Modern Marketing

Leveraging the ‘Virtuous Cycle’ to Drive Outsized Revenue Performance

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Just this past week I heard an NPR piece on how the nation’s surprisingly robust retail sales data were causing economists to believe that the much hoped for “virtuous cycle” was finally starting to kick in. A virtuous cycle is a complex of events that reinforces itself through a feedback loop that eventually creates positive results (a “vicious circle” is essentially the same thing, but on the negative side).

Confirming that this virtuous cycle might actually be real, Federal Reserve Chairman Ben Bernanke recently commented that he saw more signs that this “self-sustaining recovery” may be taking hold.

The NPR story caught my attention because I have been talking a lot about how igniting a virtuous cycle is actually a key requirement for sparking a revenue revolution in a corporation.  In my 1:1 conversations about the huge opportunity to transform the sales and marketing model to drive outsized revenue growth, I often get the question: “That’s great, but how do I get started?”

The Revenue Growth “Journey”

All too often, companies think that to get started on the revenue growth journey, they need to make big, bold changes – reorganizing, rolling out new comp plans, or implementing major strategic initiatives.  All of these may, in fact, occur as part of your revenue revolution.

But, the power of small improvements – and numbers – is a pretty amazing phenomenon in economics and business. This is especially true if you analyze them through the lens of the emerging virtuous cycle that is now starting to jumpstart the US economic recovery. For example: New hiring in a Ohio specialty steel mill puts more money in local folks’ pockets, which helps to grow business at a local coffee shop, causing them to hire a recent high school graduate as a new barista. And so it goes…

This same cycle repeats itself thousands of times across the entire economy, and before we know it, things look a lot better.

The Virtuous “Revenue Cycle”

The same cycle applies to transforming revenue creation in the corporate environment.  Marketing needs to acquire, nurture, and identify ONE great lead. That quality lead is then passed on to a hotshot sales person at just the right moment, enabling her to close a great deal in record time, which results in her earning an unexpectedly large commission check.

Sales people love to share their success stories.  If that successful sales person tells her co-workers about the “awesome marketing lead that let me exceed my number last month,” her colleagues are going to listen.  They’re going to be a little more open next time marketing comes a calling with the new leads.  They’re going to tell their boss about it.  And pretty soon the sales director is going to be saying, “We need more of those quality leads from marketing.  Lots more leads.”

Due to the rising sales results, the marketing team gets more budget to invest in expanding lead management programs, which spurs the virtuous “revenue cycle.” Pretty soon, everyone in sales is getting better (more “ready to buy”) leads from marketing.  The best sales reps figure out that if they spend their time on those leads from marketing (rather than on cold calling), they make more money. And if sales people are making more money from more efficient revenue generating activities, the whole company makes more money. The savings from the increased sales efficiency and productivity drops right to the company’s bottom line, propelling its success and ability to expand.

As I hope this scenario illustrates, a virtuous “revenue cycle” can start small, but move surprisingly quickly to a breakout level that leads to a revenue revolution!

Let’s hope that Sarah’s Coffee Shop in Toledo hires that new barista. Even small changes like that can catalyze a powerful virtuous cycle that can lead to significant growth and improvement in the US economy, and in your own company, too.