Guide to Measuring and Boosting Revenue Performance

As we approach the latter half of the year, it is time for B2B leaders to pause and evaluate their numbers. Though, with a myriad of market uncertainties (elevated inflation rates, supply chain disruptions, etc.), the year has not been easy for B2B organizations. As I speak with more industry leaders, the unfortunate truth is that the market is not showing much improvement and uncertainty is still running rampant.

There is a solution to help aid this issue and ease B2B leaders’ pains: sustainable revenue performance . But before we discuss growing and performing sustainably, how do you measure revenue performance?

MEASURING REVENUE PERFORMANCE

When looking at revenue performance, it is a bit more complicated than just subtracting costs from your gross profit. There are many aspects that go into measuring revenue performance. There are lots of sources to consider, but let us discuss the seven that resonate with most B2B leaders:

1. Gross Profit Margin. As you are likely familiar with, your gross profit margin is the percentage of your sales that generated pure revenue.
2. Customer Lifetime Value. This metric measures how much potential revenue a customer / client will generate during their involvement with your organization.
3. Revenue Growth. This is where your year-over-year (YoY) or month-over-month (MoM) sales numbers come from. Revenue growth is a great metric to answer the question of whether your organization is gaining or losing.
4. Pricing Power. This considers the average sales price you are commanding for your offering – where you examine historical trends, competitive comparisons, for example.
5. Efficiency Ratios. These ratios tell you how well your organization is using resources to generate sales. Some common ratios to measure are customer acquisition costs (CAC), win-rates and pipeline conversions.
6. Customer Churn Rate. There are several items that contribute to churn, including your pricing strategy . When you have a high churn rate, it could mean several things: your pricing is fractured, your products / solutions are not — or are no longer — serving your buyers or your customer service operations are not meeting buyer expectations.
7. Solution Sales Data. At Mereo we focus on the whole product approach . For revenue performance, that includes the whole business, customer acquisitions, sales quotas, teams, etc. Solution sales data is a tried-and-true metric. This is where you will see an overview of what products / solutions are selling and which are not. This is another great metric to show if your current portfolio is still serving your buyers. Recently our expert on the topic, Josh Hardy, has published articles to assist you in analyzing your product portfolio .

You have likely been dealing with these metrics — and likely even more — for years but creating a plan to boost revenue performance may not come as easily.

ARE YOUR PRODUCTS HELPING OR HINDERING REVENUE PERFORMANCE?

Now that you know where you stand in terms of revenue performance, how can you boost it? When considering the whole product approach, it is important to investigate your products. As we discussed, sales data is a valuable and common metric when measuring revenue performance. It is so difficult for us to say goodbye to our beloved products and solutions but sometimes it is necessary. So how do you know when it is time to say goodbye to a product? Consider using the Mereo Portfolio Performance Analysis Chart to analyze your products.

Here is a simple explanation of how to use the Portfolio Performance Analysis Chart in three steps:

1. Plot your products: what is your YoY revenue or growth with the product? What is the investment cost as a percentage for the product? Is the product contributing to revenue growth? Put each product you are evaluating in a quadrant based on your answers to these questions.
2. Shifting your product to a higher value or efficiency: Once you have placed your products in a quadrant, focus on the products in the orange quadrants first. Products living in the “developing” quadrant have the potential to be repackaged, created or delivered in a way that reduces cost. Products living in the “cash producer” quadrant are like a neutral party. They are not costing your organization a fortune, but they are also not bringing in a fortune. This is another opportunity for your teams to increase revenue without increasing its investment.
3. Know when to let go: If you cannot find a way to decrease costs or raise revenue for products that live in the “deficient” quadrant, you need to let it go. This is the disheartening part of the analysis, but with the Portfolio Performance Analysis Chart it becomes clear that letting go may be the best course of action for your organization.

If you are looking to end the summer with a bang, our expert Josh Hardy has also crafted a portfolio analysis challenge to give you a head start on next year .

You have successfully analyzed your product portfolio and, hopefully, cut what was necessary and uplifted what you could save.

ACHIEVE SUSTAINABLE REVENUE PERFORMANCE

At Mereo, we have created the Revenue Performance Blueprint? to help your organization grow efficiently and realize sustainable revenue performance. There are five interdependent operational disciplines in selling that contribute to the overall revenue performance engine: demand progression, solution marketing, solution management, sales operations and sales enablement.

The Revenue Performance Blueprint

Each discipline is necessary, but your use of these should look different from others depending on your goals and what works best for your organization. It is important to define clear roles and responsibilities for each of these five disciplines. You should also ensure that all disciplines are connecting, aligning and uniting. If even one piece of the Revenue Performance Blueprint is misaligned, your organization is at risk of failing to sustainably feed your revenue engine.

The first step to ensuring your revenue engine is being fed properly is organizational alignment. It is very easy for an organization to become misaligned, but an easy way to avoid this is to have your teams meet annually, bi-annually or even every quarter to come together and review, strategize and plan for the future. The next step is to ensure all five disciplines are working solidly through consistency, accountability and sense of urgency.

Consistency

• Instills a standard approach to sales process, lead qualification, ongoing pipeline scrutiny, opportunity management, account planning, territory management and other revenue operations disciplines to provide scale and enable measurement
• Institutes a governance cadence into the sales engine (daily activity, weekly examination, ongoing)
• Enforces common, compelling messaging in conversations (e.g. profile of buyers, conversations with buyers, differentiators, overall value proposition)

Accountability

• Implements rigor in go-to-market approach with sales team
• Brings leadership and sales savvy to management team (proactively manages up and with peers)
• Measures revenue performance and shares metrics broadly (both success and challenges)
• Displays strong communications skills and behaviors across the organization (e.g. win/loss transparency)

Sense of Urgency

• Enhances competitive energy of team (“hates to lose more than likes to win”)
• Leads with “last can of soup in the cupboard” mentality balanced by steady and confident style
• NOT a “super rep” but capable and willing to inject into sales cycles directly and indirectly as needed (beyond executive sponsor)

Growing Sustainably

Now it is time to shift your focus to growth. A key part of achieving sustainable revenue is to grow sustainably too. Considering the amount of uncertainty we are seeing in the market, focusing solely on revenue growth alone could do more harm than good. Instead, shift your focus to building sustainable revenue performance over time. When you focus on long-term revenue performance, you create a revenue engine that will serve your organization in good times and not so good times.

Furthermore, organizations that practice sustainable revenue performance command more pricing power . Selling teams working to achieve sustainable revenue performance have the motivation to close sales, but they will stand by the value of their solution and continue to support differentiated value proposition . In the end, focusing on sustainable revenue performance will generate revenue and allow you to continue prioritizing serving your buyers.

ELEVATE REVENUE PERFORMANCE WITH SOLUTION MANAGEMENT

While solution management is just part of the equation, it is still an important aspect of the revenue performance engine, and for achieving sustainable revenue performance.

>> Master your solution management engine with our free eBook .

And hit me back with other revenue performance categories (or specific metrics) you find are helpful in powering sustainable revenue performance.?