Building Your RevOps Function: In-house vs. Outsourced vs. Hybrid

This (long) article is for B2B executives and revenue leaders at early/growth stage companies.

You know you have operational friction, gaps, and weaknesses on the Go-to-Market side.

You've heard "RevOps" is the magic bullet.

But, you're either skeptical or you're not sure exactly where to start.

Read on...we wrote this for you.

Top Responsibilities of RevOps

Let's start with - what is RevOps? RevOps is the people, processes, and technology that are required to make the sales, marketing and success functions more effective than they otherwise would be.

Though it’s not specifically a go-to-market function itself, it’s more like the go-to-market back office

You might think of RevOps as the 4th leg of the "Go-to-Market stool" with the other 3 legs being sales, marketing and success.

What is Required for RevOps to Add Real Tangible Value for B2B Companies in Growth Mode?

For B2B companies in growth mode there are really two core requirements for RevOps “Done Right”.

1. The first is to implement and maintain tools and tech that make the jobs of the sellers, marketers and support staff easier and to train those people to properly use the tools.  This is important, but tactical.
2. The second core requirement of RevOps in growth mode companies is to own the Go-to-Market data and insights that provides the senior revenue leaders with the insights they need to optimize the go-to-market engine and manage it with science-like precision. This requirement is what makes RevOps a strategically important function.

Unfortunately these two critical requirements of RevOps demand uniquely different skill sets which don’t reside in the same person.

So note #1 to growth stage CEOs, CROs and CFOs…if you want to do RevOps right, you can't do that with one person.

Requirement #1: Implement and Maintain the Tools and Tech

Modern selling and marketing demands you spend a significant amount on "Rev Tech" to enable sellers and marketers.

It's the job of RevOps to maximize the business impact and realize the promise of all that tech that you buy...so it's not wasted spend.

This involves things like CRMs, marketing automation platforms, ticketing systems, cadence tools and so on.  This is the first area we see early and growth stage companies often miss the mark.

They typically start buying tools as a Seed stage company, but don’t have a good appreciation for the complexity of the tools when they purchase them. As a result we usually see the first sales leader implementing the CRM, the first marketing leader implementing the marketing automation platform and so on.

The problem is this is not where these folks’ expertise lies. They are amateurs when it comes to the tech and it shows.  More times than not the tech adds friction to the go-to-market motion rather than accelerating it.  And that’s because the tech isn’t configured in an optimal fashion to match the company’s selling process.

At some point, you’ll often see these companies hire or promote a junior level person to be a dedicated resource administering the tech stack.  This just perpetuates the problems of having amateurs maintaining sophisticated technology.

What talent is needed?

To get this stuff initially set-up properly you need what we refer to as a GTM tech stack architect.

These people have 7-10 years experience and have gone through multiple cycles of implementing multiple types of tools, with each of these experiences moving them further down the learning curve.  They know how to seamlessly integrate disparate tools so the data is synchronized and consistent rather than siloed and contradictory.  They know how to exploit every bell and whistle so the tools really do live up to their promise and accelerate the effectiveness of sellers and marketers.  To have this unique combination of breadth and depth of experience these people have typically cut their teeth as one person shops in early, but high growth start-ups.  But these people are very hard to find and when you do, they are very expensive demanding up to $200k/year base.

Once you are past initial implementation and go into maintenance mode, you’ll want to use lesser skilled and lower paid GTM tech stack admins to deal with the everyday administrative tasks such as adding/deleting users, crafting reports and dashboards, supporting sales teams with their quoting systems etc.

Without this resource, the architect will constantly be in firefighting mode and unavailable to work on the strategically important stuff which may include things like implementing CPQ systems, customer data platforms or integrations between CRMs and product platforms.  These lesser skilled people will typically have 2-3 years experience and most often limited to a single type of tool, like a CRM or a marketing automation platform.  In addition to the skills required, depending on the complexity of the environment it might be helpful to leverage change management and change monitoring tools, particularly where multiple people have admin rights.

There is no point in having these tools if the sellers, marketers and account managers don’t know how to properly use them, so an important aspect of ongoing management of the tech stack is what we call enablement, which is really just a fancy word for continuous training of the users so they can fully exploit the value of the tech that has been purchased.  In companies that are growing their sales or CS staffs by a handful of folks each year, the enablement function can be handled by the admins.  If you’re growing faster than that you will want a dedicated enablement person that can really focus on building optimal techniques and repeatable processes to accelerate onboarding and ongoing tool use proficiency. The best enablement people have a training or teaching mindset and will often leverage training tools like an LMS to maximize effectiveness.

