The time is now. Rarely have economic factors aligned to create a growth environment like we see today. Historically low unemployment, record low interest rates and inflation that barely causes a ripple are all drivers to a surge in small and mid-sized business growth. While there are obstacles in future and unforeseen events yet to happen, economic confidence has soared according to the Q3 2017 Vistage CEO Confidence Index. While slightly off from their 10-year record highs from Q4 2016, driven by post-election enthusiasm, CEO confidence remains exceptionally high.
- 77% of CEO’s expect increased revenues in the year ahead.
- 62% of CEO’s expect increased profits in the year ahead
- 62% of CEOs plan to expand their workforce in the year ahead
Positive economic conditions favor not only SMBs, it also projects growth for their customers. As customers grow and expand their need for the products and services SMBs provide grows as well. In our recent Customer Engagement study done by Vistage Research, we found that 37 percent of CEOs experienced 10%+ growth rates in 2016 growing to 43 percent in 2017 with 28 percent seeing double digit growth in both years. This contrasts sharply with only 23 percent reporting no growth or declining revenues in 2016 slumping to just 12 percent projected for no growth in 2017. Just 8 percent reported multi-year flat to declining revenues.
With all indicators showing green, why are high-growth businesses surging in this economy while no growth businesses struggle? There is never a single rationale for these differences rather it’s always a combination of factors driven by the customer growth decisions of the CEO.
Going for Growth
The path to customer growth is not in a straight line or without obstacles. Competitors are strategizing and executing in the same positive economic and market conditions. While low unemployment rates are good for the economy, they put tremendous pressure on CEOs to find, retain and engage talented people with the requisite skills and experience. The digital customer is more demanding, accessing more information from more sources forming a different set of requirements. Finding and connecting with them in the fractured digital environment requires a new set of skills and thinking.
Competing in this environment challenges CEOs to focus on how to grow their existing and prospective customers. The ability to renew, upgrade or expand business relationships with existing customer is the mainstay of long term revenue. Building on existing success and satisfaction creates a foundation to retain and grow customers based on past performance.
New Customer Growth
Adding new customers, the fuel of revenue growth, is a different and a much more difficult proposition. It requires strong marketing, solid selling competencies offering differentiated products and services to replace an existing provider or add new capabilities. Displacing a current provider or demonstrating new capabilities to a new customer introduces a level of “buyers risk” that many prospects prefer to avoid.
A clear distinction between High-growth and No-growth businesses is the contribution of the “hard to get” new customers to their revenue mix. High-growth businesses reported 29% of revenues from new customers as compared to 19% for NG. This difference compounds itself as new customer growth this year becomes existing customer revenue in the coming year. Focused acquisition strategies for new customers and markets help high-growth SMBs expand their customer base while also retaining current customers.
CEO growth decision: How do we increase sales and revenue from new customers?
Download the complete Vistage Research Customer Engagement eBook:
Customer Growth: Decisions for the SMB CEO – www.vistage.com/customerengagement