Growth Strategy: How to Create an Effective Growth Strategy

A growth strategy, also known as a growth plan, is a plan of action for starting and growing a business. Behind every successful company is a strong growth strategy. There are several methods companies rely on for creating a growth strategy, but each contains strategic growth initiatives that include a timeline, budget, and specific growth goals. Businesses also track the success of their growth strategies by collecting data and metrics that indicate where the business is in its lifecycle. The bottom line: A growth strategy provides a roadmap for growing your business from a start-up into a mature successful company.

Every business is unique, so not every growth strategy is going to look the same. Here are some of the most effective growth strategy examples:

1. 1. Market penetration: A market penetration strategy focuses on selling more of your current products or services in an existing market. This is an effective strategy for small- and medium-business owners looking to increase their market share. It is especially helpful for businesses operating in markets with very little differentiation between competitors. This is a common strategy among companies with a subscription-based business model. Some examples of market penetration strategies include lowering prices, offering incentives to new customers, and giving referral rewards to existing customers.
2. 2. Market development: A market development or expansion strategy involves selling existing products in a new market in an effort to get a greater share of the market. In order for a market expansion strategy to succeed, thorough market research is needed in order to understand the new market and its existing customer base. For this type of growth strategy a company may try to increase sales by identifying a new target market or offer franchising opportunities.
3. 3. Product development: A product development or product expansion strategy involves introducing new products to your current market in order to capture a larger share of the market. This could include expanding the offerings of an existing product line, introducing a new line of products, or updating an existing product with new features.
4. 4. Market segmentation: Small businesses looking for a competitive advantage might employ customer segmentation. When competing with larger companies, this can help a small business more acutely target potential customers. Customer segments may be based on geography, demographics, or behavior.
5. 5. Diversification: A diversification strategy is a corporate strategy to increase growth by changing or expanding products a company manufactures or offers for sale. Companies might pursue a diversification strategy to get an edge on competitors, a process known as offensive diversification, or a business might embark on a defensive diversification after facing significant pressure to change.
6. 6. Acquisitions and mergers: Merger and acquisition strategies are viable options for mature companies. This strategy involves purchasing another company, or merging one company with another. Learn more about mergers and acquisitions.
7. 7. Customer retention: Customer retention is the concept of turning current customers into repeat customers. Customer retention strategies typically focus on building brand loyalty, increasing customer satisfaction, and strengthening customer relationships so that shoppers continue to choose your business and spread word of mouth referrals. Increasing customer retention is a proven method for increasing your company's bottom line profits.
8. 8. Strategic partnerships: Joining forces with a non-competitor whose company values and culture align with your own, can be a successful business strategy for creating growth. It can be mutually beneficial to both companies as each partner gains the opportunity to acquire new business from each other’s markets. This strategy is especially effective for larger companies looking for short-term gains.

Consider these tips for putting together a successful growth strategy.

1. 1. Conduct market research. Market research helps you understand your current customer base, as well as potential customers. It can help you identify untapped potential, barriers to success, and opportunities for growth.
2. 2. Set clear growth goals. Having growth goals is essential to a growth strategy because they will determine your plan of action. Focus on creating attainable goals that can be measured. Establish a timeline for when you expect to reach each desired milestone, and do your best to hold yourself and your team accountable to your goals.
3. 3. Choose a growth strategy. Now that you have your tools, research, and goals in place, it’s time to choose the best growth strategy to help you reach your goals. Consider your position in the market, budget, and goals when choosing a strategy. Consider combining growth strategies if it helps you reach your growth goals.
4. 4. Create a plan of action. A good action plan clearly defines expectations for you and your team. Clearly outline what needs to be done, who will do it, and how they’ll do it. Avoid ambiguity—provide concrete details for each team member, including markers for how they’ll know they’ve been successful.
5. 5. Measure your success. Recording milestones and metrics helps you measure the success of your growth strategy. Take the guesswork out of what’s working and what’s not by keeping track of your progress.

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