I was recently listening to a podcast and heard an alarming statistic: Just 7 per cent of businesses recover from stalled growth. The other 93 per cent either get acquired, go bankrupt or plod along at an industry rate of growth.
Why do so many businesses fail to really build? It may be because they find business growth so confusing.
More to the point, they forget a core marketing principle: There really are only three fundamental ways to grow a business.
There may be thousands of techniques, but they won't work unless they respond to one of the three.
Before you make your next move to boost your business, ask yourself whether you will be responding to at least one of these three core principles.
Growth strategy one: Increase the number of buyers
This is probably the most obvious of all three ways to grow a business. When you increase the number of buyers of your product or service, you bring in new revenue to fuel your business.
To boost the number of buyers, you first need to create compelling competitive advantages, as I discussed in last month's column, that will make them choose your business over someone else's.
Second, you need to invest in strategies that will lead to fresh clients. This can include joint ventures, acquisitions, integrated sales and marketing campaigns, advertising and referrals, among many others.
Growth strategy two: Increase price
When you increase the price of a product or service, you are bringing in more revenue from existing clients. It might seem simple but unless you give them good reason to fork out more money, nobody will willingly pay more. Why would clients pay more for what they can buy from the competition for a cheaper price?
The answer lies in developing competitive advantages that offer more value or advantages to clients, and justify to them that there is good reason to pay a higher price. Without developing compelling reasons, it is difficult to grow through increasing price.
Growth strategy three: Increase the frequency of purchases
The final way to grow a business is to increase the number of times a customer purchases your produce or service.
That requires diligence in creating new products, services or add-ons that either can be bought along with core offerings or entice customers as special promotions.
Other ways to help increase the frequency of purchases include using tactics to keep educating – and reminding – past and current buyers about the value of your offerings, or endorsing another organization's non-competitive products or services to your own buyers for a share of the profits.
For example, if you were in automotive sales, you could endorse a company that tints windows and receive a share of the profits when one of your customers decided to get his or her windows tinted. Similarly, if you were in real estate, you could combine forces with a carpet cleaner and capture a portion of those profits when someone you'd just helped buy a house then purchased carpet-cleaning service.
Increasing the frequency of purchases is all about developing new offers, education, enticement and partnerships.
The takeaway
Now that you're reminded of the only three ways to grow a business, here's one more tidbit of advice: The more you can activate all three categories, combining techniques that boost the number of buyers, raise prices and get customers buying more often, the bigger and faster you can build your company – and become a part of the minority of businesses that rejuvenate their growth.
Ryan Caligiuri is a Winnipeg-based marketing specialist who believes that many organizations are wasting their money on ineffective marketing tactics, that many professionals and students feel lost because their actions don't translate into positive results, and that all three groups are too comfortable following the status quo. He is driven by the desire to refocus their efforts to resurrect the impact of marketing.
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