Revenue growth doesn’t happen by accident. It’s a process you need to build, execute, and optimize.
Enter revenue optimization.
Revenue optimization encourages businesses to take a holistic approach to revenue. One that doesn’t just rely on a single source of growth like new customer acquisition but that brings together sales, marketing, and customer success to build a sustainable and resilient revenue pipeline.
This article explains revenue optimization, why it’s so important, and five strategies you can use to optimize your revenue today.
Table of content:
- What is revenue optimization?
- Why revenue optimization matters
- 5 revenue optimization strategies to implement today
- How a revenue platform can optimize revenue
- Conclusion
What is revenue optimization?
Revenue optimization is the management of acquisition, retention, and expansion strategies to improve profits.
Typically, businesses only focus on one or two of the following ways to generate revenue:
- Acquisition: bringing in net new customers
- Retention: retaining existing customers
- Expansion: upselling or cross-selling to existing customers
- Pricing: setting the ideal price to optimize sales
For example, more than half of revenue decision-makers surveyed by Forrester focus on two growth areas: customer retention and expansion into new markets. Two-thirds say revenue process optimization is important to achieving those initiatives, but less than half meet quarterly forecasts with a 10% margin.
But to maximize revenue, you need to use revenue optimization to take a holistic approach. Finding a balance between each strategy is essential.
Why revenue optimization matters
There are several reasons businesses should pursue a revenue optimization strategy:
Make your business more resilient
Pursuing customer acquisition at all costs is not sustainable if you have high churn levels. Nor will your company survive if you only focus on cross-selling to existing users. Your long-term survival depends on your ability to strike a balance between each growth channel, and that’s where revenue optimization helps.
In particular, revenue optimization improves the long-term health of your company by ensuring your growth isn’t reliant on a single source of income.
Pursuing a revenue optimization strategy means that even if customer acquisition stalls, you’re also optimizing your product’s pricing, increasing customer retention, and upselling new customers.
Remove the silos between sales, marketing, and customer success
Rather than sales, marketing, and customer success teams working alone, revenue optimization encourages these siloed departments to come together under one function: RevOps.
RevOps is an end-to-end process that drives predictable revenue across all these departments. The goal is to deliver cross-departmental visibility, improve predictability, and drive growth.
There are plenty of other benefits of using revenue optimization to remove the silos between departments. Research finds that companies that lean on RevOps see:
- More predictable revenue
- A more agile and efficient organization
- Increase customer value
Automate routine sales and revenue tasks
Optimizing your revenue forces teams to automate the routine tasks sales and marketing employees complete every day—and this is hugely beneficial.
By freeing up time sales reps would otherwise spend on administrative and reporting duties, you give them more time to sell. That should result in more efficiency, more face-to-face time with customers, and higher levels of customer satisfaction.
AI is your friend if you want to automate these manual tasks. Research shows sales reps save 2 hours and 15 minutes each day automating tasks with AI.
5 revenue optimization strategies to implement today
Want to optimize your revenue? Use one or more of the following strategies.
Be careful, though, as revenue strategies are not siloed. That means changes to some areas, like pricing, may impact other places, like acquisition and retention.
Define buyer personas and ideal customer profiles
Improving customer acquisition is one of the first areas revenue leaders turn to when optimizing revenue. For example, exceeding sales targets was a top goal for sales managers in 2023, with 34% saying it was their main priority.
It pays to attract your best-fit customers if you want to smash your sales targets. Not only will they be more likely to convert, but they’ll also be easier to retain. To do so, equip your sales team with buyer personas and ideal customer profiles.
A buyer persona is a fictional description of your ideal buyer's job role, goals, and pain points. Ideal customer profiles describe the types of companies these buyers work at, including the company’s size, industry, and revenue.
Detailed descriptions of both make it easier and faster for sales reps to find and qualify prospects, meaning they can devote more time to the most profitable potential customers.
Automate sales tasks
Routine, manual tasks eat up your sales reps’ time. Reps spend less than 30% of their time selling because they’re so busy updating CRMs, running reports, and completing other administrative tasks.
The solution is to give your team more time with prospects by using a revenue platform like Clari to automate routine sales tasks.
With Clari, you can automatically capture and download every email and meeting. The platform then enriches data and automatically associates it with the right deals, effortlessly syncing your team. The result? Clari reduces time spent on manual data entry by 80%.
Book a demo to find out more.
Provide support, training, and resources to help customers succeed
Cracking customer support is vital to improve customer retention as part of your revenue optimization efforts.
After all, the quicker you help customers get value from your prospects, the easier you’ll find it to retain them. What’s more, Accenture finds companies who view customer service as a value rather than a cost achieve 3.5 times more revenue growth.
