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Growing your business is fundamental to its survival. But that growth doesn’t happen by accident. A game plan is necessary to achieve your growth goals.
That’s where a growth strategy comes in.
A growth strategy is a plan of action to increase a business's market share. If your company is looking to expand, a market growth strategy will enable you to chart your path to expansion, taking into account your industry, your target market, and your finances.
The Ansoff Matrix summarizes four high-level business growth strategies employed by companies.
The Ansoff Matrix is a framework outlining four strategies for growth. Image source: Author
Whichever growth strategy you employ, you'll likely utilize some business development principles since the goal is to develop the entire organization.
To understand how different growth strategies work, let’s look at some real-world examples.
Facebook is ubiquitous today, but when it launched in 2004, it was one of several social media networks. MySpace was the dominant social media site at the time. So how did Facebook take over?
It started by focusing on a narrow target customer base, then expanded gradually. Here’s how Facebook did it.
Amazon’s retail dominance began in 1995. Back then, consumers were not used to buying online. Despite that, Amazon grew to billions of dollars in annual sales. What enabled Amazon’s growth?
Amazon was among the earliest online retailers, offering the ability to buy online (a new concept at the time) in a new market: the internet. Here’s the growth strategy approach Amazon took.
When Dollar Shave Club launched its razor business in 2012, Gillette had a commanding share of about 70% of the U.S. market according to Entrepreneur magazine.
In 2019, Gillette’s market share had eroded to about 53% according to a CNBC report. Meanwhile, Dollar Shave Club’s growth prompted Unilever to buy it for $1 billion. How did Dollar Shave Club defy a much larger competitor?
The key to Dollar Shave Club’s success is that it could offer a lower-priced alternative to the leader by selling direct to the consumer, which represented a new market for razors at the time.
Google is renowned for its namesake search engine, but what fueled its growth into the company now called Alphabet is its outsized revenue. How did Google do it?
Google started as a business-to-consumer (B2C) company offering a search engine. But it needed a source of revenue. To achieve that revenue, it developed a new product, AdWords, targeted to businesses that had to pay to advertise.
Now that we’ve looked at examples of how others achieved growth, we turn to you. Where should you start with your own growth strategy?
Most business leaders think of revenue growth. But how can you increase revenue? By acquiring additional customers? Offering new products? Charging more for existing products?
Think about the goals that make sense for your business and what stage of the business life cycle you're in. If you’re a new company, customer acquisition may be the key goal of your growth strategy. If you want to expand into the B2B space, you’ll have to consider factors like what it takes to perform B2B sales and to market directly to businesses.
When defining your goals, be sure they're measurable. To know if your plan is on track, you need a quantifiable target. For example, you may set a goal of a thousand new customers by the end of the next quarter.
When setting your goal, it should be achievable within the next quarter or month. Why so short?
Shorter timelines allow you to go through the planning process quickly. Since you’re working on near-term, achievable goals, you don’t have to waste time trying to figure out where you’ll be a year from now, and you can continually refine your plan for successive timeframes.
You need to perform research to validate the approach you’re considering for your growth strategy. Otherwise, you’re flying blind. Where is the industry going? What’s the competitive landscape? What are customers doing today?
By gaining insights through research, you’ll be able to better assess risks and collect data that can be used to inform the next step.
A model forecasts the trajectory you’re trying to achieve through your growth strategy. This may seem like unnecessary work (I disliked doing this for the products I built), but it serves two important purposes.
First, it measures progress towards your goals. Are you hitting the growth numbers you’re targeting? The model can show this.
Second, the model serves as a communication tool to get buy-in on the plan. For example, if you rely on a sales team to acquire customers, getting them to agree to the goals in your growth strategy model is key to increasing the chance of success. And, the feedback you’ll receive is invaluable to ensuring the model’s accuracy.
Next, you need to transition from high-level goals to actionable steps. This means identifying the tactics to achieve your objectives. For instance, you may need a go-to-market strategy, especially when launching a new product. If customer growth is a key objective, CRM software can help you manage your customer relationships.
Once you’ve outlined the nuts and bolts of your growth strategy, you should have concrete next steps in place to begin executing it.
Developing a growth strategy is important, but even more so is executing on that strategy. Use the actionable steps and measure results against the forecasting model to ensure you’re headed in the right direction.
If not, don’t hesitate to adjust. With a well-developed growth strategy in hand, you can increase your chances of successfully expanding your business.
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