When to Look for Incremental Growth

There are boom times for business, and there are slow times. This goes for entire industries as well as individual companies.

The typical business lifecycle looks like this:

  1. Startup

  2. Growth

  3. Maturity

  4. Renewal or Decline

This same lifecycle can also apply to individual product lines.

In the startup phase, everything is new and the company is still trying to match a solution to a problem in the marketplace. When a company is able to offer a solution at a price that consumers are willing to pay for, they move into the next phase.

In the growth phase, the company or product captures increasing market share. Sales and revenue are accelerating as the market expands and new customers are brought in.

Growth only sustains for so long, and when it slows a company will enter the maturity stage. In the maturity stage, growth is no longer so easy to come by. The market is fully saturated. Sales are somewhat more constant, and still sustainable.

During the maturity stage, the decisions that a company makes will set up the next stage. Either the company will find a way to start the cycle all over again – with a new product, new features, new markets, or a new revenue steam – or they will start to experience decline as competitors disrupt their industry and start to claw back market share.

What is Incremental Growth?

Incremental growth refers to those small gains that a business can make through pricing and payment terms, improvements in conversion rate or acquisition costs, add-ons or upselling, etc.

These are not the massive growth schemes that define a company to investors or to the marketplace at large. They are the small levers that people inside the company pull to help improve the bottom line and sustain competitive advantage.

When to Look for Incremental Growth?

There are people in every company who are there to make incremental growth happen. They are the marketers and sales people who are constantly experimenting and looking for ways to improve the conversion rate. They are the advertisers looking to increase brand awareness in the marketplace. They are the operations and financial professionals looking to save money and improve the internal processes that drive the company.

But incremental growth is never more important than during the maturity stage of a business’s lifecycle. At this stage, the real dynamic growth has slowed or stalled. There is danger of complacency, because this company and its leaders have gotten used to year over year growth and might not immediately know where to turn to in order to renew that growth into the future.

And that’s what makes incremental growth so appealing. In the short term, while a new long term strategy is in the works, it becomes critical to maximize value within the existing business.

Productivity growth, conversion rate optimization, more favorable pricing terms, and improved return on investment in marketing are all ways to sustain some level of growth even while the larger growth curve for the business flattens out.

Those who can pull the levers to drive incremental growth at a mature company are the unsung heroes that keep things moving in the right direction.

What Happens When Amazon or Facebook Comes After Your Business?

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It can be scary at times looking over your shoulder at a larger company that seems to have the intention of swallowing you whole. There are sharks in the tank that are gobbling up the rest of the fish, growing ever larger, taking over new terrain, all in the hopes of being the biggest and most powerful.

These sharks have names. They are called Google, and Amazon, and Facebook, and to a lesser extent Apple and Microsoft. They are tech giants, born to do one thing, grow.

They cross different industries and seem each to have economy-dominating aspirations at times.

And so you, with your little business, which is quite successful now, is constantly at risk of being pushed aside by one of these giants. Should they decide to enter your market and compete for your customers, what should you do?

1. Don’t Panic

I know they’re big and scary and as soon as they announce a new product or service it makes waves. But you are not in trouble just yet. The worst thing you can do – for your business and your health – is overreact and do something that doesn’t make sense. The best thing for you and your team to do is be patient. It’s business as usual until you have a clearly defined strategy for how to proceed.

2. Do Your Research

Get to the bottom of the threat. Make sure it is a threat. In the initial hype or announcement, a lot can get lost in translation. Do your best to look under the hood and find out exactly what you will be up against. It is only by knowing the details about their plans that you can develop your response.

3. Determine How You Win

There is a reason why you have been successful to this point. You are doing something right. Do you know what that is?

Your unique value proposition is the reason why customers do business with you in the first place. One of the sharks might go after your business, but they might not understand the real reason your customers chose you. So identify what you do well, and focus all your energies there.

4. Focus on Making Customers Happy

Your existing customers are your best defense against any impending threat. So long as they are happy, you won’t lose them. And with a customer base, you have an attentive audience and an army of potential sellers.

Continue to put your efforts into delivering on your promises and turn your customers into advocates on your behalf.

5. Consider Reaching Out

Often, when one of these tech giants first enters a new market, they may be looking for an easy win. And that might mean they are looking for existing companies to buy out.

Maybe you have no interest in selling. But then again, maybe you do. And if that’s the case, it never hurts to get in touch via a lawyer or experience sales agent.

Adopt a Growth Mindset for 2019

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For this topic, I can think of nowhere better to start than with a story I recently learned. The following comes from Avinash Kaushnik, via his excellent Marketing <> Analytics Intersect Newsletter (subscribe here):

One day a group of Google engineers walked into Larry Page, co-founder of Google and current CEO of Alphabet. The group wanted to show off their latest idea.

“It’s a time machine,” they told him.

The thing they brought in was roughly the size of a small refrigerator, about one foot wide, with a sleek metallic exterior. One of the engineers looked for a place to plug it in.

“Why does it need electricity?” Larry asked.

What I love about this story is how well it illustrates Larry Page’s mindset. He wasn’t thrown by the fact that his team was working on a time machine. What he wanted to know was why they hadn’t created a time machine that ran without electricity.

And although you are not likely to be working on anything quite so ambitious, it is the mindset that all of can set out to adopt.

