Is the current business environment good for revenue growth? A lot of CEOs from small and midsize businesses (SMBs) think so.
In the latest Vistage CEO Confidence Index survey, a whopping 83 percent of SMB CEOs said that they expected their company’s revenues to increase in 2018. Another 13 percent predicted that this year’s revenues would be on par with last year’s revenues, while only 4 percent said that they expected their revenues to decrease.
According to our analysis, a main driver of this revenue growth is better customer engagement.
That makes sense: Better customer engagement means attracting more prospects, converting more prospects into customers, and then ensuring customers’ success through outstanding customer service. The result is increased sales and revenue growth.
In the survey, conducted in the fourth quarter of 2017, 1,377 SMB CEOs shared their intentions to improve customer engagement by focusing on five strategic areas: market development, marketing, sales, customer service and product/pricing. Here is what these leaders are planning to do, and how they’re planning to do it.
1. Market development
High-level goals: Expand into new markets and geographies; reach new customer segments; grow into a global company.
SMB CEOs are using a wide range of tactics to enter new markets and geographies, engage new customers, and grow into bigger companies. Some are brokering major business deals, whether by acquiring competitors, establishing joint ventures or forming strategic partnerships. Others are opening new locations, buying real estate or expanding facilities, investing in new equipment and technology, and hiring new talent for functions such as international sales. Still others are diversifying their businesses with new capabilities and products that appeal to different markets — and, to support this expansion, they’re increasing hiring and intensifying employee training.
2. Marketing
High-level goals: Progress toward tech-enabled marketing; instill stronger leadership; develop a more innovative and comprehensive marketing strategy.
For many CEOs, digital marketing is front-and-center at the moment. These leaders are focused on increasing their digital presence, investing in tools that automate and optimize their marketing, upgrading their websites and social channels, and taking a more data-driven approach to marketing. At the same time, many companies are expanding their marketing and communications teams, appointing more leaders dedicated to marketing, and integrating marketing responsibilities across multiple functions.
3. Sales
High-level goals: Strengthen sales performance and teams; increase sales with new and existing customers; improve success with cross-selling; sharpen business-development strategy.
To step up their selling game, SMB CEOs are investing heavily in talent and technology while also revamping their sales processes and strategies. On the talent side, they’re expanding their sales teams to new regions, recruiting better sales talent and changing their organizational structure. On the technology side, they’re upgrading their software to automate processes, track progress, and make their teams more efficient and effective. On the process and strategy side, they’re focusing on long-term growth, streamlining and formalizing processes, and leveraging existing client relationships to build new relationships.
4. Customer service
High-level goals: Deliver speed and excellence across all aspects of customer service; deepen understanding of client needs; increase client retention rates by improving customer service.
SMB CEOs recognize that world-class customer service is necessary for long-term customer retention. To meet this demand, many are focused on solving customer problems with speed and accuracy, fixing operational issues, improving customer relations, and dedicating more attention to current clients. They’re also relying more heavily on technology to deepen their understanding of clients’ needs, find new opportunities to add value and enhance their customer service capabilities. In some cases, they’re outsourcing their customer service in an effort to lower costs and increase efficiencies.
5. Product/pricing
High-level goals: Change portfolio of products or services; innovate pricing strategy; reduce costs.
Product innovation is high on the priority list of many SMB CEOs. Some report that they’re investing heavily in new product development, broadening and diversifying their products/services, and dedicating more time and resources to innovation. Others are rethinking their pricing strategy — whether in terms of making products more affordable, offering a wider range of price options, creating bundled offerings or even increasing prices. Broadly, companies are looking for ways to lower the cost of labor and management in order to make their pricing more competitive.
If you are among the CEOs that expect increased revenues, consider how you are leveraging these strategies to ensure that you stand out amongst your competitors.