Requirement #2: Surfacing Data and Insights to Senior Revenue Leaders

Now let’s turn to the second core requirement of RevOps - and this one is more strategic - surfacing data and insights to senior revenue leaders so they can manage the go-to-market engine and optimize the strategies, processes, people, messaging and positioning used to acquire and retain customers.

To that end, RevOps must implement a go-to-market data platform and it takes a few different skills to fulfill this requirement.

What talent is needed?

First, you need someone who understands the GTM motions of the company inside and out and what granular insights are critical for senior revenue leaders to make good decisions. This person needs to have a full grasp of the end-to-end sales and customer journey processes.

This requires deep data operations skills and process engineering acumen.

Then, they need to identify all the key data points that need to be measured throughout the process, get consensus on the definitions and KPIs, and then instrument these measurement points throughout the marketing, sales and CS technology being used.

For example - A major consideration here is how to ensure data integrity so that the data you’re capturing is actually legit and you’re not just looking at pretty pictures of garbage data. This includes finding ways to capture data points without relying on manual data entry. It means putting data hygiene maintenance protocols in place to ensure persistent quality.  Sometimes the tech stack architect has a solid Data Ops and Process mindset, but more often than not you’ll need someone else who lives and breathes data models.

Now, there is one other critical skill set required to do RevOps right for growth mode companies and that is a business analyst…essentially the person who can interpret the data. 

Just like you need a radiologist to interpret medical images, you need someone with business analyst skills to interpret the go-to-market data, separating the signal from the noise and curating the data into presentations that are consumable by the senior revenue leaders.  The reality is that the sales & marketing leaders just don’t have the time to properly analyze and interpret data…and in many cases they don’t have that analytical skillset.

So you can have all the best data in the world with impeccable hygiene, but if you can’t curate that into high impact actionable insights, the data has no value.  By nature, data analysis is an inefficient and tedious activity.  So it’s best to support the business analyst with some data visualization or analytics tools to make them more productive.

In summary, we’ve said that there are two core requirements of RevOps for growth mode companies: first…implementing and maintaining the tools required to help sellers, marketers and CS staffs do their jobs more effectively; and second…implementing a go-to-market data platform that movies the insights senior revenue leaders need to manage the GTM motion with science-like precision.

Realistically, is RevOps Even Affordable at Our Stage?

After reading through all that talent that is required, you're probably wondering if a company your size can access and afford RevOps?

The truth is that building RevOps the right way presents a real challenge for early growth stage businesses under $25M.

They need the capabilities of comprehensive RevOps so they’re not competitively disadvantaged, but they often don’t feel as if they can afford to hire a full team and purchase the associated RevOps tools.  And even if they could afford it, while they need all five of the skills that we’ve identified, there isn’t likely enough scale to require each of those skills on a full-time basis, so it would be difficult to retain the employees if they’re underutilized and not challenged.

So often these companies will hire one or two RevOps folks and hope they possess the full spectrum of skills required, but unfortunately that almost never happens, and instead these companies are hamstrung with immature go-to-market tech and data infrastructures.

There is an emerging class of RevOps service providers that provide a very attractive option for these early growth stage businesses. We'll get to that later...

When to Start Building RevOps?

Once you have enough to start hiring sales people and formalizing sales processes in order to accelerate new customer acquisition, RevOps must be a priority!

If you're raising your Series A financing you should be including RevOps in your 100 day post-money plan.

Ideally, you should start recruiting or searching for a RevOps partner at the tale end of Seed Stage.

A company’s top priorities shortly after having achieved a Series A fundraise largely depend on what is deemed strategically important to accomplish with the new capital.

But, a very common strategic requirement for Series A companies is to transition from a founder-led approach to new customer acquisition to a more institutionalized approach to acquiring customers.  We often talk about this as building an effective go-to-market engine, or go-to-market motion.

Back in the day (pre-pandemic and before) that used to mean building out a sales staff.  And to some extent, if you are a company focused on selling big ticket items to large enterprises in a specific vertical where human touch and relationships matter, it may still make sense to prioritize building out a team of experienced salespeople with useful Rolodexes.  And perhaps support that team with a sales engineer or two.

