When it comes to business profit is king. And in most small businesses the key to profitability is sales growth. Cost control is important but it is top line growth that fuels opportunity and leverage. It can be argued that all employees must be engaged in the growth agenda of a business. And very touch point with prospective and existing customers is an opportunity for revenue and profit growth.
For example, customer service reps answering the phones in the call center can provide valuable insight into customer needs. A repair technician is often able to discover patterns of demand for servicing of product. And clearly, salespeople are in a great position to gather market intelligence. Every employee can contribute to growth by helping to define and satisfy customer needs. Their leaders can best enable company-wide efforts to generate profits through sales by:
- Pursuing Good Growth. A framework for distinguishing profitable growth from bad growth is a crucial element in improving the health of the business. Good growth not only increases revenues but improves profits, is sustainable over time, and does not call for exorbitant levels of capital. It is also primarily organic (internally generated) and based on differentiated products and services that fill new or unmet needs, creating value for customers.
- Dispelling the myths that keep organizations from growing. An important part of any leader’s role is to realistically confront excuses such as: “We are in a no-growth industry, and the economy gives us little opportunity for growth”; or “Customers are buying only on price”. Every leader needs a strategic growth platform, the ability to communicate an urgency about the need to increase revenues and accountability across the organization to win customers and grow sales.
- Strengthening strategic marketing. One of weaknesses in revenue generation at most businesses is strategic marketing. Marketing is commonly thought to include advertising, promotion, brand-building, and communicating with customers through public relations, trade shows, and in store displays. Those activities are obviously of great importance but primarily “downstream” in nature — that is, they enhance the acceptance of a product or service that already exists. Strategic marketing, on the other hand, takes place at a much earlier stage by segmenting, targeting and positioning to pursue attractive markets. A rigorous marketing strategy includes analysis of end-user preferences and defines the competitive advantage and price point required to win market share.
- Being effective at market penetration. Selling more to established customers can be a significant source of revenue growth, but most companies approach it from exactly the wrong perspective. They start by saying, “What else can we sell to our existing customer base?” However, instead of looking inside-out your organization, you need to look outside-in, to be customer-centric. Successful market penetration starts by selecting a market segment and then working backward to define precisely the mix of products and services they need, creatively shaping a unique and compelling value proposition.
- Creating a culture attuned to revenue growth. When an organization has an explicit growth agenda understood by everyone, growth becomes a central focus permeating discussions at formal meetings or during informal conversations. The objective is to have employees at all levels realizing that growth is everyone’s job.
- Institutionalizing innovation by converting ideas into revenue growth. Innovation is not the private property of nerds and geniuses working apart from the mainstream of the business. In any company of reasonable size, innovation is a social process that requires collaboration and communication for idea generation, selecting the best ideas for revenue growth.
Summary. In order to cover fixed costs and to realize increasing strong levels of profit margin, a business must leverage scale by increasing sales volume. A growth agenda can help fuel creativity driving the organization to higher levels of performance. Growth truly is everyone’s business, not something that is solely management’s responsibility. And if done right, revenue growth and productivity improvement are not conflicting goals. To keep the revenue growth engine running, a business must have a disciplined program of cost reduction and productivity improvement. Not only is it imperative for competitive advantage, but it also provides for the funding of future sales growth.
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