Profitable growth is a fundamental goal for every company, whether you are a startup or a well-established corporation, planning and implementing a growth strategy is essential.

But what exactly is a growth strategy, and how can you ensure it’s effective? I cannot stress enough the importance of a customer-centric strategy if you aspire to achieve profitable growth.

Let’s review the crucial role of customer-centricity in every growth strategy, examine eight approaches, and identify five signs that your strategy may not be working. If necessary, consider one, or all, of our four recommendations to get your growth strategy back on track.

The Crucial Role of Customer-Centricity in Every Growth Strategy

The primary goal of any growth strategy is to drive sustainable and profitable growth. Your growth strategy is the basis of how your organization will acquire, keep, and grow the lifetime value of customers, and increase its revenue, market share, and brand equity over time. Your growth strategy sets the direction for your company’s expansion and provides a roadmap for achieving its objectives.

Customer-centricity is not just an individual growth strategy; it is the heartbeat that should infuse every growth strategy. Customer-centricity is not a one-time tactic; it’s a philosophy, an approach, and a set of practices that guide every aspect of an organization’s growth efforts.

A customer-centric approach, marked by a commitment to fulfilling promises and exceeding expectations, helps businesses build trust and credibility. Before we delve into various growth strategies, let’s review four merits of customer-centricity that apply to every strategy.

Evolving Customer Needs and Foster Loyalty: In his book, The Practice of Management, Peter Drucker declares there is only one purpose of a business: to create a customer. This is why placing the customer at the center of every strategy is so fundamental. Customers are the driving force behind business growth Therefore every growth strategy must address the ever-evolving needs and preferences of your existing and prospective customers. By actively listening to them, soliciting feedback, and understanding their pains and opportunities, your business can adapt its strategies to meet these changing expectations. This ensures that your products and services remain relevant and competitive in the market. When you understand the unique challenges and goals of customers, you are better positioned to foster long-term loyalty, expand your footprint within a customer’s organization, and increase share of wallet.

Continuous Improvement and a Competitive Advantage: Customer-centricity goes hand-in-hand with continuous improvement. It encourages business leaders to never settle and to keep looking for ways to enhance products, services, and the overall customer experience. This spirit of ongoing refinement is essential for sustaining growth over the long term. A business that consistently offers an exceptional customer experience stands out from the competition. The ability to adapt, differentiate, and stay ahead of the competition is often rooted in the feedback and suggestions of the customers.

Lower Churn and Customer Acquisition Costs: Happy customers are a powerful asset. In addition to their likelihood to continue to buy they also serve as referrals and recommenders for your business. Word of mouth can have a snowball effect, bringing in new customers and contributing to organic growth. On the flip side, customer churn can be particularly costly. By embracing customer-centricity, businesses can reduce churn by proactively addressing issues and providing value-added services. This both protects existing revenue streams and can lead to cross-selling and upselling opportunities, increasing the lifetime value of each customer.

Data-Driven Decision-Making and Faster Adaptability: Customer-centricity is inherently data-driven. By collecting and analyzing customer data, businesses can make informed decisions about their growth strategies. From product development to marketing campaigns, data-driven insights enable businesses to allocate resources effectively and make decisions that are more likely to yield positive outcomes. Additionally, data-derived insights facilitate the ability to adapt quickly to changing circumstances. A customer-centric approach encourages agility and responsiveness. By remaining in close contact with your customers, you can promptly adjust your strategies to meet shifting market and customer conditions and emerging opportunities.

Which of These 8 Growth Strategies Are You Implementing?

Determining whether a growth strategy needs minor or major tweaking first requires having clarity around which growth strategy you’re planning on implementing. We’ll touch on eight strategies that you may be most familiar with.

Some of the first business strategies were identified by H. Igor Ansoff, the pioneer of Strategic Management. His four primary growth strategies are captured in the Ansoff Matrix:

Market Penetration: Increasing market share by selling more of the current products or services to existing customers. It often involves tactics like price adjustments, loyalty programs, and improving customer service. It is often considered the easiest strategy to execute because the company is pursuing new business for existing products/services in markets and customers where they are known. For example, a software company that provides Customer Relationship Management (CRM) solutions might implement a market penetration strategy by offering discounts and additional services to its existing customers to increase their usage and, consequently, their loyalty.

Market Development: Entering new markets or reaching new customer segments. This can include entering new geographical areas, targeting different demographics, or offering modified products to cater to a broader audience. For example, a telecommunications equipment manufacturer could pursue market development by exporting its products to international markets, focusing on regions where there is a growing demand for their technology.

Product Development: Creating and launching new products or services to meet customer demands or stay ahead of market trends is a strategy focused on innovation and adaptation. Customer feedback plays a pivotal role in the development of these new offerings. For example, an industrial machinery manufacturer might invest in product development by designing and introducing more efficient and environmentally friendly equipment, catering to the growing demand for sustainability.

Diversification: Entering unrelated markets or industries often with new products/services. Even in this approach, understanding, planning, and meeting the unique needs of different customer bases remains crucial. This strategy is considered the most difficult strategy to successfully execute. For example, a financial services company that primarily focuses on investment management might diversify by expanding into the insurance industry.

