Tl;dr - Many manufacturing companies talk about growth strategy but simply operate on auto-pilot, allowing the market to dictate their results. A properly developed and executed revenue growth strategy creates a roadmap for the proactive execution of priority initiatives to drive the growth that management and directors value.
New Logos Illustrate Your Real Revenue Growth Strategy
Many industrial companies receive 50-70% of annual revenue from existing customers.
Yet most talk in ways that contrast sharply with reality - discussing growth opportunities in vertical markets/industries, new product innovations, etc.
In other words, while they contemplate specific growth areas, they routinely fall back on executing according to habit and comfort.
Their revenue growth strategy happens by default, rather than design; despite meetings, brainstorming, and conversation about how to structure it.
That costs them revenue.
And importantly, it's not a strategy.
Foundations of Effective Revenue Growth Strategy
What is a revenue growth strategy? It is the framework and priorities for profitable sales, market approach, and competitive positioning that are established by executive management and approved by the board.
It considers economic conditions, technology, markets, business model, (in)direct competition, and more. And it specifically is not a list of execution tactics, but rather the high-level guidance designed to strongly position the company for coming years. (More here on the dangers of conflating strategy and tactics.)
The strategy is established based on the company's purpose and vision, current and projected market and economic conditions, and the company's aspirational and baseline targets for revenue, profits, geographic/industry/application market focus/diversification, and market share. It's the product of guidance from the board, and collaboration between senior executives from all key disciplines including finance, marketing, sales, HR, and manufacturing.
These guidelines then inform intermediate frameworks which guide execution. These include the ideal customer profile (ICP), pricing approach, business development plan, regulatory considerations, customer retention and expansion, product roadmap and inorganic growth (partnerships and M&A.)
An effective revenue growth strategy must be deliberately designed and not simply backed into based on paths of least resistance, recency bias and habit.
Making a Revenue Growth Strategy Actionable
Many companies fail to proactively create a true revenue growth strategy. Even fewer actually translate strategy into actionable plans for execution. Failure to execute a strategy, no matter how well crafted, obviates the value of creating it.
So how must a company translate a revenue growth strategy into actionable elements?
There are five key steps which include:
- Relentless, public management emphasis and support (mindset, culture and change management)
- Create the "middleware" that helps to translate strategy to execution
- Orient tactics around strategic goals
- Measurement, reporting, and accountability
- Continuous adjustment
Let's look at each in more detail.
Revenue Growth Change Management
The most important, and most difficult first step is the required mindset change. Companies are habituated to lofty planning meetings that have zero impact on execution.
So from a change management perspective, it's critical that each discussion, presentation, KPI, request, and proposal - in other words, every interaction - be tied to elements of the revenue growth strategy. This will reinforce the company's goals, support better decisions and resource allocation, and inculcate in all members the fundamental importance of the strategy. (Of course, this highlights why it's important that it is properly created. A few nice-sounding suggestions from a brainstorming meeting will be quickly revealed to be inadequate when subject to this sort of attention.)
Create an Intermediate Framework
It's impossible to effectively translate corporate revenue growth strategies directly into execution tactics. An intermediate planning step is required.
That means that the derivatives of the business strategy must be created. These include:
- Refined competitive intelligence, market and regulatory research - understanding in detail the buyers, buying teams, buying journey, competitors, pending regulatory drivers, and unmet needs in target areas
- Product roadmap planning - creating solutions that will resonate in target areas vs. just adding pet features
- Partnership opportunities - establish symbiotic partnerships to access markets, technology, and authority to reach into expanded target areas
- Inorganic growth options - accessing markets, technology, and customers through acquisition or JV and divesting elements that don't support the strategy
- Sales model updates - new targets will likely require new or modified sales methodology, sales process, sales channels, and even changes in sales team configuration such as increasing inside sales
Marketing and sales will create most of this. Product marketing, marketing operations and sales operations are roles that many middle-market industrial manufacturers lack, but are critical for this sort of work.
