You don’t need to be a billion dollar global brand to muscle market share away from your competitors. What you need is an unstoppable business growth strategy.
Of course, with growth comes risk. So, truly successful businesses rarely rely on a single plan of action. Instead, they combine multiple growth strategies to win, including market development, disruption, product expansion, channel expansion, strategic partnerships, acquisitions, and organic growth.
Read on to learn seven of the most effective business growth strategies that brands use to topple the competition.
What makes a business growth strategy effective?
Before we look at specific growth strategies, let’s talk about some high-level principles regarding what makes any growth strategy effective.
First and foremost, you need to have a clear grasp on your brand identity and DNA. You also need to know your strengths, positioning, and differentiation.
Growth comes from a relentless focus on your core competencies. Walmart is a prime example of this. By delivering the lowest prices for customers, they’ve created stratospheric growth.
Second, deep audience insight is crucial for any successful business growth strategy. You must know your customers’ pain points and desires, and satisfy their needs better than your competitors. As a result, you’ll build customer loyalty and more word-of-mouth (WOM) referrals.
And, most importantly, growth requires nimbleness. You’ll certainly need to pivot in small ways, such as changing marketing tactics to match current trends or customer behavior. But, you also might need to make large scale changes to achieve growth objectives.
For example, Shopify started out selling snowboard equipment, but ultimately realized they were better at creating ecommerce software. A willingness to change in both small and large ways can significantly accelerate business growth.
Types of business growth strategies
Traditionally there have been four major business growth strategies. However, I expanded on the existing framework to include a few more. So, here are seven specific types of business growth strategies that you can use to fuel growth for your brand.
1. Market development (market penetration)
Market penetration strategy (or market development) is a business growth strategy in which you attempt to sell your existing products into untapped markets. This involves identifying new markets that would be a good fit for your current product line.
Market development is a common growth strategy because it allows you to move beyond your existing customers. As a result, you’ll expand your share of the market. This type of segmentation may involve targeting a new industry, new demographic, new corporate department (e.g., going from HR to finance), or new geographical location.
Bain & Company studied growth-driving moves by 1,850 companies to determine how successful companies achieve sustainable, profitable growth. The research revealed that companies realize the most profitable growth when they move into an adjacent target market.
Facebook is an obvious example of using market development as a business growth strategy. They started as a product accessible only to Harvard University students. From there, they expanded to include Stanford, Columbia, and Yale. Next they opened the platform to all Ivy League and a number of Boston-area schools. Then, access was expanded to colleges around the U.S. and Canada. Facebook has since expanded into many different audiences beyond the initial focus on colleges.
2. Market disruption
Market disruption involves coming into a well-established industry that is usually dominated by a few legacy brands and proceeding to do things completely differently than everyone else. There are a number of ways you can potentially disrupt a market, including:
- Using a completely different business model, as many DTC brands have done. Think of how Dollar Shave Club disrupted the male razor market with a direct to consumer model. In a sign of capitulation, Unilever acquired them roughly five years later for $1 billion.
- Utilizing innovations, such as when Salesforce offered a totally cloud-based CRM
- Offering significantly cheaper or better quality products
- Providing something totally new, such as Slack replacing traditional email
3. Product expansion or diversification
Developing new products or adding new features to existing ones can be a highly effective business growth strategy. Product development enables you to attract new audiences who previously may not have been interested in your brand.
Semrush is an example of a company that started with a rudimentary SEO and paid search platform. Through the years, the company continually added a great deal of functionality, and is now quite a comprehensive software suite. Throughout it all, the target audience has never changed. This business growth strategy has worked well for SEMrush, with a current market capitalization of more than $2.7 billion.
4. New channels
New distribution channels rank among the top 10 business strategies for growth because they propel revenue growth without any product changes. Ecommerce businesses like Allbirds have increased revenue by also growing their brick-and-mortar presence. Whereas Allbirds was exclusively online in the beginning, they currently boast 29 real-world stores.
