Here, we will take a look at the benefits and drawbacks of these two options and what you can do to get the best results from both.
What is a Growth Strategy and How Do You Build One?
A growth strategy is a plan of action that helps businesses expand their customer base, increase their reach, and boost their profits. It provides a business with clear direction and metrics against which to measure success.
Without a growth strategy, you run the risk of stagnation and being overtaken by competitors, so I’ve put this article together to help you get started in crafting your own.
What is a Growth Strategy?
A growth strategy is a comprehensive plan that outlines the steps a business should take to expand its operations and increase its profits and helps pinpoint opportunities for expansion, such as increasing its market share, customer base, and product or service offerings. It may also include diversification strategies, such as entering new markets.
While most of the growth areas named above are outwardly oriented, there are strategies that may solely target internal operations, such as expanding employee count, streamlining internal processes, and so on.
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The Benefits of Having a Growth Strategy
Growth strategies are fundamental for any business, as they keep you working towards clear objectives. They also help keep employees and leaders on the same path and help all parties focus on the long-term vision.
A growth strategy can help businesses to improve customer retention and satisfaction. It may detail how to improve the business in ways that ultimately affect the customer, such as operational efficiency, customer service, and the offering of in-demand products and services. It may also look directly at increasing customer engagement.
A well thought-out strategy can place brands ahead of the competition. By understanding the competitive landscape and developing the right approach to differentiation, businesses can remain highly lucrative and relevant.
A growth strategy also provides resilience and agility. For example, diversifying your revenue streams helps to ensure your company remains profitable despite economic downturns.
How to Create a Growth Strategy
Developing a growth strategy requires a comprehensive, holistic approach that takes into account many facets of a business. As well as the areas already discussed (i.e., identifying new opportunities and competitor analysis), the business needs to assess its available resources to determine where best to allocate them for maximum growth. They should also consider the capabilities of all relevant stakeholders and how that impacts growth prospects.
Identify Your Goals and Objectives
The first step in creating a growth strategy is to determine clear goals and establish how you will measure success. Some examples of common goals for growth include:
- Increasing revenue over a set period of time
- Creating more diverse revenue streams
- Increasing a company’s market position
- Reducing waste by a certain amount
- Reducing annual costs
As mentioned, there are several key areas a company needs to research when developing a growth strategy: the competitor landscape, their own current strengths and weaknesses, and customer preferences. In my role as Digital Marketing Consultant to many businesses around the world I run many simple and compelx research projects to inform strategy development.
Competitor research includes looking at pricing strategies, the target market of competitors, and so on. Understanding the customer base of one’s competitors is incredibly important as this can help a business understand which markets it should focus on in order to expand its reach. It will provide insights into which segments are responding well to which campaigns, as well as which channels they’re using most, helping you to reach them where they are.
Research on a competitor’s pricing structure can indicate how your pricing needs to be in order to remain competitive. It will also help determine the feasibility of what you want to achieve (i.e., whether you can produce the same product/service at a cost that allows you to charge a competitive price).
Assessing their strengths and weaknesses will also help to identify new opportunities. Checking competitors’ reviews, for example, may indicate whether customers feel that important features are missing, which you can then go on to introduce in your own product. It may also indicate that they have poor customer service, which means you can beat them on that front by ensuring your service goes above and beyond expectations.
Assessing the businesses’ own strength and weaknesses is an important part of developing a growth strategy. It acts as a compass. For example, you may have intentions for the areas in which you need to grow, but those areas may be weak and need improving before you are able to implement your plans. Let’s suppose you wanted to increase customer loyalty but your staff were poorly trained in customer service and you often received complaints. It would therefore be important to provide training or hire more skilled staff in order to meet that objective.
Once the initial research is complete, it’s time to develop actionable strategies for growth. These strategies may vary in complexity depending on the nature of the business. In some cases, it may only be feasible to select one area of growth to focus on, while companies with greater resources may develop a more comprehensive strategy that affects numerous operations.
