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Revenue analytics is one of the most important business strategies. Countless of studies have proven how staying data-driven about your top line can impact your company success.
Now here's the best part.
I've gathered all of these research papers and studies in one place for you.
Revenue analytics is very similar to user analytics in its nature but has a different set of objectives and strategies behind it.
It’s a top-down approach aiming to understand the revenue drivers and the way your revenue is formed so you can launch strategic initiatives with a positive impact on your bottom line.
Usually, you can find yourself doing it either for a quarter review reporting and planning or any other day you see the growth is slowing down, and you want to understand the root issue.
Surprisingly, I didn't find much information on the web around this topic. When you’re first starting to analyze the company’s performance, it’s easy to fall into the trap of blank page syndrome. It's that mental block you hit when you're staring at a blank slate and just don't know where to start.
Much of what you're about to learn is based on my personal experience of testing different approaches, so hopefully, you will find this helpful and it will give you some solid guidance on where to start.
Identifying Revenue Drivers
This is probably the #1 thing you need to begin with, if you haven’t done it already. No matter if you’re preparing a report for investors, trying to optimize your team’s performance, or just starting a new position and need to get your first insights on where to keep your focus. Revenue drivers are you business core sources of income.
If you have a BI Tool - that’s a good starting point for this analysis. Most likely, you already have some revenue reports there built by BizOps or Data Analyst teams. Identify every single area that contributes to your revenue growth.
If you don’t have the right tools to pull the insights, simply ask engineers to create this report for you.
New/Existing Customers Revenue Distribution
The next thing you want to see is how your revenue is structured. That’s important to understand where to focus your efforts on. It can also unbox for you how dependent your company is on the incoming customer and acquisition flow or if the majority of your business is driven by existing customers.
You can do it month over month or quarter over quarter to see how big the distribution is, so you can understand which area has the most hidden opportunities. If more than 30% is coming from your new customers, then bottom-of-the-funnel stages optimization like referral and retention would be the best to prioritize in your strategy.
And vice versa, if you see that 70%+ of your bottom line adds up from existing customers, your acquisition and activation initiatives will be your best friends, as you’re already doing a good job keeping them.
Calculate the penetration rate for Existing Customers
The penetration rate can be reworded as: “For each company in our customers, what % of its employees are our users?”. This metric should be as high as possible.
For digital products, there are 2 potential growth strategies around this:
a) User-generated growth: You can start by gaining the trust of a few users, and then users will do the rest and get every interested party in their organization to buy it. Loom is a great example of it. Once one person starts using Loom, it starts spreading like wildfire (maybe not the best term), and if your product has a PM fit and you built it with this growth driver in mind, it should do the job really well.
But it’s not always the case. Loom didn’t figure out this strategy right out of the gate. Moreover, it took them a good amount of tests and experiments to find out the winning way of incentivizing sharing and effectively onboarding new interested users. So don't get to worries if it doesn’t happen just yet.
b) Team Adoption: You get a team’s buy-in first, and when they love it, they'd basically demand that the company adopt it. Slack would be a good example here. Once a team starts using Slack, it becomes their go-to communication tool. As more teams within an organization adopt Slack, it becomes a necessity rather than an option, leading to organization-wide adoption.
Think about your product. Do your customers have to engage others in your product as a part of its functionality? If no, would it make sense to add it? If yes, growing through users natively sharing your product is where you should start maximizing your efforts.
If your product is more dependent on team adoption, then you should be focusing on digging deep within an organization and making it meaningful to invite others.
The problem becomes clear when your product doesn’t have any sharing nature and it brings users no value if they share it with others. It’s a dead-end which will lead you into a very low penetration rate, which is the worst-case scenario. One person uses you - others don’t because they simply don’t know about you.
This can be fixed either by making some part of your product shareable and stimulating user-generated growth or adding team collaborative functionality so it actually becomes meaningful to use your product with others.
Break down your acquisition efforts
If you’re getting the majority of your revenue from existing customers, that’s a good sign of a mature company with product-market fit. In this case, you should double down on your acquisition and activation metrics to get more money in, as you know people are sticking around.
