How do you break down responsibilities and KPIs between revenue operations and demand generation?

If we think about the revenue flow in terms of a funnel, demand generation would be at the top and revenue or bookings at the bottom.

KPI definition should follow roles & responsibilities. Along each step of the funnel, it is critical to first define:

- Which function owns that step?

- What are the activities and expectations for that step?

- What a good handoff looks like to the function owning the following step?

After those questions are answered, defining KPIs and targets becomes natural, in the sense that they should manifest how effective the company is both within each step and across the whole funnel.

For a "new business" funnel, common roles and responsibilities and KPIs across each step of the funnel are:

•  Top of the funnel: typically owned by Marketing. Common KPIs: lead volume by channel and type
•  Middle of the funnel: typically owned by Sales Development. Common KPIs: volume of opportunity creation 
•  Bottom of the funnel: typically owned by the Account Executive. Common KPIs: bookings, conversion rate, average selling price (ASP)

A good understanding of the funnel requires the different functions owning the funnel to be in lock steps, and in some organizations (including LinkedIn) Revenue Operations (aka GTM Operations) also own Planning & Performance for Demand Generation.

It should be a very close partnership, and the best revenue operations leaders have experience in demand generation or are deeply familiar with the KPIs, tactics, and levers to pull. The clearest line I can draw is that RevOps isn't necessarily responsible for execution, but the middle of the Venn diagram here includes tactical strategy, recommendations on campaign/Marketing decisions, and even Marketing resource allocation.

For example, I have a deep background in paid media and top-of-funnel acquisition, so I work closely with our Marketing leaders to identify opportunities for optimization and investment on a week-to-week basis. From a RevOps perspective, our job is to tie Marketing performance to other orgs that rely on Marketing (Sales is a big one of course), and help drive Marketing strategy to ensure we're maximizing leverage across the business.

In my perspective, Rev Ops is an overarching framework that covers the entire sales cycle, encompassing everything from lead generation to customer retention and expansion. Within this framework, Demand Generation is a critical component, specifically focused on the top of the funnel activities. In my view, it's essential to see Demand Generation not as a separate entity but as an integral part of the RevOps strategy, ensuring alignment in objectives and metrics.

Revenue Operations (RevOps)

Responsibilities:

• Manage the end-to-end sales process and GTM, embedding Demand Generation as a key phase in the overall strategy.

• Oversee sales and marketing technology stacks, data management, and analysis.

• Align sales, marketing, and customer success teams under unified goals and processes.

• Provide comprehensive analytics and insights across the sales cycle.

KPIs:

• Pipeline Metrics and Health: Including lead volumes and sales opportunities at various stages, this would also include top-of-funnel metrics driven by Demand Generation.

• Sales Cycle Metrics: Time taken to convert leads and sales opportunities into closed deals, this can also be seen as Sales Velocity.

• Conversion Rates: Across various stages, linking Demand Generation to ultimate revenue outcomes.

• CLV (Customer Lifetime Value) to CAC (Customer Acquisition Cost) Ratio: Assessing efficiency across the sales and marketing funnel.

• Revenue Retention and Expansion Rates: Indicating long-term customer value, initially influenced by Demand Generation.

Demand Generation (Within RevOps)

Responsibilities:

• Strategize and execute top-of-the-funnel activities to generate qualified leads.

• Develop content and campaigns that align with broader sales goals.

• Utilize channels like SEO, SEM, email marketing, and social media for initial customer engagement.

• Collaborate with sales for efficient lead hand-off and feedback loops.

KPIs (Embedded within RevOps):

• MQLs Generated: Effectiveness of initial customer engagement efforts.

• MQL to SQL Conversion Rates: Quality and engagement level of leads generated.

• CPL (Cost per Lead): Cost-effectiveness of Demand Generation campaigns.

• Engagement Metrics: Early indicators of campaign effectiveness.
  

Im my opinion, this integrated approach ensures that Demand Generation is aligned with and directly contributes to the broader objectives of Revenue Operations, creating a unified and efficient path from lead generation to revenue realisation and customer retention.

Typically, responsibilities for these teams are aligned to where they fall in the customer funnel. Demand Gen tends to focus on the top of funnel metrics, processes and reporting while other rev ops teams fall further down funnel. For example, Demand Gen could measure leads while rev ops teams could be looking at things like opportunity conversion, ASP and then even further down funnel, retention. When building your team charter, it will be important to clarify roles and responsibilities to avoid any duplication of effort.  

RevOps & Demand Gen teams work together closely, but have unique KPIs to drive company growth. RevOps focuses on aligning sales, marketing, and customer success teams to drive revenue growth and operational efficiency, while Demand Gen teams concentrate on creating awareness and interest in a company's products / services, focusing on the top of the funnel activities.

For RevOps, some of the core KPIs would be revenue growth; ASPs; Sales Cycle; Customer Acquisition Cost; Churn.

For Demand Gen teams, some of the core KPIs would be MQLs, cost per lead, conversion rates at different funnel stages, brand awareness metrics.

Important to note that through close feedback loops between RevOps & Demand Gen teams and tight collaboration, it can help to unblock any bottlenecks to make the company grow efficiently (and for sales teams to operate productively).

The name of the game here is to breakdown silos and make sure everyone is marching in the same direction and to the same beat.

For KPIs, there shouldn't be a breakdown. RevOps and Demand Gen should be looking at the same KPIs - otherwise you will be solving for different things.

In terms of responsibilities, I think it is really situationally dependent, so the best course of action here is to overcommunicate to sure all actions are in alignment and supportive of each other.