It's not very scientific but it certainly is revealing: Anytime I get a rash of inquiries on one subject over a short period of time, I know a hot topic is brewing.
These days, a frequent question goes something like this, "Gale, what are you seeing in terms of organic growth — is it back yet?" My response? "No, but thanks for asking!" M&A growth has dominated the conversation over the last several years and organic growth has been assumed. However, year-over-year organic growth among the Top 100 Firms is about half of what it was two years ago, so maybe a renewed focus is coming back in style!
This year has been dubbed "
Cross-selling
It may seem odd to define something by what it's not, but in this case it's appropriate. Over two decades ago, cross-selling emerged as a hot topic (one that I never warmed to) in our profession. In my mind it amounts to little more than "selling more stuff." It has always seemed a weak tactical element instead of a land-and-expand strategy. Strategy is a legitimate approach where a firm gains a foothold with a core service, then expands by judiciously focusing on the development of long-term revenue growth.
There have been many impediments, not the least of which are partners who act as gatekeepers, locking others out of their clients. Also, to achieve strategic, client-centric growth one must have a deep understanding of the politics and power at play within the client organization. It requires insight into the dynamics and hidden (often personal) objectives and agendas of those at the top of the client's organization.
Professional salespeople are excellent at combining this intelligence with persuasion and influence focused on solutions to the client's business problems. Certain CPAs possess this capability as well. Their eye is always on their "share of wallet" — the percentage of available revenue going to providers like your firm, which you can potentially capture. If you're going to land and expand, you'll need individuals with this skill set and set of marching orders, or you'll end up building relationships that yield little revenue.
The year of the client is also the year of the prospective client. When we create growth at the client level, we cultivate existing clients, growing revenue in our base. A focus on market level-growth requires going beyond a current book of business, seeking out the target industry or buyer group, and using that as a springboard for new business. In a word, market expansion.
Each program is different and contributes to the overall revenue mix. One informs the other. If you have multiple large/strategic clients in heavy highway construction, it makes sense to potentially expand this program to the market at large. In today's competitive environment, a deep understanding of the industry and related expertise is a strategic imperative. But it requires discipline to avoid chasing any new shiny opportunities, those that are off strategy such as in an industry where you have minimal presence.
Functional structure
Sustainable, strategic growth in any market at any time relies on a framework resembling a three-legged stool. The legs of the stool represent the three revenue growth functions — sales, marketing and innovation. The spokes between the legs are the processes, resources and actions that ensure the long-term strength of a stable, no-wobble stool.
Revenue acquisition programs can be customized around these three functional elements. For example, client segmentation is one way of dividing your client base into categories by size of invoiced revenue to the firm. Think of sales, marketing and innovation within a large-client program. In this example, the sales function is provided by account executives, marketing focuses on special offerings for top clients, and innovation highlights early-adopter programs with first-in-line access to new services. Segmentation can also be industry-specific, with an approach tailored to that industry around sales, marketing and innovation.
Why this matters
It's hard to dispute the wisdom of keeping the client at the center of what we do. But lip service does not serve our firms or our clients. Take steps to be granular and specific about your current client and market-level prospect initiatives. Adopt more refined principles, such as a large-client program. Focus on strategy over tactics and operate with a clear understanding of the differences between client-level and market-level growth programs.
The sophistication borrowed from the corporate world by private equity firms is what's new, and it's changing everything! Played right, it will change your growth prospects for the better, too.
