A couple of weeks ago, Marketo announced its research-based belief that its form of revenue performance management (RPM) could help grow global GDP by US$2.5 trillion by 2015. I love it when emerging companies talk about big plans this way. It reminds me of the young plumber who upon seeing Niagara Falls for the first time says, “I think I can fix it!”
But there’s something to this proposal that ought to be taken seriously, and when you talk about trillions of dollars, you are presumably talking seriously. Global GDP in 2011 is predicted at $68.65 trillion by the International Monetary Fund, and the Marketo announced figure was spread over three years. But that’s a lot of improvement, no matter.
How Do You Figure?
To put this into perspective you have to back up and ask about the assumptions involved, and Marketo was kind enough to anticipate the questions and perform a little research. According to the announcement, Marketo did some analysis of its customers’ revenues as they took advantage of the company’s marketing automation, sales effectiveness and analytics tools.
Side note: No one’s crown jewels were harmed in the analysis. Having a big pile of relatively hom*ogeneous data for analysis is a side benefit of multi-tenant cloud computing. Multi-tenant cloud computing could provide important analytic benefits like this to all users if we could only 1) Put down some ground rules governing the use of the aforementioned crown jewels, thus creating a data commons; and 2) Get over our hang-ups about maintaining the pristine nature of our data in clouds. Really, it’s like the five year-old who can’t stand seeing the peas touching the mashers on the plate. But I digress.
ADVERTIsem*nT
The three tools — marketing automation, sales effectiveness and analytics — combine to provide the tools a company needs to implement revenue performance management strategies. RPM is still a relatively new idea, but other companies like Eloqua (with whom Marketo competes) and Cloud 9 Analytics (a Marketo stable mate in venture capitalist Bruce Cleveland’s menagerie) are conspiring to give the idea critical mass.
In the nub, RPM is simply about using the data that is routinely given off by our business processes as fodder for the analytics engine. Too often the data goes unused or simple reporting engines choke on the abundance. But an analytics engine spits out all kinds of ideas, like what to offer the customer based on its experience, or generally offering insight that a human eye might miss but which a statistical model would discover easily.
Stunning ROI
So, two and a half trillion bucks over three years averages out to a bit more than 1 percent a year. In percentage terms, that is not much, but the existence of all the zeros in a trillion will get your attention. After all, that’s growth, and incremental improvements like this are how markets and economies grow.
More importantly, the ROI can be stunning. Given the fact that RPM would not be applied evenly across big corporations and lemonade stands, the places where it would make a difference would notice the change. Moreover, the cost of implementing ROI where it’s needed would be much less than the incremental gains, especially with modern cloud computing delivering the tools cost-effectively.
I am not an expert on RPM yet. I am more like the one-eyed man in the land of the blind. But my thought is that we ought to get familiar with this idea, which is essentially applied analytics. Our economy is still climbing out of the recession, and the jobs numbers that I have seen for May are disappointing. Every recession ends with some new product or idea taking off and leading the way. I haven’t seen the big new idea yet, but maybe this is it. Regardless, a little investigation won’t cost anything.
FAQs
In this blog, we look at some key strategies and best practices that may help your company realize the full potential of Revenue Performance Management, keeping in mind the main pillars of Revenue Operations: Insights, Enablement, Operations, and Technology.
What are the three pillars of revenue? ›
Revenue operations is the combination of people, processes, and technology that ensures an organization can generate and recognize revenue. The three pillars of revenue operations are process, platform, and people.
What are the three pillars of RevOps? ›
RevOps is founded around three pillars: Process, Platform, and People. Each pillar is a foundational building block that the next pillar is built upon. Only when you have each pillar properly defined can you achieve focus, clarity, and accountability throughout your organization.
What are 3 strategies that you would use to manage and control revenue? ›
9 Revenue Management Strategies
- Understand Your Market. ...
- Segmentation and Price Optimization. ...
- Work Closely With Other Departments. ...
- Forecasting Strategies. ...
- Embrace Search Engine Optimisation. ...
- Choose the Right Pricing Strategy. ...
- Incentives For Direct Bookings. ...
- Focus on Mobile Optimisation.
Revenue performance management (RPM) allows a company to tailor their sales and marketing efforts to specific target personas. Revenue performance management uses data to find flaws in lead generation. This process strives to find ways to improve how prospects are led down the sales funnel.
What is the three pillar strategy? ›
The three pillar strategy is a framework that businesses use to achieve long-term success. This approach involves focusing on three key areas: people, process, and technology. By addressing all three pillars in a balanced way, companies can create sustainable growth and competitive advantage.
What are the 3 pillars of running a business that operates smoothly? ›
It comes down to three main components: Business foundations, strategy and culture.
What are the key pillars of revenue management? ›
What are the strategic pillars of revenue management? The three pillars of an effective revenue management system are analytics, marketing automation, and sales effectiveness.
What are the four pillars of revenue? ›
These four pillars are the cornerstone of every business. Marketing, Sales Process, Business Plan, and Customer Service combine to drive both revenue and profits in every business.
What are the 4 pillars of RevOps? ›
Summary. Revenue Operations was created as a way to break down the silos between Marketing, Sales, and Customer Success. This can be accomplished by following the four pillars of RevOps: Technology, Data, Process, and People.
Strategies to increase sales revenue
- increasing your prices.
- finding new customers.
- selling more to existing customers.
- offering sale promotions to boost the volume of sales.
- developing new product or service lines.
- selling in new markets.
In revenue management, the major functional components for its application are: (1) market segmentation, (2) inventory pooling, (3) demand forecasting and supply forecasting, (4) overbooking's control, (5) revenue mix controls, (6) exception processing and (7) performance measurement.
What are the major steps in revenue management? ›
The Revenue Management Cycle (RMC) is a five-step guide that simplifies the revenue management process. It consists of: competitive analysis, forecasting, pricing, inventory control and performance review.
What is the key performance indicator for revenue? ›
Revenue Growth is a KPI used to measure how sales are increasing or decreasing over time. It is calculated by dividing revenue generated during one time period by the revenue generated during a subsequent time period, subtracting 1, and then multiplying by 100 to obtain a percentage.
What are the five core factors of revenue management? ›
Dynamic Factors in Revenue Management
- Revenue Management Pricing. The most obvious factor in revenue management is the price. ...
- Inventory Revenue Management Systems. ...
- Revenue Marketing Strategies and Opportunities. ...
- Sales Channels and Revenue Pricing.
Revenue performance is usually measured by looking at the total amount of money that a company or organization brings in from sales and then subtracting the cost of goods sold and other expenses.
What are the 3 primary sources of revenue for the US government? ›
The three main sources of federal tax revenue are individual income taxes, payroll taxes, and corporate income taxes. Other sources of tax revenue include excise taxes, the estate tax, and other taxes and fees.
What are the components of revenue? ›
The main component of revenue is the quantity sold multiplied by the price. For a service company, this is the number of service hours multiplied by the billable service rate. For a retailer, this is the number of goods sold multiplied by the sales price.
