The Four Types of Growth Strategies
This approach seeks to boost sales of existing products or services in current markets, resulting in a larger market share for you. You can accomplish this by luring more customers away from competitors and ensuring that existing customers purchase your products or services more often.
This can be accomplished through price reductions, increased promotion and distribution support, acquiring a competitor in the same market, or minor product refinements.
Market Penetration is all about finding out where your ideal customer is already spending their time, attention and money, and inserting yourself in front of them as a superior option.
Market expansion entails determining how a company's existing offer can be sold in new markets or how to grow the existing market. This can be accomplished through various customer segments, such as industrial buyers for a product that was previously only sold to households, new areas or regions of the country, and foreign markets.
Market Development is all about business model innovation, and rethinking all the different ways your business might acquire & monetize new customer segments.
The goal is to introduce new products or services into existing markets. In addition, product development can be used to expand the offer made to current customers to increase their turnover.
These products can be obtained by investing in additional product research and development, acquiring the rights to manufacture someone else's product, purchasing the product, and "branding" it. Joint development with another company whose ownership requires access to the firm's distribution channels or brands.
Product Development is all about increasing the lifetime value of your customers by answering the following question: What else could we sell our customers that would help them achieve the results they are after in a bigger, better, faster way?
This entails introducing new products or services into previously untapped markets. Diversification is the most risky strategy. It entails the company marketing completely new products and services in a completely unknown market.
Diversification can be further classified as follows:
- Horizontal diversification: This entails the company purchasing or developing new products to sell them to retain engaged customers. These new products are frequently technologically or commercially unrelated to existing products but may appeal to existing customers. For example, a company that previously manufactured notebooks may now enter the pen market with its new product.
- Vertical diversification: The company enters the industry of its suppliers or customers. Assume you own a company that renovates homes and offices and begin selling spray paint and other building supplies for use in your business.
- Concentric diversification: Concentric diversification entails the creation of a new line of products or services that share technical and commercial similarities with an existing product line. Small consumer goods producers frequently use this type of diversification, such as when a bakery begins producing pastries or dough products.
- Conglomerate diversification: Shifting to new services with no technological or commercial relationship with existing products, equipment, or distribution channels may appeal to new customer groups. The high return on investment in the new industry is the driving force behind this type of diversification. It is frequently used by large corporations looking for ways to balance their cyclical and non-cyclical portfolios.
Examples of Growth Marketing
Many of the world's most successful businesses utilize growth marketing methods to fuel steady expansion.
HubSpot systematically updated its website, testing multiple design iterations, evaluating data, and then applying data-driven adjustments.
Even though it was a time-consuming procedure, it yielded considerable benefits across several measures, including a 35% rise in demo requests and a 27% increase in product sign-ups.
Then, back in February 2021, HubSpot acquired The Hustle, a daily newsletter business. Axios was the first to report the deal and valued the media startup at around $27 million. And while that might be a high price to you and me, with HubSpot valued at $13.45 billion, they likely paid less than 0.3% to get in front of more than 1 million readers every day.
Slack is yet another instance of growth marketing fueling rapid expansion. They are the fastest-growing B2B SaaS firm in history, which may lead you to believe they are more interested in growth hacking than growth marketing.
Slack, however, understands that engagement and retention are just as vital as acquisition. Their growth marketing strategy addresses each level of the funnel:
- Obtaining user feedback and implementing adjustments in response
- Making an easy, smooth onboarding process
- Using a freemium pricing model to demonstrate the product's worth
- Using user data to increase engagement
Slack is also a perfect example of Concentric Diversification paying off. Back in 2011, the team was a gaming company, before they pivoted focus, ditched Glitch (their online game project), and went all-in on developing and marketing a communication tool that they used internally to collaborate. The bet paid off and Slack sold to Salesforce for $27.7 billion on July 21, 2021.
Spotify used growth marketing to utterly disrupt the music industry and become the world's largest music streaming platform. At a time when illegal downloading was generating issues for the music industry, their most successful solution was perhaps making free, legal streaming music available to everyone.
They've worked tirelessly to improve the user experience, including creating tailored playlists and recommendations based on listening history. In addition, they teamed up with Facebook to provide a social component to the site, allowing friends to see what each other was listening to and share music.
