The Revenue Engine Framework
Foundation is Key
If a house is not properly constructed, it will fall. The paint might be pretty, and the door might’ve been hand sanded from the finest materials, but if the foundation and overall construction is weak, or if the materials were arranged out of order (the roof can't be the foundation!), it will fall.
In the same way, if a business has a poorly constructed revenue engine framework, it will fail. The company logo might be pretty, and the website might’ve been hand crafted by the best graphic designer in the business, but if the models don't interplay correctly, or if they are arranged out of order (the tech stack can’t be the foundation!), the business will fail.
Order is Essential
A properly constructed revenue engine framework (from the top down) looks like this:
- RevOps Fundamentals
- Tech Stack
- Math Model
- Data Model
- Growth Model
- Sales GTM, Marketing GTM, Customer Success (CS) GTM
- Business Model
When these fit and work together, you have an engine on your hands that would make a Bugatti owner blush.
Your Business Model is Your Foundation
Let the revenue engine assembly begin! The foundation of any revenue engine framework is the business model. Recognizing whether your company is a perpetual ownership model, a subscription model, or a consumption model will dictate the motions and proper alignment of the remaining models.
The Next Level of the Revenue Engine Framework: GTM Motions
Sitting squarely on top of the business model are the GTMs of sales, marketing, and CS. What is a GTM motion? It’s a plan that details how an organization can engage with customers to convince them to buy their product or service and to gain a competitive advantage.
For real revenue growth to take place, these all must be aligned (i.e. your sales team and marketing team need to play nice). It is vital to understand how each of these fit and help to translate the applicable business model into a GTM model.
Keep on Stacking: The Growth Model
With the foundation (your Business Model) firmly in place and your sales, marketing, and CS GTM motions side-by-side, stacked neatly on top, the next “brick” is ready for placement. On top of the GTM motions is the Growth Model.
The Growth Model is key to a company’s expansion because it will show when you should begin doing more than one GTM motion or when it’s the right time to begin thinking about scaling. This model also clearly displays where revenue operations fits in the overall picture.
The Growth Model details the journey a company takes from the inception of a product to (potentially) scaling up into the nine figure revenue club. In total, there are four different stages:
- When a company works with prototype products and MVPs (most viable product)
Product market fit
- Ensuring the market likes your product
- This is RevOps!
- Learn how to sell the product efficiently and effectively and how to create sustainability by identifying which customers are best for you
- Benefitting from a solid go-to-Market fit which has produced a second tranche of money
- This is where a company generates growth at an accelerated rate by scaling what they have learned works
The Data Model
The steady construction of the revenue engine framework continues with the addition of the Data Model, which sits squarely on top of the Growth Model. Since this framework builds on itself, the performance of a given model is dependent on the models it is stacked upon.
A company’s chosen Business Model affects the GTM motions used, which in turn affect a company’s progress in the Growth Model. Together, these will impact the Data Model.
The Data Model is key to knowing if you’re being successful in hitting your targets and when to put your measurements (volume, conversion, time) into action.
The Math Model
The next addition to the revenue engine framework, the Math Model, sits squarely on top of the Data Model. This model helps to effectuate change, prioritize actions for RevOps professionals, and calculate revenue growth.
The math model is not a separate entity, but rather one that operates and exists within the Data Model (bowtie funnel with volume, conversion, and time metrics). Inside said Data Model, there exist several types of numbers:
- An addition to any volume metric will produce that same addition to a volume metric further down the line
- The reason for this? It’s linear.
- Instead of volume metrics, this involves conversion metrics
- If you affect one conversion ratio, it has a multiplicative (not additive) effect downstream on increasing revenue
- As you go further and further down the funnel, the margins get larger and larger.
- Compound occurs at an even greater rate
- A primary responsibility of RevOps is understanding where the compound interest lies, and, in turn, where the majority of time needs to be focused to drive growth
The tool/tech stack, which sits squarely on top of the Math Model, makes everything work.
Pro tip: If you’re not using HubSpot to consolidate your tool stack, then you’re doing it wrong.
RevOps Fundamentals (Measurement): The Cherry on Top!
The very top of the Revenue Engine Framework, RevOps Fundamentals (measurement), sits on top of the tool/tech stack and includes things such as:
- Lead scoring
- Sales process
This final addition to the framework is essential because it answers the question, “how do we measure?”
More specifically, it answers “how do we apply and start measuring inside our CRM?” These questions are vital to a company’s success because if you can't measure, you can’t iterate; if you can’t iterate, you can’t grow; if you can’t grow, your business will fail.
Not Sure Where to Begin?
That was…a lot of information.
Is your current revenue engine out of order, upside down, or even non-existent? Well, there’s bad news and good news. The bad news? Your revenue generation has probably been stunted. The good news? RevPartners is here to help! We offer RevOps as a service, and building revenue engines is our jam. When you make us your RevOps team, your engine will be the envy of all!