Running a thriving business feels incredible. If you’re in the right market, with the right timing and a good dose of traction, you’re unstoppable. Even when your company is in this enviable position, its continued success depends on your ability to put your time and capital in the right places.
4 ways a growing business can grow even faster
Matt Hulett has experience growing businesses from zero to $1 billion in gross revenue. He has also successfully led multiple underperforming companies, including Rosetta Stone, RealNetworks and Expedia, to double-digit growth. the author of UnlockHulett’s advice on how both startups and established companies can increase growth and build resilience is regularly featured in the major media.
“A common problem with fast-growing companies is what I call ‘spray and pray,’ which means you’re trying to do too much, and so you’re not doing it very well,” Hulett said. To avoid this problem, focus on increasing customer value, exploiting overlooked opportunities, digging into the data, and expanding your arsenal. Doing so will allow you to take advantage of exciting and lucrative opportunities for growth and expansion.
1. Prevent dollars from going to your competition
“The easiest way to generate more efficient sales for your business is to have your current customers buy more than one product from you,” said Hulett. “By focusing on selling more to the same customer, not only can businesses generate more revenue from their customers, but it also saves dollars going to your competition.”
There are several ways to approach this strategy, including bundling, upselling, and cross-selling. Bundling several offers into one package is a great way to increase customer value over the lifetime and provide customers with a real or perceived benefit. It allows companies to spend more on customer acquisition as the average order value increases and ensures that competitors do not get any of the bundle’s components for sale.
Upselling is getting an existing customer to increase their spending with you by offering more or an improved version of your product. This allows you to expand your sales volume for each customer. Cross-selling is selling complementary products to your existing customer base. You can decide to build them yourself or partner with creators of new products or services that are effective for cross-selling.
2. Take advantage of overlooked opportunities
It is also important to spend time and resources on acquiring new customers, and there are two ways to do this. “You can create a new product in the same market for a different customer, or take the same product from the same customer and sell it in a new market,” explains Hulett.
Ways to consider selling to new customers include geography, segment, and channel. For example, geographic expansion may be appropriate if you have outgrown an existing market or seen an advantage in another market.
You can also expand your sales through direct sales from a website, direct sales team and so on, or indirectly expand your channels using a reseller. Examples of resellers include third-party e-commerce websites, an app store, an offline store (for example, a supermarket or department store), or a value-added reseller (a company that integrates your solution with another set of products and services).
To give yourself the best chance of success, look for small markets that are growing very quickly. Then select which opportunities to pursue based on your ability to drive change using your existing resources, team and momentum. By expanding into a small but growing niche, you can take advantage of opportunities that companies in that market may have overlooked.
4 ways a growing business can grow even faster
3. Dive into the data
The third strategy focuses on digging into the data to ensure that your marketing is cost-effectively driving more customers to your offering, especially with regard to your customer acquisition costs versus your customer’s lifetime value.
“It is critical to understand the economic metrics of your lifetime value per customer and your customer acquisition costs,” said Hulett. “Often times you can decide not to pursue something based on the customer acquisition cost, meaning it’s just too expensive to acquire a customer.”
Experiment with paid and organic (free) ways to increase your traffic and market your product. Paid options range from Google AdWords and Facebook ads to video ads on streaming TV. It is likely that some channels will bring in new customers at a lower cost than others. Organic options include free traffic from search engines via SEO, word of mouth, and public relations, which can be experimented with to quickly acquire new customers Benchmark against existing acquisition costs, then stop if they are ineffective by comparison. You can also take advantage of product-driven options, building viral features into your product or service so that customers are referred to your other offerings.
Over time relying on paid marketing can be costly. Ideally, your referrals will grow over time, which can reduce your paid marketing costs to zero and help you keep more of your profits. By regularly analyzing your data, you can prevent ineffective marketing, unlock new growth opportunities that you previously overlooked, and strengthen a strong market position.
4. When the pan is hot, cook!
If you have a growing business that can be supported by another company and you can finance it, it may make sense to buy another company. By acquiring another company, you can also strategically block the competition and bring in customers. “If you need to quickly enter a market or add a company to your arsenal to satisfy more of the market’s wants and needs, buying a company could be just the right move,” explains Hulett.
Many large companies use this tactic, but it is also a smart idea for small and medium-sized companies. Acquiring more businesses can give your business an advantage; Affecting the size of the pie you control is important. The bigger you are, the harder it is to take you out.
For example, the travel website Expedia quickly acquired Hotels.com, Hotwire, Classic Vacations and Egencia. That gave Expedia incredible leverage with strong traffic sources in a relatively short time. In particular, it allowed them to compete with Google, which has always been a threat, as it can displace them by letting consumers book directly through their search engine.
It also gave Expedia the advantage of supply. By having more business inventory with hotel, auto and airline companies, Expedia was able to offer better prices and maintain more leverage over inventory. As a growing company, you can do the same in your market, whatever it is.
Maximize your strategic options
“By refining these four operational strategies, you can maximize your strategic options,” said Hulett. Your goal should be to use a combination of these to formulate a strong, actionable plan.
Take a good look at your company, dive into the data and discover where you can increase customer lifetime value. Consider whether there are small but fast-growing markets in which you can expand. Determine whether acquiring other companies will help you meet the wants and needs of your customers. Think about where to channel your energy, capital and focus based on your unique advantages, then consider which of these strategies will help you take your growing business to even greater success.
