Good Revenue And Bad Revenue


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There’s the old — and still good — maxim in sales, follow the money. As sales people, we continue to chase the money. We’re measured on revenue, our job is to grow revenue, we focus on orders.

When we qualify opportunities, one of the key things we look for is funding. Do they have the budget? Are they willing to obtain the funding? If the answer to this is “Yes,” along with our other criteria, it’s like a shark smelling blood–we’re off–we want to win the deal, we’re going to compete and get the order, get the revenue.

Hold on a moment — is the fact that they have money — that if we win we will get revenue — enough?

Will the revenue we get, should we win be good revenue or is it bad revenue?

“Hold on Dave, I think you’ve written one post too many! Revenue is revenue, we need it, we’re going to get it.”

Well all revenue is not created equal. We have to focus our efforts on generating good revenue, but what is good revenue?

Good revenue has a number of characteristics: First, it’s profitable. It’s from a deal where we can make the customer happy–we can solve their problem, we help them achieve the results we had committed. It’s revenue from a customer we can support — reasonably and profitably. It’s revenue we can build on — with the customer directly, getting more business from them. We also build on that revenue with other customers—using the original customer as a reference within the industry or neighborhood. Or they might even give us referrals. It’s revenue that helps us grow and get stronger — in our markets, and with our solutions. The customer is in our sweet spot, the orders from them enable us to reinforce and grow our position.

Bad revenue drains and diverts us. It’s the order where the customer has expectations we can’t possibly satisfy. Or we may have to commit a huge amount of resources to satisfy them. It may be from customers that require too much time, too much hand holding, and attention to keep happy. It’s revenue from that “customer from hell.” It’s revenue we can never leverage — we can’t use the customer as references, it doesn’t enable us to grow our visibility share and presence in the markets. It’s revenue from customers we can’t learn from. It’s revenue from that deal where we priced our solution way too low — only to win the business. It’s revenue way from outside our sweet spot — unless we’ve done it consciously to learn how to enter new markets.

Don’t get me wrong — sometimes we need revenue badly, we have to take bad revenue, but we must do it with our eyes wide open, understanding what we are doing, why we are doing it, and what risks we are undertaking. But to maximize performance, profitability, and growth, we need to be focusing on good revenue. Revenue that works as a multiplier for our efforts and those of our company. Revenue that represents opportunity beyond the order itself.

Focusing on good revenue needs to be part of our qualification criteria. We need to inspect the customer and the opportunity up front, asking, if we win this business, does it represent good revenue for us? If it doesn’t, do we want to chase it. Do we want to go to our manager saying, “The good news is we got the order, the bad news is we got the order.”

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Republished with author's permission from original post.

Dave Brock
Dave has spent his career developing high performance organizations. He worked in sales, marketing, and executive management capacities with IBM, Tektronix and Keithley Instruments. His consulting clients include companies in the semiconductor, aerospace, electronics, consumer products, computer, telecommunications, retailing, internet, software, professional and financial services industries.


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