Understanding your business’s revenue isn’t as simple as knowing the total amount you generated in a month or a year. That revenue is generated from different sources and tactics.
In order to grow your business, you need to not just know how your overall revenue is doing but also what’s causing it to perform that way — which is the goal of revenue intelligence.
What is Revenue Intelligence?
“Revenue intelligence is about understanding the motion and mechanics of the way your revenue works and how it drives your growth,” says Mike Redbord, the Senior Vice President of Operations at SaaSWorks. “In any business, there are various puts and takes on the balance sheet of your revenue. If you’re selling consumer packaged goods, you sold more this month, less last month and at a certain margin. In a subscription business, you have all that, plus the element of time.”
Revenue comes through upsells, cross-sells, renewals and net-new acquisitions. How you define those areas will be specific to your company and offerings, but those elements determine how your total business revenue will change.
Revenue intelligence is the study of the elements that make up your revenue in order to understand how they’re impacting it over time and make changes to drive growth.
How to Get Started with Revenue Intelligence
The first step of revenue intelligence is taking your overall revenue and breaking it down into its constituent parts.
What portion of your net revenue came from acquisition, churn, upsell and downsell? How does the revenue from each area compare to the revenue in those areas during previous timeframes?
“Once you can start to understand the motions of what’s going on inside your revenue, the natural next question is ‘where’s the leverage?’. If I want to grow faster and build a better business, what do I do?” Mike says.
Once you know what’s changed, you need to look into why it changed. Segmentation can help you get actionable insights about your revenue.
For example, if your revenue decreased because your churn went up significantly, look at all the companies that have churned in your designated time period and divide them into segments to identify commonalities. Maybe your churn increase all came from a specific product or industry. Then you know where the issue is so you can go about addressing it.
If your revenue increased, you can apply the same mentality to determine ways to replicate your success. Start by identifying where growth came from. Was it acquisition, upsell or cross-sell? If you acquired more customers than normal in a month, what enabled you to do that? Did you just finish onboarding a new sales rep? Did you start a referral program? Did you try out a new targeted marketing campaign?
The Challenges of Revenue Intelligence
1. Getting your business organized
Sourcing and organizing your data is a fundamental but often daunting task that even the best, most sophisticated companies struggle with.
The necessary data can be spread across your CRM, payment processor, subscription manager, legacy systems and more. It can take weeks at the end of each month to gather data from multiple systems and then compile it into a single place.
2. You need qualitative data to act
Gathering and organizing data is just the starting point. In order to optimize your revenue, you can’t just identify a problem or area of opportunity. You need insights to know how to act.
“When you look at your upgrade revenue, for example, it’s really important to understand where it’s coming from and why it’s happening,” Mike says. “The ‘where’ is going to be a graph. The ‘why’ is going to be looking through notes, listening to customer calls and talking to your frontline team to get the richness of the customer experience into the head of the person looking at the chart.”
Data doesn’t give you a single opportunity to act upon but rather reveals the paths you can take — but you need to decide what to pursue. Qualitative information will help you take actions that’ll ultimately make an impact.
3. Making the process repeatable
How can you build a repeatable process to consistently re-evaluate your revenue’s behavior?
For revenue intelligence to truly impact your company’s bottom line, it can’t be just a one-time project. You’re constantly producing revenue data, and it’s important to ensure that it’s continuously being organized and analyzed.
Your revenue mechanics will continue to change as your company scales, so the things you learned one month might not be true the next and the best actions you can take will shift too.
Why Revenue Intelligence Matters
“If you haven’t optimized the performance of your revenue, you’re leaving opportunities for growth on the table,” Mike says. “You need to manage your scale and growth in a way that is effective, repeatable and data-driven. To me, the only way to do that is to know the movement of your revenue inside and out.”
You need to understand how your revenue is acting in order to inform your business growth. Revenue intelligence will help you invest more in areas that will lead to success and reduce the effort you’re spending on areas that won’t pay off.
Quinn is a writer and copyeditor whose work ranges from journalism to travel writing to inbound marketing content.