As time has progressed, specialized approaches have evolved. These four are among the most popular:

Vertical Market: Focusing on a category of business. Verticals can include industries as broad as pharmaceuticals, transportation, or real estate. In this strategy, a company tailors its products or services to meet the specialized needs of a particular sector. An example would be an information technology consulting firm that specializes in providing cybersecurity services exclusively to healthcare organizations, leveraging their expertise in healthcare compliance.

Niche Market: Selecting customers with specific needs that are not necessarily in the same industry. A niche strategy might apply if your product and/or services (solutions) are best suited to a specific platform, such as QuickBooks which is used by a variety of people such as business owners, accountants, and tax preparers in many different industries, all with the same need.

Adjacent Market: Pursuing this strategy involves expanding into markets or industries closely related to the business’s current operations. It leverages existing expertise to tap into new opportunities. For example, an agricultural equipment manufacturer might enter the construction equipment market leveraging their engineering and manufacturing capabilities to diversify their offerings.

Land Grab: This strategy is often associated with tech companies and startups. It involves rapid expansion and market dominance to secure a strong position before competitors can establish themselves. For example, a cloud computing services provider might employ a land grab strategy by aggressively entering new geographic regions, building data centers, and securing key business partnerships to quickly become the dominant player in those markets.

5 Signs that Your Growth Strategy is Not Working

Establishing and monitoring key performance indicators (KPIs) provide insight into the first signs that a growth strategy is faltering is essential to avoid wasting resources and making ineffective decisions. Often these 5 signs are indicators that your growth strategy may not be working as intended:

• Stagnating Revenue: If revenue growth plateaus or starts declining, it’s a strong indicator that something is amiss. This could be due to market saturation, changing customer preferences, or ineffective planning and execution of your growth strategy.
• Rising Rate of Customer Churn: A high rate of customer churn suggests that your customers are not finding value in your offerings or are dissatisfied with their experiences. This is a clear signal that your customer-centric approach needs improvement.
• Declining Market Share: A loss of market share can signify increased competition or a failure to address changing market dynamics. Falling behind in your industry can be detrimental to long-term growth.
• Missing Performance Targets: Failing to meet performance targets set in your growth strategy is a sign that the plan needs reevaluation. It could be due to unrealistic outcomes or an inability to execute the strategy effectively.
• Increasing Costs: Rising operational costs without a corresponding increase in revenue can erode profitability. An unsustainable cost structure can hinder growth prospects.

4 Recommendations for When Your Growth Strategy Needs an Intervention

When the signs mentioned above begin to manifest, it’s time to take immediate action. We have found delaying in hopes that things will get better with time is false hope, resulting only in creating a deeper hole. Here are some recommendations to get your strategy back on track:

Root Cause Discovery Reconnect with customers. Conduct in-depth research to understand their evolving needs and preferences. This may involve VoC research, in-depth 1:1 conversations, and leveraging your customer advisory board. Use the insights to refine your offerings and make them more customer-centric.

SWOT and Competitive Analysis: Reevaluate your business’s strengths, weaknesses, opportunities, and threats. Stay updated on your competitors’ strategies and performance. Analyze their strengths and weaknesses to identify areas where you can gain a competitive advantage. This will help you identify areas that need improvement and areas where you can capitalize on emerging opportunities.

Talent and Skill Development and External Experts: Be clear about what skills your organization needs to execute the strategy. Review your bench. Invest in employee training and development to ensure your team has the skills and knowledge necessary to execute the strategy effectively. Make personnel changes if necessary. Bring in external experts to fill gaps.

Strategy Shift: If the strategy is right but the results are not there then it may make sense to stay the course. If you’ve determined the current strategy will not work, then it might be time to shift focus to a different growth strategy, such as altering your target market or revamping your product/solution offerings. Use the results of your customer, market, and competitive research as a guide.

The Bottom Line on Growth Strategy Success Factors

A growth strategy is not a one-size-fits-all solution. It requires continuous evaluation, adaptation, and a steadfast commitment to customer-centricity. Whatever strategy you are planning on implementing, remember that the success of your approach depends on how well it meets the needs and expectations of your customers. Customer-centricity is the secret sauce that can transform a growth strategy from planning on paper to a vibrant and thriving business reality.

Recognizing the signs that your growth strategy may not be working and taking decisive action to intervene is essential for sustained success. Continuously evaluate your strategy, adjust as needed, and stay attuned to customer feedback and market dynamics to ensure your business remains on a path of sustainable and profitable growth.

A sample of the growth strategy questions we answer for our customers are listed below. If you have one of these or other strategy questions, take advantage of our affordable and customized advisory services.

• How should we go about conducting a thorough analysis of our industry, market, competitors, and internal capabilities to inform our strategic planning and decision-making?
• What is your guidance on developing a customer-centric strategy and plan to improve share of wallet and loyalty?
• What is the best way to optimize existing solutions, and identify new solutions, markets and segments, partnerships, and acquisition opportunities?
• Do you have a proven way to compare market/segment opportunities so we can make a confident decision?
• What are the best practices and processes to effectively implement and monitor our strategic initiatives and plan?

Laura Patterson is president and co-founder of VisionEdge Marketing, Inc., a recognized leader in enabling organizations to leverage data and analytics to facilitate marketing accountability.

Laura’s newest book, Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization (Racom: www.racombooks.com ), is a useful primer for improving marketing measurement and performance. Visit: www.visionedgemarketing.com

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