While Growth Slows for Most, Leaders Take a Different Approach

Recent economic pressures have begun to stabilize, yet most mid-market companies are still struggling to achieve growth. Our latest analysis of 300 mid-market firms shows that while companies successfully restored profitability through aggressive cost-cutting in 2024, revenue growth was stagnant. The median share of companies achieving any growth while maintaining positive EBITDA margins reached only 53% in 2024. Early 2025 projections suggest profitable growth will continue to remain elusive as the rate of growth declines to a paltry 5% by year’s end.

Rising GTM Costs Meet Declining Returns

Sales and marketing expenses have ballooned 68% from 2020 to 2024. Companies now spend $1.68 for every 2020 dollar yet returns have simultaneously collapsed. The expense growth rates that once fueled expansion fell precipitously from a median 30% in 2021 to just 5% in 2024. For most, after accounting for inflation, this represents a net decrease in real commercial spending power.

While it stabilized balance sheets, the lack of sustained commercial investment may damage long-term revenue performance. Our analysis confirms what commercial leaders intuitively know: revenue growth and commercial investments tend to move in lockstep. Companies that increased investment in commercial teams to keep pace with rising costs generally saw stronger growth, while companies that failed to invest typically grew less or not at all.

Leaders Take a Proactive Approach While Laggards React

We used "Rule of" metrics (i.e., the combination of revenue growth rate and EBITDA margin) to identify companies with the strongest performance, examining three-year revenue CAGR and aggregate EBITDA margins from FY22-24. This allowed us to distinguish companies with sustained profitable growth from those with exceptional, but one-off results.

Twenty-one percent of firms in our study, the "Rule of" Leaders, exceeded their industry medians for both revenue growth and EBITDA margin. These companies demonstrated remarkable consistency in their approach, delivering strong performance even as market conditions deteriorated around them.

Leaders made three critical choices:

1. Sustained commercial investments when others cut. Leaders grew commercial expenses by 8% in FY24 versus the market median of 5%. They now spend $1.91 for every dollar spent in 2020, 14% more than average performers.
2. Expanded strategically into new markets. Ninety-three percent of leaders emphasized market expansion compared to 67% of laggards. Leaders picked deliberate growth opportunities and organized to ensure success.
3. Emphasized retention as a growth strategy. Leaders showed 20 percentage points higher emphasis on customer retention initiatives compared to laggards. They fixed the “leaky bucket” problem to keep commercial momentum without degrading the base.

Laggards Waste Energy Second-Guessing GTM Decisions

Market laggards took a fundamentally reactive approach to challenging conditions. 80% emphasized driving revenue through cost-effective channels versus just 20% of leaders. They also constantly overhauled commercial models – 63% redesigned their go-to-market approach, 77% experienced commercial leadership changes, and 87% underwent role redesigns. Nearly half focused on evolving service delivery models, while 40% attempted to shift revenue models entirely.

This pattern of continuous restructuring stunted revenue performance. While laggards reorganized their teams and rethought their approaches quarter after quarter, leaders executed consistently against their chosen strategies. As a result, leaders earned $0.71 in growth per dollar of sales and marketing spend versus $0.54 for the market. This represents 31% more growth from every commercial dollar invested, achieved not through constant reinvention but through disciplined execution of proven strategies.

Four Actions to Drive Profitable Growth

1. Move from AI experiments to strategic AI execution. Deploy AI for market expansion decisions, not just task automation. Companies that beat revenue targets were three times more likely to use AI for enhanced decision-making.
2. Transform pricing into a strategic growth lever. Build systematic pricing discipline that controls discounting and captures innovation value. Leaders showed 27 percentage points higher emphasis on pricing and packaging leverage than laggards.
3. Create dynamic fact bases for GTM decisions. Replace fragmented dashboards with unified commercial intelligence. Only 35% of CEOs currently have the data necessary for confident GTM decision-making.
4. Engineer customer retention instead of hoping for it. 77% of CEOs say improving retention is their most critical growth lever. Establish clear accountability across account management and CS and focus resources where leverage is highest.

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