Flattening of the Growth Curve Part I

In every company's history there comes a time (or two or three or four times!) when your momentum slows, and the sales curve begins to flatten. This can be one of the most trying and frustrating times for software and technology companies. It's certainly not as difficult as the startup phase, when "crib death" is an ever present fear. And a no growth, flat revenue scenario is much preferable to declining sales combined with negative profitability that follows, which leads to a "death spiral" if no effective action is taken.

I do find this situation is often more confusing to company management than either the start up or death spiral scenarios. This is because it often occurs just after a period of fast growth and prosperity, where it seems that the company can do no wrong. As a result, senior managers are often in denial about what is happening—whereas in the startup or death spiral situations, the situation is much more obvious, usually motivating folks to take fast, decisive action.

SEARCH FOR THE CULPRITS, BLAME FOR THE INNOCENT

With flattening growth, it's easy to blame things that may not be the true cause. I often here excuses and tactics such as the following:

"The marketing department just needs to put out better promotions. Fire the VP Marketing and bring in someone who will get the job done".

"The sales force isn't selling hard enough, they just need to close more deals. Get the VP Sales off the golf course and tell him to kick some butt, or he'll be the next to go".

"The channel is useless; they're taking 30% but they aren't pushing the products—take more deals direct".

"We just need to charge more for our products; we're leaving money on the table".

"Cut the price to stimulate demand."

"The UK distributor is fat, dumb and happy—sign two more of his competitors to motivate him and maximize sales in that country."

Now some of these reasons may even be accurate, and some of the proposed tactics could be possibly be useful. But I have found, quite often, that things of this nature aren't the fundamental issue, and beating up the sales force, cutting or raising prices, or messing with your channel balance may exacerbate the situation and make things worse—not better.

THE REAL PROBLEM

Sometimes the answer is as simple as "All good things must come to an end."

Growth cycles don't last for ever, as much as every software & technology company CEO, VP marketing and VP Sales wishes it would. There is almost a natural cycle that occurs with revenue that often coincides with the life cycle of your products. Also, the economy changes, competition heats up, novel marketing programs age and are copied—which reduces their effectiveness, market segments get saturated, and customer budgets are retargeted to the "next new thing." Stuff happens—always. The only real question is when.