What is preventing most companies from increasing revenue growth? The answer is not as obvious as you may think.
Some CEOs have figured out the secret ingredient needed to solving this issue regardless of industry or economy or company size, and they are enjoying sustained double digit growth.
Before we jump to solutions, however, let’s try to get on the same page regarding the root cause of lackluster growth.
The Most Common CEO Action For Increasing Revenue
Five or ten years ago, it used to be that the Sales leader was automatically held accountable for lackluster growth. It made sense: Sales did the lion’s share of new business development while Marketing focused on marketing communications and Product Management focused on features. Sales leaders are still being held accountable for sales growth, and the average tenure for the CSO/ VP Sales has dropped to 18 months, but revenue growth hasn’t improved. What’s next?
CEOs then turned to their Marketing leader. Marketing bulked up on technology, staffed up for new initiatives, and focused more on demand generation. They generated lots of leads, likes, followers and tweets. While engagement increased, revenue growth did not meet expectations. Marketing leaders are now being held more accountable for revenue growth and the average tenure for the CMO/ VP Marketing has started to drop. In a recent IDC survey, 50% of the companies surveyed had changed their CMO in the past two years. Is this the right solution? No one will really know for another couple of years.
As CEO, can you wait another couple of years before knowing whether your company is on the right track with your latest executive replacement?
Stay Focused On Your Goal: Increased Revenue Growth
Holding executives accountable is an admirable CEO trait, however, simply replacing one or two executives may not ensure company revenue growth.
If you want growth within the next 12 months, you need a better solution. Even if you are convinced that a new CMO or new CSO will add new value, you should always hedge your bets. Dig deeper into the issue.
Whatever has changed in the past five to ten years, it is impacting more than just your company. Most companies are struggling with revenue growth rates and are replacing their leaders at a faster pace. Yet some companies have figured out how to grow faster than their peers:
- most salesforces are having great difficulty generating sufficient new business (yet those with the right sales process achieved 18% more revenue growth according to the Sales Management Association)
- most marketing groups are increasingly unable to demonstrate ROI (yet high growth companies have 47% of the sales forecast originating from Marketing leads according to a study by Aberdeen Group, and, firms generating 40% or more of their new business leads digitally grow 3 times faster according to the Society for Marketing Professional Services)
- most new product launches are not dramatically improving revenues and profit (yet those with the right focus had products that produced 50% of the company’s sales and profits according to the Product Development & Management Association).
- most sales and marketing technologies are not driving dramatic growth (yet companies that successfully aligned cross functional business processes to fully leverage these technologies consistently grew over 13% faster according to Aberdeen Group).
Clearly, something has changed in the marketplace that is affecting most companies regardless of industry, economy or company size. Some companies have adjusted to this market change, others have not.
Your Company Is No Longer Aligned To Your Buyer
Your company recognized early on that buyers were taking full advantage of internet, social, and mobile technologies. As a result, you invested heavily in digital technologies and social expertise to keep pace.
However, these investments have not increased your revenue growth rate:
- Sales increased their focus on cold calling and social selling to increase new logo business, but it has not resulted in sales growth. In fact, sales forecast accuracy and reliability have dropped in recent years.
- Marketing increased their focus on branding, engagement and demand generation with investments in both marketing expertise (social marketing, email marketing, digital marketing) and marketing technology (analytics software and marketing automation). Yet revenue growth rates are disappointing. In fact, marketing still has not been able to demonstrate Marketing ROI.
- Product Management increased the breath of the product line, the complexity of the product line, and the rate of new product introductions according to a recent study by CSO Insights. However, these increased product launches haven’t produced the revenue bump CEOs were hoping for.
- And finger pointing is at an all-time high. Sales is complaining about low quality of Marketing leads and too many un-compelling products from Product Management, Marketing is complaining about lack of Sales follow-up on leads, and Product Management doesn’t think Marketing or Sales are focused enough on new product launches.
The buyer purchasing process is evolving as fast as the internet is evolving.
Your company’s revenue strategy and process has not kept pace with the digital changes within the marketplace. Your three primary revenue-generation functions are no longer aligned by a common revenue strategy and process.
By aligning your company’s revenue strategy and process to the evolving buyer purchasing process, you will be leveraging the successful strategies that high growth companies demonstrated in the above-mentioned studies by Aberdeen Group, Sales Management Association, Society for Marketing Professional Services, Product Development & Management Association, and others:
- Product Management will launch products that meet the buyer team requirements
- Marketing will generate an increased number of high quality leads by helping the buyer team move through their purchase process
- Sales will spend much more time closing business with the help of the right information from Marketing and Product Management
- Alignment: Since all three functions are aligned to the same buyer profile by the company revenue strategy, they become more aligned with each other, and better able to align the cross-functional revenue process quickly.
Your Next Step?
As most CEOs know from experience, “alignment” is often code for changing cross-functional business processes, integrating systems cross-functionally, modifying organization structure, adjusting budgets and/or tweaking incentive plans.
You don’t have the time or energy to lead such an initiative. Or, maybe you lack the Sales and Marketing expertise to tackle such a project. However, delegating cross-functional leadership to a senior executive is problematic. As soon as someone other than the CEO tries to impact change to a function’s budget, compensation, or priorities then productive change seems to grind to a halt.
The Chief Executive Officer is the cross-functional leader and must lead such an important initiative if you really want to see meaningful change within the next 12 months.
The CEO Secret Ingredient For Revenue Growth
CEOs must have a “change agent” who can be their lieutenant to design and implement the needed changes. It could be one of the company executives, or an outside consultant, as long as the person:
- has cross-functional revenue generation experience, and
- can design and implement a successful plan of action, and
- will roll up their sleeves to help the CSO, CMO, Head of Product Management, and their senior staff, execute a successful plan within the next 12 months.
The marketplace has changed. For your company to increase revenue faster than its competitors, your revenue-generating groups must stay aligned to your evolving target buyer. A detailed discussion and outline of a CEO Action Plan for growth can be found here.
The pressure on the CEO and Board of Directors to achieve sustainable growth continues to increase. Simply replacing the CSO and/or CMO is not working. What will happen next?
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