By David Dodd
By now, most B2B companies will have established their revenue growth goals for this year. Growing revenues has never been easy, but producing consistent revenue growth has become more challenging because of fundamental changes in the B2B competitive environment.
Today’s business buyers have more choices, more bargaining power, and higher expectations than ever. And the growing use of “as-a-service” and other subscription-like business models has elevated the importance of long-term customer relationships, while also making them more fragile. Therefore, there’s a growing need to provide outstanding experiences at every touchpoint across the entire customer lifecycle.
To address these challenges, a growing number of companies are retooling their leadership structure and adopting new approaches for managing revenue-generating activities. Some B2B companies – particularly technology companies – have created a new C-level position that is usually called the chief revenue officer (CRO).
The specific duties of the chief revenue officer and the scope of his or her authority vary across companies, but the CRO is usually tasked with managing the company’s revenue-related business functions, including marketing, sales/business development, direct outside sales, channel management, and customer success/customer service.
A similar approach has been adopted by many B2C companies. In 2017, for example, Coca-Cola made news when it chose not to replace its retiring chief marketing officer. Instead, the company created a chief growth officer (CGO) position to manage its marketing, customer, and commerce teams. Culture App, an employee engagement and analytics software firm, recently reported that 455 U.S. companies have chief growth officers, and that number may be higher now.
These organizational moves have been driven by the recognition that the dynamics of revenue growth have changed in fundamental ways. For most B2B companies, the business case for implementing a chief revenue officer or chief growth officer role has become compelling for two reasons.
Growth Originates from Multiple Sources
To optimize revenue growth, business leaders must first identify how growth happens, or more accurately, where it originates. There are several distinct sources or wellsprings of growth. These “structural” sources of growth are not dependent on the way a company is organized or on the types of products or services it sells. Instead, they are based on the strategies and tactics a company can use to exploit each source.
The following diagram shows the four most common structural sources of revenue growth. These sources are always present, and they exist independently of the market conditions facing a company. However, the volume of growth that any particular company can extract from each source is greatly influenced by the company’s market and competitive environment.
As a practical matter, no single source is likely to produce enough growth to enable a company to reach its overall growth objective. Therefore, to maximize overall revenue growth, most companies will need to tap all four structural sources of growth.
Growth Demands Cross-Functional Teamwork
Successful revenue growth requires the active participation of multiple business functions, particularly given the need to leverage multiple sources of growth. The following table shows that three or four …read more
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