What is a revenue growth strategy? Knowing the answer can make the difference between sporadic profitability and continuous sales growth. In this blog, we’ll cover what revenue growth strategy is and how to use it to grow your revenue. First, we’ll define revenue growth strategy and identify its benefits. Then we’ll look at eight effective tactics you can use to put your revenue growth strategy into practice.
What Is a Revenue Growth Strategy?
Revenue growth strategy, is a systematic method for sustaining long-term sales increases by using technology to predict sales trends and manage sales outcomes. To achieve this, it integrates your sales strategy with your overall financial and operational strategy so that your entire infrastructure supports revenue growth. It then optimizes your strategic initiatives by harnessing data about your customers’ behavior so you can hone essential marketing elements such as product availability and pricing. This positions you to scale up your optimized strategy for increasing revenue growth.
Why Adopt a Revenue Growth Strategy?
Using a revenue growth strategy allows you to leverage technology in order to seize control of your company’s financial future. If you’re using conventional manual methods to manage your sales, you may achieve profitable results, but your financial predictions will be prone to the uncertainty inherent in intuition, making you prone to unforeseen ups and downs in your revenue cycles. Using data and technology gives you the business intelligence you need to make accurate predictions and precise adjustments. This increases your control of your revenue results so that you can produce more predictable profitability on a sustained, long-term basis.
How Can You Increase Your Revenue Growth? Eight Winning Tactics
So how do you put revenue growth strategy into practice? A comprehensive strategy can encompass every aspect of your business which impacts your sales, including your marketing, financial planning, operational planning, inventory and logistics, to name a few. To start with some specifics, here are eight key best practices you can implement to lay a foundation for revenue growth:
- Monitor revenue realization
- Stay on track with industry growth rates
- Integrate your sales strategy with your financial planning and operations management
- Optimize customer acquisition costs
- Build strategic partnerships
- Improve your customer service
- Develop a referral program
- Broaden your product offerings
Let’s look briefly at what each of these tactics involves and how to put them into practice.
1. Monitor Revenue Realization
Revenue realization is the ratio of the amount of revenue actually coming into your organization during a given period (known as recognized revenue) to your sales for that period. The distinction and ratio between recognized revenue and sales can be particularly important if you’re in an industry where there’s a lag between the time a sale is made and the time revenue actually comes in. For instance, in the SaaS industry, a recurring subscription sale made today might not generate actual revenue until next month.
Failing to track this type of lag can create revenue predictions that don’t match your actual cash flow. Making sure to monitor revenue realization gives you a better perspective on how your recognized revenue is keeping up with your cash flow needs, enabling you to do more accurate and practical financial planning.
2. Stay on Track with Industry Growth Rates
Monitoring revenue realization and other revenue key performance indicators also helps you evaluate whether your revenue growth is keeping up with the norm for your industry. If it isn’t, this may be a warning sign that your business model isn’t sustainable without adjustments to your revenue strategy. If it is, you can use industry benchmarks as a baseline to build on and improve upon.
3. Integrate Sales Strategy with Financial Planning and Operations Management
An optimized sales strategy requires coordination between your sales team and other areas of your business that affect sales and profitability. This includes areas such as financial planning, marketing operations, inventory management, demand planning, logistics and customer service, to name a few.
For example, efficient inventory management is needed to ensure that you have enough products on hand to keep up with sales demand. Or if you sell a digital product such as a SaaS app, good customer service is essential to generating customer satisfaction, repeat sales and upsells. The better you integrate your sales strategy with the rest of your business and data from other areas of your business, the better your results will be.
4. Optimize Customer Acquisition Costs
The revenue you generate from sales is partly offset by the cost of acquiring customers. High profitability requires minimizing customer acquisition costs as well as maximizing sales. Tracking marketing costs and key performance indicators and then taking steps to increase efficiency and lower expenses will help you retain more of the revenue you generate.
5. Build Strategic Partnerships
One way to reduce customer acquisition costs is to build strategic partnerships. Strategic marketing partners can help steer qualified leads your way and reduce your marketing costs.
Strategic partnerships can help you cut costs in areas outside marketing as well. For example, developing long-term relationships with reliable suppliers can help you negotiate lower logistics costs.
6. Improve Your Customer Service
Good customer service increases revenue by promoting customer satisfaction, repeat business and referrals. In this way, improving your customer service can support your revenue growth strategy. Track your customer service key performance indicators and analyze your customer service ticket data to identify ways you can improve the support you deliver your clients.
7. Develop a Referral Program
Better customer service can also help you increase your referral rate, another key to revenue growth. Referrals represent one of the most cost-efficient ways to generate qualified leads, which can help lower your customer acquisition costs. Optimize your referral rate by creating a formal referral program and using your customer data to cultivate your satisfied customers as brand advocates.
8. Broaden Your Product Offerings
Satisfied customers create an opportunity for upsells and cross-sells, which can multiply the average revenue you generate per customer. You can increase the revenue you generate from upsells and cross-sells by diversifying your product offerings. Use market research, customer surveys and customer purchase patterns to identify potential directions for new product lines which will appeal to your customer base and target market.
Apply Revenue Growth Strategy to Optimize Your Top Line Income
A revenue growth strategy lets you leverage technology to predict sales trends and manage sales outcomes, increasing your sales and profitability. A strong revenue growth strategy is built on tracking key performance indicators such as revenue realization and industry growth rates. Integrating your sales strategy with other areas of your business will help you maximize the efficiency of your revenue generation efforts. Support your revenue growth strategy by making adjustments in key operational areas which affect sales, such as using more efficient marketing methods and striving for better customer service. Deploy referrals, upsells and cross-sells to maximize your sales.Using the right technology is critical for implementing these revenue growth tactics successfully. The revVana revenue operations platform is designed for salesforce teams to help you automate your revenue forecasts and accelerate your sales growth. Request a demo to see how revenue operations technology can help you take your sales to the next level.