In a competitive marketplace, businesses need to stay on top of their game. One obvious way to do this is to invest in your company to grow your business.
There are many different types of growth strategies that you can use to grow your company and increase your market share, but not all of them work for every type of company.
In this blog post, Sean Farnell, Partner, will briefly describe four types of business growth strategies that you could use in your business.
What is a business growth strategy?
It’s a plan of action to enable the business to expand and increase its turnover and profitability.
Why should you implement a business growth strategy?
Strategies are important because any business owner has to have a plan as to how they are going to run, develop and grow the business. But that plan has to have a time frame to it and that’s important.
A plan without a deadline is just a wish. You need to know where you’re going, when you’re going to get there.
Break the plan down into small, bite-size pieces to help you reach your goal.
Businesses should always have more than one business growth strategy on the go.
Keep a beady eye on the main strategy and if it doesn’t work, drop it and focus on one of the others. Work that strategy until you have a definitive answer if it works and then move onto developing another one.
Staff should be aware of what their impact on the strategy would be and what its impact on their day-to-day actions will likely to be.
Here are our four key business growth strategies for businesses in 2022:
CUSTOMER RETENTION
Business owners need to know what their customer attrition rate is. That is the number of customers that don’t buy from you from one year to the next.
We see all the time businesses that think they have a large customer list, when in reality they have a lot of one-time buyers.
Typically, in the UK, businesses will lose 25% to 30% of their customers every year. That’s a large amount of new customers that you need to acquire to simply stand still.
Once you understand that number and that rate you can start to do something about it. What a lot of businesses don’t realise is that 68% of customers leave not through price, product or service, but through perceived indifference.
They don’t think you care enough about them, so it’s all about speaking to them and having a dialogue with existing clients and customers.
In reality, it costs seven times more to acquire a new customer than to keep an existing one, many new businesses should rather focus on what they have got and solidify their existing customer base.
Communication is crucial and the means depends on the business, your products, services and customers. For some businesses it might be a monthly or weekly e-newsletter. For others it will be an unsolicited drop in over a cup of coffee.
You get a lot of business when you aren’t trying to sell.
Business is a people issue, people buy from people, so maintaining relationships is essential.
CROSS-SELLING AND UPSELLING
This starts with getting the right data. You need to analyse your existing customer base, analyse your income and then divide one by the other. Then look at the products and services each customer is buying.
Once you do that, you can see trends on who is buying one service and not another. You can look at similar customers who might need the same services.
Look at the pricing of those customers whose spend is perhaps lower than the average of your customer base and you will see the gaps to take advantage of.
Why aren’t they buying this product? It might be they have internal capacity and provision to satisfy that need, or it might simply be that nobody has told them that you do that.
PRICING AND DISCOUNTS
Pricing is probably the easiest thing to tweak but is one of the least used business growth strategies. It’s a very British thing to do, not wanting to talk about price and cost.
Generally, people are worried customers will walk away if price goes up. Some may do, but price is not a huge issue.
Have a look at discounting. You don’t necessarily need to reduce your regular price if you can look at the amount of discount they are offering.
There is a tendency within sales teams to offer a discount when it hasn’t been asked for, because it’s easier to make a sale.
I would suggest any business starts their accounts not at turnover level, but instead have a line above that which looks at gross sales, then less the discounts to give you your turnover.
Very quickly, if you can get that information, you will see the impact that discounting has on the business.
Always test pricing. If you have particular product, service or are in a niche market, test your pricing there first. Don’t go ahead and put the prices up across the board, instead look to test it in such a way that you can get feedback from customers old and new.
If you are looking at a higher price point, why not start with new customers first. This won’t damage existing relationships.
CUSTOMER ACQUISTION
Referrals are still the best way to acquire new business.
Ask your existing customers and get feedback, good, bad or indifferent, it will help your business.
If it’s good, then thank them and see if they know anyone else who might benefit from your business.
If they are a good customer for you, the people they recommend are likely to be good customers as well. You end up with a virtuous circle of good customers recommending good customers.
Negative feedback gives you a chance to make things better. If you can make things right with a slightly unsatisfied customer, then they generally will become big fans and refer work.
With your marketing you need to be doing the right things to get to the right audiences.
Product marketing is all good and well if you are big enough. However, in general marketing needs to reflect your business culture so you attract people who have similar values.
There are number of tried and tested ways to break into new markets. It might be attendance at trade shows or editorial into trade magazines.
How can Burgis & Bullock support?
We do a great deal of work on business growth strategies through our mastermind groups and also on how to measure the impact of those strategies.
The Burgis & Bullock Business Mastermind Group will be making a return in Spring 2022 and you can head to https://www.bb-bmg.uk/ for more information.
Building an effective business growth strategy is a long-term game but you can always take the occasional sprint too.
It’s about having a plan and working to the plan. You need to have the reporting structure in place to measure changes you have made on a monthly basis, or at the very least quarterly.
Look at the inputs into the business and what is changing as a result of the strategy, before it gets to outputs of sales/profits, this allows you to make decisions more timely and quickly.