|
Every
contact of every employee with a customer is an opportunity for revenue
growth: The people answering the phones in the call center can provide
valuable information on unmet customer needs.
The
appliance repair person can discover patterns and timing of demand for
replacement of appliances.
Salespeople
can extract market intelligence and ensure that it is communicated to the
product development, operations, and service departments. Logistics people,
through on-time deliveries, can help stores avoid stock-outs, thus
enhancing customer satisfaction, an important foundation of future revenue
growth.
The
fruits of these efforts for revenue growth energize people and enhance
their self-confidence. Growth taps into all their latent energy to generate
ideas that can carry the organization to higher levels of growth. Growth
truly is everyone's business, not something that is solely the concern of
management. Every employee at every level can be doing something for a
customer.
2.
Hit many singles and doubles, not just home runs. While home runs provide
the opportunity for a quantum increase in the growth trajectory, they are
unpredictable and don't happen all the time. Singles and doubles, however,
can happen every day of the year. They result from a determined, day-in and
day-out improvement in the activities and social processes of a company;
they form the drivers of profitable revenue growth.
Increasing
revenues through singles and doubles build a growth mind-set throughout the
business, so that when the opportunity for a home run does come along,
you'll be better prepared to take advantage of it.
For
example, Dell's efforts, beginning in 1993, to improve inventory turns to
use less cash and reduce price and product obsolescence began as a single.
The company's initial goal was to increase inventory turns, which were
averaging six a year, to ten. Over the last ten years, Dell has
continuously improved the totality of its supply chain so that its
inventory turns over one hundred times a year, or once less than every four
days. The result is higher revenue growth and what has become a lethal
competitive weapon against all PC manufacturers. In addition, this supply
chain enables Dell to accelerate revenue growth by entering into new market
opportunities like printers, servers, and storage.
3.
Seek good growth and avoid bad growth. A framework for distinguishing good
from bad growth is a crucial element in generating revenue growth. Good
growth not only increases revenues but improves profits, is sustainable
over time, and does not use unacceptable 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.
The
ability to generate internal growth separates leaders who build their
businesses on a solid foundation of long-term profitable growth from those
who, through acquisitions and financial engineering, increase revenues like
crazy but who create that growth on shaky footings that ultimately crumble.
Many acquisitions provide a one-shot improvement, as duplicative costs are
removed from the combined companies. But few, if any, demonstrate any
significant improvement in the rate of growth of revenues.
4.
Dispel the myths that inhibit both people and 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 no one is growing";
"Customers are buying only on price"; or "The distributors
are the ones in direct contact with retailers, and there's not much I can
do." Every leader needs a growth agenda and the ability to communicate
an urgency about the need to increase revenues and build the business so
that action-oriented people within the organization find out what needs to
be done today.
5.
Turn the idea of productivity on its head by increasing revenue
productivity. The old saw says "we have to do more with less."
The problem, though, is that the focus is usually on the "less"
and the "more" rarely happens. Revenue productivity is a tool for
getting that elusive "more" by actively and creatively searching
for ideas for revenue growth without using a disproportionate amount of resources.
It shows how to invest your current level of resources in a way that leads
to increased sales by analyzing everything a business does, from the
seemingly mundane to the vitally important.
6.
Develop and implement a growth budget. All companies have a budget. It is,
however, astonishing how little detail about revenue and sources of revenue
growth you can find there. Almost all of the lines in the budget are
cost-related. Few, if any, identify resources explicitly earmarked for
growth. The growth budget provides a foundation that will allow a company
to increase revenues instead of just talking about it. It includes all
critical actions over the short, medium, and long terms that require
resources to achieve revenue growth goals. And there is follow-through that
includes rewards for success and penalties for poor performance.
7.
Beef up upstream marketing. One of the key missing links for generating
revenue growth at most companies is upstream marketing. What most people
visualize as marketing involves 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. Upstream marketing,
on the other hand, takes place at a much earlier stage by developing a
clear market segmentation map and then identifying and precisely defining
which customer segments to focus on. It analyzes how the end-user uses the
product or service and what competitive advantage will be required to win
the customer and at what price points.
8.
Understand how to do effective cross-selling (or value/solutions selling).
Cross-selling 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. Successful cross-selling starts by selecting a segment of
customers and then working backward to define precisely the mix of products
and services they need and creatively shaping a value proposition unique to
them. Effective cross-selling ensures the proposition is presented to the
right decision makers in the language of the customer and spells out the
financial, physical, and post-purchase benefits of the offering.
9.
Create a social engine to accelerate revenue growth. Every organization is
a social system, the center of which is a way of thinking and acting that
sets both day-to-day actions and the long-term agenda. When an organization
has an explicit growth agenda understood by everyone, growth becomes a
central focus -- a social engine -- during formal meetings as well as
informal discussions. The social engine is then fueled by growth ideas as
one growth initiative builds on another. People at all levels then see
growth as everyone's job. The social engine and its associated tools
provide the mechanism for making revenue growth a reality by developing a
laser-sharp focus, aligning individual silo priorities and making the right
tradeoffs.
10.
Operationalize innovation by converting ideas into revenue growth.
Innovation is not the private property of lone 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 those ideas for revenue growth
that are to be funded, and shaping those ideas into product prototypes and
launching them into the marketplace.
The
tools that have been outlined are the foundation of your program for future
revenue growth. But remember what we said earlier Revenue growth and productivity
improvement are not conflicting goals. To keep the revenue growth engine
running, you must have a disciplined day-in and day-out program of cost
productivity improvement. Not only is it imperative for competitive
advantage, it provides the findings for future growth.
Ram
Charan is the coauthor of Execution: The Discipline of Getting Things Done,
the international bestseller that has changed the way managers run their
companies. He is a highly sought-after advisor to CEOs and senior
executives in companies ranging from start-ups to the Fortune 500. Dr.
Charan earned his doctorate at Harvard Business School and has been on the
faculty of that school as well as the Kellogg School of Management at
Northwestern University. His articles have been published in Fortune
magazine and Harvard Business Review, and his other books include What the
CEO Wants You to Know, Boards At Work, and The Leadership Pipeline.
|