Growth won’t just happen simply because it’s a new year!
If you’re like most technology companies, your projections for 2018 show a 15-20% increase over 2017. Predicting significant growth for the new year is a common practice for businesses, but is sometimes influenced by excess optimism coupled with a desire to assure investors of company progress. This is usually referred to as the hockey stick. This refers to the creation of a hockey stick shape on a graph, where growth has progressed slowly in the short term, but then suddenly rockets upward with impressive results.
To keep your 2018 projections from becoming an empty promise, be aware that the calendar change gives many the false impression that growth simply happens over time. Instead, real growth requires changes in your company’s plan. As you’re coming up to the end of this year, look at the steps, strategies, and advice I’ve outlined below to help you achieve your projected growth in 2018.
The Calendar Does Nothing for Your Business
One of my most beloved mentors and a former CEOs of IDSY, Jeffrey Jagid, often reminded me that nothing is different about the following year except that the calendar has changed. Many people often take the change this time of year for granted, expecting some shift that affects the business.
Don’t expect 20% growth simply because the calendar page turns.
To truly achieve those increased projections, you’ll need to implement quantifiable changes. After all, repeating the same action again and again while expecting different results is never going to get you where you need to go. Specific changes are required to meet the commitments you’ve made to your financial backers.
Approaches to Promote Growth: Top-Down vs. Bottom-Up
The best method to determine the necessary changes is to build a plan for 2018 using both a bottom-up and top-down approach. This allows you to truly account for the actions you must take to meet the expected growth.
Top-down plans consist of looking at the key elements that make up your revenue drivers, then increasing specific resources that impact those key elements. For example, you could determine the correlation between your number of salespeople and actual sales, then hire more salespeople until the number matches an expected increase in growth of about 15-20%. Keep in mind that additions like these will take time to structure, organize, and train. Adjusting for the expected time it will take to reach normal performance means that you should not expect the same level of productivity that you would from current employees. As a result, you could add the requisite number of resources or staff without quite achieving your targeted outcome.
A bottom-up approach, on the other hand, requires a look at all key accounts for the year. Rather than adding resources at the top, bottom-up approaches involve building up sales from the ground up —either through increasing business from current customers (more predictable), or through the addition of new customers (much more difficult to predict). I highly recommend using this approach, because it gives you a clearer view of the areas that need improvement in your sales process.
Using the Bottom-Up Approach to Take You to the Top
First, list your key accounts and identify what they will contribute from a revenue basis. When gathering this information, it’s crucial to go straight to the source—don’t just ask your salespeople this question. Salespeople are sometimes biased in this regard, because their compensation is based on how much revenue they bring in from each customer. As a result, they may be tempted to start sandbagging—whether they realize it or not. Sandbagging involves committing to a lower number of projected sales initially, then exceeding that number to yield a better bonus, or increased recognition. This may feel great when the company is pleasantly surprised with the salesperson’s performance, but can negatively impact your ability to accommodate the cumulative demands of all your clients if you’re prepared for a lower number of orders.
To mediate this issue, get your information from its source. Make sure that each salesperson meets with their key accounts to ask them important questions about what their spending will look like in 2018. Create a Gantt chart for each account for the year that outlines commitments on both sides, accountability for purchases, order delivery dates, major milestones, etc. This means you’ll have a path set for well-documented success in 2018.
Setting expectations early between your company and your customers is a great way to build trust, but it can also show where there’s room to sell larger orders to already important customers. As I’ve outlined in my blog about how to land F100 customers, large clients typically come with large budgets. Sometimes, a big purchase for your company could even be considered a rounding error for a major player. Planning in advance creates an opportunity to persuade them to allocate a bit more of that budget for your product. It also helps the salesperson achieve their goals, creating a nice dichotomy between what the salesperson hopes to achieve and what management expects.
Managing Potential Roadblocks
With change in any area, there could be roadblocks or hurdles to overcome. You may find that your sales team is resistant to setting these meetings because they don’t want to hear bad news. Remind your salespeople that this is a good thing; it gives them the opportunity to put energy into other accounts, or to improve the offering so that key accounts will prioritize your product in their budgets again. It’s better to know whether clients plan to purchase again as soon as possible to curb the negative effects.
Have your sales team communicate that you want to make sure your business will be able to support the client’s needs throughout the year. Importantly, it shows that you respect your client’s time and business enough to streamline their ordering process. Additional questions like, “what is your budget for our product this year?” and, “during which quarter do you expect to spend that budget?” will give you important insights about what your company’s coming year will truly look like.
In the end, if it’s not in the customer’s budget to make improvements, it’s probably not happening. So what else can you do as an executive to achieve your 15-20% growth? After establishing your bottom-up plan, you can move on to evaluating your top-down options. As we discussed earlier, this could involve:
- Hiring additional salespeople
- Adding new distribution partners—but you will need to incentivize them to prioritize your product over others they may be distributing.
- Taking a look at your marketing efforts
- Considering increased marketing resources
For more information, check out my article Taking On the Giants: How Small to Midsize IoT Tech Providers Can Land Fortune 100 Customers to help you add large clients and increase your bottom line in 2018.
For additional help, resources, or answers to questions, contact me at email@example.com.
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