Sometimes, one company’s identification of a new distribution channel can trigger a tsunami of change throughout the industry. Take Salesforce. They introduced the idea of cloud-based, subscription software in an industry dominated by large, expensive, complex enterprise software requiring an army of professional service reps to get it to work. Salesforce went on to grow rapidly, and today it’s a $21 billion+ entity. The software industry transformed, and today is completely filled with other SaaS offerings.
5. Strategic partnerships
Strategic partnerships with other brands can generate growth that otherwise wouldn’t be possible. For example, if you partner with a company that offers a product or service that complements yours, you get access to their audience, and vice-versa. You also receive referrals from your strategic partner and benefit from the goodwill built up around their brand.
An example of a strategic partnership that worked well is the one between Lyft and Taco Bell. Lyft offered Taco Bell delivery service to its customers, in which a Lyft passenger could request a mid-trip stop at a local Taco Bell (“Taco Mode”) with a simple tap within the Lyft app. The partnership led to free publicity for both companies and an increase in sales for Taco Bell.
Strategic partnerships can also focus on an improved or unique product. Once again, looking at Taco Bell, a partnership with Doritos resulted in the creation of the Doritos Locos Taco. To say it was a massive hit is an understatement. Within the first 18 months of the new product launch, Doritos Locos Taco sales surpassed $1 billion.
6. Acquisitions
Perhaps the most obvious way to grow is through acquisitions. Acquisitions are usually only a viable growth strategy if you have significant cash flow and/or debt capacity available.
There are some distinct advantages to acquisitions. They allow you to reduce competition by acquiring direct competitors. They allow you to gain access to proprietary technology that would take significant time and money to develop yourself. And they give you access to the acquired company’s customer base.
Among the various business growth strategies, rollups are one of the most efficient and reliable. A rollup involves acquisition of multiple smaller companies in the same market. The aim is to achieve greater cost savings and efficiencies through economies of scale.
Alera Group, an employee benefits and HR solutions company, is one example of this, having grown to 1,700 employees mostly through a continual stream of acquisitions.
7. Organic growth
Out of all the business growth strategies, organic growth is by far the ideal. It means you’re able to spur growth without the reliance on mergers and/or acquisitions. As for your marketing strategy, it means you’re growing without the need for advertising, where once you stop spending, you stop growing.
Largely through organic growth, a home goods startup in a $29 billion market went from zero to a 3% market share within 5 years. Organic search was a major factor in the rapid growth, with the startup attracting 340,000+ monthly organic visits to its website.
With organic growth, your customer acquisition cost is lower, your return on marketing spend is higher, and it puts you on a frictionless upward trajectory. The more organic growth you can achieve, the less you have to spend on marketing and the more you can invest in further developing your brand, developing new products, and delighting your customers.
Combine business growth strategies to win
Klarna is disrupting the online payments market by implementing several growth strategies in business simultaneously.
Disruption
The fintech company, founded in 2005 in Stockholm, Sweden, enables consumers to make product purchases without full payment at checkout. Rather than pay in full, shoppers can divide their payments into four interest-fee installments, pay the full amount within 30 days, or extend payment up to three years. The result is a 45% increase in average order value from shoppers paying with flexible installments.
Expansion
Klarna has also been focused on geographical expansion, entering new markets across Europe and finally the U.S. Today, Klarna delivers flexible purchase options to 90 million consumers across 250,000+ merchants in 17 countries. More than 2 million transactions are processed globally through Klarna technology daily.
There are a variety of business growth strategies that are effective. By combining multiple strategies, companies like Klarna are able to forge massive growth in a short period of time.
Most companies, like Klarna, strive for growth. The challenge, of course, is knowing which strategies will be most successful for your company and how to effectively execute on that plan.
Components of a successful business growth strategy
So how do you execute a successful business growth strategy? Let’s look at the most critical elements.
