Achieve the Largest Revenue Gain With the Lowest Cost Increase
Many management experts remind us to find the most important element to manage and stay focused on it. But what is that one thing when it comes to increasing revenue?
The most important factor is the reducing difference in the amount of revenue produced by the top salesperson compared to the average salesperson during the first years of a product’s introduction.
Frequently for new differentiated products, the top 10 percent of salespeople will sell more than two or three times the amount that the average salesperson sells. These early sales are critical for gaining market share for new products while the product or service differentiation is high.
Over time, as the market and the other salespeople learn more about the product and the customer value delivered, the size of the revenue gap will decrease, but by then, the competitors will have started to catch up, and the differentiating advantage decreases.
What does the average salesperson learn after the introduction and a couple of sales cycles that enables them to increase the amount of revenue produced, moving closer to the sales levels of the top salespeople? If the firm provided that information earlier, would the average salesperson be able to produce higher sales levels earlier? The answer is yes!
Firms really can’t get much more revenue out of the top 10 percent of salespeople, and trying to save the bottom 10 percent is a waste of time. But we can provide the information needed by the average salesperson to impact their revenue production nearly twofold.
This is the most important point of leverage a firm has for increasing revenue.
The Impact of Message Improvement
A classic HBR article—“Market Share: A Key to Profitability”—points out the direct correlation between market share and profitability. Additionally, we know that the best time to capture market share is at the launch of a product, when the differentiation is highest. Today competitors announce and deliver their version of your new product within months of its release. The key issue is how to maximize revenue and market share capture as soon as possible after the product is released.
This comes down to how quickly the firm can grow capacity. We normally think of the issue of manufacturing capacity (e.g., can the firm produce enough of the product to satisfy the market demand?). But frequently, the issue is not manufacturing capacity; it is sales capacity. How rapidly can the sales channels become successful at cost-effectively selling the value of the product?
All firms work to reduce the constraints of the delays in adoption and differences in sales skills as firms work to increase sales channel effectiveness at selling the new product. Many firms measure time to market as the time when the product is available for customer shipment, but time to market is really the time required before the average salesperson can cost-effectively sell the product. Having the product on the manufacturing shipping dock really isn’t time to market.
The result of message quality assurance is to shift sales channel participation from the green curve to the red curve, leading to higher sales and market share earlier.
Use the diagnostics published earlier at http://www.contentroicenter.org/insights/pov/bud-hyler to maximize the quality of your sales messaging to reduce time to market and maximize sales capacity.
Bud Hyler began his career in 1972, when he joined IBM as a sales representative. In 1976, he accepted the position of Marketing Director at Digital Equipment Corporation’s Commercial Group, where he later became responsible for marketing. In 1984, he moved on to ATT’s PBX–Large Business Group, where he served as Marketing Manager. Two years later, he joined Trimble Navigation as the Vice President of Marketing.
In 1990, after many years of developing his marketing methodology, Hyler founded Logical Marketing, Inc. His objective was to provide clients with innovative marketing concepts and processes that move beyond conventional product advocacy to a customer-centeredmarketing approach that can influence the customer’s entire purchasing journey. To date, clients have included Lucent, Microsoft, Netscape, Hewlett Packard, Sun Microsystems, Accenture, Compaq and IBM, as well as major firms outside of the high-tech arena, such as Chase Manhattan Bank. Connect with him via email at Budh@logmkt.com.