Retention-increasing customer support happens the moment a prospect signs on the dotted line. A thorough onboarding experience will set expectations and walk new customers through your product.
But don’t stop there. Ongoing education is equally important, so complement your onboarding experience with regular check-ins and a thorough and easy-to-browse customer help portal.
Collect and utilize customer feedback
You can increase revenue in several ways when you understand what customers think. That can come in proactively reaching out to at-risk customers or upselling and cross-selling services.
Hold customer surveys or one-to-one interviews to understand what your customers love about your product, which features they need help to use, and what they wish your product would help them achieve.
The answers can help you identify new potential revenue opportunities and give your customer success teams vital information on your customer’s biggest pain points.
Align pricing with value
Getting your pricing perfect is a tricky business. Too high, and you risk alienating customers. Too low, and you leave money on the table.
The trick is to avoid putting a monetary value on your product alone. Otherwise, you’ll feel like most software providers, 68% of whom, according to Revenera’s 2023 Monetization Monitor, say their pricing isn’t aligned with their product’s value.
Instead, take a more nuanced approach by considering demand, competition, and, most importantly, the value your product delivers. Charging more than anyone else is okay if your customers believe you offer the best value. This is another reason to run regular customer surveys, by the way.
Bundling your products is one way to increase value (and therefore have an excuse to increase price). Doing so ensures customers get more for their money while also opening up cross-selling opportunities for customers who don’t initially take advantage of a bundled offering.
Don’t be afraid to experiment with a different pricing model. For example, usage-based pricing can be an effective method to help customers and your company maximize value. You can also trial dynamic pricing (where prices are flexible and depend on market demand) and penetration pricing (where you set the price of your product very low at first to rapidly acquire a large user base before raising prices later).
If in doubt, A/B test pricing strategies to find optimal value.
How a revenue platform can optimize revenue
Any revenue optimization strategy should include a revenue platform to give you complete visibility and control over your operations.
No wonder that the market for these platforms is growing considerably. Research shows the market for customer revenue optimization software will have a compound annual growth rate of 7.4% from 2023 to 2033, growing from $9.7 billion in 2023 to $20 billion.
Here’s exactly how a platform like Clari can help:
Collect every piece of customer data
Data is everything when it comes to revenue optimization. You need to understand where your revenue comes from and which kinds of customers are best before you can get started optimizing your revenue. That means having a platform that can track and measure your revenue.
A revenue platform like Clari will integrate with your CRM, calendar, marketing automation tool, conversational intelligence platform, and more to put all your data in one place in real time. This ensures you have access to the most accurate data when running forecasts.
Ensure your revenue platform has out-of-the-box integrations with as many sales tools as possible, automated activity logging, and contact enrichment.
Forecast revenue accurately
Accurately predicting revenue can help you make informed decisions about your revenue optimization strategies. For example, you can use the data to choose where to focus your efforts this quarter or identify new markets for customer acquisition.
A revenue platform makes creating these kinds of accurate forecasts a breeze. These tools take almost all the guesswork out of the process by analyzing historical data, your current pipeline, and rep performance.
Clari Labs found a year of using Clari Forecast results in a 12x improvement in forecast accuracy.
Get insights fast
The core tools of a revenue platform feature real-time account-based forecasting and scoring and give sales, marketing, and customer success teams access to the insights they need to succeed. This includes answering questions like:
- Which pipeline deals need immediate attention?
- Which customers are close to their plan's limits?
- Which customer acquisition channel is generating the most revenue?
By leveraging analytics and employing data-driven decision-making processes, stakeholders can identify their customers' patterns, preferences, and pain points. These insights can guide broader decision-making, like pricing, marketing campaigns, and product development.
Improve sales effectiveness and efficiency
A revenue platform makes it easier for your employees to take action faster and achieve better results. Take your sales team as an example.
By leveraging insights thrown up by a revenue platform—things like stuck deals and account health scores—buyers can react quickly to salvage deals they might otherwise lose.
A revenue platform should also make it easy for reps to improve performance, shorten sales cycles, and close more deals. With a conversation intelligence tool, sales reps can get AI-powered coaching advice that helps them respond optimally at every point of the process.
Maximize your revenue operations with Clari
Revenue optimization makes your company stronger, more resilient, and more profitable.
But remember, you can’t focus on just one revenue generation method. Instead, use the strategies discussed in this article to take a holistic approach to your revenue optimization efforts.
If you want to make your revenue team even more effective, choose Clari as your revenue platform. Clari can help your revenue optimization efforts by accurately forecasting sales opportunities, identifying at-risk deals, and coaching your sales reps to be more productive.
If that weren’t enough, research by Forrester shows Clari makes your rev team 80% more effective and delivers a 448% ROI.