the needs of your organization.
Regards,
Stephen Hurrell