Growth Opportunities for B2B Small and Medium-Sized Enterprises

Do you know where your company’s growth opportunities lie? As an SME, you don’t have the time to brainstorm every day about which direction the organization should take to grow. It’s also questionable whether thinking about your company’s future every day actually helps you move forward. It’s better to set aside time periodically to analyze what went well and what could be improved. You can then translate the insights gained from these analyses into plans and priorities for the coming period. With the Leaky Bathtub Model that I discuss in my blog, you can make significant progress in just one afternoon. All you need is data on your customers’ annual revenue over a two-year period.

‍

Find growth opportunities within your own customer portfolio

Companies often see growth opportunities in new markets and new customers, yet there are also opportunities right there in your own customer portfolio. Have you ever thought about your lost customers or customers who still have untapped potential? By analyzing revenue per customer, you can gain insight into how your revenue has evolved over the years and where the opportunities for growth lie.

‍

Why the "leaky bathtub" model?

I have used this model extensively myself in recent years with the portfolio companies of the investment holding company Indutrade Benelux; time and again, it provides interesting insights that both the company and the marketing department can put to use. In my opinion, a good strategic plan cannot do without an analysis of where the opportunities lie within your own customer portfolio. Analyzing your customers offers the following benefits:

‍

• These figures are accurate and don't require any assumptions—they come directly from your ERP system.
• You don't need to purchase data from external suppliers
• In addition, your sales representatives are familiar with these contacts, and they are listed in your CRM or ERP system.

‍

And yes, market analyses are certainly still important for identifying where your growth opportunities lie!

‍

How does the model work?

With the Leaky Bathtub model, you look at year-over-year revenue, comparing 2020 to 2021. Where did you start (2020 revenue) and where did you end up (2021 revenue)? For example, your revenue might have increased from €1,000,000 to €1,100,000. This represents a 10% increase. With the Leaky Bathtub model, you’ll zoom in on the following groups: lost customers, revenue lost from customers, revenue gained from customers, and new customers. This model is particularly well-suited when your organization deals with repeat customers who place orders annually.

‍

Download the leaky bathtub model

‍

How to get started?

You start with your 2020 revenue and then look at the customers from whom you’ve lost revenue and those who no longer buy from you—that could easily amount to €250,000. So you don’t start at €1,000,000 but at €750,000. If you look at your new starting point of €750,000 and then at the revenue you’ve achieved, that’s a growth of €350,000—about 35%.

‍

It’s very interesting to look at this data year over year to identify potential trends—such as the average revenue loss among existing customers over the course of the year and the average growth rate among your existing customers. You can incorporate this data into your budgets and goals for the new year, and it will help you determine whether your goals are realistic if you don’t adjust or drastically change your strategy.

‍

Possible Real-World Scenarios

Have you noticed that you’re bringing in a lot of new customers, but your total revenue isn’t increasing? This could be because your tub rim isn’t high enough or because you haven’t installed a stopper in the tub. Simply put, you can prevent customers from leaving or ensure they order the same amount as they did the previous year, thereby ensuring that your growth continues.

‍

On the other hand, it’s interesting to look at revenue trends to see where the growth is coming from. It might be from developing existing customers or from new customers. If you see a 30% annual increase with a particular group of customers, it’s worth analyzing what this group has in common. Consider the products they purchase or how your salespeople assist them. And could you potentially attract similar customers through, for example, a targeted lead generation campaign?

‍

As you can see, there are many different directions you can take when it comes to capitalizing on your growth opportunities.

‍

Using Marketing to Capitalize on Your Growth Opportunities

Once you’ve conducted the analysis and identified your growth opportunities, you can incorporate them into the platform model. This model visually illustrates how you can structure your marketing and sales activities to capitalize on your growth opportunities.

‍

• Step 1 is always to set goals based on your analysis.
  • Think about recovering revenue from lost customers. Of the €100,000 in lost revenue, set a goal to recover 30% of that amount.
  • Another goal could be: I see that I’m achieving an average of 20% growth with existing customers, and I want to increase that to 30%.
  • Or, for example, attracting new customers. Think about increasing the number of new customers or the average revenue per new customer.
• Step 2 is to translate the objectives into a strategy and specific actions.
  • If you’ve set the goal of “generating more revenue from existing customers,” you’ll end up with an Account-Based Marketing strategy. This involves focusing on a select number of customers with potential and further capitalizing on that potential.
  • If your goal is more focused on attracting new customers, a lead generation strategy is a better fit for achieving that goal.
  • When dealing with lost customers, your approach is much more one-on-one, similar to the Account-Based Marketing approach—the difference being that your goal is to regain revenue first, and only then can you potentially expand further.
• Step 3 is the implementation and monitoring of the actions
  • Once you’ve identified the activities, they’ll need to be carried out. It’s important to define the KPIs in advance and record them in your systems. This includes your CRM, where you track your leads and record your interactions, as well as Google Analytics, which allows you to monitor growth in website traffic and conversions.

‍

To see results quickly, get started today

Taking advantage of your growth opportunities starts with ambition and sharing that ambition within your company. This is the driving force behind growth. Facilitating and shaping growth is the next step, and we can help you with that.

‍

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

‍