“Strategy is gaining an unfair advantage. It means tilting the playing field in your favor. It means focusing all your resources on winning a key outcome that will in turn result in overall victory.“– Prof. Richard Rumelt, Professor Emeritus at UCLA Anderson
Why? Because it negated the Persian’s massive numerical advantage. And it leveraged the Spartan’s war formation to maximum advantage.
A good strategy is about making choices and concentrating your resources to gain maximum advantage. It is about finding the maximum leverage.
In business, it is about finding the right levers, that will unlock your next biggest wave of business growth?
Business Growth Strategies:
One way to figure out your growth strategy is to map your business against two variables:
- Number of customers
- Profit margins per sale
And then use this to draw up a few growth scenarios.
Scenario 1: The freemium growth strategy
If you have a scalable business that offers a relatively low-cost product or service, then you might want to prioritize your efforts to acquire as many free users as possible.
Especially, when you can use this base to convert a small sub-set of free users to pay for additional premium purchases or features. It also works well if ads are a part of your revenue.
This is an ideal growth strategy for businesses that rely on network effects (i.e. the more users and collaborators join, the more useful does the business become).
Because free users make the business more valuable, by inviting their team and clients to also use these tools.
This is why famous startups such as Canva, Dropbox, MailChimp and Zoom grew using this strategy. It is also why giants like Google and Facebook continue to invest in acquiring more free users.
Scenario 2: The premium growth strategy
The basic premise here is to build a profitable business that relies on a few recurring, high-value clients. And it is the exact opposite of freemium.
Think agencies, niche specialized services and luxury brands.
This strategy works well for businesses that have high-profit margins because they leverage scarcity, customization and premium quality to their maximum advantage.
This is why famous brands such as Porsche, GUCCI and Louis Vitton routinely release limited edition products.
By limiting the number of customers, they can offer a more premium, exclusive and tailor-made customer experience.
This same principle also applies to specialized solution providers like Palantir or ad agencies like Ogilvy. They deliberately limit the number of customers, to work with the best in business.
Scenario 3: The partnership growth strategy
This falls smack in between the freemium and premium strategies. It is best suited for businesses that offer competitively priced products/ services for a niche market or audience.
By definition, this means that your potential customers will be more spread out, few and far in-between. In other words, you’ll have higher distribution costs because it will be harder to find, reach and serve your ideal users.
So, the attention shifts towards finding the right set of partners or influencers, who can sell the offering via their networks and thereby reduce distribution costs.
Typically, this growth strategy will require some form of revenue or equity sharing arrangement with the partners or influencers.
Several successful agriculture, fashion, makeup and personal brands have used this strategy to good effect.
Several small and medium businesses that serve niche industries also usually partner with aggregators, distributors or service providers to distribute, cross-sell and up-sell their offerings.
This strategy also equally applies to a software giant like Microsoft, which relies on its partners to sell 95% of its commercial solutions.
The partnership growth strategy in the B2B SaaS startup world is just beginning to take off. And it is creating a new industry where companies like Crossbeam specialize in facilitating partnerships.
Scenario 4: The loss-leader growth strategy
This growth strategy is for the most part applicable to two types of businesses.
First, businesses that are a platform, serving two types of users. For example, Uber needs to attract both cab drivers and riders who need a cab. Similarly, Amazon needs both vendors and shoppers.
Second, any scalable business that wants to penetrate into an already crowded market and rise above their competition. This applies to a new toothpaste, browser, office suite or file-sharing app.
Again, these businesses become more valuable as more users join. And the more valuable they become, the more market share they can acquire.
But old consumer behaviours and preferences get in the way. Therefore, they need to rapidly acquire new customers, to win their market.
So, they offer introductory discounts, free versions, extended trial periods, buy ads and use a combination of all this to rapidly acquire new users.
This is why software apps like Slack and Zoom, when entering a crowded market, offered free versions and significant early discounts.
