Nov 5, 2023

The year 2024 has been declared a time for change in the tools that Revenue Operations use. As the economy waffles and companies need to find budget for AI spend, tools in sales, marketing and customer success are easy targets. CFOs are looking for strong justifications of tools, including if the tool actually contributes to revenue generation.

The end of the year is coming quickly, so be proactive as executives are preparing for 2024. Here are 4 practical ways to reduce costs with tool spend in Revenue Operations.

1) Overuse – One of the most common mistakes that RevOps makes is paying for seats that aren’t being used. Almost every organization I’ve worked at was paying for licenses that they weren’t using. As headcount shifts and people move around, there are bound to be licenses that are unused. If you have a large sales and customer success organization, use current HR headcount lists to compare against your CRM user list. I usually use emails to compare, as these tend to stay static. Names can change due to marriage or divorce. Also, use the vlookup or index match functions in Excel as this is the fastest way to hack it together. Go back to the tool provider and let them know that your headcount has changed. Depending on your contract you may be able to reduce your costs as early as next month.

2) Renegotiate – One of the first things I do is look at the dates for all the tool contracts. I usually create a spreadsheet with all the expiration dates of tools and subscriptions and keep this updated once a month. When it’s time to renew, call the tool company up and ask for specials. Let them know that there is pressure to cut the tool entirely. But you want to stay and if there are programs to stay on board.

3) Line Item Justification – It’s really important to review your annual contract very carefully. Look at every line item and ask about them. If you don’t recognize something bring it up. Also, think about things that are “nice-to-haves.” Perhaps you purchased something like a live data test environment that you rarely use. One year, I reduced our CRM bill by 40k by dropping this feature and became my CEO’s hero that month. It was an inconvenience, but my team was okay with the new limited test environment.

4) Crossover – Many tool functions are like Venn Diagrams, there are several features that can be delivered by multiple tools. Diagram all the use cases and/or features that your tools deliver. Find the crossover of your tools or look for alternative ways of delivering the same feature from your other tools. Can you live with a tool that perhaps isn’t the best in class but does the job if it’s included with another tool? If you can’t, and the tool is mission critical, keep it. If not, drop it. 

Just remember, reducing tool spend is important, but you can never cost cut your way to revenue. On the other hand, you might be able to be a hero of your CEO.