Revenue Architecture

Revenue Architecture is a strategic framework that structures how recurring revenue businesses generate, retain, and expand revenue across the entire customer lifecycle. Developed by revenue expert Jacco van der Kooij, it moves beyond traditional sales methodologies by treating revenue generation as an integrated system where sales, marketing, and customer success operate cohesively rather than as isolated departments.

Why It Matters

Traditional sales approaches focus primarily on closing deals. In recurring revenue businesses like SaaS, however, the initial sale represents just the starting point. The majority of revenue potential lies in renewals, expansions, and long-term customer relationships.

Revenue Architecture addresses this fundamental difference. It provides a structured approach to building what van der Kooij calls a "revenue engine" – a system optimized for the compound growth dynamics inherent in subscription and usage-based business models.

The Six Foundational Models

Revenue Architecture consists of six interconnected models that work together to create sustainable growth:

1. The Revenue Model

This defines how your business monetizes value. Revenue Architecture identifies three primary approaches:

Ownership models: Customers pay upfront for perpetual access (traditional software licenses)

Subscription models: Customers pay recurring fees for ongoing access

Consumption models: Customers pay based on actual usage

Most modern SaaS companies combine these approaches – for example, a base subscription fee with usage-based add-ons, or freemium tiers leading to paid subscriptions. The key is aligning your monetization strategy with how customers derive value from your product.

2. The Data Model (Bowtie Framework)

Traditional sales funnels end at the point of purchase. Revenue Architecture uses a "bowtie" model that recognizes the full customer lifecycle:

Left side (Acquisition):

• Awareness

• Education

• Selection

Center (Commitment):

• Initial purchase or agreement

Right side (Post-Sale):

• Onboarding

• Adoption

• Expansion

This framework ensures teams measure and optimize the entire customer journey, not just the acquisition phase.

3. The Mathematical Model

This model addresses the unique mathematics of recurring revenue. Unlike one-time sales that simply add up, subscription revenue compounds over time through renewals and expansions.

Key formulas include:

MRR Growth = New MRR + Expansion MRR - Churned MRR - Contraction MRR

LTV:CAC Ratio = Customer Lifetime Value ÷ Customer Acquisition Cost

Net Revenue Retention = (Starting MRR + Expansion - Churn - Contraction) ÷ Starting MRR

Understanding these dynamics helps teams make better decisions about where to invest for long-term growth.

4. The Operating Model

The Operating Model establishes consistency across revenue teams through:

• Common definitions and terminology

• Unified metrics and KPIs

• Standardized sales methodologies

• Shared technology infrastructure

This foundation prevents the chaos that typically emerges when companies scale without operational alignment.

5. The Growth Model

SaaS companies typically follow predictable growth patterns, often visualized as an S-curve. The Growth Model helps teams anticipate these stages and adjust strategies accordingly:

Early stage: Focus on product-market fit and initial traction

Growth stage: Scale acquisition while maintaining healthy unit economics

Maturity stage: Optimize for efficiency and expansion revenue

6. The GTM Model

Your go-to-market strategy should align with your average contract value (ACV) and deal complexity:

Product-Led Growth (lower ACV): Self-serve models, viral adoption, in-product upgrades

Inside Sales (mid-range ACV): Phone/video sales with moderate sales cycles

Field Sales (higher ACV): In-person meetings, multiple stakeholders, longer sales cycles

Enterprise Sales (highest ACV): Complex deals involving multiple decision-makers and extended timelines

The Three Execution Pillars

Revenue Architecture translates theory into practice through three execution pillars:

Pillar 1: Revenue Process (Land, Expand, Renew)

Land: Initial customer acquisition

• Focus on fast time-to-value

• Minimize friction during onboarding

• Establish clear success metrics

Expand: Growing account value

• Identify usage-based triggers for expansion

• Drive cross-functional adoption

• Link expansion to value realization milestones

Renew: Ensuring retention

• Proactive success management

• Continuous value delivery

• Regular ROI demonstration

Each stage requires distinct playbooks, metrics, and team ownership.

Pillar 2: Revenue Organization

Revenue Architecture promotes role specialization with cross-functional collaboration:

Sales Development Reps (SDRs) generate pipeline through outbound prospecting and inbound qualification, measured on qualified opportunities rather than mere activity.

Account Executives (AEs) manage deals from qualified opportunity to close, focusing on deal velocity and initial contract value.

Customer Success Managers (CSMs) drive adoption, expansion, and renewal, owning net revenue retention and customer health metrics.

This specialized structure allows each role to develop deep expertise while maintaining full-funnel accountability.

Pillar 3: Revenue Enablement

Enablement translates strategy into execution through:

Playbooks and templates: Stage-specific talk tracks, qualification frameworks, objection handling guides

Technology stack: CRM systems, CPQ tools, revenue intelligence platforms, engagement automation

Continuous learning: Data-driven coaching, win/loss analysis, best practice sharing

Implementation Approach

Audit Your Current State

Begin by mapping your existing revenue engine:

• Current revenue mix (new vs. expansion vs. renewal)

• Biggest drop-offs in the customer journey

• Team ownership of specific metrics

• Friction points between departments

Define North Star Metrics

Choose metrics that align teams around sustainable growth. These typically vary by company stage:

Early-stage: MRR growth, logo retention, time to first value

Growth-stage: Net Revenue Retention, sales efficiency metrics, CAC payback period

Mature: Rule of 40 (growth rate + profit margin), expansion revenue percentage, gross margin

Align Teams

Break down organizational silos through:

• Revenue team charter defining roles and responsibilities

• Service level agreements between teams

• Regular cross-functional revenue meetings

• Shared dashboards visible to all revenue teams

Build Playbooks

Document core revenue processes:

• Ideal Customer Profile definition

• Lead qualification criteria

• Sales methodology and stage definitions

• Customer success milestones

• Expansion triggers and plays

Measure and Iterate

Revenue Architecture is a continuous improvement framework, not a one-time implementation. Establish regular review cadences at weekly, monthly, quarterly, and annual intervals.

Common Challenges

Context matters: Revenue Architecture provides a framework, not a rigid prescription. Adapt the approach to your specific market, product, and growth stage rather than copying implementations wholesale.

Post-sale focus: In recurring revenue businesses, most value comes after the initial sale. Teams often over-index on acquisition while underinvesting in retention and expansion capabilities.

Process before technology: Tools amplify good processes but cannot fix broken ones. Define your revenue process first, then select technology to support it.

Coordinated adoption: Revenue Architecture only works when all revenue teams adopt it together. Partial implementation often creates more friction than it resolves.

When to Use Revenue Architecture

Revenue Architecture is particularly relevant for:

• SaaS and subscription businesses with recurring revenue models

• Companies struggling with misalignment between sales, marketing, and customer success

• Organizations scaling beyond founder-led sales

• Businesses transitioning between growth stages

• Teams seeking to improve net revenue retention and expansion revenue

For traditional one-time sales businesses or early-stage companies still seeking product-market fit, simpler approaches may be more appropriate until the fundamentals of recurring revenue become central to the business model.