By reading this post you will gain clear insights into how you could quickly grow your business and be much more prepared to achieve success. Avoid copying what your competitors are doing, instead focus your energy on a growth strategy that’s most suited to your startup.
Here are three fundamental growth strategies that will explain how to grow a company successfully.
1. Sticky Growth
Sticky growth works particularly well for products that need purchasing on a regular basis.
Most sticky growth strategies will use a subscription revenue model.
With this kind of growth strategy one sale generates you more revenue over a long period of time, contrary to other strategies where you would need to convert more buyers to build sustainable growth.
The Dollar Shave Club is a prime example of sticky growth. The company positions itself as a male lifestyle club that helps men look and feel smarter, by delivering affordable grooming products via the post on a monthly basis. Their mantra “Shave Time, Shave Money” reflects this. The companies subscription plan generated automatically repeating sales and became so successful it was obtained by Unilever in an estimated $1 billion deal.
Netflix is another master of sticky growth. Their offering is irresistible, charging such a low fee for a subscription service that gives you access to an almost unlimited library of tv shows, films, documentaries and more. Netflix has been so successful they now create their own unique award-winning content. Furthermore, you are very unlikely to unsubscribe to their service when you’re halfway through a series! This factor alone gives Netflix a great advantage in maintaining low customer attrition. When you’re offering is cheaper than a tv licence and delivers high-quality, ongoing, addictive content, you have a winning combination.
Not all companies start off with a sticky growth strategy. For example, Microsoft Office used to only be available as a one-time purchase. It would include Word, Excel and Powerpoint for use on a single computer. It was an expensive purchase and the applications wouldn’t be automatically updated. If you wanted the most up to date version you would have to purchase office again as soon as the new software became available. Then Microsoft introduced the Office 365 subscription model where you would pay a monthly fee. By paying monthly you get more for a smaller amount of money on a monthly basis – this method is much more affordable for their customers and the applications that are used are constantly updated. This strategic move of repeat purchases has enabled Microsoft to convert more buyers and build significant growth.
When you are using a sticky growth strategy to grow your business, and your product is built on repeat purchases, you only need to gain a small number of new customers to keep your revenue growing.
So, if you choose this sticky approach keeping your current customers coming back should be your main objective before focusing on new customers.
Viral growth is one of the harder strategies to grow your business on. If you’re thinking about using this approach your product really needs the ‘wow’ factor.
Viral growth is very much dependant on word of mouth, and your product being so incredible that it can sell itself. People aren’t going to promote your product unless they really love it.
Another really important aspect to consider with this strategy is how your business will gain sufficient growth from it. If you already have a sticky product you would only need a few references from current customers to keep your business growing.
However, if your product is a one time purchase or it won’t be purchased again for a long period (for example a car) you will need to ensure that your viral growth strategy sees (on average) every customer referring more than one friend to your business, otherwise it will have negative implications for your growth.
Companies like Airbnb use something called a referral loop which gives their customers the incentive to refer as many people as possible in exchange for rewards.
Airbnb is a fantastic idea and filled a gap in the market that no one else had thought of, but viral growth was critical in making this business successful.
Airbnb’s referral loop was cleverly marketed to encourage new hosts and guests to come on board. This strategy was carried out by asking current hosts and guests to refer their friends in exchange for travel credit, which could be used against their next trip. Combining their viral growth strategy and their fantastic idea, Airbnb supercharged the growth of their user base.
Shaving brand Harry’s designed an MVP to kickstart his viral growth strategy. Harry’s is another male grooming subscription service, so before they launched they needed to be confident that enough people would subscribe to receive their products. So they created a microsite to promote their product and to encourage people to sign up and subscribe, so their launch would be off to a running start.
They combined this with a referral campaign asking customers who had already signed up to encourage their friends to do the same. If they were successful in doing so, they would be rewarded with free products.
Their week-long campaign exceeded all expectations and their launch was a huge success.
If a viral growth strategy is a route you decide to take, give your customers a good incentive that will make sharing your product irresistible. Airbnb and Harry’s carefully planned their viral growth strategy, and as a result, have their customers doing their marketing for them.
Paid growth is the most common strategy out there to grow your business, you’re basically buying your customers.
Tracking how much you are spending is crucial with this type of growth, whether you’re advertising on social media or you’re paying for TV advertisements. If your customer acquisition costs are higher than your customer lifetime value, you’ll be losing money.
Paid growth may not always be successful first time around, which is why it’s so important to monitor and control your advertising costs. These advertisements also give you a great opportunity to learn about your campaigns and what made them successful or unsuccessful.
We now have such insightful analytics readily available at our fingertips, learning from one failed campaign could drive your next successful one, or make a great campaign even better.
The name of the game with paid growth is to make enough of a profit on each customer that it covers your advertising costs and provides enough revenue to reinvest back into advertising, by increasing your budget you should be able to grow your business.
Many business use more than one growth strategy, especially larger companies. However, when you are learning how to grow your small business it’s a good idea to focus on one strategy at a time. That way it’s much easier to monitor what’s working best for your startup and you’ll gain a better understanding of how to grow a company successfully.