Increasing revenue is a common goal, but there may be other growth goals a company is focused upon that may be strategically more important than focusing blindly on top line revenue growth without having a plan to get there. Following are a few examples we come across where companies can make a difference in their growth strategy.
Increasing units sold
Perhaps their clients purchase similar products from multiple vendors. Alternatively, they may buy specific SKUs from company A, but the clients’ employees under-utilize the products meaning they don’t buy enough. The seller might want to help their clients maximize the use of the products they buy resulting in more sales. Additionally, the seller will likely focus on finding more clients to purchase those SKUs. We’ll explore this in more detail below.
Adding new lines of business to diversify customer demand
To stay ahead of shifting customer needs, technology changes, or simply to increase the variety of products – and volume – customers can purchase from a company, the seller often expands its offerings. The challenge is ensuring that the variety of products available are worthwhile to carry in the seller’s inventory. Too often, the Pareto Principle (80/20) applies to the products carried: 20% of what’s on their shelf represent 80% of their sales while the 80% of low purchased inventory may represent a disproportionate value of their inventory spend.
Growing market share within existing regions
This is often wisely seen as an obvious strategy. The company is already recognized in specific regions and has identified opportunities to increase their market share. Assuming there is significant upside potential, they have the bandwidth within their organization including sales and marketing, then this is often seen as low-hanging fruit.
Expanding into new markets
This is often more effort for a company for many reasons. Do they have sales representation, sufficient staff and services that can cover the new market? Will there be additional marketing required to establish awareness? What competitors are there now? Sometimes, a company can acquire another complementary business to jumpstart their presence in that new market.
Improving sales margins
Frequently, a company’s net profit is below what they need for the company to be sustainable. Passing on increases is legitimately awkward but losing money is more awkward. Coaching customer-facing employees to effectively communicate price increases is critically important. Playing catch up with massive increases because the company didn’t proactively stay ahead of incremental increases becomes very difficult and tarnishes the company’s image. It’s important to create a disciplined strategy to review and implement price increases on a recurring basis.
Enhancing your customer retention rate
Most companies have endured surprises when a client that everyone assumed was a happy customer suddenly announces they are switching vendors. Creating a regular client review schedule is beneficial where the account relationship lead meets with their key client counterparts to share news on enhancements, provide quality metrics and get feedback on performance. Using this process, client issues are much more likely to be shared with the company, so they can get ahead of any retention risk. In cases where the client operates under a formal agreement with expiry/renewal terms, these reviews become even more important.
Penetration – growing sales within existing accounts
Lots of publications claim it’s many times easier to grow sales with an existing client than to go find a new client. Most salespeople and sales leaders would agree. The client already knows the vendor, and there is usually a high level of trust between the client and the vendor. Increasing the size of the orders, invoices, etc. is usually seen as a win/win. They rely on less vendors, and the vendor gets increased efficiencies with their orders.
Profitable client strategies
Smart companies do a great job breaking down their market and customers by potential value to ensure they spend the finite hours available working on clients and prospects with the greatest potential return on investment. Clients and prospects get segmented into categories; the ones with the highest value get the most attention. Good clients without a lot of upside potential (known as cash cows) are important to maintain. Assigning them to high quality inside account relationship managers can free up salespeople who will gain more time to focus on prospecting for new business.
In business, there’s no such thing as status quo, because status quo results in reduced sales through attrition and being outflanked by competitors that are focused on growth. So, ensuring a company is focused on its own growth strategy is essential for success.