Now even if you have a negative revenue churn and great retention, you cannot sustainably grow your revenue without acquiring new customers. Think of all the beer manufactures - we all know how many people are “Bud fans” or “Guinness fans” only, yet the companies spend hundreds of millions in promotional dollars to hold the brand awareness and pulling the competitors customers over.
There’re so many acquisition channels and strategies you can implement, it’s a topic for a different article. What I am going to share is how to determine the weak shackles in your revenue stream and focus on what matters first.
What you want to do here is to segment your incoming new customers flow and see how much does it cost the company to acquire people from each of those.
Pie chart will help you visualize this. You can do this quarterly or monthly. Here’s an illustrative example, assuming the majority of your new revenue is coming from SEO, Paid Advertisements and Sales Channels:
Paid campaigns - using your analytics tool filter down your revenue generated from users that signed up having some UTMs in their browser. UTMs are small parameters attached to the url of a page where people land after clicking on the ad. This is how you can track all of your paid advertisement campaigns.
Sales - you can easily find the deals information in your CRM system.
Organic - export the report from Google Analytics to see all the users who signed up organically by finding your business online. It’s not coming like this out of the box so you will need to talk to engineers so they can help you identify the users in Google Analytics in your product’s customers.
Now check in with your Finance department to see how much budget is allocated to each channel. Calculate the ROI of each segment and then see what areas are underperforming.
It’d be also a good time to spy on your competitors and try to learn what key growth metrics they are hitting so you have a benchmark. You can also read the industry benchmarks, but keep in mind that the bar is going to be pretty low there as a lot of companies’ with poor perfomance end up there, skewing the average.
Cost Analysis - Reduced Costs Lead To More Revenue
People don’t usually talk about it but sometimes we spend so much money on things that do not matter at all. For example, we might be paying for software nobody uses. Or what’s happening more often is paying for features that nobody cares about only because somebody sold us on this, and now it just adds up to our monthly subscription invoices.
A quarterly overhaul of costs isn’t something only the finance department should do. It’s all included in your budget, so it’s your responsibility as a revenue leader to understand the return on every single dollar your team spends.
Write down all of the expenses you’re having and try to be pretty granular as to the value you’re getting out of those. Sometimes the value is not purely money. It could be your time or your overall mood. But sometimes the value is just absent. And it’s your task to cut this off and move the money to the areas that are indeed important.
Cohort Analyzis & Golden Cohort Discovery
Cohort analysis is one of the top-notch revenue analytics strategies revenue leaders employ all the time. It's not easy when you first start, but as you master it, you will see how significant the correlation is between the right circumstances and your recurring revenue.
There are different methods of conducting it, and I will share the one which I found the most helpful: golden cohort discovery.
The idea is simple. You take the last quarter of your customer signups or website visits and break it down by week (or any other meaningful for your business timeframe). Then you track the retention rate and lifetime value of week 1, week 2, week 3 users, and so on to see if any week stood out.
You then do the same for different key actions that you believe can positively impact your revenue goals. For example: "users who came from Google ads," "users who checked the pricing page," "users who watched a product tour," and again measure their LTV and retention.
In the end, you should identify a few golden cohorts consisting of valuable customers that greatly contributed to your revenue generation. And what you want to do now is to make as many people as possible who interact with your brand follow this golden user journey.
5 strategy tips to increase your revenue flow
If your new customers are driving the majority of revenue - focus on retention.
If your existing customers are driving the majority of revenue - focus on acquisition.
Cut down the channels with low ROI and move the budget to the ones with high ROI
Don't just focus on the money coming in. Look at your costs too. Reducing costs can be a quick way to increase net revenue.
Find the golden cohort in each customer segment and try to imitate its experience for every other customer in this segment.
Tools for Revenue Analytics
There is nothing special here, and there is no “revenue analytics platform” that will magically run sales analysis for you.
Excel will be your best friend in most cases. Just send your developers the requirements of what kind of data you need based on this article and plug the dataset into excel. Then you’ll be easily manipulating it and calculating the things we covered here.
If you have a well-structured database and a data pipeline maintained by your sales team connected to some Business Intelligence tools like Tableau or PowerBI, you should be able to build the majority of reports there yourself. Of course, considering you’re well-versed in these tools functionality as it’s not straightforward by any means.
