5 Essential Revenue Operation Metrics for Sales and Marketing

Your revenue operations (RevOps) are essential to hitting your revenue goals. 

Without them, there’s no clear way to diagnose and optimize the performance of your sales and marketing efforts.

In a sense, they’re like vital signs but for your company. They track metrics to measure its health and allow you to diagnose your performance, pinpoint problems, and even identify opportunities with them. 

I’m not the only one who’s caught on to this reality.

Gartner estimates that 75% of the highest-growth companies in the world will develop a RevOps model by 2025 due to its impact on revenue growth, which makes sense. 

Today, companies feel more pressure to be transparent and produce efficient and predictable growth. And this is where RevOps comes into play. 

At first, RevOps may feel overwhelming. There are 100s of metrics you can track. Some of these metrics can lead to insights to unlock opportunities. Others will uncover problems you will need to solve. Meanwhile, others may be a complete waste of time. 

So, what metrics should you focus on? 

What you should track will vary case-by-case. But in this post, I’ll share what I find helpful in monitoring the health of my team’s performance and our company’s revenue. 

I’ll cover:

What exactly is RevOps?

Revenue Operations (RevOps) is a strategy to unify your sales, marketing, and customer success teams, drive predictable revenue, and accelerate your company’s growth. It touches data, systems, and processes, and requires collaboration and transparency between these teams. 

Together, these teams assess customer data to identify vital indicators regarding the health of the sales and marketing operations of the business, pinpoint any problem areas, and identify opportunities for growth.

So you’ve built the RevOps team and have everyone you need ready to launch. But what’s your actual strategy?  Everyone has eyes everywhere, and there are hundreds of metrics to track, but which are the most important?

5 essential revenue operation metrics

As I mentioned earlier, there are hundreds of metrics to track, so this is where precision is key. Remember, you’re tracking metrics because you can. These metrics need to be actionable.  

When your team focuses on monitoring the right metrics, you will improve your company’s revenue operations and grow your bottom line. 

What are the right metrics? 

Though this varies by the organization, I find the following revenue operations metrics essential: 

1. Speed to lead
2. Lead pickup rate
3. Lead to opportunity rate
4. Pipeline velocity
5. Net revenue retention

Let’s explore these more in-depth.

1. Speed to lead

Your speed to lead is the average amount of time it takes for your business to respond to new leads. 

This revenue operations metric indicates the effectiveness of data flow from marketing to sales. It measures when someone becomes an inbound lead and a qualified prospect intending to buy.

This step is crucial in the conversion process of a lead. 

Data shows that organizations who respond to a lead within the first hour are seven times more likely to qualify the prospect than organizations who wait two hours. The longer you wait, the less likely that lead will continue down the sales journey. 

While it’s always best to respond to leads as soon as possible, here are some benchmarks for reference: 

• Healthcare: 2 hours and 5 minutes
• Telecommunications: 16 minutes
• Small Companies (1-300 employees): 48 minutes
• Medium Companies (301-2500 employees): 1 hour and 38 minutes
• Large companies (2501+ employees): 1 hour and 28 minutes

Monitoring this metric is one thing.

Managing it is another.

For managing your company’s speed to lead and ensuring your marketing and sales teams work well together, a service level agreement (SLA) comes in handy. In this document, you can spell out expectations about speed to lead and more.

If your team is struggling to follow up with leads, here are some questions to ask:

• Do you have routing and lead assignments set up correctly? 
• Are reps getting real-time notifications when leads come in? 
• Do you have accurate, fresh, and complete data on the leads?

2. Lead pickup rate

The lead pickup rate measures the percentage of qualified leads contacted and “picked up” by a sales representative. In short, you don’t want to leave your leads hanging. This is bad for closing new deals. 

For example, studies show that sales teams who respond to leads within 5 minutes are 100x times more likely to convert the lead. This is your insight into the collaboration between sales and marketing, as this rate indicates how effective a sales team is when engaging a new lead.

Practically speaking, if your company generates 100 leads and can successfully contact 90 of them, the lead pickup rate would be 90%. 

Because these leads have already been qualified as having an intent to buy, this rate is typically higher than the Speed to Lead rate. 

If you need to improve your lead pickup rate, ask yourself:

• Do sales and marketing both agree on what a qualified lead looks like?
• Do you have the process and tools to enable reps to work leads? 
• Do reps have contextual information about the lead to follow up appropriately?

3. Lead to opportunity

The lead to opportunity rate is the percentage of leads that convert to opportunities.

In other words, these are prospects with a high chance of closing. 

This data showcases the effectiveness of sales reps in moving deals forward and should be optimized constantly. 

To calculate this, divide the leads converted into opportunities by the total leads. So, if you had 100 leads and 40 converted to opportunities, your conversion rate would be 40%. 

Though this varies by industry, the benchmark is a 13% conversion from lead to opportunity. 

If your lead to opportunity rate isn’t where you’d like it to be, ask yourself:

• What are the campaigns and channels that lead to a lead conversation (stage attribution)?
• Do you have effective lead nurturing programs to warm leads that are not yet ready to buy?
• Are competitive factors or market factors influencing the lead to opportunity conversion rate?
• Are reps trained and enabled to have good discovery and qualifications meetings? 
• Are there other incentives that might dissuade a rep from converting leads?

4. Pipeline velocity

Go-to-market teams use pipeline velocity to measure how quickly deals move through the sales cycle.  It’s essential to have accurate data in each stage of your sales pipeline to identify when a lead becomes an opportunity and when it closes. 

Automation is another key player here, as it helps to streamline this process and enhance overall efficiency. According to a McKinsey Report, early adopters of pipeline automation reported efficiency gains of 10%-15% and sales growth of up to 10%. 

To calculate this, divide the total value of closed deals in a given period by the number of days it took to close the deals. That is your pipeline velocity. 

To improve your pipeline velocity, ask the following:

• Do you have the right tools, processes, and SLAs in place? 
• What stage are most opportunities getting stuck at? 
• What other factors might be influencing velocity (e.g., larger deals, more products)? 
• What segments are you having the most success with? How about the most trouble with?

5. Net revenue retention

Finally, net revenue retention tracks total revenue minus revenue churn. 

This data indicates customer health and data flow between sales and customer success.

A high net revenue retention rate indicates long-term profitability and sustainability (though many factors come into play). Focusing on improving this rate will increase customer lifetime value and drive overall revenue growth. 

To calculate, take the total revenue (which includes new and existing customers and upsells) and subtract revenue churn (cancellations, downgrades, or contract expirations). 

In 2022, the net revenue retention rate (NRR) was benchmarked at 102% (this rate included successful cross-selling and upselling, which masked churn and allowed it to exceed 100%). 

If you want to improve your NRR, here are some questions to ask:

• Are there any common characteristics or patterns among customers that churn? How about customers that expand? 
• Are you effectively identifying upsell and cross-sell opportunities within your existing customer base?
• How effective is CMS at engaging with and retaining customers?
• What feedback are you getting from NPS, CSAT, and QBRs?

Conclusion

So there they are, my five essential revenue operation metrics for your RevOps team to be successful. 

At its core, RevOps strategically tracks the customer’s journey from inception to completion and uses this data to enhance their experience and improve retention. 

With the right RevOps team, you’re given insights that would otherwise be inaccessible in siloed environments and team alignment on company goals and efficient methods to achieve those goals. 

But remember, the key to this is tracking the right metrics along the way.