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Good times don’t last forever. As we’ve seen in recent months, the record eventually ends and CEOs and the companies they run must reckon with the harsh realities of a down economy, most of which are completely beyond their control. The current laundry list includes everything from COVID-19 and supply chain issues to inflation and more.
Faced with these challenges, every CEO has a fiduciary responsibility to strategically position their company for sustainable success. The good news is that it’s not all doom and gloom. Despite all the things they cannot control, there is a lot. Best-in-class companies focus on what they can control, not just to survive, but to thrive. In fact, Harvard Business Review found that about 9% of companies come out of a recession stronger than before.
Surviving a Downturn: How to Be Part of the 9%
Being part of the 9% is not the result of dumb luck. It is achieved through exceptional leadership and optimizing everything you control. It starts with understanding what a complete strategy looks like.
In reality, many companies have only half a strategy for navigating the recession. In difficult times, many companies focus too much on cost cutting to survive until they get into calmer waters. You see that happening now with what seem like daily announcements of mass layoffs, especially in the tech sector.
But here’s the point: No company has ever cut corners on its way to greatness. Companies expect cost-saving measures to have an immediate effect. But the reality is that it takes time to realize the savings, and these measures alone are not enough to thrive. A complete strategy requires cost and revenue management together. Because in tough economic times, every drop of sales matters. You need to focus on making earnings predictable, which many CEOs find challenging, even in good economic times.
Each quarter, the number one question on a CEO’s mind is, “Are we going to hit, beat, or miss sales?”
It’s the most important question in business, but most CEOs struggle to answer it, and chances are it will soon be harder to answer. The reality is that it will probably get worse before it gets better. Leading indicators suggest hard times ahead, with German Bank predicting “a great recession” and Wells Fargo call a recession “difficult to avoid”.
CEOs have no control over macroeconomic forces, but they can maximize their company’s revenue engine to reach its potential. The most important KPI in business is revenue, and optimizing for full control over revenue enables fact-based, strategic decisions.
Leaks sink ships
The first step to taking full control of revenue is to understand that revenue is not just a result; it’s a process.
Up to 50% of employees are revenue critical, meaning they contribute in some way to a company’s revenue-generating process. But the systems they use to generate revenue are decades old. In addition, they are not purpose built to optimize and control revenue.
The result is a revenue leak, the loss of revenue due to breakdowns in the end-to-end revenue process – and it’s everywhere. Revenue leaks are ubiquitous in the end-to-end revenue process, including demand generation, new business closing, and even deal expansion.
Our latest survey found that businesses are losing 14.9% of turnover on average as a result of a turnover leak. Collectively, revenue leakage causes more than $2 trillion of lost economic value each year, according to Boston Consulting Group.
Revenue leakage is the biggest problem in business and it hides in plain sight, significantly slowing down sales, growth, revenue and business value. It is also avoidable. Fixing a revenue leak is the smartest way to strengthen your business and emerge stronger from the recession.
Downturn Strategy: From Revenue Leak to Revenue Precision
What if we could have a revenue breakthrough? What if there was a new way to monetize to eradicate leak points and maximize full revenue?
Meet revenue precision, the operational standard that results in complete revenue capture – predictably and repeatedly.
Revenue precision is achieved when the people, processes and systems that drive revenue work together seamlessly. Gone are the days of broken handovers between teams, inefficient processes, and isolated systems that conspire to undermine a company’s revenue potential. CEOs gain full visibility into the revenue process, master and execute key processes with constant collaboration from the C-suite and boardroom to first-line managers and account representatives.
Enter revenue collaboration and governance
To go from revenue leak to revenue precision, you need a strategy. You need a strategy for collaborating and managing the end-to-end revenue process. Revenue collaboration allows all revenue-critical employees to easily and effectively work together to generate revenue. Revenue management is the ability to control the end-to-end revenue process.
When you put it together, you have Revenue Collaboration and Governance (RevCG), a new revenue generation framework that unifies the entire end-to-end revenue process through the systems and revenue-critical employees in the business working to capture and generate revenue to connect together.
RevCG delivers complete transparency and total control over your revenue process. It’s the best way to stop revenue leakage and achieve revenue precision, and to protect revenue during downturns and emerge stronger. Healthy.
Andy Byrne is the co-founder and CEO of Clari.
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