Revenue growth rarely stalls because of a single problem. More often, it is the result of multiple internal bottlenecks that gradually constrain the organisation’s ability to generate, convert and grow revenue.
In my previous blog, “The Revenue Growth Plateau”, I explored what a revenue growth plateau is, why it can happen even in companies that are seemingly doing well, and the role of both external and internal factors. I also posed an important question: **Are we merely managing the symptoms, or are we addressing the root cause of stalled growth?**
In this blog, I will focus specifically on the **internal factors within an organisation that can lead to a revenue growth plateau**. I will discuss seven critical bottlenecks that can hamper growth and, more importantly, need to be identified and addressed if an organisation is to eliminate the root causes of stalled revenue growth.
Taken together, the two blogs provide two complementary perspectives:
- Blog 1 — Understand the problem: Why does revenue growth plateau happen?
- Blog 2 — Identify the bottlenecks: What within the organisation could be preventing revenue growth?
The objective is not simply to identify what is going wrong, but to help business leaders recognise the internal constraints that may be holding their organisation back from its next phase of growth.
1. Symptoms that indicate a potential revenue growth plateau
The symptoms are familiar:
- Good funnel but stalled revenue growth.
- Lead gen engine is working but conversions are not happening.
- Increased sales conversion cycle.
- Busy sales teams, but the order book is not healthy.
- Inconsistent productivity.
- While new logos are not coming in, farming of existing customers is not up to the mark.
- Existing customers buy once but don’t expand their relationship.
Familiar management response is to increase salespeople to increase leads, offer discounts, more campaigns, etc. But do they really address the underlying bottlenecks or just treat the symptoms?
So, the question is where revenue is getting stuck? Reasons could be many but I have shortlisted the crucial seven.
2. Seven bottlenecks that stall revenue growth
Here are seven common bottlenecks that can silently constrain revenue growth.
I. Unclear organizational positioning and sales strategy
Senior management struggles with proper position of the organization, no proper sales strategy or a sales strategy that has gone obsolete, leading to a confused sales team that does not know what to sell and how to sell.
Signs of a confused organization:
- No mission or objective statement that tells sales the direction or growth path of the organization.
- Stalled growth leading to frequent management changes.
- Internal bickering leading to a headless organization.
- Confused salespeople,
- Offerings changing frequently.
II. Value proposition not aligned with customer need
If your value proposition is not aligned with customer needs, then even if your product or services are of excellent quality and are technically superior, you might not achieve the desired sales. Customer might not perceive your technical excellence as a reason to spend their money, if your product or offering is not aligned with her / his needs. While you might be selling your product / offering, customer might be asking himself, why should I spend money on this?
For example, if the customer’s immediate need is to reduce operational costs and if you are selling him the technology behind your offering, then there is a mismatch. A better value proposition would be to explain to your customer how your product or offering will reduce his operating costs as compared to selling your offerings technology superiority.
Signs of a value proposition bottleneck:
- Prospects frequently say, “we will get back.”
- No proper differentiation as compared to competitors.
- Struggling salespeople who are not able to position your offerings relative to your competition.
- Price led discussions rather than on product capabilities, technology etc.
- Customers don’t clearly understand the business impact of your solution.
III. Proper identification of ideal customer profile
The most effective growth strategies usually identify a relatively specific Ideal Customer Profile (ICP) – the type of organization that has the strongest combination of need, ability to buy, urgency and potential value.
Without this clarity, sales teams can spend enormous amounts of time pursuing prospects that were unlikely to buy in the first place. The broader the target market, the harder it becomes to build a focused and repeatable revenue engine.
Signs of an ICP bottleneck:
- Varied prospects, no commonality leading to unpredictable sales cycles.
- Increasing sales and business development costs and no corresponding increase in the revenue.
- Unpredictable win rates, some segments doing well and some lagging.
- Ineffective or improper lead qualification.
