How Executives Can Lead Top Line Growth
The surest path to increasing net income is to start with more revenue. That seems obvious. And while it may be common sense, it’s anything but common practice. When executives are tasked with increasing profits, their response is almost Pavlovian: they try to reduce costs. And there’s nothing wrong with trimming some fat. The real issue is the failure to put at least an equal amount of rigor toward leading revenue growth.
Remember the old saying: what’s the best way to make a small fortune? Start with a large one. Applying that to top-line growth, what’s the best way to increase your net profit? Start with a larger gross profit. And once you’ve already reduced expenses, that can only happen with more revenue.
To drive a serious focus on increasing revenue, try this:
- Get out of the echo chamber. It’s hard for leaders to get really good insights about why clients don’t buy from them. When executives visit prospects or clients, it is typically late in the sales cycle or with established clients. These aren’t “value-less” meetings, but leaders would learn a lot more by talking to the indifferent prospects. That will give you a clear sense of what you and your sales team are really up against in the marketplace.
- Take time to understand the sales forecast. Recognize that unlike most other measurement systems in your company, the forecast doesn’t operate in a linear fashion. Some sales cycles move fast. Some slow. Some evaporate. So work with your sales organization to understand the factors that contribute to the velocity of your pipeline. Just looking at the numbers and asking for the “commit” number for each month or quarter will not help you figure out the revenue stream.
- Prioritize “getting better” as a growth strategy. It’s always surprising to me how few executives talk about improving sales capability to achieve higher levels of performance with clients. Especially for their customer-facing people who play a critical role in influencing customer buying decisions. The best way to get better? Consistent effective coaching. My Harvard Business Review article Sales Teams Need More (and better) Coaching, explains this in detail.
If you are an executive with responsibility for the long-term value of a business, you have to demonstrate growth or at least have a clear trajectory. Expense reductions unquestionably hit the bottom line faster, which is great. But if you want to create real value, shift your focus to increasing the number at the top of your financials.
I spent last week in Santa Barbara, CA filming a new program for LinkedIn. The course title is Solution Selling. It’s a series of 21 videos, each breaking down a part of the solution sales process. The expected release date is January 2018 and there will be some sample videos to share soon.
A Slice of Life Balance
If you think the year has gone by fast so far, trust me – the next 60 days will go by in a flash. November and December are consumed with a sprint to finish the year strong, planning for 2018, and the holidays, all mixed together. If you have ever felt like “the holidays snuck up on you” and that you had to scramble to get gifts for family and friends, here’s a plan for you.
In the next 3 days, take a moment to write down everyone you want to buy gifts for during Christmas, Hanukkah, New Years, etc. Decide what you are going to get them, and then buy the gifts. Life will be a rush of things-to-do during mid- to late December. Plan and shop now, and you’ll be able to relax a little (and actually enjoy!) the holidays.
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