What Is Revenue Growth?
Revenue growth is the percentage change in a company’s total revenue from one period to the next. It’s typically reported quarterly or annually. Companies may sometimes track revenue growth more frequently, such as monthly or daily.
When a company is on the stock market, revenue growth is often one of the measures that investors and analysts watch the most carefully.
People often mix up “revenue” with “sales” and “earnings,” but there is a slight difference between the three:
Revenue is the money a business makes from selling things and services and investments, fees, subscriptions, and royalties before any costs are taken out.
Sales are the money you make by selling things or services before you take out any costs.
Earnings are left over after taxes and other costs are taken out.
Revenue growth is the most critical metric, but sales and price increases are also significant. Even though revenue growth is one sign of a company’s health, it’s still important to look at other things, like net income and cash flow.
Like words
- Sales Growth: The rise in the amount of money a company makes from sales over time
- Revenue Expansion: Getting bigger by adding more goods, services, channels, or customers that bring in more money.
- Revenue enhancement means using plans to make more money from current goods, services, channels, or customers.
- Top-Line Growth: When a company makes more money,
Strategies for Increasing Sales
You can make more money in many different ways, many of which are unique to your business. Here are five innovative ways for a business to make more money:
Line up Getting sales and leads
Because they have different KPIs, sales and marketing often work separately. When sales and marketing work together, marketers can find out what customers are telling sales teams, which helps them improve their message and lead nurturing efforts.
It also means that salespeople can do their jobs better because they have the most up-to-date knowledge of how their company wants to communicate.
Ways to Sell
75% of all trade goes through channels like value-added resellers, system designers, and consultants. They can be a great way to get new people without having to pay more to get them.
Channel sales also benefit from having a network of contacts that can help companies market their goods. They help companies make more money without having to hire a lot of straight salespeople.
Pay attention to keeping customers.
Businesses that focus on keeping customers can make more money without getting more customers. It’s usually easier and cheaper to sell to people who have already bought from you than to look for new ones.
You can do many things to keep customers longer, like giving them excellent service, having loyalty programs, and starting buyer engagement projects.
Freemium and membership plans
Making a membership program or a freemium plan (a free version of a paid product or service) is another way to make more money.
Customers can get discounts, unique content, and other benefits from membership schemes. Freemium models can get new customers and turn them into paid customers through subscriptions.
Cross-sell and up-sell
Finally, businesses can make more money by cross-selling and up-selling to people they already have. Businesses upsell when selling a more expensive version of the same good or service.
Cross-selling means that a company sells a similar item or service. People might buy a camera, a camera bag, or a memory card at the same time.
Upselling and cross-selling are ways to bring in more money and raise the usual order value.
How to figure out growth in sales
It’s pretty easy to figure out how to calculate income growth. Most of the time, people compare the current period’s income to the same period the previous year.
How to Grow Your Sales
How to figure out the rate of income growth:
Revenue Growth = ((Upcoming Period Revenue – Past Period Revenue) / Past Period Revenue) x 100
Consider a company that made $100 million in Q1 2018 and $120 million in Q1 2019. Its revenue growth would be 20%, which is equal to (($120 million – $100 million) / $100 million).
It’s a little harder to figure out how to measure revenue growth in more prominent B2B companies. Because they usually have many different product lines, business units, interests, ways to make money, and places where they do business.
Most of the time, businesses figure this out with a weighted average or an organic growth rate. A weighted average looks at a company’s different ways of making money and gives each one a weight based on its importance.
Methods for Figuring Out Future Sales Growth
Businesses usually use one of two ways to guess how much their sales will grow in the future.
The first way is to calculate how much money has grown in the past. For instance, if a business has grown its sales by 20% every year for the past three years, it might think it will continue to grow at that rate.
This method doesn’t consider changes in the business, like new goods, markets, or competitors, though.
The second way is to work from the bottom up. To do this, you need to make revenue predictions for each customer, product, region, or channel and then add up all those predictions to get a company-wide prediction.
It takes longer to use this method, but the estimate is more accurate.
What Kind of Sales Growth Is Good?
What makes a reasonable income growth rate depends on several things, such as:
Type of business; size of the company; growth stage; present sales and profits
A company might not think that a specific revenue growth rate is reasonable for another business.
People might expect a small business in an industry with a lot of growth to make more money quickly, but they might not expect a big company in an already well-established industry to make more money slowly.
But a business that grows its sales by 10% or more is thought to be doing well.
What does revenue growth management mean?
Revenue growth management, or RGM, is a planned way for a business to increase its sales. It involves looking at different parts of the business, like pricing, customer segmentation, and channel tactics, to find ways to make more money. A different name for RGM is “top-line growth management.”
RGM is now an essential part of any business’s growth plan. Many businesses have whole teams whose only job is to manage sales growth. There are also a lot of software platforms and consulting groups that help businesses with their RGM projects.
How to Pick a Platform to Make More Money
When picking a revenue growth platform, businesses must consider their wants and goals. One size does not fit all; what works for one business may not work for another.
Here are some things to think about:
- What kind of business it is (B2B, B2C, e-commerce, etc.)?
- The size and growth stage of the business
- The exact goals for increasing sales
- The budget
- The internal tools and expertise that are available
