Whether you’re running a small startup or managing a well-established company, one thing is certain – growth is essential for success. But it’s not always easy to figure out the best approach to take your business to the next level, especially with so many different growth models out there.
In this blog we’ll guide you through the complexities of growing your company in a competitive and ever-changing marketplace.
Discover practical and straightforward advice, along with real-life examples from successful international companies. No more overwhelming information – the focus is on ten key strategies that you can implement right away.
Prioritizing customer experience
To succeed in business, focus on giving your customers a great experience. While many people think price is the most important factor, research shows that customers remember bad experiences more than they remember prices.
Online customer reviews are powerful in today’s world, with over 70 percent of people relying on them to make buying decisions. So, if you prioritize customer experience, it can really boost your business.
For example, look at Shake Shack. They started as a small hot dog cart in New York but grew into a global fast food chain with 136 locations worldwide. Their secret? They not only served high-quality food but also made customer service a top priority. They encouraged feedback from customers and engaged in discussions with them. This approach led to a flood of positive reviews and word-of-mouth marketing.
On the other hand, Starbucks learned the hard way that neglecting customer experience can hurt a business. In 2007, they expanded rapidly and introduced more menu options, but this led to a decline in the quality of their service. Customers complained, and growth stalled. To turn things around, Starbucks closed thousands of stores for training and upgraded their coffee machines. They also asked customers for ideas on how to improve.
By refocusing on customer experience, Starbucks got back on track and started growing again within two years.
So, remember, putting your customers first is the key to staying competitive in today’s market. Listen to their feedback, make improvements, and watch your business thrive.
The importance of focusing on existing customers
To grow your business, it’s not just about finding new customers; it’s also crucial to focus on your existing ones. Acquiring new clients can be expensive, while keeping your current customers happy is more cost-effective.
To get the most out of your customer base, you need to understand them better. Data plays a vital role in this. Knowing your customers’ preferences and needs allows you to improve their experience and offer them more products they’ll enjoy. When you build a good relationship with your customers, they are more likely to try new products from your company and forgive any mistakes you may make.
This approach is called customer base penetration. McDonald’s, a fast food giant, faced a growth slump in 2006 when they tried to attract new customers with an expanded menu. However, it didn’t work out well. They realized that their customers were longing for an all-day breakfast, and they listened to their customers’ needs. When McDonald’s introduced the All-Day Breakfast in 2016 and scaled back the menu options, their business started to grow again after years of stagnation.
Taking care of your existing customers is essential for business growth. Understanding their preferences and making improvements based on their needs can lead to long-term success. So, focus on your customer base and make them happy to ensure your business thrives.
The importance of planning in market acceleration
Market acceleration is when a business wants to grow even more after being successful in a specific market. The next step for such a business could be to explore new markets and sell products to different people in different places. To do this successfully, careful planning is essential.
Let’s take the example of Under Armour, a sportswear company. They started by focusing on a specific group of customers – American football players. They developed a unique synthetic shirt that kept athletes cool and dry, gaining popularity in the sports world. Once they established their brand and reputation in their niche market, they expanded into new markets in the United States and later internationally. This approach helped Under Armour become a successful billion-dollar company, competing with big players like Adidas and Nike.
On the other hand, Mattel, a famous toy company, attempted to expand internationally without proper planning. They noticed that traditional toys were declining in popularity, so they looked to the international market for stability. However, their lack of understanding of the new markets led to a massive failure. Their flagship store, House of Barbie, opened in Shanghai but had to close down after just two years, causing significant losses. The products and preferences of the international customers didn’t match what Mattel was offering.
Market acceleration provides new growth opportunities for successful businesses. To succeed, companies need to plan carefully and expand into new markets only after establishing a strong brand in their original market. Blindly entering new markets without understanding the customers can lead to costly mistakes and failure.
Adapting to customer needs
To succeed in today’s ever-changing markets, it’s crucial to adapt to your customers’ evolving needs. This means expanding your product line strategically to meet their demands. Whether you’re a new or established company, this approach can be highly effective.