Unfortunately, unless you work for a pretty big company and you have a lot of dedicated resources managing your data - it’s hard to be this nuanced in your analysis without technical know-how. So in this case, your best bet would be to create a ticket and ask your engineers or analysts to prepare it for you
When you have a lot of data but lack the ability to analyze it, you’re steering the vessel blindfolded. Probably the most effective way to do any kind of analysis when you don’t have much time is to make someone do it for you.
In 2023, we have AI capable of doing really complicated work on any project you might think of. For example you can connect your CRM and database to ChatGPT and talk to your data as if it were your personal data analyst.
Datalynx, can do exactly this. It is the only tool revenue leaders need to cut the back and forth time with their data analysts and become 80% more efficient in gaining insights from their data. After connecting your data, you can ask any data-related questions directly in the chat and get insights in seconds.
Diving Deeper into Revenue Analytics Strategies
As we continue our exploration of revenue analytics, it's important we go a little deeper into some of the key concepts, technologies, and thought leaders shaping this space.
According to Zach Cross, president of Revenue Analytics based in Atlanta, Georgia, there are several core components that make up a comprehensive revenue analytics strategy.
This includes leveraging predictive analytics and data analytics to uncover insights around customer behavior, marketing analytics, sales performance, revenue potential and product performance.
By analyzing key performance indicators, conversion rates, page views and other sales data, revenue management teams can start to understand root causes behind changes in revenue.
From here, they can start to model different scenarios to optimize price points, promotions, sales strategies and more to positively impact revenue growth. Many software tools help automate components of this through algorithms that enable yield management, forecasting, revenue analysis and reporting.
The end goal is to arm sales, marketing and executive teams with strategic business intelligence to guide key decisions around go-to-market initiatives, targeting, pricing and positioning. When this is done right, it has the power to significantly improve customer experience and loyalty over the long run.
United States healthcare organizations in particular have benefited greatly from embracing modern revenue analytics techniques according to recent case studies.
It's clear that the first step any business should take, once they have a good handle on standard reporting, is to continue leveling up their revenue analytics strategies and capabilities over time. The payoff in top and bottom line growth can be substantial.
Revenue analytics is about the story
Wrapping it up, revenue analytics isn't just about tracking numbers. It's about understanding the story behind those numbers. It's about figuring out what's working, what's not, and where you can make changes that will really move the needle.
So, take a deep breath, dive into your data, and start making those strategic moves that'll lead your company to greater profitability. It's all about asking the right questions, looking in the right places, and being relentless in your pursuit of growth. Go get 'em!
Revenue analytics is one of the most important business strategies. Countless of studies have proven how staying data-driven about your top line can impact your company success.
Now here's the best part.
I've gathered all of these research papers and studies in one place for you.
Revenue analytics is very similar to user analytics in its nature but has a different set of objectives and strategies behind it.
It’s a top-down approach aiming to understand the revenue drivers and the way your revenue is formed so you can launch strategic initiatives with a positive impact on your bottom line.
Usually, you can find yourself doing it either for a quarter review reporting and planning or any other day you see the growth is slowing down, and you want to understand the root issue.
Surprisingly, I didn't find much information on the web around this topic. When you’re first starting to analyze the company’s performance, it’s easy to fall into the trap of blank page syndrome. It's that mental block you hit when you're staring at a blank slate and just don't know where to start.
Much of what you're about to learn is based on my personal experience of testing different approaches, so hopefully, you will find this helpful and it will give you some solid guidance on where to start.
Identifying Revenue Drivers
This is probably the #1 thing you need to begin with, if you haven’t done it already. No matter if you’re preparing a report for investors, trying to optimize your team’s performance, or just starting a new position and need to get your first insights on where to keep your focus. Revenue drivers are you business core sources of income.
If you have a BI Tool - that’s a good starting point for this analysis. Most likely, you already have some revenue reports there built by BizOps or Data Analyst teams. Identify every single area that contributes to your revenue growth.
If you don’t have the right tools to pull the insights, simply ask engineers to create this report for you.
