Blog written by Elizabeth Harris, President of Resultist Consulting, www.resultist.com
Building revenue can be a good thing or it can be disastrous. Done well it can lead to long term business success. When it goes wrong it can lead to many undesirable consequences. The key to successful revenue growth is ensuring that your revenue is profitable, not growing just for the sake of growth.
From a revenue perspective, profitability can be achieved only when you’re engaging in the sale of products or services in areas of core strength for your business (typically those that generate 80%+ of your profits) while focusing on customers who generate 80%+ of your revenues. At one time or another most businesses find themselves in a spot where the inverse is true – they are focusing up to 80% of their efforts and resources on the products and customers who generate at most 20% of their profits. Over the long term, this situation does not lead to profitable revenue growth, but it can be turned around.
Building profitable revenue requires that your revenues are made up of “good” revenues. Not all revenues are created equally. “Bad” revenues will end up costing you money. “Good” revenues are those that come from:
- Concentrating on sales of your most profitable products or services
- Getting more opportunities with the right prospects
- Using your sales funnel to consistently turn your prospects into customers
Selling your most profitable products and services seems like a no-brainer. However, it is easy to become distracted by what a prospect wants to buy. Just because “they’re breathing and have money” doesn’t make them the right prospect for your business. If you are tempted to sell them a product that isn’t in an area of strength for you or offer them payment terms that don’t really work for you, they may turn out to be a source of “bad” revenue. Profitable revenue growth requires consistent focus on the sale of your most profitable products or services.
To achieve those sales you also need more opportunities with the right prospects. While the characteristics of the right prospect vary by business, one thing’s for certain – they must have better qualifications than “they’re breathing and have money”. By examining your best customers, you can determine the characteristics of your best prospects. Then through appropriate lead generation and ongoing sales qualification you can focus your sales efforts on the right prospects.
Once you are focused on selling the right products and services to the right prospects, your sales funnel will become one of your most valuable tools to convert a good prospect into a customer. By identifying the various funnel stages a prospect moves through during the selling process, you can identify the steps you need to take at any stage without fear of forgetting something or someone.
With an established set of processes and action steps you can be assured of profitable revenue growth over the long term.