Growth opportunities for B2B companies in SMEs

Do you know where your company's growth opportunities lie? As an SME organization, you lack the time to brainstorm every day what direction the organization needs to take to grow. It is also questionable whether thinking about the future of your business every day will help you move forward. It is better to set aside time periodically to analyze what went well and what can be improved. You can then translate the insights from these analyses into plans and priorities for the coming period. Using the Leaky bathtub model I discuss in my blog, you can get very far in an afternoon. What you need is data of your customers' sales per year over a two-year period.

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Find growth opportunities in your own client portfolio

Companies often see growth opportunities in new markets and new customers, yet there are also opportunities for the taking in your own customer portfolio. Have you ever thought about your lost customers or customers with even more potential? Based on the turnover per customer you can see how your turnover develops over the years and where the opportunities for growth lie.

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Why the leaky bathtub model?

I have applied this model myself many times in recent years at the portfolio companies of investment holding company Indutrade Benelux, the model time and again gives interesting insights to get started with as a company and marketing department. In my opinion, a good strategic plan cannot do without an analysis of where the opportunities lie in your own customer portfolio. Analyzing your customers the following benefits:

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• These are numbers that are accurate and don't require you to make assumptions; they come from your ERP system.
• No need to purchase data from external vendors
• In addition, the contacts are known to your salespeople and are present in your CRM or ERP package.

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And yes, market analysis certainly remains important as well to analyze where your growth opportunities lie!

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How does the model work?

In the Leaky bathtub model, you look at sales year over year, 2020 you compare to 2021. What did you start at (2020 sales) and what did you end at (2021 sales)? For example, you may have gone from €1,000,000 to €1,100,000 sales. This is a 10% increase. With the leaky bathtub model, you will zoom in on the groups: lost customers, revenue gained from customers, revenue gained from customers and new customers. This model is great when your organization is dealing with repeat customers who order annually.

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Download leaky bathtub model

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How to get started.

You start with 2020 sales and then look at the customers where you have lost sales and customers who have stopped buying from you that could just be €250,000. Then you start not at €1,000,000 but at €750,000. If you look at your new starting point of €750,000 and then at the sales achieved it's a growth of €350,000, about 35%.

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It is very interesting to look at this data year over year to discover possible trends. Such as the average loss of sales with existing customers during the year and what the average growth percentage is with your existing customers. You can take this data along with the budgets and goals for the new year and give you insight if your goals are realistic if you don't change or drastically alter your strategy.

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Possible situations in practice

Notice that you are bringing in a lot of new customers, but your overall sales are not increasing? This could be due to the fact that your bath rim is not high enough or that you did not put a stopper in the tub. Simply put, you can prevent customers from leaving you or from ordering as much from you as they did the year before, thereby ensuring that your growth continues.

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On the other hand, it is interesting to see with the sales development where the growth comes from. Possibly from developing customers or does it come from your new customers. If you are up 30% annually with a group of customers, it is valuable to analyze what this group has in common with each other. Think about products they purchase or how they are helped by your salespeople. And could you possibly attract lookalike customers with a targeted lead generation campaign, for example.

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So you can see that you can go in many directions in terms of taking advantage of your growth opportunities.

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Using marketing to leverage your growth opportunities

After you have done the analysis and determined where your growth opportunities lie, you can incorporate them into the platform model. This model visually depicts how you can go about implementing marketing and sales activities to get started on your growth opportunities.

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• Step 1 is always to set goals based on your analysis.
  • Consider recovering revenue from lost customers. Out of €100,000 in lost customers, set a goal of winning back 30% of that.
  • Another goal might be: I see that I am growing an average of 20% with existing customers and I want to turn that into 30%.
  • Or, for example, attracting new customers. Consider increasing the number of new customers or the average revenue per new customer.
• Step 2 is to translate the objectives into strategy and actions.
  • If you have formulated the objective 'generate more sales from existing customers', you will end up with the Account Based Marketing strategy. Where you focus on a number of customers where there is potential to exploit this further.
  • If your objective is more focused on new customers, lead generation strategy is a better fit for you to achieve your objective.
  • With lost customers, your approach is much more one-on-one like the Account Based Marketing approach only the difference is that you want to win back sales and only then can you potentially build on them.
• Step 3 is implementing and monitoring the actions
  • After you have determined the activities, they will have to be carried out. It is important that you define the KPIs in advance and record them in the systems. Think of your CRM where you keep track of your leads and record your contact moments. But also Google Analytics to see if you see growth in visitor traffic and conversions on the website.

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See results quickly, then get started today

Seizing your growth opportunities starts with ambition and sharing your ambition within your company. This is the engine for growth. Facilitating and shaping growth that is the next step and we can help you with that.

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Get started today and contact me at casper.lucassen@tmcmedia.nl or fill out the form and we'll help you spot your growth opportunities and turn them into profitable revenue growth.

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