The metric: Revenue R&D

Learn how Refine Labs uses their new Revenue R&D method to build new, sustainable revenue streams for clients.

How They Moved The Needle

Executives want repeatable, predictable revenue streams. Marketers need time, budget, and trust to build them.

This often causes conflict.

So Refine Labs is using a new framework to fix this, while simultaneously creating new, revenue-driving marketing programs for their clients.

Here’s a common issue companies face:

Marketers want time, trust, and budget to build new demand-generating programs. Execs want to know which programs are “working”, the ROI of each, and how much they could grow if given more money or resources.

In other words, company leadership usually just wants to know:

• how much revenue are current programs driving?
• how much growth can we forecast?
• if we put in x dollars or team members, what will we get out?

The problem is, most new demand-generating channels aren’t as simple as “dollars in, dollars out”. At least not right away. As a result, executives often unfairly compare these early programs to mature ones, holding marketing to unrealistic expectations. Meanwhile, marketing struggles to communicate what’s showing promise or working, and what isn’t, in a way execs want and need.

Because of this, programs that might’ve worked get cut off early, they have to “manage up” more, or they can’t get buy-in for continued time or budget. Besides all that, there’s often misalignment on what “demand” even means. Many demand-gen marketers are actually performance marketers in practice.

So Chris Walker (Founder & CEO of Refine Labs) created a method designed to do two things:

First, help marketers better evaluate a new channel’s potential, communicate what stage the new channel or program was in, the early signs of success it’s showing, and what leadership could expect to see in future stages.

Second, help executives evaluate these new channels differently than they do mature ones, holding appropriate expectations of them, and ultimately – being able to make a clearer decision on if they want to invest in that channel or not.

And ultimately, the main purpose is to help companies create repeatable revenue streams. Because in the end, most executives and c-suites (or their boards) just want predictable channels they can count on to drive growth, and forecast growth for the future. And to make that happen, marketing needs time to test and develop them.

So Chris created “Revenue R&D”. The idea behind it is simple:

When companies do R&D for new products, the idea is that they’re developing something that’s going to be a source of revenue. They often use a scientific, “stage gate” process to evaluate the opportunity at each stage. Chris (who has an engineering background) felt they could use a similar process to explore, test, and create new revenue programs for their clients.

Here’s how they do it, step by step:

Stage 1: Experiment

After launching a brand new program into the world (e.g. LinkedIn, Podcasts, Google), it’s officially in Stage 1. In other words, they look for a handful of people starting to raise their hands and say “this is how I heard about you, this channel moved me to you.” This stage isn’t time bound, so there’s no time limit here.

🟢 Progress to Stage 2 if = 10 attributable conversions to the program (self-reported, sales-reported, or UTM-attributed).

Stage 2: Positive Signals

Next, they look for high intent, revenue opportunity (HIRO) pipeline generation. Here they’re looking for signals that this channel can drive repeatable, sustainable results.

🟢 Progress to Stage 3 if = $200k~ in HIRO Pipeline

They’re looking for legitimate opportunities that the sales team wants to work. This is the phase where Refine Labs will start to measure their metric of HIRO Pipeline, which is pipeline where 20-30% of the opportunities will move to a closed/won deal. It’s important to note that the $200k they look for, is just a rough average across all clients.

The actual amount they’ll set to make it to Phase 3 takes into account the deal volume and average deal size of that client. Also, like Phase 1, this stage still isn’t timebound.

Phase 3: Repeatability

Next, Refine Labs tries to see if they can repeat this success for an entire quarter. This indicates the program didn’t just see temporary success but has the potential to drive repeatable growth.

🟢 Progress to Stage 4 if = $200k~ for 3 months in a row.

Phase 4: Commercial Integration

Now that the program is out of the “proof of concept” phases, they see if it can generate a large amount of pipeline, with some of it starting to move to closed/won revenue.

🟢 Progress to Stage 5 if = generates $1m~ in cumulative HIRO Pipeline

Phase 5: Scale & Sustain

If the program made it this far, it’s considered mature: able to predictably generate revenue. It’s at a stage where execs can forecast growth, and would be seen as more “dollars in, dollars out”.

At this stage, the program produces consistent, repeatable revenue, and the Client might take it over from the Refine Labs team and devote resources to maintaining in-house, or try and scale it further. Meanwhile, Refine Labs can start over with a new idea, to try and develop the next revenue generating program.

By using the Revenue R&D framework, they’re able to provide executive teams with a clear picture of how all the company’s programs are performing, at all times. No matter how young or mature, they can always say “here’s what this program is showing, and here’s what we can expect to see next if we progress further.” And the c-suite gets what they want: a quick understanding of what’s working, and how well it’s working.