How to find the few drivers that actually move revenue

Ask a leadership team what drives their revenue and you'll get a long list: leads, proposals, hiring, marketing, pricing, referrals, retention, capacity. All of it matters. Very little of it explains why you're behind plan this year.

The work is narrowing that list to the few drivers that do.

A driver is a number you can move that moves revenue

There are two tests. First, it must sit upstream of revenue: when it changes, revenue follows within a month or a quarter. Second, someone on the leadership team must be able to change it through their own decisions. Revenue itself isn't a driver. Neither is the economy.

Start with the revenue equation

Every business can write revenue as a simple equation. A few common ones:

• Project businesses: bids × win rate × average job size
• Recurring services: active clients × average monthly fee, minus clients lost
• Distribution and retail: active accounts × orders per account × average order
• Professional services: billable people × utilization × rate

Write yours on one line. Each term is a candidate driver.

Use your own history to find the sensitive ones

Pull two or three years of monthly data for each term. Look for the ones that moved when revenue moved. Often one or two terms barely change, and one swings a lot. The one that swings, and that you can influence, is where to focus.

Check the gap, not the average

Compare each driver to what the Growth Plan needs. If you need 20 jobs a month and you're winning 15, the gap is volume. If you're winning 20 but at $16,000 instead of $20,000, the gap is price or mix. The same revenue shortfall can have different causes, and they call for different Rocks.

An example

We worked with a company of a little over 30 people and around $3M in revenue that ran on EOS® well. Meetings were sharp, and Rocks got done. Revenue kept falling short of plan, and it eventually led to layoffs.

The leadership team picked six measures tied directly to its Growth Plan. Every month they saw where they stood on those six and decided what to push. Two years later, the company is doing great. The team didn't work harder. It worked on the right few things.

Keep it to three to six

Fewer than three, and you'll miss a cause. More than six, and the list becomes another report nobody reads. Give each driver an owner and a monthly target, and review it beside revenue every month.

If you're not sure where to start, our guide Built to Fix, Not to Grow includes a short self-assessment your leadership team can score together.