Identifying revenue growth - Strategies to grow, expand and thrive

As our world changes, we need to figure out how to not only earn money, but to keep earning revenues to cover our bills, grow, expand and thrive. As we think of growing our businesses, we must strategise to increase our revenue growth opportunities. It is important to know that structural sources of growth are not dependent on the types of products a company sells or on how a company is organised, but rather on the business and marketing strategies which a company uses to tap into each source.

Many persons accurately think of earnings in two ways – from current customers (retention) and from attracting new customers (acquisition).

Let us expand that thought and look at four tried and proven growth strategies:

(1) Market penetration strategy: sales of existing products in existing markets;

(2) Market development strategy: sales of existing products in new markets;

(3) Product development strategy: sales of new products in existing markets; and

(4) Diversification strategy: sales of new products in new markets.

To implement these strategies, we need to think of the primary avenues to deliver on them. These are:

• Grow within your current category (strategy 1). Sell to new customers in existing markets. This may include identifying and capturing your competitors’ customers or capturing previously unserved customers. Sell more to current customers, for example, improving customer retention strategies by keeping your current customers happy and coming back to support your business.

• Seek opportunities outside your market or category (strategy 2 & 4)

• Identify adjacent markets and grow through partnerships, mergers, acquisitions (strategies 2, 3 & 4)

Driving consistent, profitable revenue growth is one of many business challenges but is perhaps the most persistent of them that a business may face. Please note the word “consistent”. Though companies often produce substantial revenue growth sporadically or over short periods, it is often difficult to consistently generate above-average growth over the long term. There is need to develop ways of generating consistent growth through deep-diving into the strategy implications. Planning for sales growth is essential for a business’ revenue improvement.

We can grow our revenue by deepening markets through selling to new customers in new markets. It is, however, important to first find the right balance between short-term and long-term growth opportunities. Having struck the balance, the business must then ensure the identification of the available growth opportunities and prioritise which are most attractive. When you are planning for growth one of the first steps in identifying potential growth opportunities, is to understand the dynamics of revenue growth or increase in income. We must understand not only how growth happens but more importantly, how we can sustain this growth.

Identifying the growth opportunities is often simple: What are the challenges within your industry which you can address? Listen to your potential clients and understand their needs, wants, challenges and frustrations with your industry.

You should also talk to your current customers, ask for their feedback and ideas, as well as get to know their needs, likes and dislikes.

It is also important to know your competitors and to understand and know the trends and insights of the industry in which you operate.

To put thoughts into a framework, we can look at five structural sources of growth:

(1) Continuous sales to existing customers - base retention;

(2) sales attracted from the competitors - market share gain;

(3) new sales in an expanding market - market positioning;

(4) sales from expanding into related but different markets - adjacent market expansion; and

(5) sales from expanding into new, unrelated lines of business – diversification.

The framework above is a good tool for stimulating thinking about how to grow your business and for identifying the growth opportunities that are available to the business. You must however keep several things in mind when using this framework. Remember that:

• Structural sources of growth as shared above are always present, at least to some degree.

• Their existence is not dependent on the market conditions faced by a company at a particular moment in time; and

• The size of the revenue that a company can obtain from each source, is greatly influenced by the market and the competitive environment.

Although we have identified potential sources of revenue growth, the framework does not explain the relative attractiveness of each of the identified sources. To properly evaluate the relative attractiveness, traditional market and competitive analysis tools and techniques need to be employed. It is also important to note that no single source of growth is likely to provide all the revenue needed to reach your business’ growth objective. In addition, each source of growth has distinctive attributes and dynamics.

You will need to create a specific strategy and game plan for each source of growth chosen. In the midst of the current global pandemic, there are still many growth opportunities. However, we now are forced to take a focused and strategic approach to ensuring growth and sustainability.

Charlene Ashley is an international business strategist & behaviour consultant. Email: cashley@theconsultancyinc.com