The four sources of business growth, and how to balance them.

Business growth is a rocky road, no doubt about it. Sometimes slower than you hoped, sometimes faster than you can handle, but seldom without serious effort involved.
And just when you think you’ve got it under control, something changes.

Let’s assume that like most SMEs your resources have their limits, and you’ve got to be careful about where you spend your time, money, and effort.

That being the case we’re going to lay out the four sources of business growth for you – and yes, there are ONLY four sources and this applies to ANY business, small or big, so you only need to decide how to allocate resources across just four elements.

Easier said than done, so we’ll also provide some business growth strategies related to each, and a little guidance on what might be best for your business.

Now, we’ve all heard the old adage that doing ‘something’ is better than doing nothing at all. And while there’s truth in that statement, we’d argue that it’s the choices you make that truly make the difference.

Sometimes doing ‘something’ without thinking it through properly, actually moves your focus and your efforts away from where they could be applied more effectively – thus choosing what NOT to do, is often more important than choosing what you will do.

“Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives – choice, not chance, determines your destiny.”

Aristotle 

The four sources of business growth. 

Business Growth Source 1: Hold.

Before thinking about sources of growth, you need to be sure you haven’t got a customer leakage or churn problem, otherwise you’ll always be spinning your wheels – expensively.

But of course, holding tight to existing clients, whilst critical, doesn’t generate growth. So, the Hold strategy also includes trying to increase the number of times they use your services, or buy your products, and also trying to increase the value of each sale.

Obviously this assumes you actually have some existing clients to begin with, so it isn’t an option for start-ups, rather businesses looking to create a stable base for growth in other areas.

‘Hold’ Business Growth Strategies include: 

Fix your issue
If you are losing clients, you really need to dig into why, so that you can take steps to address the cause. It could be a product/service problem, or related to the customer experience, before, during or after purchase. Look at your data, talk to your customers, drill right down and be very honest with yourself about the cause/s and solution/s – no matter how hard they may be.

Work the 80/20 rule
Just about every business gets 80% of revenue from 20% of customers. Move that dial, identify and concentrate on increasing sales frequency and transaction size from that 20%!  Look for ways to anticipate their needs and prompt their purchases. For example, if you know that a customer usually buys from you at Easter, or in the run up to EOFY, you can contact them just before the trigger point, and make sure they don’t go anywhere else.

Depending on your business, loyalty and reward programs are definitely worth looking into as a way of systematising repeat purchases and creating a remarkable experience that encourages referrals.

Increased contact = increased care
You should be communicating with your clients on a regular basis, finding ways to help them. Email and social media updates that share genuinely useful information can work a treat. Plus, since believe it or not your customers don’t walk around with your business in their head the whole time, you’re also gently reminding them you’re still here.

“Businesses rarely come up for air to re-evaluate how they are selling. This means that current sales practices, process, and organisational structure may in fact be hindering their growth more than any external factor they believe they are facing.”

Tiffani Bova, Growth and Innovation, Salesforce

Business Growth Source 2: Deepen

Once you have a stable client base, the next source of growth to explore what is often the most cost-effective growth is by deepening the relationship with these clients. If you’ve built up familiarity and trust with your clients around a particular product, leveraging that to up-sell or cross-sell is a natural source of growth for your business. Just as it was with the ‘Hold’ strategy, the 80/20 rule is the place to start with experiments to increase customer yield.

‘Deepen’ Business Growth Strategies include:

Education: what don’t they know?
By analysing your top clients (the 20%) and building a customer / product matrix, often there is (significant) untapped growth to be accessed with from these clients.

You’d be amazed at how often even regular customers aren’t aware of what else you sell! Generally, people will pigeon-hole suppliers based on what they currently provide and are blind to other related product and services you offer. I could have easily retired if I had a $1 every time I heard “I wish you told me you offer that service, I just bought it from someone else”. 

Incentivise the upsell trial 
You should be communicating with your clients on a regular basis, finding ways to help them. Email and social media updates that share genuinely useful information can work a treat. Plus, since believe it or not your customers don’t walk around with your business in their head the whole time, you’re also gently reminding them you’re still here.  

What this means is the cost of securing your product B sale is reduced (because you don’t have to acquire a new customer). And what THAT means is you could consider making product B (or a limited ‘taster’ version of it) available on a discounted basis. The ROI of this can be especially good if they’re likely to make repeat purchases i.e. their lifetime value is higher.

