The way we conduct business has changed. To survive and grow in today’s market you need to adapt to customers’ buying habits and continually know your market.
Every company, no matter how big or small, wants to grow their business. However, there is no one “magic bullet” strategy that works for everyone every time. The fast growth companies have vision and focus and they fully engage their people, driving productivity, profitability and delivering value to all stakeholders.
Here are five key growth drivers that your company should consider when developing your own strategy.
1. Market segmentation
Market segmentation involves dividing a target market into subsets of consumers, businesses, or countries that have, or are perceived to have, common needs, interests, and priorities. You can then go about designing and implementing strategies that target each of these market segments. This gives the sales team added clarity and focus.
Successful companies are good at identifying their unique product offering and their corner of the market. Then they do whatever they can to own that space and become the market leader. They use market penetration, market development and use alternative channels to target their customers.
One international company that has used the strategy of market segmentation extremely successfully is Ikea. This Swedish multinational is known for its furniture and flat packs, with its target market the global middle class that has shared buying habits. It tailors its product offering to suit the customer in each individual locality.
Ikea stores are usually located outside CBD areas, isolated from other shops. This is done intentionally so that Ikea can create a complete shopping experience for its customers, making it a day out for the customers with value added services such as playgrounds and cafes onsite.
For companies to be successful they need to identify their target market and understand their customer. You need to listen to your customers and be able to adapt and respond to customers’ requirements and buying habits. Your entire business needs to be focused on your core customer, if you want a clear path to growth.
Segmenting your market comes down to making choices. Who is your customer? Who will you avoid? And which segment can you focus on to improve profitability?
2. Business culture and customer focus
Customer-focused companies outperform their competition in every dimension that matters – profitability, sales growth, innovation and customer satisfaction. Most business leaders in growing companies agree that increasing customer focus will improve business performance so the question then becomes, “how?”
In successful, customer-focused companies, every employee understands the importance of making a positive impact on customers, and the role they play in achieving this. Sales and marketing teams make the promises to customers that the entire business must deliver on. If everyone is not committed to making it happen for the customer, the company will fail.
Customer service needs to be measured and benchmarked. As Peter Drucker once said, “If you can’t measure it, you can’t manage it.” A customer-focused culture is no different. In fast growing companies there is a customer focus culture that infiltrates all facets of the business; staff are customer-focused and customer service is on the core agenda in all meetings. Staff are proactive; they hire and poach people with a customer-focused mindset and managers communicate with staff to help them connect their work with the company’s customer focus.
Companies that have a strong customer-focused culture produce sustainable business growth and profitability and have more passionate and loyal employees. A strong customer culture is founded on the belief that what is best for the customer is best for the business.
3. New technology and business systems
In this digital age, successful companies understand that managing the day-to-day operations in busy environments is too complex for one person and without a good IT system business, growth will be slowed. There are too many variables to track.
Fast-growing companies run their entire business from one system; CRM, sales, accounting, inventory, distribution, HR and reporting are all brought into one software solution. By automating and streamlining processes the business can focus on sales and growth. There are different ways this can be done. Factors such as, what system is right for you, cloud hosting and how you use your server all need to be looked at.
In addition, these companies are using technology not just as a way to improve their own internal processes, but also as a driving force for how they grow. Pioneering companies have already realised the implications of tapping into a digital ecosystem and e-commerce. They see that in such digitally driven, hyper-connected times, they have the capacity for transforming themselves into digital businesses.
4. Leveraging partnerships and alliances
Establishing partnerships or alliances is another innovative and cost-effective way to develop new business by leveraging off other organisations’ innovation, credibility and customer bases.
A business partnership involves commitment and collaboration between parties to achieve shared objectives. This can enable businesses to gain a competitive advantage through access to a partner’s resources, including markets, intelligence, technologies, capital and people.
Teaming up with others adds complementary resources and capabilities, enabling partner companies to expand faster and more efficiently. In particular fast-growing companies rely heavily on alliances to extend their technical and operational resources. In the process, they save time and boost productivity by not having to develop everything on their own from scratch. They are thus freed to concentrate on innovation and their core business.
I once asked my mentor, who was a successful business owner and entrepreneur, “what’s the most important thing in business?” His answer was simple. “Cash flow; without it you don’t have a business and you can’t grow”.
A company needs positive cash flow to be able to fund annual capital expenditure needs, interest costs and business expansion.
Fast-growing companies understand that positive cash flow is critical, especially if they have aggressive growth plans. They need the cash to help meet their commitments; otherwise they have to keep going back to their bank for more debt or to their shareholders for new equity.
Growth strategies are never implemented in a vacuum. Companies need to be able to adapt and change to market condition in response to feedback from customers, and market trends is as important as implementing the strategy. Too often, companies take a year to develop a strategy and, by the time they are ready to implement it, the market has changed. You need to continually improve every day to stay ahead of the competition.
Stuart Haines is the managing director of Haines Consulting Group, a management consultancy firm specialising in business turnarounds, strategy and new venture development.