6 Data-Driven Revenue Optimization Strategies
Revenue leaders within sales organizations have one goal; to increase the revenue generated from sales.
You may be thinking: How can I increase my sales revenue?
Most leaders would raise prices or find a way to make more sales. The best leaders, however, optimize the revenue they’re already generating.
We provide revenue management and optimization services for Fortune 500 companies.
Here are some of the approaches and revenue optimization strategies we help them implement.
What is Revenue Optimization?
Revenue Optimization is the process of managing acquisition, expansion, retention, and pricing strategies to increase revenue.
A robust revenue optimization strategy should include using sales intelligence software to make data-driven decisions that lessen the burden of financial risk in compensation plans and identify potential issues early.
When used correctly, this information leads to a greater ability to understand your customer base and their decision-making processes-increasing your revenue.
6 Ways to Optimize Your Sales Revenue
Optimizing your sales revenue takes more than adjusting your pricing strategy or closing more deals.
More enterprises should take a holistic approach where data and analytical tools underpin all executive decision-making, considering the many different functions and needs of your organization’s stakeholders.
1. Set quotas based on real territory potential
One area where many organizations fail to take full advantage of their data is market segmentation, particularly when setting territories and quotas.
Setting quotas based on the sales potential of a territory is one of the most critical ways to optimize revenue and assess the new market opportunity.
To set your quotas, start by segmenting your accounts.
Customer segmentation should be based on data, highlighting customer potential, needs, and buying process differences.
Ask yourself these questions:
- How have I segmented my customer base?
- What data do I have to inform it?
- Which sales teams are covering which segments? Why?
Best-in-class sales organizations will take this information and assign their sales resources accordingly to fully capture that potential. That benefits your sales reps, who are more likely to hit their quota and reach their expected earnings, meeting both their personal goals and your company objectives.
2. Use customer workload data to determine resource distribution
Customer workload data considers how much time is required to sell and service your customer and prospect accounts — and the return in revenue you will see.
Once your accounts are segmented, design territories to maximize coverage of your highest priority target accounts while balancing workload across reps.
Determining your resource distribution to these territories is essential for optimizing revenue. Ask yourself these questions:
- How many salespeople do I have for each role, segment, region, etc.?
- What is that assignment of resources based on?
- What is the average # of accounts, $ potential, $ revenue, etc., by territory?
Top sales organizations use this workload data to allocate their resources appropriately.
The better your distribution, the more income you will generate.You can't expect reps to beat their quota if you haven't approximated the real potential in their territory. Click To Tweet
3. Automate routine operational tasks
Whether you recognize it or not, routine operational tasks cost your sales organization revenue. With so many software solutions becoming available, there’s a reason more than 30% of sales-related activities can be automated.
Sales automation can reduce your sales cost by freeing up time spent on administration and reporting and unlocking revenue by automating outreach to customers in the sales funnel.
Here are some ways to use automation to drive incremental profitability:
- Uploading data to CRM
- Transferring data between departments
- Processing commissions
- Producing reports and analysis
- Data modeling
4. Integrate AI technology to optimize and forecast
Increasing sales revenue is made possible by integrating AI technology with your sales. Various tools are available to help optimize and predict your sales processes and maximize revenue.
Tool #1: Sales Engagement Platforms
Sales Engagement Platforms (SEPs) integrate with CRMs, helping sales teams advance opportunities faster by automating workflows and data analysis. With SEPs, reps can work more efficiently, leading to more revenue.
Tool #2: Sales Incentive Compensation Management
Sales Incentive Compensation Management (ICM) software automates commission calculation, analysis, and forecasting.
While smaller sales organizations generally don’t need anything more complicated than a spreadsheet to manage compensation, larger teams with hundreds of sales reps need significantly more sophisticated solutions.
Forma.ai is the first ICM software to automate sales compensation planning, programming, forecasting, and analysis in a single platform.The best revenue leaders use AI tech to optimize and forecast their sales process. Here's how and five other ways: Click To Tweet
5. Retain top performers like you would key customers
Have you heard of the 80/20 rule? It states that 20% of your company’s salespeople will generate 80% of your sales revenue. These top performers should be retained with the same effort you would for key customer accounts.
Retain your top performers by motivating them with a core sales compensation plan. Organizations with best-in-class sales compensation functions have more engaged reps that produce better results and stay with their employers longer than the average.
Many sales organizations motivate their reps with financial incentives beyond the core comp plan, such as SPIFs or President’s Clubs. These incentives help close sales gaps and leave reps wanting more-increasing revenue and improving retention.
6. Target accounts to expand based on historical customer data
As mentioned earlier, the best leaders increase profits by optimizing the revenue they’re already generating.
They do this by using historical transactional and customer behavior data to profile customers and approximate the growth potential of existing accounts, allowing them to commit resources accordingly.
Build a data model to determine which customers you should target. That will help you estimate their potential spending and will be a key input into your revenue optimization decisions.
When building your model, consider the following:
- How will you map the customer data?
- How will you process the customer data?
- How will you assess the customer data?
- How will you calculate the maximum customer spend?
Forma.ai is the first sales performance platform that uses a collective data model, enabling our customers to manage risk by forecasting the expense required to execute new initiatives, incentives and pricing strategies or expand into new markets and verticals.
Data Drives Revenue Optimization
To optimize your sales revenue, you must incorporate some, if not all, of these top data-driven ways to increase revenue.
All of these processes are driven by sales intelligence. Your goal as a revenue leader is to use data and intelligence to generate more revenue for your sales organization fairly and equitably.
That is where Forma.ai excels: Revenue Management Science.
We recently expanded our product set with revenue monitoring and optimization solutions to help our customers maximize their sales performance.