Executive leaders know there is always a push to generate more profitable revenue. However, the end of a fiscal year creates added pressure as companies strategize and plan for the coming year.
Your company’s success next year depends on the planning you are doing now.
So, what does your strategic revenue plan look like for next year? Ask yourself:
- Where will revenue come from?
- How will you prune your client base and modify offerings to increase profitability?
- Can you trust your forecasts and existing sales processes, or do they need to be updated?
- How will you encourage cross-functional efficiencies between sales and marketing?
- Who will provide unbiased advice to leadership when big decisions must be made?
An effective revenue plan answers these questions and more.
A business should know what percentage of its annual revenue is generated by its largest client. Companies that are too heavily reliant upon a single client open themselves up to risk that can jeopardize revenue when industry or market disruptions occur. Diversify your revenue sources to mitigate this risk and improve organizational resiliency.
Analyzing Profitability at the Client-Level
Regularly report on individual client profitability to facilitate strategic decision-making across the organization. Without tracking profitability down to the client-level you cannot understand which clients are the most profitable. This data is important as it informs how you prioritize support resources, offer retention incentives, and reward loyalty.
Additionally, individualized profitability analysis also allows your business to determine which clients should be re-homed to allow more scalable revenue growth. Send your bottom 10-20% of clients elsewhere every year to prune your client base and improve overall profitability.
If you can avoid it, do not simply “fire” these clients. Ideally, you will have a partner you can send them to that will fit their needs better while simultaneously freeing up your customer-facing teams to devote their time to nurturing more profitable accounts.
Analyzing Profitability at the Product/Service-Level
You should be reporting on the profitability for each line of business at regular intervals as well. Look for ways to improve profitability on products/services that are selling well but not meeting profitability goals. Without focusing on improving margins on these offerings, you run the risk of heavily investing in revenue growth that ends up being unprofitable.
In the same way that you should prune your client base, you should also lean on the data to intentionally discontinue your lowest-performing products/services every year.
Improving Your Sales Forecast Accuracy
To be effective your monthly sales forecast must be at least 90% accurate. An accurate sales forecast is vital to cash flow management and informs everything from purchasing to staffing decisions. Use updated forecasting tools and processes to improve your sales forecast accuracy, especially when business disruptions occur.
Formalizing the Sales Process
Document the sales process and distribute it to all market-facing team members – not just the sales team. Sharing information between teams creates a better customer experience, integrates business processes for improved efficiency, and builds team alignment through the use of a common language.
Using a CRM Tool
All customer-facing teams should use a CRM tool to keep information on clients, leads, and prospects organized and updated. Regular CRM usage informs an accurate forecast and allows workflows to be tracked and automated to ensure that relevant resources and offers are provided to leads and clients throughout their customer journey.
Profitable revenue growth requires sales and marketing to work together. If sales and marketing teams are always fighting and competing for credit, a revenue plan cannot succeed. Teams should share resources and data, collaborating to succeed together. When the numbers come up short, neither team should be pointing fingers to place blame. Instead, they should unite and rally around a new approach to fix revenue numbers.
Generating a Written Marketing Plan
Your marketing plan is not just for your marketing team. It guides marketing efforts and also informs sales and customer service efforts as well. The goal is to generate the type of leads that help you achieve the company’s vision and provide predictable revenue. And your marketing plan simply cannot do this effectively if it is not written down to serve as a company-wide resource. If you have not done so yet, you need to formalize your marketing strategy.
Finding an Advisor
Having an impartial and unbiased opinion is incredibly valuable in strategic planning and critical decision-making. Utilize a group of trusted advisors, whether it is a board of advisors, consultants, or a peer group, to assist with strategic planning and problem-solving. A fractional Chief Revenue Officer is a great option because a CRO oversees revenue strategy development and implementation.
Take our revenue generation assessment for yourself to generate a customized look at how your company is poised to generate revenue in the coming year. Get instant access to actionable revenue planning information and insights now!