Revenue growth in three flavors

Revenue growth can be achieved by a variety of means. For enterprise B2B software, there are really three different flavors.

1. Sales
2. Growth Marketing
3. Brand Value

Sales Growth

The first of these is sales. A salesperson alone can achieve linear revenue growth. That person can go out, source deals, close them, and generate revenue. Their capacity is simply limited by time. This can be thought of as linear growth - or as a written formula.

$$ = Time * (Avg sales person effectiveness) * (Number of sales people)

Adding more people can help ensure this slope increases, making more money in the same amount of time. However, adding too many people can decrease the effectiveness of each individual salesperson — effectively finding some “Cap” of linear growth that you can achieve with sales alone. This cap is quite hard to identify - until you hit it. You’ll go from a team where everyone is crushing their quotas to one where no one seems to hit it.

Perhaps most important about this type of growth is the floor - rather than the ceiling. The very best sales team will grind out deals, even if the company has yet to find real product market fit. In the example below, a couple of amazing salespeople are finding a way to close deals, even though it’s tough and taking time.

Growth Marketing

The second is growth marketing. This is where we start to have some fun, and turn up the dial on growth. A great growth marketer should be able to systematically test a variety of levers to figure out which ones work best. They are less limited by time than their sales counterparts - because their goal is to figure out what works and then automate it. We now start to achieve exponential growth.

$$ = Time * [ (Avg sales person effectiveness) * (Number of sales people) ] ^ [(Growth team effectiveness) / (Money spent)]

Similar to sales teams, there is a cap in effectiveness with these growth marketing teams. We will typically run into three ceilings.

1. The lead flow ceiling - There are too many leads for the sales team to deal with. This is an easy solve, hire a few more folks for sales!
2. The poor spending ceiling - If a team is spending too much money and now achieving returns, then growth, obviously stalls. Tying spend to revenue ensures that everything is in order.
3. The poor PMF ceiling - This one will limit the growth team's effectiveness. As the team’s name implies, you need a “something” before you can “grow” it. The best growth marketer in the world cannot do anything if the product does not have at least some traction in the market.

The core point here is that even while a great sales rep can find a way to make some money in a company with poor PMF, a great growth person will only have a little impact carrying out their typical responsibilities.

Brand

The third one is the most tricky to visualize, however, this is equally as important, especially as an organization grows. Depending on the stage of the company “brand” may be controlled by various people. As with most things, the CEO will typically handle this in the earliest days, then this will be passed to a product marketer and eventually a brand manager.

Brand is a step function change.

$$ = (Brand effectiveness) + Time * [ (Avg sales person effectiveness) * (Number of sales people) ] ^ [(Growth team effectiveness) / (Money spent)]

A great brand will give you an advantage over others. This is like a new starting point, putting you at an unfair advantage and making you a company that others want to do business with.

The brand builds over time, but it is notoriously hard to measure. Public companies have brand values associated with them that have been built up over decades. Startups, on the other hand, do not have enough history to have an associated brand value.

This way, brand impact can be most felt is by a leg up on the competition, public perception, social sentiment, and the like. There are typically moments in time when there are tectonic shifts in a company's brand value, and thus there are moments when brand value bumps occur "mid-curve".

If there are no competitors, than brand value is essentially useless - you are a monopoly, and everyone needs to do business with you whether they want to or not. Alternatively, if you're an early-stage company thinking that a great brand will grow your business over time - it won't. You need scalable solution that continue to bring in revenue rather than the polish of a great brand.

Growing together

These concepts can be applied to organizations immediately. If you notice that you're losing deals to competition too often - invest in brand. If your sales reps seem limited in effectiveness, explore growth marketing. And if you're still trying to figure how to hit PMF, be sure to stick to a lean, sales-led team.