Many CEOs and boards will tell you their corporate strategy is already designed to grow revenue. These executives wonder whether they really need a Revenue Growth Methodology to hit their objectives.
They do, and here’s why: If you dig into many corporate strategies, you’ll find they fall short on delivering revenue growth because strategy without execution results in average to below-average revenue performance. To make your number consistently—every month, quarter, and year—requires a masterful blend of strategy and execution. That’s what differentiates top growth executives from their functional peers. The secret? They implement an emerging best practice called the Revenue Growth Methodology.
For instance, a corporate strategy will define which markets the company competes in. But it will not tell the sales team which accounts to call on. A corporate strategy outlines a revenue and profit objective. But it will not determine sales quotas or gross margin targets for individual sales representatives. A corporate strategy determines a company’s competitive advantage. But it will not tell the sales team how to beat a competitor on a deal.
Given advances in corporate strategy development together with a Revenue Growth Methodology, the CEO can work effectively with executive leadership teams to meet aggressive business and revenue goals. The Revenue Growth Methodology fills a significant gap by focusing on the needs of sales, marketing, and product leaders in a way the corporate strategy alone simply cannot.
Is Your Corporate Strategy a Problem?
This is a big, and difficult, question to answer. Here are some signs that may indicate your corporate strategy needs modification:
- Your industry and competitors are growing revenue at a faster rate than you are.
- Your company is undervalued.
- The objectives of the executive team are not in alignment with the objectives of the CEO and the board.
- Your markets have matured and you need to enter new growth markets.
- Your products are not persuading existing customers to buy more and they are not attracting new customers.
- Your competitive advantages over traditional competitors are eroding and you now are dealing with a new set of competitors.
- Your go-to-market model is not as effective and efficient as it needs to be.
If you see one or more of these issues in your business, it might be wise to take a fresh look at your corporate strategy.
What Is the Solution to a Corporate Strategy Problem?
Leaders who work with the executive team to fix a corporate strategy problem start by challenging current assumptions. They analyze what top growth executives around the world are doing and take a renewed look at their own practices. In some cases, leaders who are too close to the corporate strategy may need to reach out to get a neutral perspective.
It is important to use a common language that talks about complex concepts in a simple way. For example, the Revenue Growth Methodology uses common language to break down corporate strategy into the following six steps.
Step 1: Objectives
Create clarity throughout the entire company by getting everyone laser-focused on the real drivers of revenue growth. Organizations that have too many objectives and priorities have none. They risk accomplishing nothing of significance. The corporate strategy often does not get executed because sales, marketing, and product leaders are in their own silos pursuing what they feel is important. This causes strategic misalignment and results in subpar revenue growth.
Step 2: Markets
Define the markets in which you will, and will not, compete. Being in fast-growing markets is the largest driver of revenue growth. Least important is growth in market share. Yet many executive teams tend to focus most of their attention on gaining share in their existing markets. While it is necessary to maintain and sometimes increase market share, changing your company’s exposure to growing and shrinking market segments should be a major focus.
Step 3: Products
Create new markets through new products; attract new customers to an existing product; or convince current customers to buy more of an existing product. Not all revenue growth is equal. Some types of revenue growth create more enterprise value than others.
Revenue growth that comes from increased market share for a product does not create much long-term value because competitors can easily respond. Raising prices for certain products may boost revenue but that growth comes at the expense of the customer, who may retaliate by buying less or seeking alternative products. The most valuable type of revenue growth is driven by products that create new markets, attract new customers, and convince customers to buy more.
Step 4: Competitors
Define whom you compete against and how you win. Share battles often lead to below-average revenue growth because the cycle of market share give-and-take rarely results in a permanent share gain for any one competitor.
Sustainable revenue growth from share gain comes when you change the product or its delivery enough to create what is effectively a new product. Price wars do not result in share gain–driven revenue growth because they may lead to a decline in sales, and are not repeatable. Customers eventually push back, eroding any short-term revenue growth.
Step 5: Go to Market
Select and optimize sales channels to cover your market sufficiently, and price and package your products correctly. Be sure to cover your addressable market entirely to avoid missing revenue opportunities. Explore innovative ways to reach customers as traditional routes to market erode.
Price your products in a way that scales with customer growth to help prevent revenue leakage. And make sure your product pricing is easy for sales channels to explain to your customers. If not, your sales will steadily decline when prices change. Last but not least, avoid packaging your products the same way as your competitors. That results in perceived commoditization and a race to the bottom.
Step 6: Talent
Match the capabilities of the executive leadership team to the objectives and requirements in your corporate strategy. To achieve aggressive revenue growth goals, you need executive superstars. At times, your revenue growth strategy will call for a new set of competencies that the existing team does not possess. If you field an average team, you risk missing the revenue growth target—especially if your competitors have a talent advantage. Mismatched talent and corporate strategy lead to significant execution problems.
We have looked at different facets of a corporate strategy. Now it’s time for you to dive in. Our 10th annual workbook codifies emerging best practices in the Revenue Growth Methodology. It provides a comprehensive set of questions designed to keep your corporate strategy discussions on track. Each question is categorized as an emerging best practice, best practice, or standard operating procedure. Your ability to answer those questions will indicate where your corporate strategy lies on this scale. To learn how you can gain a distinct competitive advantage going into the new year, download SBI’s annual workbook, How to Make Your Number in 2017 … and Every Year Thereafter.
Make Your Number in 2017 - Special Strategic Planning Issue
Discover how you can align your Corporate Strategy with a successful Revenue Growth Methodology using our 10th annual workbook.