A post-pandemic bounceback relies on a well-developed sales growth strategy. Plenty of businesses were put on the ropes by the pandemic economy. Others were luckier, riding the wave in one of the post-COVID growth sectors. Either way, regaining (or retaining) a solid sales growth rate is vital for a sunnier 2021.
What Is Sales Growth?
Sales growth measures how much your sales team has managed to increase revenue over a given period. If your sales team brought in higher numbers in that period than in the previous period, you have positive sales growth. There is no context in which positive sales growth is not good for your company; revenue and profitability depend on your company’s ability to maintain consistent sales growth, whether your measure of it is month over month, quarterly, or year over year.
Negative sales growth, on the other hand, means your revenue over the most recent period was less than the previous one. Various factors — some of them not within a company’s control — can lead to an isolated period of negative sales growth. But consistent negative sales growth points to systemic flaws within your sales strategy and, if not corrected quickly, can lead to the end of your business.
The Sales Growth Formula
You can calculate your sales growth rate and find out whether you’re in positive or negative sales growth territory using this growth rate formula:
In this formula, “y” is the net sales from your current period (i.e., this fiscal year), and “x” is the net sales from your previous period (i.e., last year).
A company that made $380,000 in net sales during the current period, having made $293,153 in the previous period, enjoyed a 29.6% sales growth during that period. Not bad at all, especially given the difficulties of the market.
On the other hand, a company that made only $458,888 during this period, having made $587,254 last year, has a negative growth rate of -21.9%. This company’s sales operation needs a little course correction.
Why Track Your Sales Growth?
The first and most obvious benefit of tracking your sales growth carefully is that it tells you whether what you're doing is working. If annual sales are rising year-on-year, and your rate of growth is positive, then your strategy is sound.
By breaking down sales growth, you can get a better grasp of your revenue growth by quarter, as well as with a host of by-class sales metrics: by region, age-group, buyer persona, and more. Keeping tabs on these metrics enables you to pinpoint customer types who are particularly suited to your product, those who aren’t, and those who are more likely to churn. With that data on hand, you can make improvements to your sales strategy. This is particularly important now. Companies need high strategic agility to deal with the continued market flux in the aftermath of COVID, and high retention/low churn rates are more vital than ever before.
Understanding your sales growth trajectory is also key for your business’s valuation. Sales growth rate plays a key role in long-term tracking of where your company is headed, factoring heavily into things like year-over-year growth predictions. The quality and consistency of your growth determine the valuation your business will receive from investors. Your valuation, in turn, will determine your company’s ability to secure loans or further investment funding, go public, sell up, or acquire another business. During times of uncertainty, maintaining good strategic investor relations is key.
You should have programs in your tech stack devoted primarily to keeping tabs on your sales growth; their importance to your business’s future cannot be overstated.
Sales Growth vs. Revenue Growth
Where sales growth is being discussed, you may also hear the term “revenue growth” a fair amount. Both sales and revenue growth are core KPIs concerned with the direction of your company, and you should be aiming to maximize both.
Nevertheless, they aren’t identical, and differentiating between them is important during reporting:
- Sales growth: A single component of total revenue. It is often referred to as “gross sales” on a company’s income statement
- Revenue growth: An increase in the total income a company generates before any expenses are subtracted from the calculation. It includes sales, but your company may well be pulling in money from sources other than sales — equity affiliates, MRR, investment capital, etc., will not be counted among sales.
It should also be borne in mind that neither sales growth nor revenue growth account for expenses, and so is not suitable as measurements of your company’s net sales.
Organic Sales Growth vs. Acquisitive Growth
When trying to track and expand your sales growth, it’s also important to differentiate between organic sales growth and acquisitive growth.
- Organic Growth: Organic sales growth — our primary focus in this guide — involves trying to increase profits via changes to processes within your company. It involves adapting your prior business model, and, while not cost-free (research/upskilling/tech-stack additions/coaching programs don’t come free!) it is the cheaper and more stable of the two types of growth pursuit.
- Acquisitive Growth: If your target is exponential growth within a short time, then you can target another small business to acquire instead of targeting new distribution channels/customers/buyer personas. It’s considerably riskier, requiring a much greater outlay of funds and other circumstantial necessities (legal advice/financial advice/a period of due diligence). In times of recession and global financial downturn, this risk is even greater and should only be pursued by companies with years of cash runway to rely on.
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4 Ways to Improve Your Sales Growth
While your sales team is responsible for delivering sales growth, making improvements to your sales growth strategy requires that you analyze the processes that run throughout your entire company. This includes things like how you conceive of your customer base, what markets you’re pitching to, and how you go about coaching members of your team. Some or all of these things may already have shifted or are in the process of shifting following the events of 2020.
Sales management must assess its sales team’s basic ability to find leads and nurture relationships with prospective clients when trying to improve sales growth, but it’s not enough by itself. To move your sales growth up to the next level, you need to look at your company overall.
