revenue performance

The State of Revenue Performance Presents an Opportunity for B2B sellers

The performance of the top companies around the globe can be a telling sign of our current economic environment — and an insightful opportunity for where sellers can Seek to Serve™ their buyers.

In Mereo’s fifth annual revenue performance report of Fortune 500, Global 500 and Russell 2000 companies for the most recent fiscal years, we have uncovered results not seen since before the 2007 and 2008 recessionary period — signs of positive growth in top companies.

Albeit there was still a significant portion of companies that experienced declining revenue or sluggish growth, especially compared to their peers, many organizations’ fortunes have improved. And this improvement is likely due to the effects of tax legislation and the stronger GDP.

In comparison, the Mereo 2016/2017 Revenue Performance Report showed a trend of increasing profits yet decreasing revenue. But this year’s report tells us a new story.

Revenue Performance Report

In this past fiscal calendar year, just 21% of Fortune 500 companies experienced decreased revenue; a year ago that number was an unnerving 48%. While this marks significant improvement in the performance of revenue laggards, it is still somewhat shocking that one in five of these companies had declining revenue and another 9% grew at less than 2% year-over-year.

Mid-sized companies, as represented by the Russell 2000, for the first time in our review, performed worse than their larger counterparts with 27% showing declining revenue and only 46% growing at more than 5%.

On the other end of the spectrum, for the first time since the 2007 and 2008 recession, more than 50% of the Fortune 500 companies (50.7%) had revenue growth of more than 5% — which is over twice the number of companies when compared to last year.

This leaves us with a corporate landscape defined by “haves” and “have nots” — with the haves creating a significant performance gap between themselves and their poorly performing counterparts.

Companies’ Strategies in 2019 and Beyond

In our current economic environment, companies continue to focus on driving down costs and improving productivity. By doing so they will work toward improving profitability as confirmed by the most recent quarterly earnings reports that showed S&P 500 results averaging over 3.3% earnings growth.

On the positive side, in addition to having stronger growth overall, companies in Quarter 1 forecasted positive earnings revisions by over a 2-to-1 ratio (Seeking Alpha April 28 S&P Earnings Analysis Brian Gilmartin). This means companies are committing to their shareholders that they will see continued earnings growth by either improving revenue or lowering costs — or both.

The Opportunity for B2B Sellers

Sellers have an opportunity to assist the poor revenue performers with primary value statements encompassing a story of cost-reduction and productivity improvement. And if a seller can clearly show how their solution can play a role in enabling new revenue streams for their buyer, this may resonate even more with the buyer’s internal initiatives.

Sellers engaging better-performing buyers should do so with a message of identifying revenue initiatives and accelerating or decreasing the risk of those initiatives. This strategy will show a seller’s commitment to helping their buyer continue along their current upwards trajectory and to meeting their public commitments (often easier said than done). To be considered as a trusted advisor rather than just a seller and to gain executive access, sellers will need to focus on the most complex aspects of those initiatives where the business risk is greatest and be prepared to have compelling and provocative points of view backed up by experience and proof points of success.

In this environment, references become an even stronger requirement.

Understanding the needs of buyers and seeking to serve those needs will set you apart in these interesting financial times. At Mereo, we thrive on equipping teams to provide value to their industry and to serve their buyers. For guidance on how to have these conversations, contact us.


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