Three Keys To a Powerful Revenue Flywheel

In Good to Great, Jim Collins observes that great companies embrace the power of the flywheel. Nowhere is this more important than revenue growth.?

I believe there are three key aspects to creating a powerful revenue flywheel: a common focus, two core areas to apply force, and consistent execution.

1. Have A Common Focus

The first key to a flywheel is to have a common focus. Like the center of a wheel on your car, there needs to be a central point around which the flywheel rotates. For revenue, I believe this central focus is your Ideal Client.

Too many companies make their products the central focus of their sales and marketing efforts. The challenge with this is that as soon as a new product comes into the mix, everyone loses focus. When that happens, the flywheel looses momentum.

Years ago when I worked in the office technology industry, we began with a focus on copy machines. As technology evolved, the industry began to offer software and then services. Many companies lost their way because they didn’t know where to focus. Some reps focused on copiers. Others sold software. Still others tried to pull the company toward focusing on services. Everyone sold in a different direction. Marketing became scattered and schizophrenic. As such, many of these companies failed to generate a flywheel of exponential growth.??

The common focus is not around a product or service. It needs to be around the Ideal Client and the outcomes they want. Those in the office technology industry that understood that an Ideal Client was a process-intensive company that needed to run more efficiently could have kept the focus on that client’s desired outcomes. The additional products and services could have been added to create additional force around the flywheel.

Collins presents the Hedgehog Concept as the powerful concept to understand the core focus of the company. Drawing a venn diagram, he challenges us to look for the overlap between:

1. Passionate About
2. Can Be the Best In the World
3. Economic Engine.

In the context of Ideal Clients, I like to think about the overlap between these three circles:

1. Values—What are the mission, purpose and values of your company? When you find clients that align with this you create long-term relationships that generate lots of referrals.
2. Value—What is the 10 year value of this client if they bought everything you offer? Ideal clients have a high potential value. Like a good investment, they have the potential of a high yield.
3. Value Proposition—What is your unique value proposition? This helps you define where you can generate competitive advantage.?

The overlap of these three areas helps you identify the Ideal Client that should be the center of your flywheel.

2. Apply Force to Two Key Areas

Flywheels get momentum by applying force in the same direction over a sustained period of time. In the context of exponential revenue growth, this force needs to be applied to both the net-new and cross-sell portions of the client journey.?

When this happens, you not only generate exponential revenue growth, you also generate momentum.

• Cross-Selling marketing and sales efforts put you in front of your Ideal Clients on a consistent basis. Not only does this drive additional revenue per client, it also generates opportunities for referrals. Plus, the deep understanding about the current outcomes your prospects want. All of this fuels net-new growth.?
• Net-New sales and marketing efforts bring in more Ideal Clients. This generates fresh revenue while creating more opportunities to cross-sell.

When sales and marketing teams focus exclusively on net-new business while neglecting cross-sell activities, they miss the opportunity to create a flywheel.

3. Take Consistent Action

All of this requires consistent action. Consistency needs to happen in two ways: what you do (process) and how regularly you do it (cadence).

Processes are a series of steps for a repeated outcome. While operations and finance teams typically have documented processes in place, sales and marketing are more like the wild west. We hire some gunslingers and tell them to go “make some calls and sell something.” On the marketing side, it’s easy to chase shiny objects.?

Sales and marketing need documented processes. Even though the processes may not be perfect, since they are documented, they can be improved over time.

Sales and marketing also need consistent cadences. These become the non-negotiable habits that are executed consistently week after week.

The three keys to creating a powerful revenue flywheel are a common focus on Ideal Clients, force applied in both net-new and cross-sell revenue, and consistent action based on processes.?

If you like the ideas in this article, you’ll enjoy the Revenue Growth Engine? model. It brings all of this together in a framework that allows you to create a powerful flywheel for your business.

Originally published on the Revenue Growth Engine? Blog