This is also why cab aggregating platforms like Uber and takeaway delivery platforms DoorDash made no money initially, at least until they got a critical threshold of users.
Scenario 5: The organic growth strategy
The organic growth strategy relies on delivering an excellent customer experience to retain existing users and attract new ones.
Startups such as CD Baby, Zappos and Zoho all became market leaders, by increasing their brand value and reputation, day by day, sale by sale, customer after customer.
Successful brands that have grown organically, are all known to have loyal customers who become evangelists for these brands, and in turn, recruit more users for the brand.
On the other hand, this growth strategy also suits family-operated and lifestyle businesses well.
Summary of growth strategies:
|Growth Strategy||Key Attributes||Focus/ Difference||Examples|
|Freemium||Scalable and low-cost offering||Acquire max. free users||Canva, Dropbox, Google, MailChimp, Zoom, Facebook|
|Premium||Few recurring high-value clients||Exclusivity and speciality||Porsche, GUCCI, Louis Vitton, Ogilvy, Palantir.|
|Partnerships||Serves a niche market or audience||Partners and influencers||Personal brands, SMBs, Microsoft, Crossbeam|
|Loss-Leader||Need to rise above the competition||Discounts, free/ trial versions||Slack, Zoom, Uber and Door Dash|
|Organic||Profitable and in it for the long game||WOW customer experiences||CD Baby, Zappos and Zoho|
As you can see, there is no one right way to come up with your growth strategy. Instead, it’s about coming up with the most effective one that gives you a massive advantage.
The difficult part is of course in making sense of this challenge, defining your options and focusing your resources where it matters.
Your business growth strategy will ideally dictate your content strategy. That comes next.
Aligning content with your growth strategy:
“Seek the smallest viable market. And make the biggest possible change.“– Seth Godin, Best-selling Author and Permission Marketer
Once we identify what is our biggest area of growth, we can then think about how content can help fuel this growth.
For instance, a software app relying on a freemium growth strategy will want to significantly reduce the costs of finding and serving a free user. So, its top three priorities may look like:
- Get on Google’s 1st page for relevant niche keywords to attract more traffic
- Optimize the no. of visitors converting to free users via lead magnets and email marketing
- Reduce user support costs by creating useful how-to articles, a self-service knowledge portal and building a community of users to support each other
So, as part of their content strategy, they may focus their resources like this:
Again, if they are just starting out, and their email and user lists are small, bringing in traffic takes the highest priority. So, even while creating support knowledge resources, they’ll want to do it in a way that can both educate their users and also time attract more traffic.
A tailor-made content strategy that is aligned with the business growth strategy will create win-win scenarios like this.
The content strategy of an agency or personal brand, relying on a premium growth strategy, will be completely different from that of the freemium app.
Instead of keyword rankings, it might focus on thought-leadership pieces and case studies. And instead of creating a user-facing blog, it might want to invest in an internal blog, that up-skills its employees.
On a similar note, the content strategy for a niche business that relies on the partnership growth strategy will be different. It may prioritize creating a set of resources that partners use to co-brand and promote their offerings.
The point is that a good content strategy will help narrow down your focus. And focusing your resources on the narrowest possible area will help you penetrate deeper and more effectively, into your ideal target user base.
“You can either dig a hole that’s broad and shallow like a pond, or one that’s narrow and deep, like a well… all good startups are like wells. It’s the depth you need.“– Paul Graham, Co-founder, Y Combinator
This is important, especially, early on. When you only have limited resources to get it right.
However, a lot of content strategies today put the cart before the horse.
And can quickly become superficial, debating the effectiveness of 1,500-word blogs VS 60-second YouTube vlogs, without connecting them to what your business needs.
So, in addition to focusing on your keyword rankings and traffic, maybe, it can help to take a step back, and ask yourself:
Is your content strategy aligned with your growth strategy?
Want to work with me on your content strategy? Write to me at email@example.com.