For example, let’s consider a business whose objective was to increase marketing ROI. In order to achieve this, they may need to reduce unnecessary marketing expenses. Their first step may be to start using marketing automation software, as this would reduce the time required for managing marketing campaigns, allowing staff to spend more time on high level activities. Cost savings resulting from using the software could then allow for the introduction of new initiatives, and these should be planned as part of the growth strategy.
Let’s consider another example. Suppose a company’s objective was to increase revenues by a given percentage within a specified time period; one aspect of their strategy may be to increase Customer Lifetime Value (CLV). There are many activities that could be improved or introduced in order to meet this objective. For example:
- Improving customer service
- Introducing a CRM system to achieve the above, and other objectives
- Introducing or improving customer loyalty programmes
- Applying actionable insights generated through gathering and analysing Customer Insights data
- Improving the user experience of your website
Another facet of increasing revenues may be to reduce the customer acquisition cost. The components of achieving this objective could include:
- Reducing the cost of marketing
- Lowering the price of products or services
- Increasing the effectiveness of marketing and advertising efforts
- Improving targeting
- Developing an SEO strategy to improve website visibility (or improve an existing strategy)
- Developing partnerships with strategic partners to increase reach and influence
There are endless activities that can be undertaken in order to meet each objective. Each business needs to assess its available options and apply creativity to put together a strategy that is suitable for their circumstances.
The final example we’ll look at is how a company may approach the objective of diversifying their revenue streams. The first step would be to assess what revenue streams are suitable depending on the nature of your business. For example, would it make sense to introduce a subscription model? Could you introduce add-ons to an existing product or service? Could you offer consulting services?
Once you have identified your potential revenue streams, you should assess the potential profitability of each one. This will help you narrow down your options and focus your efforts on those which are the most promising.
From there, you would create a plan for how to pursue these new revenue streams. This may include doing further competitor research, planning new marketing campaigns, researching whether your target audience would be interested in those new features/services, and developing the necessary infrastructure to support the new revenue.
If you have many ideas of where you want to grow and don’t know where to start, it’s a good idea to begin with scaling your core offering and move onto exploring other areas later on. In addition, prioritise fast-growing markets to benefit from such trends.
Finally, there is no point in having a strategy without implementing it – in fact, 67% of well-formulated strategies fail due to poor execution. So, make sure you also plan the means by which your plans will come to fruition.
Examples of Successful Growth Strategies
There are many examples of successful growth strategies. For example, Amazon has successfully used a combination of expansion and diversification strategies to become one of the world’s largest online retailers. Nowadays, people take to Amazon when they need items from any and all categories and seem to always find what they were looking for, which they may have never found in a local store. Amazon has managed to position itself as the go-to for any and all needs, at highly competitive prices.
Apple has successfully implemented a combination of product innovation and innovative marketing strategies to become one of the world’s most valuable companies. By constantly outputting cutting edge technology with unique, recognisable and intuitive design, paired with cohesive branding between their communications, products and even their address, Apple has continued to tower above their competition.
One core aspect of this success is rooted in their early marketing campaigns. In the 1990’s, Apple used their “think different” slogan to call people to challenge the status quo and therefore, stand out.
Over time, some have even come to see Apple consumers as being part of a ‘cult’ of sorts, which greatly highlights the powerful grip the company has in the hearts of its consumer base.
Finally, Starbucks has successfully used a combination of customer loyalty and marketing strategies to become one of the world’s leading coffee chains. One notable strategy is their constant rolling out of seasonal and otherwise limited-time beverages that stand out with bold flavours and colours. In addition, their recognisable presence and consistent customer experience across the board creates a sense of trust for consumers everywhere.
A growth strategy helps you plan how to increase profits through expansion and diversification – whether that concerns your customer base, product offerings, or the markets in which you operate. It begins with research and identifying areas of opportunity and assessing feasibility; from there, you can develop concrete, actionable plans.
Small businesses should still have a growth strategy and the steps they can take may be as simple as using marketing automation software or a CRM system. There is always a way to grow, no matter the current size or capabilities of a business – it just requires research, data-driven decisions, and planning.
You can read about my in-depth approach to developing marketing strategies in my best-selling Digital Marketing Strategy book.
To learn how my team and I can help with your marketing strategy, get in contact here – we would be delighted to assist.