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Hit Your Revenue Target through Customer Improvement and Value Enhancement

By Dave Egloff | June 28, 2021 | 0 Comments

Sales Strategy and Operationssales strategySales Strategy and Design

(Preamble) As a commercial leader, how do you get to your “number”? Undoubtedly, it’s an audacious goal to attempt a bite-sized answer to such an abstract and broad question. However, two guiding principles should be considered and influence commercial messaging, execution and support.

Annually, commercial leaders receive a revenue target and devise a plan on how to hit and beat that goal.  Often, it starts with some simple math.  First, you take your book of business subtract revenue attrition and risk, then add the revenue coming from new sell, cross-sell and resell activity.  Finally, you add other inputs – such as price increases. 

Admittedly, this is fairly straightforward and a great mechanism to improve planning and sales strategy.  This model explains the sources of revenue.  It explains the where but not the how.  Savvy commercial leaders recognize that the how comes from focusing on two key buyer priorities – recognize that the focus is on buyer priorities and not seller priorities.  These priorities include:

Customer Improvement

Gartner defines customer improvement as the extent to which customers believe that their relationship with the supplier improves their business.  Importantly, customer improvement directly links to customer retention as well as account growth.  One commercial leader shared this sentiment:

“We cannot rely on our relationship strength to grow accounts.  It’s not working.  Relationships are still key since weak relationships cost us. However, to growth existing accounts, we increasingly need to execute more like it’s a new deal.” 

While this may not be the case for everyone, it does echo the importance of customer improvement for new and existing customers.  Commercial leaders should focus on three key to improve sales execution:

  • Challenge customers to think critically about how they can improve their business
  • Provide a vision on how your products and services fit into improving customer outcomes
  • Calculate the ROI of customer improvement

Value Enhancement

Gartner’s research shows that value enhancement is a greater predictor of customer loyalty than some more commonly discussed metrics like net promoter or customer satisfaction.  Notably, customers recognizing value enhancement have an 82% probability of rebuying/ renewing with the supplier and an 86% probability of increasing their wallet share.  Those are significant drivers to revenue achievement.

Commercial leaders – across all functions including sales, service, product delivery, etc. – should unify messaging and customer engagement to improve value enhancement.  A few ways to improve value enhancement include:

  • Validate customers on their purchasing decisions
  • Educate customers on new or better use cases to drive more value from the existing investments
  • Know your customers so you can anticipate their upcoming needs

For more information on this important concept, see “A Better Way for Service to Predict Future Customer Loyalty.”

Clearly, both customer improvement and value enhancement lead to new revenue streams and serve to protect existing revenue streams.  This fills the top of the funnel while reducing revenue attrition.  That’s a win-win.  Commercial leaders should factor these concepts into customer messaging, engagement and support.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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