1. Make the Most of Your Current Market.
You might have clicked on this article expecting to be told that the secret to sales growth is to leave the comfort of your current market. As we’ll see below, that can certainly help, particularly if your market segment was hit hard by the recent economic upheaval. But you can make a key positive difference to your sales growth simply by analyzing your current market and taking steps to increase your penetration in that key area.
One of the key drivers of negative sales growth is unexpected changes to the terrain in your current market. You may have found new competitors entering your market, backed by explosive amounts of venture capital. If your company is in the online dating, edtech, or cybersecurity sectors, this is more likely to be the case. Maybe your business was reliant on physical products or events and is suffering from lower store footfall or the lack of large event hosting since the pandemic broke out.
Better sales growth means prioritizing high-quality sales. To flush those high-quality sales opportunities out of your current market, you may have to adapt to changes in the landscape.
Reevaluate industry benchmarks as they currently stand, and make price adjustments to bring in more customers. This strategy of strategically lowering your price points for a fixed period in order to make yourself more competitive is known as penetration pricing. It’s a quick route to gaining, or regaining, a larger market share and more exponential sales growth. It’s particularly useful if your market segment has become more price-sensitive in the past year.
Avoid lowering your prices for a longer period. Persistently lower prices will not only cause your bottom line to suffer, but will also create a distortion in the perceived value of your product. You may even find yourself in legal trouble, none of which is good for your sales growth.
New Incentives and Channels
Creating new incentives is another great way of encouraging sales growth. Introduce promotional offers and schemes, such as discounts for new customers, cash gifts for recommending your service to a friend or another company, and sign-on bonuses. Make sure these offers are put in place for a fixed period of time — customers might be hard up now, but they won’t be forever. Treat your customers to a promotion now to secure their loyalty and enjoy increased sales revenue later, when normality resumes.
Don't neglect your legacy customers in all this — customer retention is key to weathering a storm in the market. Even if your company's new business sales have dwindled, your existing customers are there, providing stability for your company. On top of that, they still contribute considerably to sales growth when they upgrade. Inviting them to trial new products, services, and upgrade options for free and offering loyalty discounts or custom contracts makes it more likely that those upgrade requests keep on coming. It also makes it less likely that they'll consider turning to one of your competitors.
Along with coming up with new incentives, seek out new channel dealers and channel partners. There’s an extensive ecosystem of partners out there for SaaS companies. Many of them are listed, such as this one for automation services.
Find partners amenable to your company’s mission and to the type of growth you’re targeting. Top-of-funnel partners such as influencers and referral partners drive interest and awareness in your product. This helps you create new leads, as well as giving you deeper insight into compatible market segments you haven’t tapped yet. Bottom-of-funnel partners such as resellers, managed service providers, and marketplaces can also help you drive conversion and ultimately sales.
2. Expand into Adjacent Markets.
While you shouldn’t neglect the value of your main market in driving sales growth, expanding your focus into new markets can uncover exciting new possibilities for sales growth in these unpredictable times. It can sometimes require that you change your product offering or develop your next feature range slightly differently, but it has a huge potential upside for your sales growth.
Audit your clients’ purchasing and subscriptions as closely as you can. Are there things they’re going to other companies for that you could potentially provide? Remember, upselling is as good (and as important) a sales-growth driver as finding new business for your company.
For instance, let’s say you’re running cap table management software. Your equity management features are top-notch, but multiple clients are going to one of your competitors who allows the clients to model and plan their future investment rounds. That competitor also produces a record-keeping app and throws it in for free as part of their promotional offering for new customers.
Note these insights. Build up a matrix of features that are typical of products in your field, and grade them by the value they deliver to customers combined with customers’ willingness to pay for them.
With that information, try to incorporate a few higher-value features into your next update. This way, you can attract more customers who already work in an adjacent space and become more competitive against rival companies. All the while, you have the opportunity to deepen your relationship with existing customers who already have positive experiences with your product under their belt.
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3. (Re)Create New Buyer Personas.
You might find that, in order to give your sales growth that needed push, you need to reevaluate your buyer personas. You might need to edit the ones you've got, and/or create new ones from scratch. Sales growth rewards the ability to think modally about your product, and nowhere does that come in handier than where buyer personas are concerned.
Start with the by-class sales data we mentioned earlier. By breaking your customers down by category, you’re able to see more clearly what customer types are more attracted to your product, and which ones aren’t so keen, as well as patterns of price sensitivity within those groups.
By Price Sensitivity
Price sensitivity has always been an important consideration when thinking about buyer personas. However, patterns of buyer personas have shifted quite a bit since the pandemic began. If your business is operating in consumer goods, price sensitivity is likely to remain high even after the pandemic has died down. In this case, drive your sales growth with dynamic pricing to keep retail sales consistent. You might explore the idea of investing in an appropriate AI solution for this purpose.
