How to Drive Revenue Growth by Selling to New Customers
Drawing new customers to your business and your products is the leading strategy for growing your revenue and helping your business thrive. When you understand how to attract new customers and implement effective revenue growth strategies, you position your company for success.
From finding growth opportunities to creating a roadmap to analyzing your pricing strategy, many factors should be considered when you’re accelerating revenue growth for your products and your business. Make sure your company focuses on your customers’ needs, wants and pain points to position yourself for maximum revenue growth.
This guide can help you get started with an understanding of what revenue growth is, why it’s important, who should spearhead it, how to implement key strategies and what numbers you should be tracking to determine if you’re successful.
What is revenue growth?
Revenue growth is the measurement of the increase in your revenue over time. You typically express it as a percentage. For example, if your company made $100,000 in January and $105,000 in February, your revenue growth for the month would be 5%.
Here’s how to calculate revenue growth: Take your current month’s income and subtract the previous month’s income. Then divide that number by the previous month’s income.
You can calculate revenue growth for whatever period works for your business. For example, if your business has a lot of seasonal sales, you may want to calculate growth annually, while if your sales are more stable, you might want to calculate growth monthly or quarterly.
Revenue growth can come from two key areas: You can bring in new customers who add to your revenue, and you can grow the revenue that you receive from your existing customers.
Revenue growth looks different depending on the stage your business is in. A startup, for example, might not see revenue growing. But a mature business might be able to predict revenue growth accurately.
Revenue growth is the measurement of the increase in your revenue over time.
Why revenue growth matters
Revenue growth is important because bringing in more money is crucial for making your company profitable. The potential for revenue growth can be almost unlimited, so growing your revenue can propel your company to success. (Cutting costs can also impact your bottom line, but there’s a limit to how much you can trim.)
Check out the Pragmatic Institute article, How One Executive’s New Product Ignited Revenue Growth, for an analysis of a successful revenue growth strategy that includes:
- Finding an opportunity for revenue
- Turning the vision into reality
- Building a revenue roadmap
- Hiring and getting ready to launch
Then, take a look at the Pragmatic Institute article, Scaling Faster with Product-Led Growth. Learn more about how your products can help convert, retain and upsell your customers and how to grow revenue in a landscape of digital natives, subscription-based services and heightened design and user experience expectations.
Who is responsible for revenue growth?
Revenue growth is so critical that some companies have begun to add a Chief Revenue Officer to their C-suite. A Chief Revenue Officer can make sure that the main areas responsible for revenue growth—marketing, sales and customer support—are working together and supporting one another.
If your company doesn’t have a Chief Revenue Officer, the product manager may be responsible for revenue growth.
Revenue growth means shifting your mindset from company-centered (focused on marketing and selling) to customer-centered (supporting the customers’ buying process). Begin by interviewing your customers and analyzing what they say to build an action plan for growing revenue. Learn more about this process with the Pragmatic Institute article, The Roadmap Leading to Your Company’s Revenue.
How to grow revenue
Depending on your company and your product, there are various revenue growth strategies you can use:
- Converting more trial users
Improving customer loyalty and satisfaction
- Creating roadmaps that deliver features your users actually need
- Accelerating development and maintenance on what matters most
- Increasing retention rates
Growing revenue stems from keeping your customers happy. So you want to find out:
- How satisfied they are
- What new features they might want
- What user experience issues or bugs you need to fix
- How you can accelerate the speed at which users adopt a new release or feature
- When it is safe to stop supporting an old build
- Which customers might not stay with you and how to retain them
You’ll also want to target the right people when you’re looking to grow your revenue. That can mean having a solid understanding of both your buyer persona and your user persona. It’s also smart to understand how the right revenue-growth strategies for reaching key decision makers can accelerate growth.
It’s also important to be continually improving your products and staying ahead of your competition. You may need to focus on alpha, beta and delta testing and customer validation. For a closer look at testing your products, listen to the Pragmatic Institute podcast, More Revenue, Happier Customers.
If you offer a free trial period where customers can use your product, you can evaluate how often they use it, which features they use and which features they may not be aware of. You can engage with users to accelerate your conversion rate with discount offers, loyalty programs and surveys.
To learn more about revenue growth, watch the Pragmatic Institute video, Understanding Product Engagement to Drive Revenue, where Keith Fenech, vice president of software analytics at Revulytics, shares case studies and examples of how to drive revenue.
The role of pricing in revenue growth
Pricing is the most effective driver of revenue growth for your company—it can make a bigger difference than increasing sales, reducing costs or launching new products. In fact, a 1% change in pricing could add almost 13% to your bottom line.
Many companies don’t pay close attention to pricing. You should be reviewing your pricing quarterly and adjusting it if necessary once or twice a year. Setting the right price means you’re charging the appropriate amount for the value your product or service brings to your customers.
Pricing is a process where you:
- Analyze data to arrive at a price
- Pilot the new price with a small group of salespeople and prospects
- Roll out pricing changes
- Repeat the cycle
To better understand the methods behind the pricing process, read the Pragmatic Institute article, The Pricing Process: How Product Marketers Can Improve Revenue with a Scientific Approach.
Metrics to help predict revenue
Forecasting revenue accurately is vitally important—after all, stock price plunge after public companies miss their own revenue predictions. Other repercussions occur in private companies of all sizes. Mastering the fundaments of revenue forecasting will serve you well.
You can use various metrics to forecast revenue and help foster revenue growth:
- Customer acquisition cost
- Monthly recurring revenue
- Average revenue per user
- Daily active user to monthly active user ratio
- Conversion rate from free trial to customer
- Net promoter score
- Customer retention rate
- Monthly customer churn rate
- Net revenue retention rate
The Pragmatic Institute article, 8 Essential Metrics to Help Product Managers Predict Revenue, explains more about how to calculate these metrics and what you can learn from them.
Forecasting revenue accurately is vitally important—after all, stock price plunge after public companies miss their own revenue predictions.
Learn more about growing revenue for your company
Understanding how your new customers can grow your company’s revenue is a key component of your business’s long-term success. When you implement revenue growth strategies, you can help position your company as an industry leader. Dive into the details of revenue growth with Pragmatic Institute’s Market course.