New/Existing Customers Revenue Distribution
The next thing you want to see is how your revenue is structured. That’s important to understand where to focus your efforts on. It can also unbox for you how dependent your company is on the incoming customer and acquisition flow or if the majority of your business is driven by existing customers.
You can do it month over month or quarter over quarter to see how big the distribution is, so you can understand which area has the most hidden opportunities. If more than 30% is coming from your new customers, then bottom-of-the-funnel stages optimization like referral and retention would be the best to prioritize in your strategy.
And vice versa, if you see that 70%+ of your bottom line adds up from existing customers, your acquisition and activation initiatives will be your best friends, as you’re already doing a good job keeping them.
Calculate the penetration rate for Existing Customers
The penetration rate can be reworded as: “For each company in our customers, what % of its employees are our users?”. This metric should be as high as possible.
For digital products, there are 2 potential growth strategies around this:
a) User-generated growth: You can start by gaining the trust of a few users, and then users will do the rest and get every interested party in their organization to buy it. Loom is a great example of it. Once one person starts using Loom, it starts spreading like wildfire (maybe not the best term), and if your product has a PM fit and you built it with this growth driver in mind, it should do the job really well.
But it’s not always the case. Loom didn’t figure out this strategy right out of the gate. Moreover, it took them a good amount of tests and experiments to find out the winning way of incentivizing sharing and effectively onboarding new interested users. So don't get to worries if it doesn’t happen just yet.
b) Team Adoption: You get a team’s buy-in first, and when they love it, they'd basically demand that the company adopt it. Slack would be a good example here. Once a team starts using Slack, it becomes their go-to communication tool. As more teams within an organization adopt Slack, it becomes a necessity rather than an option, leading to organization-wide adoption.
Think about your product. Do your customers have to engage others in your product as a part of its functionality? If no, would it make sense to add it? If yes, growing through users natively sharing your product is where you should start maximizing your efforts.
If your product is more dependent on team adoption, then you should be focusing on digging deep within an organization and making it meaningful to invite others.
The problem becomes clear when your product doesn’t have any sharing nature and it brings users no value if they share it with others. It’s a dead-end which will lead you into a very low penetration rate, which is the worst-case scenario. One person uses you - others don’t because they simply don’t know about you.
This can be fixed either by making some part of your product shareable and stimulating user-generated growth or adding team collaborative functionality so it actually becomes meaningful to use your product with others.
Break down your acquisition efforts
If you’re getting the majority of your revenue from existing customers, that’s a good sign of a mature company with product-market fit. In this case, you should double down on your acquisition and activation metrics to get more money in, as you know people are sticking around.
Now even if you have a negative revenue churn and great retention, you cannot sustainably grow your revenue without acquiring new customers. Think of all the beer manufactures - we all know how many people are “Bud fans” or “Guinness fans” only, yet the companies spend hundreds of millions in promotional dollars to hold the brand awareness and pulling the competitors customers over.
There’re so many acquisition channels and strategies you can implement, it’s a topic for a different article. What I am going to share is how to determine the weak shackles in your revenue stream and focus on what matters first.
What you want to do here is to segment your incoming new customers flow and see how much does it cost the company to acquire people from each of those.
Pie chart will help you visualize this. You can do this quarterly or monthly. Here’s an illustrative example, assuming the majority of your new revenue is coming from SEO, Paid Advertisements and Sales Channels:
Paid campaigns - using your analytics tool filter down your revenue generated from users that signed up having some UTMs in their browser. UTMs are small parameters attached to the url of a page where people land after clicking on the ad. This is how you can track all of your paid advertisement campaigns.
Sales - you can easily find the deals information in your CRM system.
Organic - export the report from Google Analytics to see all the users who signed up organically by finding your business online. It’s not coming like this out of the box so you will need to talk to engineers so they can help you identify the users in Google Analytics in your product’s customers.
Now check in with your Finance department to see how much budget is allocated to each channel. Calculate the ROI of each segment and then see what areas are underperforming.
It’d be also a good time to spy on your competitors and try to learn what key growth metrics they are hitting so you have a benchmark. You can also read the industry benchmarks, but keep in mind that the bar is going to be pretty low there as a lot of companies’ with poor perfomance end up there, skewing the average.