For example, look at Kylie Jenner, a social media star who created the successful cosmetics brand Kylie Cosmetics in 2015. From the beginning, the company focused on introducing new cosmetic categories like eye shadows and eyeliners. It also provided SnapChat tutorials and special thematic collections. By continuously expanding its product offerings, Kylie Cosmetics quickly became well-known and earned an impressive revenue of $600 million in just two years.
John Deere, an agricultural machinery producer with a long history, also adopted this strategy. Initially known for its self-scouring plough in the 1800s, the company embraced change and started manufacturing tractors and combine harvesters as customer needs shifted. John Deere’s close relationship with its customers, through salesmen, helped them understand what the users wanted and adapt their products accordingly.
However, failure to keep up with market changes can have disastrous consequences, as seen with Blockbuster, the once-dominant movie-rental giant. Blockbuster failed to evolve and ignored new rental methods, like Netflix’s convenient mail-order model. As a result, Netflix seized the opportunity and dominated the market before Blockbuster even attempted an online presence. Ultimately, Blockbuster’s inability to adapt led to its downfall.
So, to thrive in today’s dynamic markets, you must anticipate and meet your customers’ changing needs. Adopting a product expansion strategy will help you stay competitive and successful. Failure to adapt can lead to being overshadowed by more agile and innovative competitors.
The benefits and pitfalls of diversification
Diversifying your customer base and the products you offer can be both risky and expensive, but the rewards can be enormous. When you’ve exhausted other growth strategies like expanding your product line or entering new markets, diversification becomes an attractive option. Essentially, it means rethinking what you sell and who you sell it to. However, it’s essential to consider the market context and the potential risks.
A great example of successful diversification is Marvel, the comic book publisher. In the 1990s, they faced tough times, and their traditional products, like comic books and trading cards, lost popularity. Marvel filed for bankruptcy but later realized that their real value lay in the characters they created. So, they decided to enter the movie industry, producing their films. This move paid off, and in just a few years, they were bought by Disney for a staggering four billion dollars.
On the other hand, diversification doesn’t always work out as planned. Lego, the famous toymaker, tried expanding into various new markets, such as computer games, theme parks, and clothing. Unfortunately, this ambitious plan backfired. They spread themselves too thin and couldn’t keep up with the changing trends in multiple markets. Eventually, Lego had to scale back and focus on its core strengths, which led to their successful comeback.
Diversification can be a powerful growth strategy, but it comes with risks. It’s essential to carefully assess the market and your capabilities before venturing into new territories. If done right, it can lead to remarkable success and open up exciting opportunities for your business.
Making buying easy for your customers
Selling products successfully involves two essential elements: knowing what to sell and to whom. However, that’s not all. You must also understand how to sell your product effectively. This process is called optimizing sales, which aims to ensure your customers have a positive experience when they interact with your company.
In today’s business world, convenience is crucial. To take advantage of the internet’s opportunities, companies need to make technology work seamlessly for their customers. This means making the buying experience easy and hassle-free. For instance, when Walmart expanded into e-commerce in 2016 by acquiring jet.com, they embraced this idea. They made a smart move, as Amazon soon entered the grocery market after buying Whole Foods. If Walmart had hesitated, they wouldn’t have been prepared for such a strong competitor.
However, optimizing sales is not just about selling more at all costs. Setting unrealistic targets and fostering an overly competitive sales culture can backfire on your company. A case in point is Wells Fargo, a long-standing bank in the US. In the pursuit of higher sales, the company under CEO Dick Kovacevich created a high-pressure environment for its employees to secure more sales. Unfortunately, this led to unethical practices, public relations scandals, and millions of unauthorized accounts opened between 2009 and 2016.
Successful sales involve understanding your market, making buying easy for customers, and maintaining a healthy and ethical sales culture. By focusing on these aspects, your business can thrive and provide a positive experience for your customers.
The importance of customer retention
Keeping your current customers is just as important as getting new ones. Getting new customers is expensive, so it’s better to focus on keeping the ones you already have. This way, you can avoid slowdowns in business growth. This is called customer retention or minimizing churn.
Churn happens when customers leave for various reasons, like not needing your products anymore. While you can’t stop all churn, you can control certain factors. Two important factors are product quality and customer experience. If you make sure your products are good and your customers are happy, they are more likely to stay.
