A Turning Of The Tide

Through most of this year, we’ve been trying to disentangle a most peculiar set of market signals. Consumers are wracked with anxiety about the future in what is one of the best labor markets in recent times, and they worry about their finances while continuing to spend. As we prod these murky tea leaves to glimpse what the future may hold, we see a turning of the tide. Three outcomes seem highly likely:

  1. When it comes to profitability, the next 12 months will be unlike the last 12 — a rapidly dwindling capacity for consumers to stomach high prices will end the profit bonanza for brands.
  2. There will be a knee-jerk reaction to these profit declines and will take the shape of operating expense management to steer the business away from the red — a vast majority of CEOs are gearing up for cost-cutting.
  3. Any downturn is expected to be a bump in the road and not a detour, however; most CEOs expect a “short and shallow” recession — cost management will only be a temporary fix and not a long-term value driver.

Implications For Brands And Marketers

There are two ways to fight the profit pressure that lies ahead: defense — belt-tightening where appropriate — and offense — growing the business to drive top-line revenue and boost bottom-line growth. Marketers need to widen the aperture on what it means to increase revenue. They must transcend a funnel-loading mentality and look at the full funnel journey to see where their efforts will best bear fruit. And they must go back to the first principles of marketing and capitalize on drivers such as salience, innovation, and distribution to grow demand and revenue in a structured and surgical fashion.

A Forrester Framework To Guide Revenue Growth

Over the last several months, we’ve reviewed academic research, evaluated practitioner models, spoken with CMOs, and studied best practices among companies to distill a framework to help companies develop a structured approach to growing revenue. This is Forrester’s framework for revenue growth and comprises two parts:

revenue growth framework

  1. Growth vectors. There are two: new and existing customers. You must determine the right balance of effort between new and existing customers based on your category, consumer, and competitive dynamics. (In our report, you will find guidance to help ascertain the right balance.)
  2. Growth levers. There are five: Salience is a requirement to get into the consideration set; product and experience will determine the relevance of the offering; and pricing and access will determine the strength of the go-to-market strategy. (See the report for a detailed discussion on each lever.)

What’s Next?

Please read our new report, Unlock Your Revenue Growth Potential, for more details on implementing our growth framework and best practices for ensuring its success.

I’ll be at CX North America in Nashville discussing this research and taking questions on Tuesday, June 13 at 11:30 a.m. CT. If you haven’t registered yet for the event, you can do so here. If you have registered, I hope to see you there.

If you can’t attend the event, please request a guidance session with me to walk you through our findings.

We can also help you apply this framework during a hands-on day-long strategy working session; if you’re interested, please get in touch with me, my coauthor and colleague Eric Epstein, or your account team.

Finally, visit my Forrester page and follow me to be notified when I publish similar research.