Management Tip of the Day: Go After High-Quality Revenue

Are you having trouble viewing this email? If so, click here to see it in a web browser. HOME   |   TIPS   |   BLOGS   |   THE MAGAZINE   |   BOOKS   |   STORE RSS   |   Mobile MAY 13, 2013 Go After High-Quality Revenue An uncompromising focus on growth can take companies in the wrong direction. Take Groupon. Once lauded as the "fastest-growing company ever," its stock price has fallen about 80% since the company went public in 2011. The key is to find quality, sustainable revenue. Here's what that looks like: It's predictable. It's always easier to forecast if you can be confident that 90% of last year's customers and dollars will be back this year. The money should come from returning clients willing to spend the same amount. It's profitable. A benchmark for a good margin varies by sectors, but quality revenue tends to be higher-margin. Aim for gross margins of at least 70%. It's diverse. While early-stage companies may often have a couple of customers that make up a large portion of revenue, over time you want to build a diverse base. None of your top five clients should make up more than 15% of revenue. Today's Management Tip was adapted from "What High-Quality Revenue Looks Like" by Anthony K. Tjan. Read the full post and join the discussion » Share Today's Tip: FEATURED PRODUCT Harvard Business Review All-Access Subscription For over 90 years, Harvard Business Review magazine has been an indispensable and unrivaled source of ideas, insight, and inspiration for business leaders worldwide. Each issue contains breakthrough ideas on strategy, leadership, innovation and management. Available in Print, Digital Replica, Online Archive, and on our HBR iPad app as our All-Access bundled subscription. ADVERTISEMENT Follow the Tip: PREVIOUS TIPS The Right Way to Voice Your Complaint Improve Your Ability to Anticipate Crises Set an Email Quota and Stick to It Don't Listen to Customers — Observe Them Set the Right Tone for Your Talk Know When It's Time to Quit Your Job 2 Strategic Choices You Have to Make Use Your Online Network to Test Ideas Prepare Stories for Your Job Interview Walk at Your Next Meeting All Previous Tips BEST SELLERS HBR Guide to Persuasive Presentations Ebook + Video Case Study HBR's 10 Must Reads on Leadership HBR's 10 Must Reads on Managing Yourself HBR's 10 Must Reads: The Essentials HBR Guide to Getting the Right Work Done Introducing Mobile ManageMentor Powered by the proven content of Harvard ManageMentor™ iTunes >> Android >> UNSUBSCRIBE   |   UPDATE YOUR PROFILE   |   MORE EMAIL NEWSLETTERS   |   PRIVACY POLICY Was this email forwarded to you? If so, sign up to start receiving your own copy. ABOUT THIS MAILING LIST You have received this message because you subscribed to the "Management Tip of the Day" email newsletter from Harvard Business Review. If at any point you wish to remove yourself from this list, change your email address, or sign up for other email newsletters and alerts, please visit the Harvard Business Review Email Newsletter Preference Center. OPT OUT If you do not wish to receive any email messages from Harvard Business Review, click here. ADVERTISE WITH HBR This enewsletter is read by thousands of decision makers every day. Learn more about connecting your brand with this audience. Copyright © 2013 Harvard Business School Publishing, an affiliate of Harvard Business School. All rights reserved. Harvard Business Publishing | 60 Harvard Way | Boston, MA 02163 Customer Service: 800-545-7685 (+1-617-783-7600 outside the U.S. and Canada)