A Sales Leader’s Dilemma – Top Ways to Grow Revenue
There are only so many actions available to a sales leader to profitably grow revenue. The art is identifying, agreeing to, and committing to top ways to grow revenue for you and your sales team.
Growing Revenue is a Bit Like Training for a Marathon
Defining strategies to grow revenue is a lot like preparing for a grueling race; there are multiple training regimens, but no single training plan works well for everyone. In fact, a study in the International Journal of Sport Physiology and Performance asked 93 U.S. elite marathoners who qualified for the U.S. Olympics how they trained hoping to uncover universal themes. Surprisingly, there were not any.
While all of the athletes ran between 40 and 125 miles per week (at a relaxed pace more than 70 percent of the time), there was no consensus as to how to best prepare for a marathon. The same is true for profitable revenue growth. Each situation, industry, and competitive landscape requires a unique approach to get elite results.
To complicate matters, sales managers rarely have the luxury of investing on multiple fronts simultaneously. Most must focus on only one or two main ways to increase growth. So as a sales leader, your success and the buy-in of the sales team depends heavily upon the strategic growth choices you make.
What We Know
We know that if you want sales growth, unless you have the next big thing that sells itself, you must start with strategic sales clarity. When it comes to growing the top line, the lack of strategic clarity is a performance killer. Our organizational alignment research found that strategic clarity accounts for 31% of the difference between high and low performing sales teams in terms of revenue growth, profitability, customer retention, and sales leader effectiveness. Sales leaders need to invest where it counts and concentrate the most important resources where they will have the greatest impact.
Sales Growth Strategy Choices to Consider – 7 Top Ways to Grow Revenue
To drive rapid, sustainable, and profitable revenue growth, sales leaders have 6 main options.
- Optimize Pricing Strategies
The easiest and often most overlooked option to grow revenue is to optimize pricing. As it becomes easier for buyers to compare prices, pricing strategies have become more important. If prices are too high or too complex, you can lose sales; if prices are too low, you can undercut profitability.
Setting the optimal price depends upon your sales strategy. Some sales strategies call for maximizing gross margin, others seek to capture new market share, while others may focus on growing and protecting current accounts. Price optimization approaches can range from data-driven scenarios that recommend prices based upon supply and demand to just being more thoughtful, strategic, consistent, and customer-centric about pricing and promotion strategies.
There are many types of pricing strategies to consider including: competition-based pricing, cost-plus pricing, dynamic pricing, freemium pricing, penetration pricing, premium pricing, value-based pricing, and bundle pricing. The most effective pricing strategies maximize revenue, profit, and your buyer’s perception of value.
Once your sales strategy is clear, make sure that your pricing strategy (including your approaches to contracting, billing, and collecting) is clear, simple, and aligned with how your buyers want to purchase what you offer.
- Sell More to Existing Customers
According to Invesp, Bain, and Marketing Metrics respectively, acquiring a new customer can cost five times more than retaining an existing customer, increasing customer retention by 5% can increase profits from 25-95%, selling to a customer you already have has a success rate of 60-70%, while selling to a new customer is 5-20%.
There is no doubt that the most fertile sales ground revolves around growing existing accounts and relationships compared to chasing down new customers. If you are truly committed to growing current accounts, cross selling existing and new offerings to current clients is the name of the game. With only 31% of sales people having the capabilities to effectively cross- or up-sell to current customers according to Korn Ferry, do not underestimate what it will take to move the needle.
Make sure that you focus predominately on your ideal target clients who appreciate and want most what you have to offer. Then align your sales and service teams to meet their needs while never taking them for granted.
- Win More New Customers
Even though it is easier to sell to existing customers that already know and trust you, growth solely from current customers is often not enough. Sometimes you just do not have a large enough customer base and sometimes your current customers are not the right fit for where your company is headed. This can be especially true if you are shifting your value proposition.