Cost Analysis - Reduced Costs Lead To More Revenue
People don’t usually talk about it but sometimes we spend so much money on things that do not matter at all. For example, we might be paying for software nobody uses. Or what’s happening more often is paying for features that nobody cares about only because somebody sold us on this, and now it just adds up to our monthly subscription invoices.
A quarterly overhaul of costs isn’t something only the finance department should do. It’s all included in your budget, so it’s your responsibility as a revenue leader to understand the return on every single dollar your team spends.
Write down all of the expenses you’re having and try to be pretty granular as to the value you’re getting out of those. Sometimes the value is not purely money. It could be your time or your overall mood. But sometimes the value is just absent. And it’s your task to cut this off and move the money to the areas that are indeed important.
Cohort Analyzis & Golden Cohort Discovery
Cohort analysis is one of the top-notch revenue analytics strategies revenue leaders employ all the time. It's not easy when you first start, but as you master it, you will see how significant the correlation is between the right circumstances and your recurring revenue.
There are different methods of conducting it, and I will share the one which I found the most helpful: golden cohort discovery.
The idea is simple. You take the last quarter of your customer signups or website visits and break it down by week (or any other meaningful for your business timeframe). Then you track the retention rate and lifetime value of week 1, week 2, week 3 users, and so on to see if any week stood out.
You then do the same for different key actions that you believe can positively impact your revenue goals. For example: "users who came from Google ads," "users who checked the pricing page," "users who watched a product tour," and again measure their LTV and retention.
In the end, you should identify a few golden cohorts consisting of valuable customers that greatly contributed to your revenue generation. And what you want to do now is to make as many people as possible who interact with your brand follow this golden user journey.
5 strategy tips to increase your revenue flow
If your new customers are driving the majority of revenue - focus on retention.
If your existing customers are driving the majority of revenue - focus on acquisition.
Cut down the channels with low ROI and move the budget to the ones with high ROI
Don't just focus on the money coming in. Look at your costs too. Reducing costs can be a quick way to increase net revenue.
Find the golden cohort in each customer segment and try to imitate its experience for every other customer in this segment.
Tools for Revenue Analytics
There is nothing special here, and there is no “revenue analytics platform” that will magically run sales analysis for you.
Excel will be your best friend in most cases. Just send your developers the requirements of what kind of data you need based on this article and plug the dataset into excel. Then you’ll be easily manipulating it and calculating the things we covered here.
If you have a well-structured database and a data pipeline maintained by your sales team connected to some Business Intelligence tools like Tableau or PowerBI, you should be able to build the majority of reports there yourself. Of course, considering you’re well-versed in these tools functionality as it’s not straightforward by any means.
Unfortunately, unless you work for a pretty big company and you have a lot of dedicated resources managing your data - it’s hard to be this nuanced in your analysis without technical know-how. So in this case, your best bet would be to create a ticket and ask your engineers or analysts to prepare it for you
When you have a lot of data but lack the ability to analyze it, you’re steering the vessel blindfolded. Probably the most effective way to do any kind of analysis when you don’t have much time is to make someone do it for you.
In 2023, we have AI capable of doing really complicated work on any project you might think of. For example you can connect your CRM and database to ChatGPT and talk to your data as if it were your personal data analyst.
Datalynx, can do exactly this. It is the only tool revenue leaders need to cut the back and forth time with their data analysts and become 80% more efficient in gaining insights from their data. After connecting your data, you can ask any data-related questions directly in the chat and get insights in seconds.
Diving Deeper into Revenue Analytics Strategies
As we continue our exploration of revenue analytics, it's important we go a little deeper into some of the key concepts, technologies, and thought leaders shaping this space.
According to Zach Cross, president of Revenue Analytics based in Atlanta, Georgia, there are several core components that make up a comprehensive revenue analytics strategy.
This includes leveraging predictive analytics and data analytics to uncover insights around customer behavior, marketing analytics, sales performance, revenue potential and product performance.
By analyzing key performance indicators, conversion rates, page views and other sales data, revenue management teams can start to understand root causes behind changes in revenue.
