Growth is the most important driver of long-term shareholder returns and value creation. For the average industrial company, consistently growing 200 basis points faster than the market can increase its enterprise value to EBITDA multiple by two to three turns.
There are proven practices that can drive above-market growth, but companies often lack a clear litmus test to know what effective sales growth benchmarks and goals should be if they’re poised to do so. What are the actions that sales and business leaders should hold themselves and their commercial teams accountable for, to give confidence that they are on the path to growth?
Our research examining successful, large, serial growers across B2B sectors has helped us answer that question. We identified seven practices that sales growth leaders consistently do and converted those into a litmus test.
Companies looking for growth should use this litmus test to benchmark themselves against top growth company practices:
- Growth performance is tracked against your market.
- There is a concrete portfolio of three to five “100 basis point” growth bets.
- Share of wallet is quantified for every single customer or prospect.
- More than 10 percent of annual revenue growth comes from new customers.
- Annual margin expansion is around 25 basis points.
- Seller bonus/commission is at least 50 percent of total compensation.
- Sales technology is a force multiplier, not an anchor.
We’re certainly not suggesting that driving organic growth is easy, or that the practices here are exhaustive. But our experience and analysis find that they are practical litmus tests leaders can use to ensure their organizations outperform their markets.
1. Growth performance is tracked against your market
It is surprising how few B2B companies proactively talk about their performance versus the market and overall share trends. While finding perfect data for that level of analysis can be challenging, even a “good enough” index of market performance as a measuring stick is possible.
In our experience, there is no more important metric. A company’s performance against the market should be front and center, and defined as granularly as possible (for example, by area, product line, or customer vertical). Business leaders should be held to performance goals that are set by leveraging market insights, and resources should be allocated according to market potential and growth. Companies that rigorously and religiously track their trajectory against the market are more agile—able to quickly identify when they may be slipping in certain areas, and pivot.
2. There is a concrete portfolio of three to five “100 basis point” growth bets
Many companies place all their bets on one big growth effort, from a new product or service to a revised go-to-market model or a new e-commerce portal. Too often, that leads to a disappointing outcome in terms of the magnitude of impact.
Our research shows that top B2B growers place multiple bets—typically three to five—each able to deliver at least 100 basis points of incremental enterprise revenue growth. Most companies claim to have such 100-basis-point bets. But if you ask to see them, how they are quantified, and how they are tracked, many executives concede they do not manage growth bets of that size or with that level of ambition.
While that may sound like a simple ambition, the reality is any bet able to consistently drive extra growth of that magnitude must be a sizable opportunity. While it is rare that all bets reach their full potential, the combined impact of the bet portfolio is enough to deliver significant above-market growth across a variety of market scenarios.
This portfolio of three to five bets typically includes a combination of opportunities in the organization’s core, in adjacencies, and in new breakout-type opportunities. The most common division among top growers is that around 70 percent of incremental growth comes from the core, 20 percent from adjacencies, and 10 percent from breakout growth, ranging from tactical (for example, launching inside sales teams to better hunt small/medium accounts, using analytics to identify white space customers in new markets, creating predictive churn models to get ahead of customer losses) to more strategic (such as innovation).
3. Share of wallet is quantified for every single customer or prospect
Sales teams often have basic data about their customers and prospects, but not at a sufficient level of detail to understand how to sell more effectively to them. Using AI, external data sets, and advanced analytics, companies in almost any industry can map the full potential of the market, quantifying the spend opportunity of every single customer (existing or potential), including all the products and services they should be buying. With that data, sales teams can determine how much potential spend is at stake, prioritize opportunities, and develop an ambitious plan to target that opportunity.
For example, leading building-products companies increasingly use web-scraping to map all new construction permits by municipality. They convert those permits into an estimated bill of materials for each job, which allows them to develop targeted outreaches to both current and potential customers.
In food services, suppliers can scan online restaurant menus and reviews to estimate the product basket and size of spend for every restaurant. And in after-market services, sell-in data, historical service rates, and real-time data monitoring can be combined to predict with high probability the likely service and parts needs for a customer.
4. More than 10 percent of annual revenue growth comes from new customers
One of the first factors companies struggling to grow at or above the market should review is their new-customer acquisition rate. In our experience with such companies, that rate is almost always significantly below the industry’s. Sales practices often reinforce the problem, such as minimal prospecting activity, compensation models that reward farming, limited to no dedicated hunting resources, and limited pipeline visibility and performance management on prospects.
While targets for new-customer acquisition differ by industry—for example, they are generally higher in transactional businesses like industrial distribution and lower in long-term contract businesses such as healthcare providers—our research finds that, on average, strong growers target more than 10 percent of their revenue growth each year to come from new customers.
