TheUC 046: 5 Tactics that Increase Revenue


Companies of all stages struggle to increase revenue. This discussion lays out an easy, 5 tactic approach that leverages your company’s current customer base and core business to increase revenue.

Identify Impediments to change.

What’s keeping you from changing to a new unit of business or from achieving higher performance and increase revenue on the key metrics associated with an existing unit of business? In this part of the process, you want to remove the blinders that exist when you’ve been competing in the same way for a long time. Ask yourself WHY…Why are we doing things the current way?  And Why aren’t we evolving or innovating?  It could be simple questions such as: why are we incurring certain costs? Why are your customers choosing your products or services? Why aren’t we doing more to increase revenues?

This 5 step technique to increase revenue is a simple framework asking “Five REs.” The idea is to look at all the key metrics that represent costs and assets and probe them ruthlessly. The five REs to increase revenue are:

Remove. Why incur a cost at all? Why not remove it entirely from your cost base?

Replace. If you can’t remove a cost, can you lower it by substituting a less-expensive product or service? For instance, companies have sometimes used voice-recognition systems in place of expensive human operators, and manufacturers of sodas and candies have used corn syrup in place of sucrose.

Reduce. If you can’t replace the cost, can you reduce it instead? A company can reduce the labor intensity of its ordering system by switching to an interactive online system. Alternatively, can you reduce the price you are paying for your cost of goods?

Redesign. If you can’t reduce the amount you need to spend on a scarce resource, can you redesign your business to use it more efficiently? There are many ways companies can economize on technical or service resources. For instance, law firms may complement services from their expensive lawyers with services from less costly paralegals; hospitals may replace some physicians with nurse practitioners; software companies may encourage customers to use self-help Web sites or phone services rather than rely on costly help-desk technicians.

Redistribute. If you can’t redesign, can you redistribute costs over more units?

A way to gain perspective throughout the methodology to increase revenue is to do some benchmarking—but not necessarily against your direct competitors. It’s useful to benchmark against firms that have successfully transformed a particular metric through better business practices. It can help to seek outside advisory to help you identify best-in-class performers for the metrics you want to explore.

Review the key customer segments you serve.

The next challenge as you work to increase revenue is to apply the techniques described above to your customers. The questions you want to consider are whether you might benefit by developing a different unit of business for a particular set of customers, whether those customers might benefit if they developed a different unit of business, or whether you can help them with their key metrics.

Assess the need for new capabilities and the potential for internal resistance.

Typically, a significant shift in your business design also implies major shifts in your capabilities. To increase revenue you may have to add new skills to your organization. As you go through this assessment, you’re bound to run into resistance from senior managers; they aren’t likely to embrace a change that will require the company to develop totally different skill sets. So it’s worth thinking about how to deal with the politics of changing a business before you find yourself stalled by internal opposition which can thwart efforts to increase revenue.

Decide on a marketing and communications plan.

It is essential if you are going to increase revenue that you have an effective marketing and communications plan. How can you convey the value of your new approach to your customers and your internal constituencies? And who needs to be part of the communications process? Make sure you consider which audiences are important, in which sequence, and with what types of communication. The idea is not to spend endless hours agonizing but to make sure that when you do make a move, it is decisive and clearly conveyed to critical constituencies. Remember, too, that analysts who are used to looking at your company one way may need to be educated on a more appropriate set of metrics to use that demonstrate you will increase revenue.