Why Revenue Should Be Used as a Trailing (Although Critical) Indicator of Business Health

“Revenue should not be your leading indicator.”

Come again?

That’s the claim made by Brian Turner, General Manager with Slalom. Brian says that while revenue is absolutely a critical indicator of the health of your business, you run into problems when you make it the leading indicator. Your solution, your rate and structure around a dollar, and you can backend the most important part of the solution—the value you bring to the client.

What is your value? Are you doing the right thing? Are you truly solving your customers’ problems in the manner they need them solved rather than applying your tools and assets no matter how well they fit?

Indiscriminate application can have some short-term wins, but long-term if you’re trying to create a brand and own a market as well as a culture within an organization, you’ll fall short.

We covered these topics and more in a recent interview with Brian, which we’ll summarize here.

Would Slalom Feel Different if It Were a Public Company?

Has Slalom been able to focus less on revenue because they’re not a public company? If they had shareholders, would it be as simple?

It ties into the “leading versus trailing indicator” concept. Their philosophy allows them to be proactive versus reactive to their clients’ needs.

Obviously, they still look at daily, weekly, quarterly, and yearly revenue. You still have to break things into measurable chunks to analyze them.

But you don’t have to react to them. If you’re answering shareholders, and they want to know exactly what you’ll deliver in a quarter, you can get into trouble. A better number, no matter the story of how you achieve it, can alter your longer term vision.

For example, take something as simple as “People are your biggest asset.” Brian has seen companies have to make decisions on hiring and firing based on a three-month projection. If you have a person who’s been with you 10 years as an excellent resource, but they had a hiccup with a client or something and you start getting rid of them, you face two major problems:

1. That’s the wrong thing to do for a culture; you’re never going to build the loyalty you want.
2. Even just looking at it from a dollars and cents perspective, how much money will you have to spend to rehire that person? The inefficiency you’re creating is significant.

You still need to make moves and stay efficient, but you don’t need to answer to a calendar date.

The Biggest Challenges as Slalom Grows

A lot of companies have great culture, keep their arms around their people, and truly partner with their clients in an intimate way. But many times, at about the $1 billion mark, you can start to see breaks happen.

You need process to effect scalability. For Slalom, the biggest challenge is how to empower and be scalable, to bring the appropriate assets and knowledge to their clients while keeping that small local intimacy from a partnership, from understanding their clients’ needs.

The one-liner Brian gave was this: “How do we maintain our culture, intimacy, and partnership with our clients while taking advantage of the success we’ve had to bring more assets to those clients to solve their most critical problems?”

4 Things That Fall Into the Circle of Business

In the interview, Brian four components of the circle of business:

1. Investments in Products
2. Investments in People
3. Innovation
4. Longer Sales Lifecycles

It all comes back to bringing value. Clients expect you to have the best people. At the same time, if you’re just bringing all the tools that everybody else brings, no matter how much your people take care of their clients, the mighty dollar wins out in the end.

That’s where innovation comes in. Clients want you not only to be doing what you do well, but to push the boundaries and bring other items to the table.

For Slalom, sometimes that’s investing in projects with them, or ROI deals. Sometimes it’s investing in pilots to show them what could be.

Then comes longer sales cycles. It’s a tough discipline, something Slalom is going through right now.

As anybody who sells knows, the best way to sell is working with a client from the ground. But it’s a big world, and you’ve got to bring enough value from the outside to interest people, to bring a different level of value when you’ve already had the partnership and they expect more from you.

It doesn’t mean you’re inefficient, but it does mean sitting on your heels, listening, and making sure you’re solutioning right.

What is the most effective way to get your attention and provide you value?

We like to ask all of our podcast guests this question. Here’s how Brian responded:

“There are the easy things like having a personal connection from a credibility standpoint. But that can’t always be the case. So what’s effective for me is when the value proposition they’re giving is clear, meaning their initial reason for reaching out makes sense in my context.

Then it’s the connection. How are you doing it? Is it customized? You’ll know in 30 minutes if it’s another sales pitch or if they’re really listening.”

Acceleration Insight

In each episode of the B2B Revenue Executive Experience, we’re going to ask our guests for one nugget of wisdom they would impart to a sales professional. Here’s this one:

“You can’t game the system. In the end, hard work and effort is hard work and effort, and you’re going to need that to be successful. You might be able to find pockets between there, but it comes down to, ‘Are you following through? Are you addressing the gaps that you know you have or pushing them off?’”

This post is based on a podcast interview with Brian Turner from Slalom. To hear this episode, and many more like it, you can subscribe to the B2B Revenue Executive Experience.

If you don’t use iTunes, you can listen to every episode here.