The good news is this is something companies can quickly accelerate (although we recognize some sell cycles are longer than others). Some old-school practices can make a difference, such as increasing the number of dedicated hunters on the sales team, instituting an outbound calling inside sales team for lead generation, turning up senior visibility on the top new opportunities, sharpening value proposition messaging, engaging in top-to-top conversations, and considering special pricing. It is also critical to adjust compensation to ensure sellers are disproportionately rewarded for new wins.
Analytics and gen AI are also changing the way leaders do this quickly and inexpensively. Thousands of customer leads can be identified through a variety of sources (such as cold CRM contacts, industry databases, and third-party aggregators) and contacted with customized messages through tailored AI-generated outreach—increasing the response rate compared with traditional email and SMS.
Another bonus? No more groans from sellers about having to manage thousands of leads, many of poor quality. In our experience, well-designed AI agents can identify, qualify, and hand over the best leads to reps with little to no human intervention.
5. Annual margin expansion is around 25 basis points
Strong growers drive steady margin expansion from price and cost discipline. They collectively set clear annual goals for margin expansion of about 25 basis points, quantify expected cost changes every year from material-cost inflation, and ensure those are passed through consistently.
They maintain an innovation pipeline, so customers are willing to pay for regular price increases, and do not rely on blanket price increases. For example, one company found that willingness to pay for rush orders was almost two times higher in the peak season and changed pricing accordingly.
Leaders also align compensation to profitable growth. Table stakes are having a margin component of compensation. Many leading companies add extras that reward strong pricers, typically tied to a deal score that scores a deal’s margin based on deal size, customer size, and value-based factors.
6. Seller bonus/commission is at least 50 percent of total compensation
While many companies have variable compensation plans, the difference between top and bottom sales team performers may be only $5,000 to $10,000 a year. That will not motivate your best performers and often perpetuates long sales cycles and inertia.
Good reps should be incentivized and well-rewarded for winning business, and the differences in compensation between top and bottom performers should be large. Bonuses for those with high growth and margins can reach up to several times base salary, with low performers receiving much less.
There are different ways to achieve this, but some of the main tenets we see that work include having no caps on the upside, a simple formula so sellers can easily understand the value of every new win, bonuses for things like bringing in new brands or attaining higher margins, and lower payments for farming—that is, steady-state accounts are managed at lower cost, often by being transferred to a farming rep with a different compensation model. Over time, an incentive model wired to reward high performers will retain the highest-value sellers while encouraging turnover for reps who are not well-suited for the role.
7. Sales technology is a force multiplier, not an anchor
Top growers have seamless and interconnected omnichannel experiences for both sellers and customers, with sellers citing technology as a force multiplier for their performance. Three core sales tech capabilities are key:
- A seamless omnichannel experience. Our biannual B2B Customer Pulse survey has shown a steady transition in the past decade from customers primarily interacting with sales reps, to using an average of ten different channels across the purchasing cycle. Top growers incentivize reps to push sales actions to digital channels, compensating for sales across all channels (and even including digital penetration as a metric in the incentive plan). They also create an interconnected experience across digital, in-person, and remote sales and service channels through a well-integrated CRM and 360-degree view of the customer. Customers can make purchases more easily online than picking up the phone to call a rep. Increasingly, AI agents can address up to 90 percent of product and service questions without human intervention.
A CRM that sellers are excited to use. We frequently hear from sellers in low-growth organizations that their CRM is “just a tool for management reporting.” While CRM should be used for this purpose, data is typically low-quality (opportunities being entered at the last stage of the pipeline, incomplete data entry, incorrect numbers) making seller interactions inefficient. The CRM is seen as another job responsibility versus a core enabler to sellers’ everyday work.
High-growth organizations have oriented their CRM as a one-stop shop for everything a seller needs and loaded it with valuable insights that are proactively shared with sellers at the moment they need them. Every day, reps receive high-value leads that are heavily enriched by AI (contact info, why the opportunity is a good lead, what value proposition to lead with, historical insights on the relationship). Automation is embedded throughout the sales journey (automated service request insights, AI-driven new customer prospecting, automated account planning).
- A value-backed AI road map. AI is evolving rapidly, making an expanding set of new use cases more accurate and feasible. Getting AI deployed correctly, however, and seeing AI’s value in the profit and loss (P&L) are extremely difficult. Value comes from having a well-defined yet flexible AI road map that covers the end-to-end seller and customer journey (see sidebar, “End-to-end AI sales scenario”). That end-to-end view grounded in well-targeted opportunity is the best path to growth.
When it comes to driving total returns to shareholders and creating value, organic growth is critical. We hope this practical checklist facilitates an honest assessment of your organization’s performance and practices. And don’t be discouraged if your company isn’t getting all of the above right. In our experience, few companies do. But the rewards of doing so are well worth the effort.
