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Tilting The Revenue Curve

by David Brock on August 3rd, 2016
exponential growth

In the past few days, there have been a couple of outstanding articles on “Tilting The Revenue Curve.”  Bob Apollo wrote an outstanding article.  It was based on Jason Lemkin’s article.

I was captivated by one line in Jason’s article about new sales managers in early stage SaaS companies.  He states the job of the sales manager is to increase revenue growth, within one sales cycle or less.  Honestly, I struggled with that idea for a few moments.

Jason positions this in a very special use case:  The first sales manager a new SaaS company puts in place.  I thought this might be reasonable for the very first sales managers in SaaS companies.  After all they are the first sales professionals being brought into the company, so they should be able to do much better than the non-sales professionals that have been attempting to grow sales.

But I struggled with the idea, what if we challenged every sales manager in every company, in every industry with the same thing?

Whether they are incumbents or new to their role, is it reasonable to say their job is to increase revenue growth within one sales cycle or less?

I reflected on some of the companies I’ve advised–companies in very difficult times that need to turn things around to survive, that need to re-establish growth.  Sometimes these companies are dealing with huge challenges across multiple fronts, and hundreds to thousands of people may be involved.

Given the complexity of the situation, the change management challenges, and all the moving pieces, is it reasonable to expect the sales executive to increase revenue growth within one sales cycle or less?

Then I thought about some of the truly top performing companies we’ve worked with.  Companies that are already the leaders in their industries and markets.  Is it reasonable to think these top performers can drive revenue growth within one sales cycle or less?  They are doing really well, presumably improving on that is difficult–particularly within one sales cycle or less.

At first I thought–in some cases this is reasonable, particularly in the cases Jason outlined.  But I thought in the majority of cases it’s simply unrealistic.  Particularly as you look at very large organizations with very complex sales/buying processes.  Clearly, it’s unrealistic to think that we can drive revenue growth improvement in one sales cycle or less.

I was prepared to write an article condemning the idea, saying it may work in the special circumstances Jason outlines, but not generally.

As I put my fingers to the keyboard, I realized I was completely wrong!

Not only is is possible to drive increased revenue growth within one sales cycle or less, it’s our obligation as leaders–to our people and our companies.

Next year, we have to be better than we are this year.  Next quarter, we have to be better than we are this quarter.  Next month, we have to be better than we are this month.  Tomorrow, we have to be better than we are today.

What we are really talking about is continuous improvement.  It’s our job to continually improve our capabilities and performance—to grow our sales at a rate faster than before.  If we aren’t growing, if we aren’t putting in place the things that allow us to do better within one sales cycle, then we are falling behind.

Let’s put some numbers to this.  If we are in very complex enterprise buying processes, we have longer sales cycles–often 12 or more months.  Jason’s challenge is, “This year we have to put in place the things that allow us to grow more in the coming year!”  Stated differently, if we aren’t putting them in place this year, we will never achieve that growth in the coming year—the clock works against us.

Likewise, if we have a 4 week sales cycle, we have to constantly look at, “are we improving and growing, are we better this month than last?”

Continuous improvement is mandatory, not optional.  If we aren’t improving, we are on a path to irrelevance.

What drives this need to continually improve, to grow over what we have done in the past is the accelerating rate of change?

We may not like change, we may resist it, but in spite of everything we do, change still happens.  And the rate is increasing.

We can’t even stay with “the rest of the pack,” unless we are constantly improving.  We can’t be leaders in our markets and industries, unless we are constantly growing.

Our customers can’t afford to stand still either.  If they aren’t constantly improving, they will fail.  It’s our job to help them identify areas to improve and grow.  If we aren’t constantly improving how we serve them, than our value diminishes–it’s displaced by those who can.

You may agree with the concept, but the idea of doing this within one sales cycle seems unreasonable and achievable.  That was the key struggle that I had with Jason’s idea.  But then I realized, what we must do is identify those things that will move the needle on revenue growth now.  We must be putting them in place in the current sales cycle so that we can see the results of them in subsequent sales cycles.  We must understand the leading indicators that show we are on the right path–we can’t wait to see the results in revenue, because if we miss, then we’ve lost at least one sales cycle and may miss more in recovery.

The concept of increasing revenue growth within one sales cycle seems daunting, but when you look at it in the context of continuous improvement, it’s what we should be doing anyway.

As sales professionals–whether we are managers or individual contributors, we have to drive growth.  We have to see that we are improving—not in five years, not in a couple of years, we have to be improving with each sales cycle.

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3 Comments
  1. Scott Woodhouse permalink

    Great article and take on this.

  2. David Locke permalink

    Continuous improvement ends. It converges to that manager. Then, there is the other problem, exceeding the value of the game. That happens by optimizing too much.

    Once upon a time, the board insisted on moving sales to the CXO sale in the middle of a quarter without prior forecasts and guidance. That lengthened the sale cycle, missed the quarter’s guidance, and killed the company. So much for improvement.

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