From here, they can start to model different scenarios to optimize price points, promotions, sales strategies and more to positively impact revenue growth. Many software tools help automate components of this through algorithms that enable yield management, forecasting, revenue analysis and reporting.
The end goal is to arm sales, marketing and executive teams with strategic business intelligence to guide key decisions around go-to-market initiatives, targeting, pricing and positioning. When this is done right, it has the power to significantly improve customer experience and loyalty over the long run.
United States healthcare organizations in particular have benefited greatly from embracing modern revenue analytics techniques according to recent case studies.
It's clear that the first step any business should take, once they have a good handle on standard reporting, is to continue leveling up their revenue analytics strategies and capabilities over time. The payoff in top and bottom line growth can be substantial.
Revenue analytics is about the story
Wrapping it up, revenue analytics isn't just about tracking numbers. It's about understanding the story behind those numbers. It's about figuring out what's working, what's not, and where you can make changes that will really move the needle.
So, take a deep breath, dive into your data, and start making those strategic moves that'll lead your company to greater profitability. It's all about asking the right questions, looking in the right places, and being relentless in your pursuit of growth. Go get 'em!
Revenue analytics is one of the most important business strategies. Countless of studies have proven how staying data-driven about your top line can impact your company success.
Now here's the best part.
I've gathered all of these research papers and studies in one place for you.
Revenue analytics is very similar to user analytics in its nature but has a different set of objectives and strategies behind it.
It’s a top-down approach aiming to understand the revenue drivers and the way your revenue is formed so you can launch strategic initiatives with a positive impact on your bottom line.
Usually, you can find yourself doing it either for a quarter review reporting and planning or any other day you see the growth is slowing down, and you want to understand the root issue.
Surprisingly, I didn't find much information on the web around this topic. When you’re first starting to analyze the company’s performance, it’s easy to fall into the trap of blank page syndrome. It's that mental block you hit when you're staring at a blank slate and just don't know where to start.
Much of what you're about to learn is based on my personal experience of testing different approaches, so hopefully, you will find this helpful and it will give you some solid guidance on where to start.
Identifying Revenue Drivers
This is probably the #1 thing you need to begin with, if you haven’t done it already. No matter if you’re preparing a report for investors, trying to optimize your team’s performance, or just starting a new position and need to get your first insights on where to keep your focus. Revenue drivers are you business core sources of income.
If you have a BI Tool - that’s a good starting point for this analysis. Most likely, you already have some revenue reports there built by BizOps or Data Analyst teams. Identify every single area that contributes to your revenue growth.
If you don’t have the right tools to pull the insights, simply ask engineers to create this report for you.
New/Existing Customers Revenue Distribution
The next thing you want to see is how your revenue is structured. That’s important to understand where to focus your efforts on. It can also unbox for you how dependent your company is on the incoming customer and acquisition flow or if the majority of your business is driven by existing customers.
You can do it month over month or quarter over quarter to see how big the distribution is, so you can understand which area has the most hidden opportunities. If more than 30% is coming from your new customers, then bottom-of-the-funnel stages optimization like referral and retention would be the best to prioritize in your strategy.
And vice versa, if you see that 70%+ of your bottom line adds up from existing customers, your acquisition and activation initiatives will be your best friends, as you’re already doing a good job keeping them.
Calculate the penetration rate for Existing Customers
The penetration rate can be reworded as: “For each company in our customers, what % of its employees are our users?”. This metric should be as high as possible.
For digital products, there are 2 potential growth strategies around this:
a) User-generated growth: You can start by gaining the trust of a few users, and then users will do the rest and get every interested party in their organization to buy it. Loom is a great example of it. Once one person starts using Loom, it starts spreading like wildfire (maybe not the best term), and if your product has a PM fit and you built it with this growth driver in mind, it should do the job really well.
But it’s not always the case. Loom didn’t figure out this strategy right out of the gate. Moreover, it took them a good amount of tests and experiments to find out the winning way of incentivizing sharing and effectively onboarding new interested users. So don't get to worries if it doesn’t happen just yet.
b) Team Adoption: You get a team’s buy-in first, and when they love it, they'd basically demand that the company adopt it. Slack would be a good example here. Once a team starts using Slack, it becomes their go-to communication tool. As more teams within an organization adopt Slack, it becomes a necessity rather than an option, leading to organization-wide adoption.
