One of the most common traps I see business owners fall into is making revenue growth the most important driver for their business. As ironic as this may sound [coming from me, a revenue generation consultant], revenue growth isn’t everything.
Why Growth Shouldn’t Be Your Only Metric for Business Success
Obviously, growth is vital for the long-term survival of your business. As a fractional VP Sales, I certainly appreciate the importance of revenue growth as an indicator of business health. To ensure long-term success, growth of course needs to go hand-in-hand with profitability.
When you focus purely on growth, your attention gets shifted away from the efficiency of your processes and profit is likely to take a hit.
There are plenty of examples of companies that adopted the “growth at all costs” model of doing business only to realize they had scaled unsustainably, had customer acquisition costs that are way too high, and ultimately experienced a drop in profits.
Why Declining Revenue Isn’t Necessarily a Bad Thing
A plateau or even a dip in your revenue is no reason to panic. In fact, sometimes it’s a good thing. It causes you to pause and reassess all things revenue generation. Before you start worrying about decreased revenue, take stock of your cost of sales. The resulting profit picture will tell you more about the efficiency of your sales processes than your revenue does.
Tips for Lowering Costs of Acquisition from a Fractional VP of Sales
When it comes to sales, your profit is related to lowering your cost of client acquisition. To do this, you need to optimize your sales processes so that you not only increase your throughput of leads but also increase your ratio of paying customers to leads worked. Here are some key factors for you to consider in order to streamline your sales function and decrease your costs.
Put the Right Processes in Place
Establishing repeatable, reliable processes is the first thing you need to do to optimize sales performance. Having a purpose built sales process in place guides your sales team through each sales stage and empowers them to provide a consistent experience to prospects.
Not only does this contribute to a higher win rate, but it also makes it possible to measure the effectiveness of each stage of your process to help you determine how you can optimize further.
Find the Right People for Each Role
Once you’ve got the right pieces in place, you need to make sure you’ve got the right people executing each of those process steps.
As Jim Collins points out in his influential management book Good to Great, it’s crucial to ‘get the right people on the bus before you decide where the bus needs to go.’ In other words, you need to ensure you’ve got the right talent in the right positions so that your team can operate as efficiently as possible.
Unsurprisingly, when you’ve got the wrong people in the sales department, they will be slower, less efficient, and less effective- not to mention quite unhappy about having to execute on those steps. Let’s look at a specific example of why this is the case and the knock-on effects it can have on your business.
Keep Your Closers Free to Close
Different roles require different skill sets…obvious, right? Yet you’d be surprised how often business owners have their best salespeople doing business development work or account management, to the detriment of the business. Sure, you may have that anomaly salesperson who happens to be excellent at both research and sales outreach. But chances are that’s not the case.
What’s more likely is that you have a great salesperson who hates research, who when given a business development task may take 2 hours to do what a research person who enjoys that task could do in 20 minutes. This is bad for business for multiple reasons:
- It’s an inefficient use of time and resources.
- A salesperson who isn’t good at research won’t get great data.
- The salesperson in this scenario probably won’t want to record the detail in the CRM, leaving a weak point in the historical data your company needs to draw from.
Now consider these impacts in the context of how many salespeople you have and it’s clear why assigning a business development function to the right person is an easy win!
Similarly, once they close a deal, your star salespeople shouldn’t be responsible for onboarding the client and keeping them happy. After all, the first rule of business is to keep what you have, then to grow – so keeping a Closer bound to an existing account is a surefire way to have new sales grind to a halt as that salesperson focuses on keeping that customer satisfied and on board.
This responsibility can and should fall on the shoulders of someone who has the time and talent for nurturing accounts. Depending on your business, this may be an implementation team, an operations team, or some other type of internal support team.
Focusing on Growth Without Addressing Operational Issues is Lethal
As we’ve seen from the above examples, single-mindedly pursuing growth without addressing areas of weakness in your sales process and sales effectiveness can harm rather than help your business.
By taking the time to strategically address operational issues, you can improve the efficiency of the sales process, lower costs, reduce sales staff churn, and ultimately achieve sustainable revenue growth.
Want to know more about why it’s more advantageous to focus on profit than simply striving for growth? Reach out to me, and I’d be happy to draw on my experience as a fractional Vice President Sales to discuss how this is relevant to your business.