Revenue growth isn’t a business growth strategy
It seems pretty standard to prioritise revenue growth in business because the point is to bring in money, right? Without revenue coming in, a company will struggle to survive, and end up failing. Yet, the #1 mistake businesses make is when they focus only on revenue as a business growth strategy instead of considering the real drivers of growth. The activities that— when done right—lead to growth.
Here's the thing, “grow revenue” isn’t a strategy. It’s not a plan of attack, and it doesn’t give you any idea how to make it happen. It’s an end-goal, but not a means to achieving it. It’s the smaller activities, the components of your business activity that lead to revenue growth, but you can't just rely on one activity to get you through. In business you’ve got to pull multiple levers at the same time to keep growing and changing. It's like driving a car: you can’t make all your left turns at once. Always take a balanced approach in your activities, whilst keeping your destination front of mind.
Revenue is the outcome, not the strategy
The first and most important thing to understand is that revenue growth is not a strategy, but the outcome of a business's activities. It's like arriving at work: The destination is the outcome, and it's the result of left turns, right turns, and all the other elements of driving a car that got you there. To use the car analogy, revenue is where you’re going and business strategy is how you’re going to get there—the route you’re going to take, whether to go through down the freeway or along the coast.
Putting all of your focus on revenue growth without paying attention to the activities contributing to it can be a big mistake and there's four important reasons why:
Revenue is not the same as profit
Just because your company's revenue is increasing, it doesn't necessarily mean it's making a profit. Understanding your numbers is key. For example you want to add a new product or service (revenue stream) but in order to do that you need to hire. Understanding the timing required to hit a break even point, then achieve enough market share to push into the green takes time.
But as mentioned, in order to do that you must be clear in your positioning and value of your service. You’ll also need to have clear systems and processes to deliver the result you promised.
It can lead to unethical behaviours and unsustainable growth
Focusing too much on revenue growth can lead to cutting corners to achieve goals fast, which can result in unsustainable growth. Short cuts include things like lowering the quality of products or services or neglecting employee well-being. This short-term approach may result in fast growth, but it can harm the company's reputation and long-term sustainability to a point where it is not generating enough profit to sustain its day to day operations.
It can distract from other important metrics
When a company only focuses on revenue growth, it can distract from other important metrics like customer retention, employee satisfaction, and product quality, to name a few. These are crucial as neglecting them may lead to a decline in customer loyalty, productivity, and overall reputation. The result of these metrics declining will inevitably be your bottomline revenue declining, too. It's important to strike a balance between monitoring revenue growth, but focussing on other key metrics to ensure sustainable success. A “balanced scorecard” approach is a great place to start.
It can lead to a lack of innovation
It's not just about making money. It's about staying ahead of the competition. Focusing only on bringing in revenue may cause businesses to forget about the bigger picture, like new opportunities for market penetration, expanding their product line or developing new services. They become complacent and stop innovating, which can lead to their downfall.
We stuck it on the walls here at Dilate, in big letters to remind us; “Businesses only have 2 functions. Marketing, and innovation.” By combining strategic marketing with creative innovation, you can bring valuable results and growth to your business.
Looking beyond revenue growth
How are your employees and customers?
Happy employees = happy customers. Just as a car needs a well-tuned engine to run smoothly, a business needs a happy and engaged workforce to provide great customer service and drive sales. By prioritising the satisfaction and well-being of employees, businesses can create a positive work environment that translates to happy and loyal customers.
To achieve long-term success, companies should focus on making their customers happy by providing top-notch service and high-quality products. That way, they can attract new customers, and retain existing customers who will stick with you through thick and thin.
So, take a look at your customers and your employees, and figure out if everyone is happy!
How is your product or service quality?
Are your products or services the kind that people just can't get enough of?
When companies invest in product and service quality, they show their existing customers that they care about delivering the best possible experience. Business is simple. Deliver on what you say you're going to do, and people will tell their friends.
So if you want your company to be unforgettable, don't skimp on quality! Make sure your product or service is top notch, and watch as your customers keep coming back for more, and bring a few new customers with them.
What is your vision and have you shared it?
Think of it like rowing a boat. If everyone isn't rowing in sync, they'll just go in circles. But if they all work towards the same goal, they’ll get to their destination faster than anyone else.
The key to getting your crew rowing together is to share your business vision with them, and get their buy in. When your team knows the goal and believes in a shared vision, they can get behind it and work together to achieve it.
So, set your sights on that horizon and get your crew rowing together! With a shared vision, there's nothing you can't achieve.
When was the last time you innovated?
If you keep doing the same thing over and over again, your competitors are going to catch up and leave you in the dust. But if you're constantly innovating and staying ahead of the game, you'll be the one leaving them in the rearview mirror.
Start innovating! Constantly stay updated with market research and look at the existing market versus new markets, work on product development, new products and product expansion, and don't be afraid to change or develop your marketing strategy.
With a little bit of creativity and a lot of hard work, you can take your company to the top and stay there for the long haul.
How to create a good Business Growth Strategy
We’ve given you reasons why focusing on revenue is not a good business growth strategy:
- Revenue is not the same as profit
- It can lead to unethical and unsustainable growth
- It can distract from other metrics
- It can lead to lack of innovation
… and what you can start looking at right now to start improving your business growth:
- Customer and employee satisfaction
- Product and service quality
- Shared vision
Now it’s time to create your own Business Growth Strategy. Now, there’s no one-size-fits-all approach to a business growth strategy, so we can’t exactly give you a definitive amount of steps to follow. But we can tell you how you can get started:
1. Find out what needs the most attention
Whether it’s employee or customer satisfaction, product or service quality, how you’re generating traffic and closing leads, or your operations systems, take a look at every corner of your business, find what needs strengthening and work towards it.
2. Understand your numbers
You need to be able to measure everything you do, from customer acquisition, to customer retention, through to cash flow. Understanding your numbers gives you the ability to predict future outcomes and make better informed decisions.
3. Stay accountable
Businesses know what they need to do 99% of the time, but we also know how overwhelming it can get trying to wear all the hats. Bringing in someone else to keep you accountable and stay on top of your business growth strategy can be a great investment for your business.
What else do you need for a good business growth strategy?
Remember how we said to pull multiple levers at the same time to keep your business growing? Now, that might seem overwhelming, but take a look at this: it's our Business Growth Map here at Dilate, and it's the model we currently use to stay on top of our business growth. It's the activities that influence each stage of a customer's journey, from generating traffic to conversions, lead generation to customer acquisition, and customer retention down to profit and cashflow.
Notice how there are many little activities that can take place in order to achieve a result at each stage? This is how your business growth strategy should look - not exactly the same, but similar with your unique situation in mind.
- How are you generating traffic, and what are you converting from that?
- What quality of leads are you generating and how are you closing them?
- What is the retention rate of total customers, how are you retaining them?
At Dilate, we’re not just a digital marketing agency that creates and launches epic digital marketing campaigns. We understand there are many many elements involved in growing a business that actually affects the overall marketing strategy. So if you want to create an action plan for your business growth strategy, but don’t know where to start, let’s talk.