How to Leverage Growth Marketing
Here are five basic marketing methods used by businesses to increase client reach, stimulate repeat business, and build brand loyalty:
Offer A Free Trial
Offering a free trial of your product or service is one of the most successful ways to attract leads. This allows potential customers to firsthand experience your product or service and gain an understanding of the value it may provide them.
Make it a point to spell out the free trial's rules and what they may expect. Remember that the goal is to convert them into paying customers, so don't give too much away for free. However, use the free trial to familiarize them with your brand and show them the benefits of partnering with you.
Create A Lead Magnet
A lead magnet is a tempting gift that encourages individuals to subscribe to your email list. It could be a free ebook, a special deal, or access to an important resource. The idea is to encourage them to give you their contact information by offering them something they can't refuse.
Creating various lead magnets allows you to understand more about your customer journey. And to establish a close relationship with individuals by providing useful content.
Use Social Media
You can't ignore social media if you want to use growth marketing strategies. It is an effective place for experimenting with material. In addition, social media is a great way to engage with potential leads and clients.
You may use Facebook, Instagram, TikTok and other social media sites to provide useful content, hold contests and giveaways, and market your products or services.
Make sure you're present on the platforms that your target audience uses. Also, test your ads, social media copy, graphics, and post timing. You'll see an increase in engagement and other metrics as you figure out what works best for you.
Use Landing Pages
They are developed to convert visitors into prospects or customers. They are typically used in conjunction with advertisements and are an excellent approach to marketing a specific product or service.
Ensure your landing pages are pertinent to the growth marketing campaigns and offer the user value. To find what performs best, you can experiment with different aspects of a landing page, such as headlines, copy, graphics, and CTAs.
Trying out several email campaigns to evaluate what works best for your organization is a great approach to applying growth marketing efforts.
To keep customers connected with your company, try a welcome email campaign for new subscribers, a promotional campaign for special deals, or a nurturing campaign. This helps you to enhance conversion rates.
To make more compelling emails, vary your email subject lines, greeting, call to action, and even offer. Remember to run small-group tests on your material before distributing it to your complete list. This will assist you in avoiding major email marketing blunders.
Increase Customer Lifetime Value (CLV)
Increasing customer lifetime value (CLV) can result in large revenue advantages. To accomplish this, you must provide increased value to your clients so they will be compelled to purchase more from you throughout your relationship. Finally, LTV improves by providing your consumers with more excellent value than they can receive elsewhere.
Monitoring the Progress of Your Growth Marketing Strategy
Growth marketing is a broad concept with numerous interpretations. To keep your growth marketing strategy on the course, you must first define what it signifies and how you intend to evaluate it. Here are a few of the most important metrics to keep an eye on:
The conversion rate is divided by the number of visits or clicks divided by the total number of conversions. Email click-through, landing page form fills, and upgrades from freemium to paid plans are all examples of conversions.
To begin monitoring progress, go through your conversions and pick the ones essential to you.
Customer Acquisition Cost
CAC is computed by dividing your overall customer acquisition, nurturing, and conversion expenses (including sales and marketing) by the number of new customers. Therefore, keep the CAC lower than the customer life-time value to achieve growth.
Monitor traffic to the most valuable and high-converting pages. Monitor bounce rate, page views, time spent on a page, and new sessions for a comprehensive view of page performance.
Examine client acquisition, new contacts via landing pages, and leads generated per unique offer to determine what works and doesn't.
Customer Lifetime Value
CLV is the total potential earnings throughout a customer's lifecycle. To calculate, multiply the average purchase value and number of purchases per year by the average length of client connection (in years).
Every experiment or technique should be subjected to it. Of course, this indicator will fluctuate regularly, but it is crucial to determine which growth marketing variants may be automated for long-term growth and which must be eliminated.
Marketing, sales, customer growth success, assistance, and any other segment or activity inside your firm are all part of growth marketing. Although routine testing, it's an integrated technique for growing your business and enhancing your digital growth plan across marketing channels.
Growth marketers seek new opportunities to help your organization's audience grow and interact. Understanding the ability to be inventive and possessing an eye for possibilities will help you stand out from the crowd. We hope that knowing what it means to be a growth marketing specialist drives you to achieve long-term success.