Opportunities to grow your revenue manifest in numerous ways. Once product-market-fit and serious market traction is achieved, extreme focus is required to determine the correct route to grow your sales with minimum opportunity. If you have ten hours to chop down a tree, spend 8 hours sharpening the axe.
There are three ways to unpick the area in which you can grow your top line, and each requires entirely different execution.
1. Addressable market
2. Who you can service
3. Who you can close
Growing your addressable market
This is the market in which you are currently playing to win. The people who make up your addressable market are the group in which your team spend 80% of their time targeting.
There is a common misconception that the bigger your addressable market, the faster you can grow. However, companies frequently look at their addressable market in the wrong way. Too often, the segments & sub-segments of the market in which you operate are forgotten about. In other cases, the addressable market is met with a machine gun approach rather than the sniper – without a clear idea as to which market increases your propensity to win.
This can drive two risks:
1. You believe you are selling to one market, but treat every nuanced sub-segment the same, therefore failing to maximise the value that you are providing to any one
2. You believe you are selling to an entire market, but you have only penetrated one small sub-segment, and failed to consider tapping into adjacent areas
How do you identify whether you have room to grow within your addressable market?
Plot your solution as a chart – ‘propensity to buy’ vs ‘relevance to business model’:
Are you targeting firms who have a huge urgency to buy, but getting suck in the ’nice to have’ zone as it is not vital to their business model?
For example, in financial services, the buy & sell side would be two distinct segments. Within that, the sub-segments are endless, from asset managers, to brokers, to sovereign wealth funds. If your edge is ‘increases to efficiency’, the relevance to an asset manager’s business model would be much lower than a hedge fund. However, identifying who has the propensity to pay the price might flip that on its head.
Similarly, use this matrix to develop a market segmentation internationally, by size, or by future market projections.
Growing your serviceable market
When there is no room to grow your market headroom. Are you alienating a specific audience through your pricing, service or product limitations?
If there is no room to grow your market headroom with the product or service you can currently offer, perhaps consider breaking out into an adjacent avenue with a product, pricing or service development.
This could include:
- Identifying every potential revenue stream or asset to commercialise within the business, such as a data stream, or an additional service
- Shifting your product, pricing or offering to increase market relevance – is your pricing alienating a whole segment of the market in which you believe you could service? Are your product limitations hindering your penetration into a new market?
- Becoming an end-to-end solution – consider your acquisition, product or partnership strategy to break into adjacent use-cases, or even shifting the structure of your technology such as to an open-source or SaaS model. The objective is to move across the value chain in which you are selling.
Growing your closed market
When your addressable market is small, but you have failed to achieve significant market share, or your conversion rate is low, it might be time to consider the best approach to increase your penetration.
- There is no silver bullet, but some steps to take would be:
- Map your year’s target – revenue target, number of deals & value per deal
- What does this mean for how many meetings, calls & new deals in the pipeline you need to be getting per quarter, per month & per week
- Is this realistic against your current conversion & team capacity
If not, it might be time to re-think your addressable market, sales strategy to increase conversion, or approach to the market in which you operate.