“Someone once told me growth and comfort do not coexist. And I think it’s a really good thing to remember.”

Ginni Rometty, Former CEO of IBM

Business Growth Source 3: Displace

This is what most people first think of when they think of the role of marketing. It involves growing your market share, in your existing marketplace i.e. competing more effectively. Winning new clients is often described as the hardest thing to do, but if you’re good at it, and you hang on to them, you’ve got the formula to building a great business.

‘Displace’ Business Growth Strategies include:

Stand out from the crowd 
If you’re going to attract new customers, you need to attract their attention with a distinctive brand that gives them a compelling reason to choose you over your competitors. You need to find, and focus on whatever’s unique about your business, that your target market actually cares about, that the competitors don’t offer. We’ve written about how to do that right here.

If your product or service doesn’t stand out, get creative. Maybe your brand looks completely different to all the others, this is called a Challenger Brand and here are some Australian examples. Maybe you design a difference into your way of doing business, for example develop a pricing strategy that gives you an advantage. Not that you have to be the cheapest, in fact that’s a strategy we’d caution against, but it could mean you’re completely transparent or you spread the cost over time, or your costs are fixed, within certain parameters. Be innovative. Whatever it is, you’re looking for an advantage over your competitors, and a compelling reason to buy. 

Target (or even buy) your competitors
Another way of doing this, is to specifically target your competitors’ customers! Seriously. You already know your target market’s pain points, and if you dig into your competitors offering, you’ll discover where they might not be satisfied with the service. Then, develop a campaign targeting those exact customers, and if you get it right, you’ll displace your competitors, and gain market share. 

If you happen to have funds at your disposal, however, you can always skip all of that and acquire a competitor, instantly gaining access to their customers. Or, if funds aren’t available and you see the right target, perhaps a merger could work.   

Either way, it’s going to grow your business.

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”

Peter Drucker 

Business Growth Source 4: Penetrate

This is where you expand into markets (geographically, or a new segment you haven’t targeted), or develop a new product. The boldest move of the lot is to create a new market with a new product.

Despite the risk, this might well represent the highest growth potential of all. And in some industries not constantly innovating is even riskier.

‘Penetrate’ Business Growth Strategies include: 

Do your research
Penetration strategies need to begin with market research, to give yourself as much information as possible before jumping into the deep end of a territory you don’t know.

Whether considering a new product for your existing customer base, new prospects within your existing market or especially a new product for a new market, market research is critical so don’t rush.  

Consider your distribution model
Throw away all assumptions! Reconsider your distribution channels and perhaps form strategic alliances with complimentary businesses. If your expansion is geographic, you may want to forge relationships with distributors in that area or explore sales partnerships that can expediate your growth.

Leverage your marketing experience
Try not to re-invent the wheel. Apply everything you’ve learned to date about what works for your business. Once you understand your new market and their particular challenges, you will want to adapt your marketing messages, to talk directly to the new segment. But try to utilise channels and techniques you’re familiar with, there will be enough to learn on the fly as it is.

“Good ideas usually look like good ideas because they build on what you already know. But great ideas often look like bad ideas because they’re completely new.”

Tom Dawkins, Start Some Good CEO, Sydney

So there you go, four sources of business growth, the onely four options you have in fact, and a few strategies to go with them.

Does anything stand out for you?

Hold and Deepen are the low hanging fruit, for sure, but if you focus entirely on them, you won’t grow your pipeline either. All businesses are different, of course, but if you consider all of this in relation to your business and how you want to achieve your sustainable success, not only will you be one step ahead of the competition, you will also be able to create more freedom to choose if and how you want to grow your business.

The point is, you can’t do everything, you need to intentional, and allocate your effort carefully to deliver the business objectives you have set.

Involve your whole team
Don’t think this is just about marketing. If you have a complex product and sales operatives are involved in closing the deal, they need to actively support this program. Perhaps you make them responsible for identifying and targeting the top 20% of clients, possibly there will an outbound sales calling program, and maybe their targets and rewards need to be amended so that they’re incentivised to align their efforts to the growth strategy. 

As always, if you want some help figuring your way through any of this, just contact us here, and we’d be happy to help.