Our new report, “How to Make Your Number in 2016,” includes the Revenue Growth Maturity Model. That’s a tool for evaluating your business’s strategic alignment today and planning for tomorrow. Use it to quickly identify your company’s likelihood of achieving its growth goals.
What’s so important about the Revenue Growth Maturity Model ranking? Simple: the criteria you meet to attain it. Where your company ranks suggests that you’ll hit – or miss – your 2016 number.
Maturing through the levels cuts costs and raises revenue.
The Revenue Growth Maturity Model ranks five levels of organizational maturity. Each has particular characteristics. Following are capsule rundowns of the rankings. You can read more starting on page 12.
As we review them, here are a few terms to keep in mind. “Customer Acquisition Cost” (CAC) and “Customer Lifetime Value” (CLTV) are just what they seem. We found a strong link between these and the level rankings. Look what happens as your ranking improves.
Level One: Chaos:
At this level, there may be a corporate strategy. The functional side is in disarray. Its leaders have no strategies and little understanding of corporate strategy. Functions are not well defined and not well managed. Stability is lacking, inconsistency prevails, and success is rarely repeatable. Budgets are blown, targets are missed and customers pick up on company frictions. Due to churn CAC is high and CLTV is low.
Level Two: Defined:
Level Two: Defined:
At level two, there are corporate and functional strategies. But the executive team develops them separately, with no attempt to align them. No one else knows the strategies. They hit the shelf, and that’s usually where they stay. Individual and team competency drives success, which may be repeatable with similar initiatives. This degree of planning improves CAC by 3 percent and CLTV by 2 percent.
Level Three: Implemented:
Corporate and functional strategies are in operation. Everybody’s working in silos, but the organization is extending strategy into functional areas. Successes are repeatable, and processes produce at least a minimum functional performance. Dependability and consistency improve. Conflict within functional areas diminishes, but it still exists between them. Customer confusion hasn’t been erased. But both CAC and CLTV have improved 8 percent from level 1.
Level Four: Managed:
Corporate and functional strategies are now internally aligned. Functional teams know their strategies. They’re working together to support the corporate strategy. Focusing on common KPIs, organizations can solve problems before they cause damage. Sharing of best practices is up, internal friction is out. Market alignment is still not complete. Improvements to CAC and CLTV are 16 and 13 percent respectively since level one.
Level Five: Predictable:
The organization has brought corporate and functional strategies into sync with the external market. Strategic alignment is complete. Teams understand their roles and their impact on customers. Functional areas optimize operations. Conflict is gone. Management navigates the market in real time. Company responsiveness to opportunities and challenges accelerates. Excellence is the emphasis. Customers love the company. Improvements from level one are 26 percent for CAC and 30 percent for CLTV.
Rank Translates to Results:
The inescapable conclusion is that maturing through the levels cuts costs and raises revenue.
Most companies budget 35 percent of revenue for product, sales and marketing. When your CAC plummets and CLTV soars, it’s easier to make your revenue number.
Next, we’ll discuss how important your existing clients are to hitting your 2016 number.