Executive management, and perhaps even an independent board director, should be involved to guide the work and ensure it remains true to the intent and strategy.
It's easy to skip this. Often companies decide they'll target a new market - say more eat-at-home prepared foods as food inflation impacts restaurant dining. There's an inclination to simply tell reps to start calling on more prepared food companies with retail vs. institutional focus.
And that will likely fail.
Their challenges, their customer conversations (grocery vs. restaurant), their production considerations (frequent changeovers, small unit increments, etc.) will be different. That requires very different marketing messaging and sales activity that must be designed to match the market instead of simply evolving in an ad hoc way with each content piece and individual rep.
Turn Broad "Whats" into Atomic "Hows"
If, as in the eat-at-home example above, the revenue growth strategy requires targeting new markets, success depends on creating granular increments of marketing and sales.
Every activity (editorial content including social posts, press releases, blog articles, site pages, and brochures, as well as trade show themes, sales cadence messaging, target account identification, product feature, staffing decision, etc.) needs to tie back to the revenue growth strategy.
This doesn't happen accidentally but requires the explicit and deliberate update of existing processes. Too often companies say something along the lines of "OK, let's shift marketing and sales to focus on XYZ." but leave all the talent, resources and processes (to the extent that they're even defined) in place.
Improvements follow a process like this:
- We know we need to reach more manufacturers of eat-at-home prepared foods
- Our research tells us the following about their business challenges, their buying process, competition, upcoming regulatory changes, etc.
- That means that we'll target that market in the following ways (resonant messaging, sales process, partnerships, PR, etc.)
- So we'll create content for this key persona around this problem at this stage in the buying journey and train our sales team on how to uncover compelling reasons to buy and use the sales enablement content to do so
Too often a quarterly reporting deadline approaches and the team scrambles to justify their work. Simple retrospective reporting often just documents the lack of progress and fails to inform activities.
Instead, companies must create KPIs, dashboards, and frameworks to ensure that activities remain focused on important outcomes, and that progress (or lack thereof) toward them is continuously tracked.
This structure needs to guide every decision toward the priority activities and provide real-time tracking toward the goals. These can be high-level (e.g. identify 5 strategic acquisition targets by end of Q2 with a timeline to close the deal by EoY) or very granular (e.g. for growing manufacturers of eat-at-home per the example above - five press mentions around industry solutions, top ten ranking for five process/problem key terms, and account-based marketing campaigns created.)
But....tracking only works if it's accompanied by accountability. That means the dynamic allocation of resources by management, and clear, unequivocal expectations of each team member with consequences if they consistently fail to perform.
Adapting Execution In Pursuit of Strategy
Appropriate measurement and tracking will provide early warning of gaps in attaining the goals. And there will be some.
Occasionally the strategy may be faulty. The most common mistake among machinery manufacturers is the creation of products and solutions based on what the company founders and engineers want to create rather than what buyers will need in the next phase of market evolution. So evaluation of results must, at times, consider whether the strategy is solid.
Generally though, adjustments need to be made elsewhere in the process - most often in the tactical execution and sometimes in the framework. That's to be expected and not a reflection of poor planning. It's impossible to know what articles, email sequences, videos, etc. will resonate. A/B testing can inform decisions quickly and the dashboards and KPIs will help to quickly identify lagging areas.
There may be new information to be incorporated, or often it's simply a matter of going back to the planning and brainstorming sessions and shifting to the next option.
Revenue Growth Strategy Doesn't Just Happen
Too often companies vaguely articulate a "strategy" founded in familiar, recent, default conditions. "We'll grow 7% by emphasizing our commitment to customer service and quality." for instance.
That neither drives any proactive activity nor forces the team to actively work toward specific goals.
To achieve notable results a strategy must be properly created, translated to priorities and in turn to tactics, then measured, and finally, continuously adjusted.