For CEOs everywhere, the pressure is on. With an overheated economy creating outsized results – and enhanced expectations, “thrive” has replaced “survive” as the mantra in boardrooms across the country.

As a result of the “go-go” market conditions, a new benchmark has been established: If your company can't show a minimum Compound Annual Growth Rate of 10 percent, you are putting yourself and your company at risk. As never before, the key to a business's health, high corporate valuations – and CEO job security -- is revenue growth.

According to Nathaniel J. Mass in his book, The Relative Value of Growth, "… convincing the market that they can grow by just one additional percentage point can be worth six, seven, or even ten points of margin improvement, … resulting in significant improvement in business valuations."

Though there are no magic wands, secret potions, or crystal balls that can guarantee results, I can assure you of this: You can best help your cause with a keen focus on the ingredients that constitute CAGR success! In my years of experience working with CEOs, I’ve had a front-row seat as companies have experimented with formulas for growth success. In this three-part blog series, I’m going to spotlight three of the top focus areas that you should address immediately if you are going to take your best shot at that 10 percent benchmark.

In future blogs, we’ll focus on how to up-skill your sales process and tune your KPIs for the stretch run; here, we’ll kick things off by taking a close look at a sound business development strategy.

Prospecting with 20/20 Clarity

Do you have a robust, innovative vision of where you want to drive your organization? Can you clearly identify your ideal customer? Do you have the right marketing message to attract that customer? Without a sharp and crystal-clear focus on business development, you’ll continue to cast your line into a muddy creek of prospects.

Here’s what I mean: I once worked with a provider of third-party logistics (3PL) that aspired to expand beyond its current customer portfolio and into new market segments. However, they did not have a clearly defined, robust vision for doing so, nor did they have a clear view of who their ideal customer should be. The results, predictably, fell short of their expectations.

After we worked together to define their strategic vision and ideal client profile, this 3PL company was able to develop its correct messaging, positioning, and value proposition to attack the new market segments – necessary prerequisites for a successful business development gambit.

When developing your business development strategy, here are some other high-level goals that should be in view:

• Customer Retention: You don’t need to be a mathematician to understand this stark reality: If you generate $100 million in new sales, but lose $50 million in existing revenue, you're obviously not going to hit your $100 million revenue goal. Though customer retention results are gauged by this ultimate measuring stick, it can also be an indicator of the level of service you provide. That’s why all businesses (particularly technology and professional services) should strive to create a stellar customer service experience. Your service experience is at the core of long-term value creation. Don't forget; it costs seven times more to land a new customer than keep the ones you already have.
  
  
• Customer Lifetime Value (CLV): CLV is the amount of revenue you can expect from an average customer over the lifetime of their business relationship with you. If you're a new business that is highly dependent on one or two customers, diversification should be of the utmost importance. After all, if you lose one (or both) of those customers, the impact on your business could be devastating. In this case, you would set a goal to reduce your average CLV as you bring on more customers to diversify your revenue base. On the other hand, you’ll want to avoid too many low-revenue customers – otherwise, you may find yourself spending time chasing late-payers that aren't generating sufficient margins. In this case, you would set a goal to increase your average CLV.
  
  
• Introduce new products/services or enter new markets: While it's essential to have a focused business development strategy, there may be circumstances when you’ll want to expand your services or the markets you serve. For example, you may have hired a new business development professional who has relationships in an industry that you haven't served in the past. If your service adds value to prospects in this industry, you could set a SMART (specific, measurable, achievable, relevant, time-bound) goal to expand into this industry. But be careful: You risk taking focus away from your core business model when you grow. You should keep a close watch on expansion and be ready to exit if it's not working out as expected.
  
  
• Some other areas you may also want to address include:
• • Potential adjacent market opportunities
  • Blue Ocean opportunities
  • Development of recurring revenue strategy
  • Development of strategic partnerships
  • Targeted acquisitions to improve your market position

Without a clear and robust business development strategy from which to build the foundation of your CAGR growth, you have little hope of growing your revenue. In our next blog, we’ll take a look at how sales talent, the sales process, and compensation play into the process.