About > Revenue Science
Revenue science - what is revenue science, how it's different than sale, how it relates to customer development, and why you should care
Our company name was selected with specific and intentional thought to reflect our value proposition.
We improve sales revenue performance. We do that by improving the performance and effectiveness of the customer development process. Our science, systems, services and guidance all work together to help owners and executives solve issues that increase revenue, company performance and business valuation.
We call our fact and evidence focused approach to improving sales revenue growth Revenue Science. So why is our name plural? Because we use science from several domain areas:
- Probability and statistical science to examine situational tendencies
- Data science to look at broader indicators and tendencies of group and segments of markets and industries
- Psychology and social science to address the realities of behavior
- Organizational research and game theory to consider competitive actions, rivalry and optionality
- Organizational development sciences to recognize how people learn and grow
- Financial science to describe the economic and accounting realities of change, inefficiencies and optimization
Increasing sales by improving sales related activities is a popular topic. A recent Google search for "increase sales" resulted in 250M hits of companies, products and people claiming that they can help.
That's because growing sales revenue is very often the top challenge for a company.
There are 4 simple themes that would allow you to increase sales revenue:
- Create more customers - As Peter Drucker stated, the purpose of a business is to create customers.
- Raise your prices - charging more for the same goods.
- Increase your average sale - common terms are average selling price (ASP) or average transaction.
- Increase the frequency of sales - increasing the pace at which products or services are purchased.
Those 4 items are easy to say, but not easy to do, and do well.
Many activities in a business can - and should - be designed for low cost, time efficiency, high quality and minimal uncertainty in the production of their outcome. The core function of simple work task activities such as packing a box are easily trainable. Uncertainty is low, and cost, time, quality and production are easily measured.
As work task complexity increases, new factors become important. Answering a phone is easily trainable. Successfully conducting a sensitive contract negotiation with the senior executive team of a large new client for a 5-year $25 million dollar agreement is not easily trainable. Uncertainty is higher. Cost, time, quality and production are measured, but are now measured differently, and other factor are present.
Sales and revenue producing activities have high task complexity. Members of the same sales organization can perform the same sales process for the same product to a similarly sized organization. They can get strikingly different outcomes. Understanding the variance and difference between expectations and realities is more than challenge. It is THE challenge.
Sales and revenue generation is a blend of a number of factors. Success is a complex function of factors and qualities that include selection, process, probability and execution.
We use science and evidence-based approaches to work through and simplify that complexity. We refer to the use of science, probability and fact-based methods in assessing and improving company performance as revenue science.
Sales effectiveness and getting customer development right
Sales in an important measure of company performance. Sales revenue, and EBITDA (earnings before the charges for interest, taxes, depreciation and amortization) are crucial levers of business valuation.
Revenue science is only one component of the suite of sciences related to customer development. That includes probability sciences, social sciences, operations research and science, optimization sciences, demand sciences and quality sciences to name a few.
Revenue generation, customer development and the operational effectiveness of the entire sales revenue generation function of a company matters to investors. Better performance of how a company creates products, markets and sells those products, and provides services affects valuation.
Superior levels of sales growth rates, combined with superior revenue production performance reduces customer loss (known as churn) and reduces sales cost ratios.
When those results are achieved, that creates higher levels of EBITDA and EBITDA ratios. That translates to higher profitability, and higher valuation.