Think about your product. Do your customers have to engage others in your product as a part of its functionality? If no, would it make sense to add it? If yes, growing through users natively sharing your product is where you should start maximizing your efforts.
If your product is more dependent on team adoption, then you should be focusing on digging deep within an organization and making it meaningful to invite others.
The problem becomes clear when your product doesn’t have any sharing nature and it brings users no value if they share it with others. It’s a dead-end which will lead you into a very low penetration rate, which is the worst-case scenario. One person uses you - others don’t because they simply don’t know about you.
This can be fixed either by making some part of your product shareable and stimulating user-generated growth or adding team collaborative functionality so it actually becomes meaningful to use your product with others.
Break down your acquisition efforts
If you’re getting the majority of your revenue from existing customers, that’s a good sign of a mature company with product-market fit. In this case, you should double down on your acquisition and activation metrics to get more money in, as you know people are sticking around.
Now even if you have a negative revenue churn and great retention, you cannot sustainably grow your revenue without acquiring new customers. Think of all the beer manufactures - we all know how many people are “Bud fans” or “Guinness fans” only, yet the companies spend hundreds of millions in promotional dollars to hold the brand awareness and pulling the competitors customers over.
There’re so many acquisition channels and strategies you can implement, it’s a topic for a different article. What I am going to share is how to determine the weak shackles in your revenue stream and focus on what matters first.
What you want to do here is to segment your incoming new customers flow and see how much does it cost the company to acquire people from each of those.
Pie chart will help you visualize this. You can do this quarterly or monthly. Here’s an illustrative example, assuming the majority of your new revenue is coming from SEO, Paid Advertisements and Sales Channels:
Paid campaigns - using your analytics tool filter down your revenue generated from users that signed up having some UTMs in their browser. UTMs are small parameters attached to the url of a page where people land after clicking on the ad. This is how you can track all of your paid advertisement campaigns.
Sales - you can easily find the deals information in your CRM system.
Organic - export the report from Google Analytics to see all the users who signed up organically by finding your business online. It’s not coming like this out of the box so you will need to talk to engineers so they can help you identify the users in Google Analytics in your product’s customers.
Now check in with your Finance department to see how much budget is allocated to each channel. Calculate the ROI of each segment and then see what areas are underperforming.
It’d be also a good time to spy on your competitors and try to learn what key growth metrics they are hitting so you have a benchmark. You can also read the industry benchmarks, but keep in mind that the bar is going to be pretty low there as a lot of companies’ with poor perfomance end up there, skewing the average.
Cost Analysis - Reduced Costs Lead To More Revenue
People don’t usually talk about it but sometimes we spend so much money on things that do not matter at all. For example, we might be paying for software nobody uses. Or what’s happening more often is paying for features that nobody cares about only because somebody sold us on this, and now it just adds up to our monthly subscription invoices.
A quarterly overhaul of costs isn’t something only the finance department should do. It’s all included in your budget, so it’s your responsibility as a revenue leader to understand the return on every single dollar your team spends.
Write down all of the expenses you’re having and try to be pretty granular as to the value you’re getting out of those. Sometimes the value is not purely money. It could be your time or your overall mood. But sometimes the value is just absent. And it’s your task to cut this off and move the money to the areas that are indeed important.
Cohort Analyzis & Golden Cohort Discovery
Cohort analysis is one of the top-notch revenue analytics strategies revenue leaders employ all the time. It's not easy when you first start, but as you master it, you will see how significant the correlation is between the right circumstances and your recurring revenue.
There are different methods of conducting it, and I will share the one which I found the most helpful: golden cohort discovery.
The idea is simple. You take the last quarter of your customer signups or website visits and break it down by week (or any other meaningful for your business timeframe). Then you track the retention rate and lifetime value of week 1, week 2, week 3 users, and so on to see if any week stood out.
