If you’ve worked in the startup world, chances are you’ve heard the term growth strategy tossed around at some point. But what exactly is it, and how does it fit into your business’s overall marketing strategy?
Imagine you’re planning a road trip. You wouldn’t depart without first determining your destination and mapping out exactly how you’ll get there. A growth strategy works the same way: It provides you with a concrete plan for your company’s growth and how you’ll reach your business goals.
Whether you’re launching a new product or service, entering a new market, or planning for expansion, your growth strategy should ultimately bring your company more revenue and increase your presence in new or existing markets.
By the end of this article, you’ll understand how to choose a growth strategies framework that creates greater profitability for your business.
What Is a Growth Strategy Framework?
When most people think of a growth strategy, they think of product growth. However, growth strategy frameworks aren’t exclusive to product marketing; service-based businesses can use them as well.
A growth strategy is a marketing strategy implemented for predictable and sustainable business growth. It utilizes data-backed methods to help structure your business’s thinking and guide your actions.
Think of your growth strategy framework as an ecosystem that you develop to market to your target audience. It should encompass all potential areas for growth, from branding and positioning to product development, even your online presence.
Why Businesses Need a Growth Strategy Framework
A growth strategy should be a fundamental part of any new business’s planning, but it’s not always solely for newbies.
Generally, there are two common situations where your business might find itself in need of a growth strategy:
- You don’t have an actionable plan for how your business will grow.
Your business can have the best product or service in the world. But without a vision for revenue growth, getting your business off the ground will be hard.
For example, your business might be struggling to decide on a market penetration strategy. How will you build awareness around your product or service? Will you use social media or rely on organic growth through word-of-mouth? What points of differentiation will you focus on? How will you determine your product or service’s pricing so the margins make sense? These are all things to account for in your strategic planning.
Creating an actionable plan that focuses on the right growth opportunities and initiatives can set you up for profitability for years to come.
- Your current growth has stagnated.
It’s common for startups to experience a lot of growth in a short amount of time. However, if you don’t keep that momentum, you risk stalling your business growth.
A growth strategy framework can help restart the engine by exploring new customer segments or refining how you target your existing ones. You might also consider adding new product lines, entering new markets, or strengthening your position in existing markets.
By re-evaluating your current growth plan, you can identify gaps and shift your business strategy to focus on more high-growth opportunities.
Types of Growth Strategies Frameworks
Not every growth strategy framework suits every business. To maximize your potential for success, select the growth strategy that best fits your needs.
Here are four of the best-known growth strategy frameworks.
1. Ansoff Matrix
According to a planning tool called the Ansoff Matrix, growth strategies can be divided into four main categories:
- Market Development: Establishing a new customer base, expanding a current user base, or entering a new market with existing products.
- Diversification: Entering a new market or launching a new product line.
- Market Penetration: Using a new marketing tactic, such as a special offer, discount, or bundling of products, in order to increase market share.
- Product Development: Developing new products to expand a business’s reach within an existing market.
(Source: Ansoff Matrix, 2022)
2. Porter’s Five Forces Model
Porter’s Five Forces is a model that identifies and analyzes five key competitive forces that shape every industry. This model is most commonly used to determine an industry’s strengths and weaknesses, as well as potential opportunities.
Porter’s Five Forces are:
- Competition in the industry
- Potential of new entrants into the industry
- Power of suppliers
- Power of customers
- Threat of substitute products
(Source: Investopedia, 2022)
3. BCG Growth Share Matrix
The BCG Growth Share Matrix is a useful tool for companies who are struggling to decide where to invest or divest in their growth. It looks at four areas based on their degree of profitability:
- Low Growth, High Share (Cash Cows) - These are “cash cows” that companies milk for cash to reinvest.
- High Growth, High Share (Stars) - These represent opportunities with high future potential in which companies should invest a good portion of their assets.
- High Growth, Low Share (Question Marks) - Companies should either invest in or discard these opportunities based on their chances of becoming Stars.