- Sales and Business development teams are on a different page leading to frequent disagreements on what constitutes an ideal customer.
- Selas and Business development team on a different page leading to frequent disagreements on what constitutes a good, properly qualified lead.
IV. Quality of pipeline
Pipeline quantity does not mean pipeline quality. A 100-crore lead pipeline isn’t really meaningful if the leads are not properly qualified, leads are not well funded, budgets are not in place, no proper identification of decision-maker, specific buying timelines etc.
Signs of a low quality pipeline:
- Salespeople repeatedly miss targets because opportunities don’t materialize.
- Pipeline coverage looks healthy but bookings don’t follow.
- A large percentage of opportunities don’t move or have become dormant.
- Quality meetings with the prospects not happening, prospects not giving time to meet sales people.
- Lead generation is inconsistent.
- Increased and expensive sales cycles.
V. The sales cycle bottleneck
The sales-cycle bottleneck is often where the effects of the earlier bottlenecks become visible. Poor positioning, weak value propositions, incorrect customer targeting and low-quality pipelines eventually manifest themselves as longer and more unpredictable sales cycles. Businesses might be still winning deals, but we see increased sales cycles, which directly impact sales forecasting. Further, there is a reduction in the overall order book size.
Typical signs of a sales cycle bottleneck are:
- Increased sales cycles wherein it takes longer to close a deal.
- Low quality order booking – reduced order ticket size, orders taken at lower margins.
- Proposal stuck in “evaluation stage”.
- No opportunity closure plan.
- Decision makers not properly mapped.
- Prospects either not responding or saying that “we will get back”
VI. Effective farming the existing customer base
An aspect that is hugely ignored in most of the companies. They focus and spend more on acquiring new logos as compared to their existing customer base. They invest enormous amount of energies in acquiring new customers while underinvesting in retention of the existing customer base, repeat purchases, long-term renewals, cross sell etc.
It creates a situation that incoming revenue is less and farming of existing customers is inefficient leading to leaky revenue bucket.
Signs of ineffective farming of existing customer base:
- Steady loss in existing customer base.
- Customers not renewing existing business.
- No incremental revenue.
- No account mapping and planning.
- Inefficient customer feedback.
- Sub-par or low-quality customer relationship management.
VII. Gaps in talent, technology and processes
If the organization is not equipped with the right sales talent, supported by well-defined sales processes and does not use the current available technology to it benefit, even if it has a sound strategy, it will not grow and will start seeing revenue stall or a revenue drop.
This is where people, processes and technology intersect. Talented sales force, backed with right technology and well defined sales process will lead to better results. The key is to have the right balance of people, technology and processes to achieve desired results.
Signs of Talent, technology and processes gaps:
- Long lead time to onboard salespeople
- Salespeople taking more time to become productive due to ill-defined processes, technology gaps
- Outdated CRM or data inputted in CRM is not adequate or incomplete
- CRM systems populated with fake data just to pump up the funnel
- Due to the above, management does not have a proper view of the sales pipeline and revenue visibility
- Lack of training or no training to the salespeople
3. In conclusion
The challenge is that these bottlenecks rarely exist independently. A weak positioning can create an unclear value proposition. An unclear value proposition can affect lead quality and conversion. Poor lead qualification can increase sales cycles. Longer sales cycles can reduce order bookings and make revenue forecasting difficult. At the same time, inadequate customer farming can increase the pressure to acquire new logos.
This interconnectedness is precisely why simply increasing sales activity often fails to solve a revenue growth problem. The organisation needs to identify the root constraint first.
This is where a proper and comprehensive Sales Audit conducted by an experienced professional organisation can help. A structured audit can identify the underlying bottlenecks, assess their impact on revenue performance and help management prioritise the areas that need attention.
To learn more about Plakxa’s Sales Audit and Revenue Growth Assessment, contact Plakxa Business Consulting LLP at www.plakxa.com or call +91 96203 00550.