Entrepreneurs need to optimize their business’s revenue streams to increase their bottom line and ensure sustainable growth. No matter the company’s size, there must be an actionable revenue strategy to maximize income possibilities.
Research states that one out of 12 businesses close up shop due to low cash flow and sales. Therefore, it’s imperative to establish preventative measures to ensure a noticeable rise in revenue. This guide will discuss three proven ways to increase revenue growth in detail.
The Definition of Revenue Growth
Revenue growth is a company’s revenue increase over a specific period. It is measured in percentage from a decided starting point. For instance, if a company’s revenue triples from $1 million to $3 million, it counts as a 3% revenue growth.
Companies need to consider this factor, as it works as a metric to indicate a business’s success. When a company calculates the rate of revenue growth, they receive critical insights regarding the sales volume and the whether business expansion is viable.
The Optimal Rate of Revenue Growth
Even though the rate of revenue growth varies due to several factors, such as the industry, market trends, and target audience, among others, a 10% growth rate is considered optimal. However, a rate of 2 to 3% is also considered healthy in several cases.
How Is the Revenue Increase Analyzed?
Revenue growth analysis does not just entail coming up with new ways of making money. Instead, it also requires a diligent examination of the company’s financial statements.
Company owners need to observe and identify the internal aspects and processes of their products that are leading to the most revenue growth. They also need to check for the factors causing a decrease in revenue and the overall long-term financial outlook.
Reasons Why Revenue Decreases
The strategies devised to increase revenue growth can be successfully implemented only after the factors undermining it are ascertained. A decrease in revenue can be due to several factors, including the following:
Poor Customer Experience
No matter how valuable a product is, if a company isn’t investing in satisfactory customer experience, it will lose customers and, as a result, revenue. In a PwC study, 32% (1 in 3) customers stated that even after just a single bad experience, they stop purchasing from the brand they love. Considering this, businesses must optimize customer satisfaction.
Company owners need to assess whether their pricing is justified. Each tier needs to be well thought out, and customers must understand the value they are receiving for the price they are paying. Otherwise, the sales will decrease, and revenue will follow suit.
Increased Churn Rate
Churn is one of the most important components determining a company’s revenue growth. The churn rate is a way to measure the number of customers who have stopped using a service or product. Deducing the reasoning behind the churn rate can help businesses decrease this number. This initiative is fundamental for companies wanting to maintain and increase revenue growth.
The Top 3 Revenue Growth Strategies for Companies to Use
Only a meager 50% of SMBs end up surviving for over five years, with just 30% of the remaining making it past the 10-year mark. Therefore, companies need to account for the following tried-and-tested strategies to increase revenue growth sustainably.
1. Identify Prospective Customers
Prospective customers are influenced regarding their purchasing decisions before even reaching out to a company or visiting their website. For instance, when people read reviews or consume content on their social media accounts, they make up their minds and are persuaded to go in a specific direction.
This is determined through third-party behavioral data. This type of data is massive in volume and highly unstructured. Resultantly, only a few companies possess the expertise or budget to integrate this data into existing sales and marketing processes.
However, it is possible and easy to incorporate anonymous third-party topic data into predictive user scoring models, so companies can determine how likely prospects are to buy from them. The leads who are most likely to buy can be identified and targeted for outbound campaigns, and their inbound inquiries can be prioritized accordingly.
2. Enhance the Proficiency Of the Sales Team
A proficient sales team has the ability to formulate and execute conversations with prospective buyers. They need to be prepared according to each customer’s touch point and understand the buyer’s pain points and characteristics. To do so, they must conduct extensive research into the market and targeted audiences.
To execute their sales process, businesses need to get in contact with qualified buyers and create a conversation that effortlessly converts them. They must be ready for all and any questions and should be qualified and experienced in selling the product or service in question.
Improving interpersonal skills and product knowledge can help a company increase its customer count and get more sales. This will help increase revenue growth.
Though successful salespeople are people-oriented, friendly, creative, and prefer unstructured environments, it’s important to supply them with the required structure to establish these habits. This entails the development of cohesive and comprehensive sales processes, systems, and metrics.
The main infrastructural components needed for a sales team to be effective include:
- Set templates for correspondence and written documents
- An established process for lead generation
- A proper process for coaching sales teams
- A sales manual
- Automated CRM system
Furthermore, hiring salespeople who have a proven track record and possess values that are in line with the company’s ethos is the key to success.
3. Utilize The Most Successful Marketing Strategies
Research shows that consistently exposing a brand online can increase a company’s revenue by a maximum of 23%. This is done through established marketing strategies. To do this effectively, companies must analyze data revolving around product preferences and customers’ purchasing patterns.
Marketers then create a strategy targeting prospective customers, which helps to develop promotional offers, ad messages, and other marketing materials. Companies can utilize several kinds of marketing channels and strategies to get their service or product notices, including:
- Traditional marketing via billboards and flyers
- Content marketing
- Public relations
- Email marketing
- Social media
- PPC advertising
A company’s success rides heavily on its revenue growth rate. By identifying quality leads, enhancing the proficiency of the sales team, and utilizing successful marketing strategies, companies can increase revenue growth.