Today, in all but the largest enterprises, buying and selling works a lot differently.  Much of the buyer journey is manifested digitally and the degree to which there is a sales motion, it typically is an inside sales motion with interactions taking place over Zoom or equivalent.  So for companies with a sales motion, an optimized go-to-market engine requires a balance of demand gen expertise, selling expertise, and enabling technology.

This is where RevOps comes in.

The enabling technology to support the sellers and marketers is sophisticated and complex and includes things like CRM, marketing automation, sales acceleration, conversation intelligence and so on.

RevOps is the function that implements and maintains the tech so that it delivers on its promise, effectively making the jobs of the sellers and marketers much more efficient. But RevOps done right also turns the tech into a strategic asset which delivers actionable data and insights to the revenue leaders that allows them to optimize the go-to-market engine much more quickly than would otherwise be possible.

Since GTM execution is typically the primary strategic goal of Series A companies, the 100 day plan after Series A fundraise should definitely include ensuring you have leaders of the demand gen and sales functions that are capable of taking you to the next level, but also that you have an experienced RevOps leader or RevOps partner that can make sure the GTM tech and data infrastructure are accelerators of the sales & marketing efforts rather than inhibitors.  Without this, the investments in demand gen and sales will definitely underperform.

Indicators that Your B2B Startup Needs RevOps

The telltale sign as a CEO that you need to invest in a RevOps function is when you’ve invested in a tech stack but yet your sales and marketing leaders can’t quickly answer even some of the most basic questions you might have about go-to-market effectiveness.

scaleMatters CEO & Founder, Scott Stouffer, detailed the moment he realized his company needed RevOps on The Data Room episode 17

"I experienced this first hand about 10 years when I took over as CEO at a $5M SaaS company that had invested a fair amount in Hubspot as the marketing automation platform and Salesforce as the CRM.  As I was trying to quickly understand what was and was not working from a Go-to-market perspective I started asking a lot of questions of the sales and marketing leaders and it just seemed to take a really long time for them to produce answers and I’d say probably at least half the answers really didn’t make any sense and this is because the data in CRM had devolved to where it was a complete mess.  That’s when I first realized that expecting the sales and marketing leaders to be the people to implement and maintain the tech tools was too big of an ask.  They are experts at sales and marketing but amateurs when it comes to technology and data analytics and this stuff is sophisticated and complex."

This is what nearly all Seed stage companies and certainly the majority of Series A stage companies experience. They’ve invested in tools but put the burden on the sales and marketing leaders to implement those tools and it’s never done in an optimized fashion.  As a result the promise of the tools is never realized and worse people make bad decisions off of bad data that is stuck in the tools.

We recommend starting with an experienced RevOps leader or RevOps partner and then you start to acquire and implement the tech stack, not the other way around!

How to Know if You're Too Early for RevOps?

Typically, very early stage companies are focused on finding product/market fit and associated message fit.

At this point it would be counter-productive to invest in building a repeatable, scalable, predictable and efficient go-to-market engine because without reasonable product/market fit and message fit, nothing else really matters.

So,  for companies that are still working through product/market/message fit issues, investments in RevOps would be premature. With that said, investments that help you arrive at product/market/message fit more quickly are definitely worthwhile.

For example, if your sale involves speaking with prospects, you should definitely invest in a conversation intelligence tool to record those conversations so you can go back and extract useful insights from them. Or, similarly if your motion is product-led then you should invest R&D dollars to put meaningful instrumentation in your platform so you can derive feedback and insights that help inform actions to improve conversion and adoption.

Generally, if you haven’t reached $1M in annualized revenue you probably still have work to do around product market fit and an investment in RevOps would likely be premature

5 Factors to Determine How You Build Your RevOps Function

Are you 100% committed to having a comprehensive RevOps capability to arm your sales, marketing and success teams with the modern tools and data insights they need to effectively compete?

If you’re serious about building comprehensive RevOps capabilities, there are really only 3 choices for how to acquire this capability:

1. Build it in-house - hire FTEs and acquire the necessary tech
2. Outsource it - find a RevOps-as-a-Service provider
3. Hybrid approach - hire some FTEs and partner with an outside RevOps services provider

Which approach is best for any given company really is driven by five characteristics...

1. Current and near-term scale
2. Funding
3. In-house management capacity
4. Uniqueness of the Go-to-Market motion
5. Urgency.

1. Current and near-term scale

Let’s start with scale considerations.  Earlier, we identified five different skill sets…tech architect, tech admin, enablement/training, data ops and business analysis. You might be able to find these five skill sets across four different people and if you’re really lucky perhaps even three people.

