Companies often experience explosive growth at their launch or with a new product. They address a big unmet need, and customers quickly recognize the value. It’s as if customers hold money in the air, clamoring for attention just to make a purchase.
And just as suddenly they don’t.
These revenue shifts don’t have to be as dramatic as the boom-and-bust dotcom era. Often revenue simply flattens. And stays there.
Internal and external drivers can stall revenue: competitive response, market shifts, replacements, customer experience, etc.
Crossing the Chasm describes the driver that often stalls revenue for disruptive tech start-ups: early adopters typically have different needs from the early majority.
Although both are customers of the same product, the groups have different expectations and a different decision processes. These differences create a chasm between them.
Crossing that chasm requires understanding and addressing those different needs to fuel revenue through the adoption cycle.
Whether revenue plateaus because of internal or external drivers, there are a few immediate steps that can reverse the trend.
Survey the Revenue Streams
Analyze the performance of each of your revenue streams, going back at least 18 months if possible. Focus on those revenue streams that are flat and declining.
Create trend lines for each, ideally with dates marking the different quarters minimally.
Then, look for an inflection point: when did revenue stall or begin to decline?
Consider events, both internal and external, on or around that date. Did the competitor introduce a new product? Was sales material revised?
It may be possible to isolate a driver—or drivers—of stalled revenue. (Other answers may result from the steps that follow.)
If driver(s) are external, determine ways to combat the threat. If driver(s) are internal, make the appropriate adjustments.
Measure the incremental impact to ensure that the trend reverses.
Evaluate the Customer Lifecycle
Next assess how revenue has stalled from a customer perspective: is one or all of customer acquisition, growth, and retention stalled?
If customers are not converting, and/or are defecting, survey the intelligence that has been developed, and more importantly how it is used to engage customers and drive sales.
Determine if new customer intelligence is required, and/or if existing practices need to better reflect customer understanding.
Assess Customer Behavior
Assess customer behavior to determine if they disengage in greater numbers at one or several interaction points.
Here are two examples:
Google Analytics includes a visualization tool. With it, focus on the marketing- and sales-related pages and determine where customers leave your website.
Address issues with content, flow, and customer experience on those pages.
As a second example, if you have a sales automation tool, like Salesforce, determine where opportunities frequently end. (Without sales automation, you may have to survey the sales team.)
If, for example, proof of concept is a common end point, reexamine what is provided. Is it helpful or overwhelming?
Whatever your technology or process, determine the points of customer experience that could be driving customers away, and correct those points.
Again, measure the impact of the corrections.
Replicate What Works
As you’re going through the exercises above, hopefully you will identify success drivers. These are the never-miss approaches that one or a group employ. They could be winning objection responses, or an ROI calculator that proves value, etc.
Determine if these winners can be replicated. Perhaps the individuals or teams that created and employ them should train others.
However, do not include liberal discounting as a success. While offers and discounts are reasonable, cutting price as the only tactic starts a race to the bottom.
Go-to discounting simply trades a near-term revenue problem for a long-term revenue problem.
Ask the Big Question: Is Our Strategy Correct?
It is worth assessing whether the revenue challenges are created by tactical missteps or a strategic oversight.
It is possible to regain revenue from tactical corrections, but by focusing on trees and not the forest, incremental gain could come at the expense of tremendous return.
As an example, I had a tech client whose revenue stalled after a few years of explosive growth. I was brought in to identify and correct the revenue loss.
Analysis revealed that my client was not targeting adopting industries. Further analysis revealed adoption drivers. With this added insight, market and sales materials were retooled to speak directly to the adopting industries’ needs.
It is likely that my client could have regained some revenue by changing the marketing drip or coaching the sales team. However, analysis unveiled the elephant in the room. Once recognized, the correction was quite simple and highly profitable.
Take the Longer View
Cycles are natural. However, it is necessary to take a longer view to recognize coming shifts that could have a negative revenue impact. This is the difference between managing seasonality, and missing the signals of impending, impactful change.
As an example, I was a consultant to a Fortune Global 500 telecommunications company. With aggressive market entrants, we worked doggedly to retain market share and revenue. At a company meeting, market research was presented projecting the wide adoption of an emerging technology. Attendees nodded pleasantly at the fun factoid.
They failed to recognize the threat. My client and I exchanged panicked looks: we had no presence in that technology.
We knew that we had to quickly get smart about—and likely catch up to—this industry shift. All our prior efforts would mean nothing if we lost focus and didn’t evolve—as companies naturally must.
* * *
There was a time when the largest industry in the United States was the manufacturing of buggy whips. Change—to needs, industries, markets—is inevitable.
Recognizing whether new customer intelligence is needed to cross a chasm or monitoring the multivariate drivers that can drag down revenue must be a continual practice. That practice can be complex.
The reward for managing near-term adjustments while planning for long-term changes, is reversing stalled revenue, and instead growing the company and its profits.
Would you like to discuss revenue growth? Or how to meet revenue goals? Let’s talk! Set up a 30-minute phone conversation with Marina.
Photo Credit: Carolina Pimenta