Ways to achieve revenue targets more effectively?

This is a quick illustration (the subject is more complex than this, however a useful way to think about when you need to start marketing activity to achieve your end financial targets.

Summary digest

  1. Invest in marketing the year before you want to achieve your revenue growth.

  2. Marketing activity needs to stare earlier to allow for the sales cycle.

  3. Focus on shortening the sales cycle and acquiring leads closer to a decision.

  4. Inbound marketing methodologies achieve a compound return on investment YoY.

  5. Optimise your sales team to increase conversion of the additional leads.

  6. If purchase trends are seasonal, take those into account when planning

The problem

Owners of the business are often the best performing sales person and generate most of the leads. Much of their time is taken up meeting prospects and clients rather than having time to think strategically about their business, next target market or product.

Making time to start marketing earlier is fundemental to achieving targets.

Prioritising strategy time

CEOs know that to free up their time they need to become more effective in generating inbound leads, reduce the sales cycle and increase conversion, to generate additional income to employ additional sales teams. At what point does prioritising time to focus on this ahead of sales meetings?

Here is an illustration to help…

Lead time to achieving growth

Many loose sight of the lead time needed to achieve growth targets. Let’s take an example business case.

  • £1.2m in turnover, average contract £120,000/annum, £10K/mth subscription

  • Growth target to double sales in the next 12 months

  • Sales cycle varies from 3 months to 24 months. With an average of 5 months from initial contact to contract.

Are growth targets achievable?

Ideally, businesses want to steadily win new clients over the year. If you put this example into a simple business plan winning 1 client per month, you can quickly see:

  1. The business won’t achieve it’s sales target in 12 months, unless they shorten the sales cycle, start earlier or win more clients per month.

  2. Marketing activity needs to start 8 months before winning the new client to allow for the sales cycle from initial meeting to contract.

  3. Activity needs to start 20 months before the end of the year. Most businesses start investing in their marketing too late.

Simple-business-plan-acquisition-example-grow-revenue.png

How reducing your sales cycle can achieve £210,000 in incremental revenue

By shortening the sales cycle, the business can achieve an incremental 2 months of revenue in that year for each new client won. In this case equivalent to £210,000.

However, this still doesn’t achieve their sales target of £1.2m.

Simple-business-plan-acquisition-example-grow-revenue 3mth sales cycle.png

 Why you need to start marketing activity earlier

In order to achieve steady sales growth, starting strategic marketing planning and implementation is key to achieve growth goals.

In this simple example, if they start their marketing activity 2 months earlier e.g. 22 months before the end of the next financial year, they can achieve their revenue targets winning 1 per month. Allowing for the sales cycle.

Simple-business-plan-acquisition-example-grow-revenue marketing 2mths earlier.png

 Invest a year in advance

To build up awareness, build a relationship and have enough touchpoints with your prospect to convert them to talking to, your business plan should have marketing budget in the previous financial year to achieve the next year’s sales growth. In the example above, we’ve only used a 3 month marketing development phase, but in most cases it takes longer to get setup.

Is there a better way?

With Inbound marketing strategies, you generate greater inbound leads that are closer to the decision making stage, so you can expect to further reduce the sales cycle and win a greater number of clients as the compound ROI interest of the content you generates increases.

Simple-business-plan-acquisition-example-grow-revenue-with-inbound.png

Inbound marketing strategy reduces time to achieve sales

In this illustration (above), you can see that the number of clients won in each month increases due to inbound marketing strategy being implemented, therefore reducing the time to achieve target revenue goals by a further 4 months. 

Businesses are obviously more complex than this & often more clients are won each month.  However, businesses should still expect to start their marketing activity the year before.

Note: This is a simplified model and doesn’t show the number of leads you need to acquire to convert into the sales cycle. Nor does it take into account the option of increasing your marketing budget or sales team effort. However, optimising the sales team’s conversion from initial demo or contact to contract is key. You don’t want to generate 100’s of marketing qualified leads only to lose them once they’re handed over to the sales team/process. It also doesn’t show sectors or products that need a longer awareness generating phase. This is just a high level simple example.

Conclusion and lessons to take out of this example:

  1. Invest in marketing the year before you want to achieve your revenue growth.

  2. Marketing qualified leads need to be generated earlier to allow for the sales cycle.

  3. Focusing on shortening the sales cycle and acquiring leads closer to a decision.

  4. Inbound marketing methodologies achieve a compound return on investment, so you’ll continue to reap the rewards of the content you create next year too.

  5. Optimise your sales team to increase conversion of the additional leads you generate.

  6. If purchase trends are seasonal, take those into account when writing your business plan

Further Reading

If you need help developing your business & marketing plan feel free to contact me for a consultation or find out how I’ve helped other businesses achieve their goals

Sarah Joy