Now the first consideration: are you at enough scale to fully utilize somewhere between 3-5 people? If you can’t fully utilize them it’s very difficult to retain highly skilled employees.

Our experience is that you begin to reach that appropriate scale around $20-$25M in annual sales and are certainly there by the time you are at $40-$50M.  Beneath the $20-$25M mark you probably don’t have enough scale to fully engage in-house staff with the full complement of requisite skill sets.

Furthermore, from an ROI perspective your sales & marketing budget needs to be at enough scale that investing in comprehensive in-house RevOps is a no-brainer return.  As a general rule of thumb, let’s assume that comprehensive RevOps makes the overall go-to-market engine 20% more effective than it would otherwise be.

Since it will cost at least $700K annually for in-house RevOps, that suggests your overall sales and marketing budget should be on the order of $7M per year for this to be a no-brainer investment.

2. Funding

Now let’s consider a company’s funding. To build a comprehensive RevOps function in-house is an expensive proposition.

Bootstrapped companies as well as companies with relatively short capital runways will generally not be in a position to head down the path of building this in-house, even though the return might be well worth it.

Since the time to value on this investment is relatively long, you will negatively impact your short-term EBITDA and cash runway when you head down this path, so you should only go this route if your balance sheet is strong enough to support it.

Related: What Good RevOps Solves at Series Seed, A, and B >

3. In-house Management Capacity

Similar to scale, you need to consider if you have the management capacity to lead an in-house RevOps team, because if not, you’ll need to hire the RevOps leader in addition to the 3-5 RevOps doers you will need.

RevOps is not a function that should be left unmanaged or just stuck under a head of sales, marketing or finance.  Someone needs to be dedicated to managing the function.

4. Uniqueness of GTM Motion

The uniqueness of your go-to-market motion also comes into play in determining which approach you should use to acquire RevOps capability.

Though everyone seems to think their company is particularly unique, when it comes to go-to-market, there are only really a handful of motions and virtually all companies use some combination of those common motions.

If you truly do have a one-off approach to go-to-market, then in-house RevOps is probably best for you.

But, if you’re like the 90% of companies that employ some variations of the common go-to-market themes, then outsourced RevOps is a very viable and potentially preferable option for you.

5. Urgency

Finally, let’s talk about urgency. Building a comprehensive in-house RevOps function takes a long time, upwards of 2-3 years before it is realizing full value.

That’s because it takes a long time to find these highly skilled people and then onboard them to where they are fully productive.

Additionally, it takes a couple of years to perfect the data model used in the tech stack so you can begin to surface useful analytics and actionable insights to help optimize the overall GTM engine.

That may be fine for later stage companies that are playing the long game and seeking continuous improvement.

But, for companies earlier in their growth cycle, they are under immense pressure to accelerate their GTM effectiveness in order to survive, and generally speaking, going down the path of in-house RevOps will not provide the time to value these companies need.

When is In-House RevOps the Best Choice?

In-house RevOps works best when you are at sufficient scale to be able to fully utilize 3-5 people and your annual sales & marketing budget is north of $7M both which imply you are at last $25M in sales if not higher; your cash position can support the near term hit to EBITDA and cash burn, you have managerial capacity to oversee the RevOps function, you potentially have a very unique go-to-market motion and you are in a position to be patient with the time it will take to build a fully functioning RevOps team in-house.

When is Outsourcing RevOps the Best Choice?

In contrast, outsourcing RevOps is best if you have insufficient scale to fully utilize 3-5 people or your sales & marketing budget is insufficient to generate good returns on a comprehensive RevOps function.  We would generally consider this to be below $25M in sales.  Outsourced RevOps is a less expensive way to get the equivalent capability of comprehensive RevOps, so it is more attractive if you cannot incur a significant hit to EBITDA and cash burn.  If you don’t have in-house managerial capacity, you should definitely use outsourced RevOps.  And perhaps most importantly, if time is of the essence and the pressure is on to improve your GTM effectiveness sooner rather than later, then outsourced RevOps will almost always provide fastest time to value particularly for companies that have fairly common go-to-market motions.

When is Hybrid RevOps the Best Choice?

The last approach is a hybrid approach.  We see this most commonly at companies between $8M-$20M.  In this case, they will hire a RevOps leader in-house to drive overall strategy, but then heavily rely on outsourced RevOps providers for the day-to-day operation of the tech and data infrastructure.