Spotify and Netflix are examples of companies that excel in customer retention. Spotify offers different account options, including a more affordable one, which helps prevent customers from leaving altogether. Netflix produces its own content, setting itself apart from competitors and giving customers a reason to stay.
High churn rates can be a sign that something is wrong with your company. For instance, Blue Apron faced high churn because their deliveries were often late or incomplete, making customers unhappy. To succeed, they need to improve their product and service.
Keeping your current customers happy is vital for your business’s success. It’s often cheaper and more effective than constantly trying to find new customers. By focusing on product quality, customer experience, and offering unique benefits, you can reduce churn and build a loyal customer base.
Leveraging partnerships to reach new markets
To achieve your growth targets faster, consider forming partnerships. Expanding into new markets or diversifying your product lineup can be complex and costly. However, teaming up with other companies can make things much easier and cheaper. For instance, if you want to sell your product in a new market, you could collaborate with a retailer already active in that market. This way, both you and the retailer benefit, and you can avoid stretching your resources too thin.
A great example is GoPro, the company that makes action cameras for extreme conditions. They grew quickly by partnering with big retailers like Best Buy. GoPro’s cameras are available in Best Buy stores, helping them reach new customers, while Best Buy gains revenue from selling GoPro products. Another successful partnership was between GoPro and Red Bull. Through cross-promotion campaigns, both companies expanded their customer bases.
For partnerships to work, trust is crucial. Take Apple’s experience with iTunes Store and Apple Music. When they launched the iTunes Store in 2003, it was a hit because of their partnership with artists and record labels. However, in 2015, Apple faced criticism when they offered a three-month free trial for Apple Music. Musicians like Taylor Swift were concerned about payment during the free trial. Apple managed to address the issue and preserve trust with its partners, but it was a close call.
Partnerships can be a smart way to grow your business faster and more efficiently. By collaborating with other companies and building trust, you can expand into new markets and benefit from each other’s strengths.
How cooperation with rivals can pay off in business
In the business world, competition is often seen as fierce and cutthroat, but sometimes it can be beneficial to work together with your rivals – we call this “coopetition.”
For example, in the car industry, companies like Fiat-Chrysler, BMW, Intel, and Mobileye joined forces to create self-driving vehicles. They realized that together, they could revolutionize the industry and reach a broader market.
Tesla also made a surprising move in 2014 by offering its patents for free. Why? Because they understood that if the electric car industry flourishes, there will be a massive demand for products like batteries and charging stations, which Tesla specializes in. By supporting the growth of the industry, Tesla stands to benefit too.
These types of alliances are not common because it’s challenging to cooperate with your competitors, and their interests often differ. However, when it does work, all parties involved can reap rewards. Still, it’s essential to remember that these alliances are temporary, and competitors are still rivals. So, caution is advised.
Changing the world through business
To boost your business and stand out from the rest, consider adopting unconventional strategies that have a unique mission. Companies that strive to make a positive impact on the world tend to inspire customers and create a stronger following.
Take Toms Shoes as an example. They started in 2006 with a special approach: for every pair of shoes sold, they donated a pair to underprivileged children in need of footwear. This mission not only helped those in need but also attracted customers, leading to significant success for the company. The concept of “conscious capitalism,” where businesses focus on social and environmental responsibility, is gaining popularity.
However, regardless of the strategy you choose, timing is crucial. Monitoring your company’s performance and relevant metrics is essential for making informed decisions. Additionally, ensure you have the necessary resources and preparation to enter new markets successfully. Execution is key, so make sure your resources, communication channels, and team are ready for the transition.
Consider the ten growth paths presented here as ideas and apply them when the timing is right. By pursuing unconventional strategies and recognizing the opportune moment for growth, your business can achieve remarkable results and have a positive impact on the world.
In conclusion, no matter the current state of your company, be it stagnant, thriving, or facing challenges, a growth plan is essential. However, the reality is that growth in business is often misunderstood, and generic strategies rarely yield desired results. To effectively manage growth, it’s crucial to identify what suits your unique circumstances. Begin by understanding your business context, and then explore the ten growth paths to find the ones that best align with your objectives. With a tailored approach, you can pave the way for sustainable and successful growth for your company.
Inspired by a book “Growth IQ”; Tiffani Bova