You then do the same for different key actions that you believe can positively impact your revenue goals. For example: "users who came from Google ads," "users who checked the pricing page," "users who watched a product tour," and again measure their LTV and retention.
In the end, you should identify a few golden cohorts consisting of valuable customers that greatly contributed to your revenue generation. And what you want to do now is to make as many people as possible who interact with your brand follow this golden user journey.
5 strategy tips to increase your revenue flow
If your new customers are driving the majority of revenue - focus on retention.
If your existing customers are driving the majority of revenue - focus on acquisition.
Cut down the channels with low ROI and move the budget to the ones with high ROI
Don't just focus on the money coming in. Look at your costs too. Reducing costs can be a quick way to increase net revenue.
Find the golden cohort in each customer segment and try to imitate its experience for every other customer in this segment.
Tools for Revenue Analytics
There is nothing special here, and there is no “revenue analytics platform” that will magically run sales analysis for you.
Excel will be your best friend in most cases. Just send your developers the requirements of what kind of data you need based on this article and plug the dataset into excel. Then you’ll be easily manipulating it and calculating the things we covered here.
If you have a well-structured database and a data pipeline maintained by your sales team connected to some Business Intelligence tools like Tableau or PowerBI, you should be able to build the majority of reports there yourself. Of course, considering you’re well-versed in these tools functionality as it’s not straightforward by any means.
Unfortunately, unless you work for a pretty big company and you have a lot of dedicated resources managing your data - it’s hard to be this nuanced in your analysis without technical know-how. So in this case, your best bet would be to create a ticket and ask your engineers or analysts to prepare it for you
When you have a lot of data but lack the ability to analyze it, you’re steering the vessel blindfolded. Probably the most effective way to do any kind of analysis when you don’t have much time is to make someone do it for you.
In 2023, we have AI capable of doing really complicated work on any project you might think of. For example you can connect your CRM and database to ChatGPT and talk to your data as if it were your personal data analyst.
Datalynx, can do exactly this. It is the only tool revenue leaders need to cut the back and forth time with their data analysts and become 80% more efficient in gaining insights from their data. After connecting your data, you can ask any data-related questions directly in the chat and get insights in seconds.
Diving Deeper into Revenue Analytics Strategies
As we continue our exploration of revenue analytics, it's important we go a little deeper into some of the key concepts, technologies, and thought leaders shaping this space.
According to Zach Cross, president of Revenue Analytics based in Atlanta, Georgia, there are several core components that make up a comprehensive revenue analytics strategy.
This includes leveraging predictive analytics and data analytics to uncover insights around customer behavior, marketing analytics, sales performance, revenue potential and product performance.
By analyzing key performance indicators, conversion rates, page views and other sales data, revenue management teams can start to understand root causes behind changes in revenue.
From here, they can start to model different scenarios to optimize price points, promotions, sales strategies and more to positively impact revenue growth. Many software tools help automate components of this through algorithms that enable yield management, forecasting, revenue analysis and reporting.
The end goal is to arm sales, marketing and executive teams with strategic business intelligence to guide key decisions around go-to-market initiatives, targeting, pricing and positioning. When this is done right, it has the power to significantly improve customer experience and loyalty over the long run.
United States healthcare organizations in particular have benefited greatly from embracing modern revenue analytics techniques according to recent case studies.
It's clear that the first step any business should take, once they have a good handle on standard reporting, is to continue leveling up their revenue analytics strategies and capabilities over time. The payoff in top and bottom line growth can be substantial.
Revenue analytics is about the story
Wrapping it up, revenue analytics isn't just about tracking numbers. It's about understanding the story behind those numbers. It's about figuring out what's working, what's not, and where you can make changes that will really move the needle.
So, take a deep breath, dive into your data, and start making those strategic moves that'll lead your company to greater profitability. It's all about asking the right questions, looking in the right places, and being relentless in your pursuit of growth. Go get 'em!
Start retrieving the insights in your own language
Think about the last time you had a question about your data. How long did it take to answer it?
Start retrieving the insights in your own language
Think about the last time you had a question about your data. How long did it take to answer it?
Start retrieving the insights in your own language
Think about the last time you had a question about your data. How long did it take to answer it?