What is a Growth Mindset?

Growth mindset is a psychology term coined by Carol Dweck to describe the difference in outlook between groups of people. Those with a growth mindset see things as changeable over time, whereas those with a fixed mindset believe in the inherent nature of things.

When we apply that concept to our businesses, one can see how Larry Page’s mindset might be different from other people. He wants his team to push the limits on what they think is possible. He wants them to ask “why not?” rather than “why?”

A growth mindset is critical for success as a marketer, because growth is our responsibility.

How to Adopt a Growth Mindset for 2019

The business as usual approach would say you should measure your growth in 2018 and forecast 2019 accordingly. Perhaps your revenue grew 5% this year. Okay, so let’s aim for another 5% next year. If the business grows 5% every year, things are pretty good. Right?

Enough with the business as usual approach. If your business grew 5% last year, the Larry Page mindset would ask, “why not 50%?”

And yes, 50% growth might seem unreasonable. But it’s not as crazy as you might think. Because if you aim for 50%, while you might not get there, you might get somewhere closer to 20% or 30%.

So force yourself to be unreasonable. Setting unreasonable goals forces you to adopt a growth mindset. If forces you to think about your business in new ways. And only when we think about things in this way will we be able to see the strategies and opportunities available that we might otherwise miss.

Business as usual is boring. Don’t be boring.

What Are Your Key Business Questions?

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On Monday, we posted what has already become one of our most-read posts of the year, entitled “Who is Your Data Expert?” If you have not had a chance to read it, take a few minutes to do so now.

Enough readers have reached out with follow up questions about recruiting and hiring data analysts and scientists that we thought it a good idea to remind everyone of the critical step every company should take before employing your data expert.

You must know your key business questions (KBQs).

What is a Key Business Question

Key business questions are the questions that your data expert will be tasked with answering. They are the questions you have about business performance that are central to the overall strategy you are deploying, or considering deploying in the future.

The best way to define key business questions is to look at a few examples…

A key business question for Netflix (and most subscription-based businesses) is, “how long does each new customer stay with us?” The answer to that question will guide marketing and acquisition strategy. It will tell the marketing team how valuable each customer is, and what the return on investment is for each campaign.

Going a step deeper, another key business question could be, “what causes a customer to quit the service?” To become more profitable without raising prices, Netflix can lower the cost of acquiring new customers, or it could build strategies for keeping customers longer. It is only by knowing what causes a customer to quit the service that they might develop interventions that affectively keep people subscribed.

In this way, KBQs are the questions you ask to derive the key metrics you need to operate your business successfully. You may know the answers already, and you may not. But two things are supremely important:

  1. Knowing the answers without knowing the question doesn’t help you. This is like looking at a business dashboard that is overly complex and does not drill down into the key performance indicators that truly matter.

  2. Once you can agree on your KBQs, you need to ensure that you get accurate answers to those questions. Those answers are going to be what you use to drive strategy going forward.

Effective Branding Strategies for a Start Up

Today’s guest post comes to us from Sara Mackey. Sara works for www.Connexx.com, a leading authority in the field of small business financing.

An effective branding strategy is a vital component of any successful business. Brand strategy can give your business a strong edge against your competitors. In basic terms, branding is the promise you have made to your customers. Your promise tells your customers what they can expect from your services or goods, and if done differently, can set you apart from your competitors. Essentially, your brand consists of how people perceive you to be, who you want to be and who you are.

Deciding on Your Brand

First, you need to decide what direction your brand needs to go. You need to decide if you are the innovator and leader in cutting edge technology or are you the reliable voice of experience or high-quality affordable goods for the everyday person. A business cannot be all things to all people. Every business fits within a niche market. Find your niche and you will find your brand. The basic foundation of your business is your brand, the basic foundation of your brand is your logo. Your logo is one of the first things communicated to your customer about your business. Your packaging, promotional materials, your website and even your employee's uniforms communicate your brand when the logo is used.

Brand Strategy

An effective brand strategy answers to whom you will be communicating, how you will be delivering the message and the what, where and when. Where you advertise is a vital aspect of brand strategy. Businesses waste valuable resources on ineffective marketing because they advertise in places that do not cater to their niche market. Other areas of brand strategy that are crucial are what is verbally and visually conveyed to your potential customer and your distribution channels.

Brand Equity

Consistent and persistent strategic branding leads to stronger brand equity. This equity adds value to your brand which allows you to charge more for your product than the generic counterpart. For one example, Nike tennis shoes versus a department store tennis shoe. Nike has built brand equity into its products which allows them to charge more and at a price customers are willing to pay.

The added value inherent to brand equity is also fostered by perceived quality or emotional attachment. Name brand beer commercials associate sexually attractive people and fun times with their product in hope that their customers will transfer their emotions triggered by the commercial to their product. For Miller Lite, it is not just their beer's taste that sells the beer.

Brand Definition

Defining your brand can be a slow process, but one well worth the time it takes. Do your research, know your customers and their desires, habits and needs. Once you define your brand, you need to get the word out. One of the biggest mistakes businesses make is not devoting enough of their business working capital to their marketing campaign.

Developing an effective branding strategy is a time-consuming and challenging time, but it is necessary for the success of a business. Know what your customers think and how you can deliver to their needs and you will have the start of a great brand strategy.