Actually, the title of this blog should be, “There are Only Four Ways to Grow Your Business.” That’s it – just four ways. Without further ado, here are the four ways to grow your business (or any business for that matter):
- Market Penetration – encourage current customers to buy more, encourage users of competitors’ products to use yours
- Market Development – go after “non-users,” those who are not currently in the market for your product
- Product Development – develop a new product or reformulate an existing product
- Diversification – enter/acquire new lines of business
The person who related this axiom to me was Baba Shiv, Brand Management lecturer at Stanford GSB. What a wonderful revelation − but it begged the question, “How does one apply this insight to everyday business?” All of us want to grow our businesses, or our respective piece of a business and, if these are the only four ways to do so, certainly there must be a way to practically apply this knowledge. So I looked at ways of doing that.
The model below takes the four ways of growing a business and condenses them into one of two objectives: Grow Customer Share or Grow Market Share:
If you want to Grow Customer Share, you need to ask two questions:
1. Where do we need to play spectacular defense with our customers in order to address our weaknesses?
2. How can we go the extra mile to capitalize on our strengths?
Once you have done this, you are ready to address two further questions:
1. Who do we need to reach out to in order to develop our network (includes colleagues, customers, partners, distributors, influencers, etc.)?
2. What intelligence and research are we missing? What don’t we know about the competitive environment?
As the number of questions and the flow of the arrows indicate, this is a progressive exercise that starts internally, moving from a reactive stance to a proactive effort before reaching externally (another proactive move). The last step of the cycle moves beyond dealing with immediate needs by conducting environmental research and monitoring competitive industry activities and trends to determine the foundations for looking inward again in the context of objective, rather than subjective information.
We’ll dig deeper into this subject in a future blog: Turning a SWOT Analysis into a SWOT Plan.