Is there an easier way to grow your business?

A simple way to harness your growth potential does not necessarily include investing in new solutions or new markets.

 
Roughly one month ago, I was in a meeting with the owners of a mid-sized company in the building materials industry. In our discussion, there was a pain point in focus – top-line growth was absent, and this was preventing the owners from seeing the added value they had hoped to achieve from their investment in the company.
 
Talking to the company, I was surprised to learn that all ideas for potential growth which they had produced up until this meeting was about new innovations or new markets. I do not disagree that these are possible growth drivers, but they are typically medium to long term in horizon and associated with significant investments and risk. So, the question remains:
 
Is there an alternative path to growth that produces results in the short term and with a high degree of certainty and sustainability?

 

A mathematical formula for growth

In order to answer the question above, let me introduce you to the four main drivers of (pure*) organic growth in any company:

1. Number of opportunities created
2. Win rate
3. Average order/contract size
4. Retention rate

^{(*no change of products, services and/or people)}
 

For the sake of simplicity, let’s make the following growth formula:

 
Number of opportunities created x Win rate (in %) x Average order (or contract) size constitute the revenue created in any period on top of recurring business. The retention rate is a measure of the company’s ability to keep customers on board after their first purchase.
 
Broadly speaking, you can argue that any %-increase or -decrease in any of the four drivers directly influence the growth rate. All things equal, if you increase Number of opportunities created by 10 %, your new revenue growth will be +10 % on top of your running business. The same logic applies for the other drivers. If your retention rate remains constant, but you improve Number of opportunities created, Win rate and Average order/ Contract size by just 5 % each, your new sales growth is close to 16 %. If, at the same time, you increase the retention rate by 5 -10 %, you will be looking at growth rates way beyond market or industry average.
 
 

From theory to real-life growth – short-term results with a high degree of certainty

Math is easy, but in practice, how is this improvement doable?
 
We have worked with 100 + leading companies, and what we have learnt is that almost every day, commercial people go to work and repeat their routines as they did yesterday, and the day before, and the day before. The result is, not surprisingly, the same outcome as yesterday and the day before.
 
So, once commercial routines have been established, additional growth with the same organisational setup and the same products becomes troublesome. But from our work, we have seen some common patterns that suggest that the key to transforming results is quite simple:

1. Find out which new routines will produce a better result.
2. Design a visual and engaging meeting concept that will help people change their routines.
3. Support commercial managers (on the job) in installing this meeting concept with a strong coaching routine to drive new routines.
4. Follow up on relevant KPIs for the four growth levers and your commercial staff’s satisfaction with each encounter with their manager.

If you combine the four points above with strong involvement of your commercial leaders, better results are a highly likely outcome.
 
We have labelled this concept Commercial Acceleration.