Conduct market research
No matter what growth strategy you choose, the starting place is research. Market research gives you insight into both your current customers, as well as potential new business from untapped markets. It will help you determine trends, growth opportunities, and potential barriers to entry that could limit your success in a new market.
Audience research will help you understand not only your current market, but also future potential new audience segments that could benefit from your offerings. This knowledge can reveal their buying behavior and product preferences. You can also uncover the channels they use most frequently, which then helps to shape your customer acquisition efforts.
Competitive research allows you to gain a clear understanding of how you are positioned against your competitors in your current market, as well as who has market share in new markets you might develop. A clear understanding of your competition allows you to identify areas where they are vulnerable and then capitalize on those opportunities.
And finally, keyword research gives you insight into how your audience is thinking. It reveals what your existing and potential customers are searching for as they move through the customer journey. You can use the data from keyword research to create a content strategy, identify topics they care about, and craft the right experience for each customer touch point along the journey.
Additional Resources
Establish growth goals
Once you have a clear understanding of your current market as well as where you want to grow (new markets or existing markets), you can then establish specific growth goals. Goals are key to any growth strategy because they drive the actions that lead to success.
All growth goals should be measurable, and quantitative goals should be time-bound with deadlines.
By establishing clear goals, you can measure your success and optimize your activities over time. You can adjust your strategy as necessary in order to ensure the achievement of your growth objectives.
Determine your growth strategy
After you set growth goals, decide which growth strategy you’ll implement to acquire new customers and achieve your goals.
Will you target organic growth, or use an acquisition strategy? Alternatively, you might combine several strategies to achieve your goals. It’s obviously more complex to implement multiple business growth strategies. But, as we saw with Klarna, it’s certainly a method to maximize your results.
The strategy or strategies you choose will depend on a variety of factors, including your budget, goals, opportunities, competition, timelines, and calculated market share targets.
If you’re a startup entering an already crowded market, you may need to rely on market disruption strategies. Or, if you’re a large retailer with a massive budget and you need immediate short-term gains, you could utilize strategic partnerships.
However, if you seek long-term organic growth, you’ll need to invest in SEO and content marketing.
Create your execution plan
Your execution plan contains the nitty-gritty details of your growth strategy. It’s the concrete actions you’re going to take to make your growth strategy a reality. For example, if you’re going to use acquisitions as a growth strategy, define the specific gaps you’re aiming to fill or the new audience segments you’re trying to capture.
Don’t be vague with your execution plan. Spell out all the details of your growth strategy so that you and your team members know what needs to be executed, when it needs to be done, and how it will be achieved. All of this planning creates accountability and helps ensure that you hit your intended growth goals more reliably.
Monitor and measure success
Once you have established your growth strategy and have started executing it, regularly measure the key metrics that indicate your progress toward achieving your goals. The metrics you choose should be closely tied to your overall growth goals, not vanity metrics that have no real-world bearings on actual results.
For example, if your goal is to increase revenue for a particular business line by 20% within two years through a geographic expansion strategy, the size of your social media following isn’t going to be the best metric to track. Rather, you might want to track location-specific metrics, along with site traffic and conversion metrics from traffic sourced from your newest regions.
Optimize business growth strategies for what’s working
The more you monitor and measure your growth efforts, the more you’ll begin to see which parts of your execution plan are producing results and which aren’t. If something is working particularly well, double down on it. If a particular tactic isn’t effective, try to make corrective adjustments. Consider pivoting if that doesn’t work.
Even though you’re making serious investments with any of the business growth strategies listed above, there needs to be elements of flexibility in your approach. You may discover that certain growth efforts simply don’t result in sufficient market traction. Perhaps a new geographical focus is lacking product-market fit, whereas a different location may produce the originally desired results instead. Or, if you’re an online business that’s now opening brick and mortar stores, accelerate the pace of your new store openings if you see positive results from your initial set of stores.
Continually optimize the activities of your business growth strategies, and you’re bound to come out ahead in the end.