- Low Share, Low Growth (Pets) - These should be liquidated, divested, or repositioned in some way.
(Source: BCG, 2022)
4. Hambrick and Fredrickson’s Strategy Diamond
The fourth and final growth strategies framework is the Strategy Diamond.
The diamond is a method of illustrating how the different parts of your growth strategy fit together. It includes five elements:
- Economic logic
- Staging and pacing
(Source: Four Week MBA, 2022)
Benefits of Using a Growth Strategy Framework
As mentioned above, the reason many startups fail is that they lack a clear plan for growth.
The right growth strategy framework can set you on a path to sustainable growth by:
- Helping you meet your customers where they are when they’re ready and giving them exactly what they want.
- Allowing you to systematically map out the phases of growth in the areas that are most effective for your business and audience, saving you hours of time that might have been wasted on market segments that are a poor fit.
- Generating more customers, which gives you more data to inform your strategy.
- Capturing more market share and, ultimately, more revenue.
5 Tips for Developing a Successful Growth Strategies Framework
While your exact growth strategy may vary depending on the model you choose, here are some general tips to keep in mind as you work to develop your growth framework.
1. Select an Area to Focus Your Growth
Using one of the four growth strategies above, select an area or industry to focus your growth efforts. Depending on your product or service offering, you might create or enter a completely new market or increase your position in an existing market.
When selecting a focus area, consider your resources, your skills and experience (as well as your team’s experience), the competitive landscape, market conditions, and potential for growth. Use research and industry data to create a strong rationale for your decision, then obtain buy-in from your organization and stakeholders.
2. Understand Your Customer Base
Developing a fundamental understanding of your various customer segments can help you identify your biggest growth opportunities.
In the early stages of your growth planning, you should aim to collect as many customer insights as possible. Get a clear idea of their challenges, motivations, and desires so you can determine how best to position your product or service for their needs.
You can obtain customer data through methods like customer interviews, buyer persona development, and closely evaluating your buyer’s journey.
3. Set Goals
After you’ve selected an area to focus your growth and developed a strong understanding of the customers in your target market, it’s time to set your strategic goals.
Your goals should align with your business’s overall mission and vision. They provide a clear direction and keep everyone in your company moving in alignment.
We recommend breaking them into short-term and long-term goals to keep your employees motivated. Goals should also follow the SMART framework and be specific, measurable, attainable, relevant, and time-bound.
Examples of strong growth goals include launching a new product line this quarter or increasing brand awareness among a new customer segment.
4. Develop A Roadmap for Growth
This is where your growth strategy really comes to life.
Now that you have clear goals in mind, you can map out exactly what actions you’ll take to reach them. You’ll put the relevant players in place, map out exactly who is responsible for what, and prioritize your actions to move toward your goals.
This stage also involves establishing timelines and setting budgets. Once these logistics are nailed down, you can assign roles and tasks accordingly.
Strong communication is a necessity for the planning phase. If your team members are unclear on who is responsible for what, your entire operation could fail. You also need effective accountability systems to identify any shortcomings and rectify them as soon as possible.
5. Execute and Adjust
With your new plan in place, it’s time to execute and make strides toward your growth.
Your growth journey will have its ups and downs. Markets change, customer behavior shifts over time, and new competitors eventually emerge.
Identify learning opportunities as often as possible by looking at the data regularly. Analyze what went well, what didn’t, and where you can modify your strategy. The ability to pivot and adapt is what separates the strong businesses from the weak ones.
If your growth strategy framework isn’t working for you, don’t be afraid to examine other models to find one that suits you better. Ensure that your strategy accounts for your current market conditions and resources, and adjusts as your business grows.
Work With an Expert to Create a Data-Backed Growth Strategies Framework
Now that you understand what a growth strategies framework is and why it’s vital to your business, it’s time to take action and start building one.
Delverise’s team of growth specialists can execute your growth marketing faster and without the additional expense of an in-house team. We’ll help you get new customers at scale while making sense of your data in order to develop the best growth strategy framework possible.