If your business is primarily B2B, both sales growth and cash flow stability may rely on your ability to target less price-sensitive customers, like enterprise clients. If you operate with a stable of small-to-medium-sized business clients, your sales growth strategy will need to include more temporary offers and custom packages to satisfy price sensitivity.
Given current conditions, it’s important to appraise your buyer personas by price sensitivity first. This will allow you to adjudge the extent to which your region- or age-group-based persona targeting may need to be revised.
Expanding your geographical outlook can lead to positive sales growth, sometimes immediate and exponential. It may need a more extensive research base, but planning for an international customer network can be a huge driver of consistent sales growth.
Let’s say you’re running a website design platform out of Denver, Colorado. A quick browse of the international tech press tells you that there’s a concentration of demand for easy-to-use website design platforms in East Asia. Just like that, you’ve unlocked a new and lucrative buyer persona!
By Age Group
Most buyer personas start with age; it’s such a simple metric, but it tells you a tremendous amount about a would-be customer. To drive sales growth, think outside the box with regard to how your product might be able to appeal to a formerly discounted age group. For example, let’s say your company creates digital brain-training exercises used therapeutically for elderly patients with degenerative mental conditions. Your buyer personas, particularly as they relate to age group, would be pretty firmly set at the upper reaches, right?
This may bring your sales growth to a certain point, but by thinking laterally and considering how your product could also be of great use to college students studying for finals, you can open up entirely new avenues of sales growth for your company. Knowing how to map communities that are interested in your product can be a great way to identify new market segments for your product.
You may find a new set of personas that are entirely unrelated to your first group, but that is just as legitimate a source of future revenue.
4. Coach, coach, coach.
When all’s said and done, your sales growth still comes down to your salespeople: Whatever directions, connections, or leads you give them, they still have to go out there and bring in those new deals. Be sure to do everything you can to help them.
Coaching your sales team is one of the cornerstones of our philosophy here at Chorus.ai. Your sales curriculum should be well aligned and deliberately and carefully planned, and it should include a clear concept of what success will look like. It bears repeating: Structure, preparation, and hard data form the foundation for rep coaching that is sufficiently tailored to each rep. Solutions like Chorus.ai’s conversation intelligence platform can help you individualize your sales training by drilling down on data to identify trouble spots in reps’ performance.
Evaluate your team’s performance at every stage of the sales process.
There will likely be room for improvement at each step. For instance:
- In successful cold calls, your rep should speak slower and use longer monologues (we’ve found around 46 seconds to be the perfect length) to appear confident and authoritative.
- If you’re only sending one rep to a discovery call, bear in mind that reps stand a much higher chance of closing a deal if they have another colleague, such as a manager or a sales engineer, attending to cover blind spots. Do you have team scheduling to accommodate this?
- Counterintuitively, discounts are mentioned in 50% of successful discovery meetings. Do you have a clear way to train reps to talk about pricing and discounts?
Don’t just coach your sales team to talk to leads and clients; teach them to talk to you. Solicit feedback from them during the sales cycle — the earliest and most direct way to get a sense of whether or not your sales strategy is working. Although your strategy may have seemed absolutely perfect, if your reps are coming back reporting disinterested clients, poor targeting, or a lack of interest following the discovery phase, it’s unlikely that the cycle will see sales growth.
Sales is about relationships, and a surprising proportion of sales growth comes from members of your team going that extra mile, particularly where upselling and similar tactics are concerned.
Factoring this into your sales coaching plan is particularly important if your sales team also fulfills any account management responsibilities:
- Train your team on how to get any underlying negative feedback from your client. It’s a lot easier for your client to just tell you everything is great than it is to embark upon a discussion about an issue they might be having. Have your team make the first move. Not only will the criticism be immensely useful in improving the process, but the conscientiousness this approach shows will also buy you trust with your client.
- Let your customer be the first to know about new deals/upgrades that could benefit them. Offer discounts, etc.
Providing optimal support to customers establishes trust, which will eventually yield sales growth that is not only substantial but also consistent. And, as we noted at the beginning, consistency is one of the hardest aspects of sales growth to master.
If you’re still raring to learn even more about the best routes to better sales coaching, then we might have just the solution.
Interact with the Numbers
The last year has taught us that nothing is promised. You might have had a booming annual growth rate up until March 2020, only to find your business fighting for survival in June. The key to triumphing over unpredictable circumstances is adaptability. The more you dedicate resources to improving sales growth, the more dynamic your company will be: more flexible in overall growth options, greater in year over year growth, and more able to keep ahead of the competition.
The ideal path to better sales growth is to double down on what you know and strike out boldly in new directions — to trust in your original sales strategy and be able to identify its areas of weakness. If you can couple these insights with a robust plan to get the best out of your sales team, then better sales growth is just a matter of time.