What is Revenue Growth? How to Calculate and Improve Yours

There are so many metrics to track when trying to improve your business. Should you focus on sales? Marketing results? Customer satisfaction and retention?

You can do all of this at once if you track your revenue growth.

This article will talk about what revenue growth is, how to view it as a strategy, and why it may be worth prioritizing over other metrics. Then, we’ll talk about calculating your revenue growth, the ups and downs to anticipate, specific strategies for improving it, and how to choose a platform to help you nail your growth strategy.

photo of an agency with revenue growth chart

What is Revenue Growth?

In simplest terms, revenue growth is the amount of money your company makes over a pre-determined time compared to the previous, identical amount of time. So, for instance, it’s how much money you made this month compared to last month.

“Revenue” is often confused with sales and earnings. So, let’s take a quick look at the differences:

  • Revenue: Revenue is the amount of money made from all sources, including sales, investments, royalties, fees, and more. Expenses aren’t considered.
  • Sales: Sales are the amount of money made from selling items or services. They also don’t factor in expenses.
  • Earnings: Earnings deduct expenses from revenue.

Another big difference between sales, earnings, and revenue is sales and earnings tend to be goal-oriented, while revenue growth should be considered a strategy rather than an end goal.

Revenue Growth as a Strategy

A revenue growth strategy is a plan for increasing revenue over both the short and long term. Every company has different needs, so each revenue growth strategy will be different.

However, they all should involve ensuring your marketing, sales, and customer experience teams are aligned, communicating, and working cohesively. A great way to do this is to ensure employees are generally satisfied in their jobs—more on that in a bit—and involve them in the planning process.

Using an all-in-one platform to streamline communication and work is also great to help keep things moving smoothly between teams.

Why Focus on Revenue Growth Over Other Types of Growth

The broad nature of revenue growth allows you to have a bigger picture of what’s working, what isn’t, and how to fix things.

A revenue growth formula should guide strategies in other areas, including:

  • Customer acquisition, retention, and success
  • Human resources
  • Marketing
  • Pricing
  • Professional development
  • Sales

If your revenue isn’t showing the success you expected, you can more easily review the results of each area’s strategies to determine and address pain points.

It can be most tempting to look at earnings growth rather than revenue growth. However, while you should look at both, you should generally evaluate revenue growth first. This is because earnings are revenue minus costs. You can marginally improve your overall earnings by cutting costs, but without growing revenue, that isn’t a permanent solution.

To sum up, focusing on revenue growth is beneficial because it encompasses a bit of everything and determines the overall health of your business. It allows you to locate challenges, fix them, and continue to grow your company’s earnings.

How To Calculate Revenue Growth

Let’s go back to math class with a word problem.

In January 2021, the ABC Company made $100,000. In December 2020, they made $96,000. Using the revenue formula, determine their revenue growth rate from December to January.

If that made you want to bang your head on your desk, it’s okay. We’ll give you a cheat sheet.

The revenue growth formula is:

(Current Period Revenue – Previous Period Revenue) / Previous Period Revenue

(The difference between the current period revenue and the previous period revenue divided by the previous period revenue.)

For ABC Company, that’s:

(January 2021 Revenue – December 2020 Revenue) / December 2020 Revenue

Numerically, it becomes:

($100,000 – $96,000) / $96,000.

This leads to $4,000 / $96,000 = 0.0417 (rounded up).

As revenue growth is a percentage, ABC Company’s growth between December and January was approximately 4.17%.

3 Strategies for Increasing Revenue Growth

Revenue growth strategy should be proactive rather than reactive, so get started now and reevaluate whenever necessary.

If you wait until there’s a problem, you may have to go into emergency profit strategy mode. Unfortunately, this focuses more on cost-cutting than growing revenue—which will likely make employees, investors, and customers nervous.

Though the best overarching strategy for revenue growth is ensuring each team is working together, there are more specific strategies for increasing revenue growth. Here are three of them.

Invest in Your Employees

As teams are made up of people with different opinions and concerns, the first step in any revenue growth strategy is to get buy-in.

Motivate your employees to buy in and do their best work by showing them you trust them (no micromanaging!) and providing them with professional development opportunities.

When your employees feel motivated—not to mention more competent thanks to the professional development—they may be more willing to listen and adjust to new methods.

Find New Ways to Reach Customers

To expand your market and keep your current customer base engaged, find new ways to reach your clients. Outreach methods can be part of your marketing, sales, or customer experience strategies—but ideally, the teams would work together for this.

These new ways could include developing a well-written blog, maintaining an active email list, investing in social media campaigns, or using paid advertising.

Use Technology

As business technology has evolved over the years, many companies have found themselves piecing together technology as needed.

Perhaps it started with word processing and spreadsheet software. Then came email. A basic website. An internal chat software. A more advanced website. Some social media. A customer relationship management system.

Suddenly, you have a ton of different programs and apps at your fingertips. Often, these things don’t communicate well with one another, and your employees must learn several different systems to get one project done.

Using the right technology can improve efficiency and, by extension, revenue. Research all-in-one systems to automate your processes, speed up communication, assist with marketing, and manage customer relations.

These types of revenue growth programs may look expensive at first glance. However, think about how much you spend on the separate systems you currently have—both on the programs and the time training and retraining on them.

Perhaps it’s time to simplify.

How to Choose a Revenue Growth Platform

Getting an all-in-one revenue growth platform to partner with can ease your mind, take some things off your plate, and help streamline your strategies.

When considering revenue growth platforms, you should think about:

  • Your profit goals
  • The support you need
  • Necessary features
  • Integration capabilities
  • Trustworthiness

SharpSpring is a revenue growth platform that provides marketing automation, sales automation and CRM, tracking and analytics, and top-notch service and support at reasonable price points. Our ultimate goal is to help you build revenue.

We also offer a variety of add-ons to suit your business needs. And if you want to integrate some of your current software systems with SharpSpring, chances are, you can—we partner with dozens of popular business apps and tools.

To learn more about what SharpSpring can offer your business, contact us for a free demo today!

FAQs About Revenue Growth

How do you calculate revenue growth?

You calculate revenue growth by comparing the current month, quarter, or year's revenue to the previous one. The formula is (Current Period – Previous Period) / Previous Period, and the final answer should be a percent.

What is good revenue growth?
Good revenue growth depends on where you are in your company's life cycle, your overall goals, and what changes your company is undergoing. However, about 5% year over year is a reasonable revenue growth expectation during the most stable period.
Is revenue growth the same as sales?
Revenue growth isn't the same as sales. Sales involve purchasing items and services, while revenue involves income from sales, investments, fees, and other sources.
Why is revenue growth important?
Revenue growth gives you an idea of the overall health of your business and lets you see and remedy pain points.
photo of an agency with revenue growth chart