Kedar Gharpure shares themes a business leader could explore as a first step to uncover organic growth potential.
Picture this – your organisation has just delivered a double digit EBITDA growth, and there are high fives all around. But as a business head you reflect on some of your customer interactions and your commercial reviews, and feel that there probably was more growth to be captured. So how do you know if your gut is right and more importantly, how do you convince your top team to stretch even further against the backdrop of a solid growth already delivered?
Over the years I have had the privilege of working with the business heads of several Fortune 250 and Private Equity owned companies and they all have faced this question at some point. While each situation was unique, in summary, a business head could probe three themes as a first step to uncover organic growth potential.
Are we growing in each of our micro-markets?
Organisations typically have a fair understanding of their market size, share and growth at an aggregate level. But the information quality rapidly deteriorates as you drill down to your specific solutions / applications at a country or sub-region level i.e. a micro-market. The task is even more difficult if your market is niche and not covered exhaustively by analysts.
The best organisations have a great insight into each of their key micro-markets. It is a capability that they have systematically developed over time – sometimes building insight for one micro-market at a time as done by a global OEM and a professional service company.
You should explicitly task your commercial organisation to get on this micro-market journey too. Until then, use the data you have to build the best possible view of growth and share evolution for your solutions/applications at a sub-region level i.e. in each micro-market.
If you spot key micro-markets where you have a poor growth or share evolution, then you already have your first potential areas to investigate further growth.
Is there a large variation in Sales/FTE across teams?
Organisations can spend lot of time and $$ to get an industry Sales/FTE benchmark. However, it cannot reliably provide the precision needed to assess performance or allocate territories. If your sales organisation is big enough, always build an internal Sales/FTE benchmark
A global hi-tech company used statistical clustering to identify product-country units that would require similar level of sales effort. By doing so it discovered that Australia was similar to the UK and France, while Portugal was similar to Turkey. It then used cluster level Sales/FTE to set performance targets and size teams.
Building internal benchmark does not always require sophisticated analytics. A global speciality chemicals company calculated Sales/FTE for each product group-region, then took the best value and adjusted it for each region for relevant market dynamics and operating model. The sales performance improvement potential in some product group-regions became too obvious to miss.
Like-for-like units of product group / application – region with biggest gap to internal Sales/FTE benchmark give you the second area to investigate further growth potential.
Is our GTM approach tailored to our strategy, our customers, and are we executing it effectively?
Assessing and redesigning a GTM approach requires time, but three questions can quickly highlight whether more growth could be unlocked by improving quality of your GTM approach.
Key points include:
- How GTM segments are differentiated
- Account planning
- Pipeline management
Read the full article, Is my sales organisation aggressive enough? Practical tips for Business Heads to uncover organic growth, on LinkedIn.