Every business owner wants their company to grow and soar to new heights with each passing year. However, about 20% of all small businesses fail within just one year of starting. There is a lot of competition these days and all businesses especially small businesses require a plan — a plan not just to stay afloat but to thrive. That plan is the growth strategy for your small business.
“Failing to plan is planning to fail”
– Alan Lakein
“Failing to plan is planning to fail”
– Alan Lakein
Before we get knee-deep into discussing growth strategies for your small business, let’s understand what is a growth strategy and some common growth strategies that businesses of all sizes have followed for decades.
Growth Strategies are techniques that businesses use to expand their scope — mostly it translates to an increase in revenue. Usually, a growth strategy is adopted with a vision for the future, which could sometimes mean short term setbacks.
This is done in a variety of ways:
This technique involves a company selling its products or services in a market where similar businesses already exist. A company tries to gain maximum market share in this approach. This can be done by acquiring the competitors’ customers by showing differentiation or offering more attractive prices.
Example: Netflix and Amazon Prime — both streaming platforms are competing in the same market and try to attract customers by offering the latest movies and TV series.
Netflix: $16/month, 4 screens
Amazon: $12.99/month, 3 screens
Netflix pricing starts from $9 for one screen and goes up to $16. Prime offers a better deal — it also offers a student plan for $6.49 per month or $59 annually. It’s clear that Prime here is catering to a more cost-conscious segment.
Unlike market penetration, a company using a market development strategy seeks to gain new customers into using their products or services. It could mean expanding into ‘foreign’ segments to offer one’s services.
Example: Starbucks, the global coffee brand — used to sell their coffee beans only in their own stores but later on started selling them in grocery stores too thereby expanding their market and exposing their product to a new customer base.
Co-marketing can be a good market development strategy — co-marketing is the process by which two businesses combine to offer their products to each other’s customers, it is useful for small businesses to co-market with a larger company to gain exposure. An example would be that of Casper and West Elm, Casper mattress partnered with West Elm, a high-end furniture company — their partnership allowed customers to try out the mattresses made by Casper, at the same time providing a platform for West Elm to display their furniture.
The aim of this strategy is to create new products or services in the business’s existing market.
Example: One of the best examples for product development strategy would be Apple, having started with the Macintosh in the 80s, Apple has continued to innovate with a whole suite of products like iPad, iPhone, and iWatch. Buffer is a good example when it comes to SaaS, they initially had only one product that scheduled social media posts but now have two more offerings (Reply and Analyze) which makes buffer a complete social media management tool.
Diversification can be considered as a mix of market development and product development. It is the most ambitious of the 4 strategies because it involves selling a new product to a new market.
Example: Amazon is a good example of a diversified company, which started off as an eCommerce company that now provides cloud hosting and streaming services. One could say they are also into hardware as they make the Kindle and Alexa. Another example in the software space would be Freshworks which offered only helpdesk and CRM solutions to begin with, later came up with Freshmarketer — a marketing automation tool, thus diversifying its product offerings.
These four strategies are not the only ways in which businesses can grow but they most certainly are the tried and tested ways of growing a business.
We live in rapidly changing times now, businesses cannot afford to bank on or stick to one growth strategy. Even if it has worked in the past, you miss out on big growth opportunities if you have your eyes in the past.
This is especially true for small business, every small business dreams of scaling and growing big. However, they cannot achieve this exclusively by doing what they have always done. The future brings in several opportunities, you have to tap into them and model your growth strategy based on them.
Don’t worry, we have done the work of finding them for you in this blog, we believe by the end of this blog you would have several growth strategies in place for your small business.
Growth need not necessarily come from conventional strategies, some of the above-mentioned strategies may not be easily implementable as it involves long term changes. In that case, it is a good idea to have in place certain in-trend strategies. The following are some strategies that can boost the growth of your small business and can be easily implemented:
People look for social proof — what’s the first thing you do when you go on Amazon? Read reviews. This isn’t true of only physical products, people look for reviews all the time even while purchasing software, they go on review sites like g2crowd or Capterra to read reviews.
As a small business, you need to focus on getting more reviews — the bitter truth is if customers are unhappy with your service they will leave a review real quick but that can’t be said if they are happy. You have to become proactive in your approach towards getting reviews from your happy customers.
AR and VR technologies are coming up in a big way — many businesses are already using them to their advantage to provide a unique experience. For example, Ikea has an AR app that lets you place furniture in your house before you buy them to avoid any last-minute surprises.
There are a lot more ways you can use AR to grow your customer base. You can make your shopping catalogs come to life by making it interactive using AR technology thus giving your customers an immersive shopping experience.
As a small business, it can be overwhelming to think of implementing AR. At first, AR may seem like complex technology. However, there are many AR companies that are working to bring Augmented Reality to everyone’s hands. The key to cracking AR for small businesses is to start small, test it out and look to create a ‘wow’ experience for their customers.
When thinking of growth strategies, we only think of acquiring new customers. However, did you know it costs 5 times as much to acquire new customers than to retain existing ones? According to research by Bain & Company — a 5% increase in customer retention produces more than a 25% increase in profit.
Simply retaining existing customers is a great way to increase profits, smaller businesses can provide ‘wow’ experiences to customers which will ensure they stick around for a long time.
Related: The 7 deadly customer service phrases (and what to say instead)
Chatbots aren’t exactly ‘new’, they have been around for a while but since last year there has been a big push towards AI for business and with that comes chatbots. Chatbots are intelligent enough to handle basic questions from customers without any human intervention. What’s better is that they constantly learn from interactions with customers. Chatbots are just getting started and will become more ‘intelligent’ in the years to come.
When it comes to customer service, chatbots can help provide 24-hour service. Having a chatbot installed on your website can increase engagement with visitors and also help collect information. Chatbots can be helpful for small businesses that are short on employees. In fact, according to chatbotsmagazine, chatbots can help reduce customer service costs by 30%, these are big savings for a small business.
Emails are becoming old, many businesses are now moving towards messaging apps like Whatsapp, Viber, WeChat etc. Businesses are using these private messaging apps to create a more personalized shopping experience for their customers. It also makes the purchasing experience easier, WeChat has already made it possible to pay using the app, soon many other messaging platforms would follow suit making transactions frictionless for businesses and customers alike.
If you enjoyed reading this blog, you may also be interested in knowing the small business trends for 2020 so that you can stay ahead of the curve!
Freshdesk Contact Center is a modern-day reimagining of our everyday phone system for customer support, sales, IT, and HR teams. With Freshdesk Contact Center’s cloud-based architecture, it brings together the best of legacy features like IVR and advanced capabilities like Smart Escalations, Custom Call Center Analytics to help you set up a state-of-the-art business call center. Freshdesk Contact Center offers phone numbers in 90+ countries, requires zero phone hardware, and is extremely easy to use.
If you want to find out more about what we do, check out www.freshcaller.com.
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