For many reasons, it can be difficult for sales teams to market and sell differently enough to get current customers to buy new offerings that have a different value proposition.
For example, to remain competitive in a disrupted industry one recent client needed to sell more complex solutions to higher level buyers. Their current client base consisted of lower-level transaction buyers who were not prepared to have more strategic, intricate, or impactful conversations. Consequently, their sales teams needed to identify and win more new customers to meet growth targets.
Based upon our organizational performance research, the most effective approaches to win more new customers all start with having a clear, compelling, believable, and implementable sales strategy that focuses on what truly motivates your target clients to buy and sets you apart from the competition.
Why? Because it is difficult to execute marketing, business development, and referral selling strategies if you do not know where you should win most of the time and why.
- Create New and Better Offerings
Whether it is moving from Hardware to SaaS, creating the next iteration, pushing into an adjacent category, or just building a better mousetrap, many companies need something “better, faster, or cheaper” to create revenue growth.
In fact, according to the Product Development Institute, new products and services account for more than 25 percent of total revenue and profits across industries, and companies that focus on creating new offerings while maintaining core competencies across functions grow faster than their peers.
But beware; McKinsey reports that 50 percent of new product launches do not meet their targets. If you need to add to your portfolio to grow revenue, make sure you invest the time to truly understand the total addressable market, value proposition, target clients, competition, and market window from the start. Then use feedback from current customers, potential customers, sales, marketing, and other stakeholders to ensure that your new offering is easy to sell, try, and buy.
- Optimize Sales Channels
Most high growth sales organizations have many routes to market that are highly aligned with target customer demand. Once you figure out the best path your products and services should take to make them easy to sell and buy, your next steps are to ensure that you have the right distribution partners, the right incentives, and the right sales enablement to make it happen.
Most distributors and resellers will sell what is easiest and most profitable to sell. Optimizing sales channels is as much about creating an aligned path of least resistance as anything else. Make the sales process as simple, meaningful, and profitable as possible.
The challenge is that the majority of sales alliances fall short of expectations due to misalignment, weak commitment, and reactive execution. To get the most from your sales channels, make sure that you agree upon your desired results, align go-to-market strategies, incentivize the right behaviors, track progress, and provide high levels of sales support and enablement.
- Align Sales Culture and Sales Strategy
Sales culture – how sales related work gets done – accounts for 40% of the difference between high and low performing sales teams in terms of revenue growth, profitability, customer retention, and sales leader effectiveness. Once your go-to-market sales strategy is clear enough, your next step is to ensure that your sales culture is healthy, high performing, and aligned with your sales strategy.
That means (1) assessing sales force engagement and taking action, (2) making certain that sales performance expectations are clear with high levels of accountability, and (3) ensuring that how you treat customers, make decisions, and operate as a business is 100 percent aligned with how you want to win in the marketplace.
- Improve Salesforce Capabilities
Sales talent accounts for 29% of the difference between high and low performing sales teams in terms of revenue growth, profitability, customer retention, and sales leader effectiveness. If you want to grow the top line, make sure that you know how to attract, develop, engage, and retain top sales talent that fit your business model and sales culture.
Fundamentally, selling is about moving someone else to action through influencing, inspiring, and adding value. And B2B solution selling is only getting harder. Gartner recently reported that the typical buying group for a complex B2B solution involves six to ten decision-makers.
Invest in business sales training to ensure that your sales team can get above the noise and have more than a “commoditized, reactive, and tactical sales conversation.” High performing sales teams get qualified meetings, identify what matters most to their clients, and articulate how they can help their clients to succeed in a way that makes sense for their unique situation, budget, timeframe, and objectives.
The Bottom Line
Are you being strategic about the way you intend to grow revenue? Be smart about the choices you make. No one method fits all. Select the one or two that best fit your business, your team, and your goals.
To learn more about how to take advantage of the top ways to grow revenue, download 7 Ways to Stress Test Your Current Sales Strategy