At any one time, your business is likely to have various plans and tactics in play to optimise performance and boost sales. But a business growth strategy goes beyond this.
A business growth strategy is a high-level roadmap that sets out how you are going to grow your business. It defines and articulates where your business is going, to help shape tactics, campaigns, R&D, and a host of other activities right across the company.
To illustrate, here’s a rundown of the growth strategy fundamentals…
Types of business growth strategy
Growth has to come from somewhere. And in fact, no matter your industry or size of business, there are just a handful of growth sources. At the heart of any growth strategy, you need to be clear as to which growth source you are going to focus on. Here they are:
1. Creating the market
Airbnb arrived on the scene with a twin-pronged value proposition. For guests, Airbnb offered a new, cost-effective and authentic way to experience new destinations. For hosts, it promised the ability to unlock a new source of revenue.
With this novel value proposition, Airbnb effectively created an entirely new market. In many ways this is the most challenging growth lever to focus on: i.e. identifying a particular pain point and presenting a novel way of addressing it. Remember that when Apple launched the iPad, its first customers largely had no previous tablet experience. Resources-wise, bear in mind this approach can involve communicating an entirely new way of doing things.
2. Growing volume with existing customers
This might involve increasing current usage, by getting existing customers to use more of your product or service, more often. One example of this might be re-organising your tiered service structure to ‘nudge’ customers towards levelling up. Alternatively, it might involve stimulating new uses for your product for existing customers, coupled with efforts to reduce customer churn.
3. Entering new markets
This could involve taking your existing product into another region or country. For this, you will need a well-researched market entry strategy plan.
Alternatively, we’ve all seen how the likes of Tesco have transitioned into the financial services sector over the last decade. This is an example of additional products or propositions aimed at existing markets. Let’s say you offer accounting software solutions in the B2B sphere. An example of product expansion would be to offer your market additional solutions in areas such as compliance or HR management.
4. Gaining market share
“Stealing” a larger piece of an existing pie is the other main broad strategy. In contrast to the first strategy example (creating a market), there isn’t generally the need to educate the market about novel solutions. Instead, the focus is on creating a clear positioning statement versus the competition. Is your service cheaper, quicker and more convenient than the alternatives? Is it of higher quality? Do you prioritise ethical sourcing and environmental responsibility? These are all examples of differentiators that could assist you in gaining a greater slice of the market.
Acquisition of a competitor can be a fast-track route towards achieving greater market share. In theory, it allows you to instantly bring on board an entirely fresh customer base, as well as new resources and competencies. This business growth strategy comes with considerable risks, however.
Are the objectives of both companies aligned? Are there likely to be cultural and branding clashes? If the target company is experiencing reputational difficulties, could these have a negative impact on the purchasing company? To what extent should the two entities be kept separate or aligned, post-acquisition? Extensive research is necessary to avoid expensive mistakes.
Should you premiumise or discount your offerings? What factors should shape your R&D initiatives? Is this the right time to form partnerships, or should you go it alone? Your answers to these and many other questions are shaped by your growth strategy. For help in generating the right blueprint for your business, speak to White Space Strategy today.