How to build your product growth process
Why focus on Growth Strategy process and Innovation?
To formulate an effective Growth strategy as I learned from CXL institute a company must know all its customers’ needs, which needs are unmet, and what segments of customers exist with different unmet needs. But in most companies, managers can’t agree on what a customer need even is, so of course they don’t know what all those needs are, let alone which are unmet or what needs-based segments exist. Given this situation, there is no way they can successfully formulate an growth strategy that will help customers get a job done better. And this is why companies focus on activities instead. Activities are something tangible that companies can control. Unfortunately, activities merely enable competitive advantage, they’re not the reason for it.
Formulating an Growth process strategy
The truth is, competitive advantage and differentiation are derived from choosing the right unmet customer needs to target. To do this, all the customers’ needs must be known. Our approach to formulating an innovation strategy works because it is built around a solid definition of what a customer need is, and our approach reveals all the customers’ needs. It is the only process to do so. We have discovered that customers consider between 50 and 150 metrics when assessing how well a product or service enables them to successfully execute any job. These metrics (or desired outcomes) are the customer’s needs
The brand growth strategy matrix is a simple method for visually representing the options a company can use in order to increase its market growth. The matrix considers two dimensions, products and markets, and considers whether they are new or existing. This results in four distinct growth strategies: market penetration (existing market and existing product), market development (new market and existing product), product development (new product and existing market) and diversification (new product and new market).
The market penetration strategy is the most conservative growth strategy, but it is also the most difficult. It is conservative because it relies on a current market and current customers. This means that there is a low risk of failure, but it is also difficult to achieve growth through this strategy because you must rely on a limited market without anything innovative to offer. In order to achieve greater market penetration, a firm will need to sell more to the existing customer base.
The market development strategy is slightly riskier. It involves taking an existing product and developing a new market for it. There are two types of market development: demographic and geographic. Developing a new demographic environment involves finding new customers in the same geographic area. For example, if a company sells ice cream in Ohio to commercial customers it could expand demographically by selling to consumers in Ohio as well. Geographic market development involves expanding to a new area; for example, exporting products to a new country.
Product development is essentially the opposite of market development. Instead of developing a new market for an existing product, the company creates a new product for an existing market. The risks of this strategy are moderate, because the company knows the market, but developing a new product can be uncertain. An example of this would be if an accounting firm that provides auditing services to corporate clients expanded its products to include financial consulting services to the same clients.
Diversification is the riskiest of growth strategies. It involves creating a new product for a new market. It is risky simply because there are many more uncertainties than any of the other strategies. A company pursuing this strategy must learn about a new market while simultaneously developing a new product for this market. An example of diversification would be if an American computer hardware company whose sales are all domestic decided to enter the software market in a foreign country.
Often central to a product-led growth strategy is a self-service trial or freemium option that allows a prospective customer to evaluate the product independently and without charge, bounded by time and/or functionality, and often without engaging a salesperson. This self-service approach aligns to shifting changes in buyer preferences, particularly in the research and evaluation phases of the buying journey. Many buyers want to try before they buy, relying less on a salesperson’s assistance than on their own first-hand experience with the product, in conjunction with customer and social proof that they discover via review sites and social networks.
Many companies use these trial and freemium experiences to measure product usage and engagement, scoring leads and timing and targeting conversion offers and sales outreach accordingly. Citrix, for example, used product analytics to identify a certain trial usage pattern that converted to paying customers at a higher rate than others. The team then created an onboarding flow that steered trial users toward those particular features, and was able to increase their trial conversion rate by 28 percent.
How does growth reduce customer acquisition costs?
A growth strategy can have a positive impact on customer acquisition cost (CAC) by reducing the burden on sales teams. Sales and marketing expenses contribute to customer acquisition costs, thus the more downward pressure a company can place on these expenses, the better their efficiency metrics, such as CAC, will appear.
How to tie growth into my company’s product-led strategy?
growth is a subset of a broader product- strategy, which expands beyond the try/buy phase of a self-service buying journey to include other touchpoints, pre- and post sales, where the product takes center stage. For example, a product-led strategy may also mean bringing aspects of sales, marketing, service, support, and education inside the product for convenience, reduced friction, and greater contextual relevance to end users. Here, business functions and customer interactions that were previously executed through other channels converge inside the product, all toward the goal of making the product more useful, more engaging and, ultimately, more valuable for customers and end users.
The diversification growth strategy holds the greatest risk of failure. Creating new products for new markets means the business is a trailblazer. As a result, it’s challenging to know how to succeed, although the rewards are higher if you do (see: Apple convincing us that we needed a tablet, an entirely new product category, to complement our laptops and smartphones).
Whichever growth strategy you employ, you’ll likely utilize some business development principles since the goal is to develop the entire organization.
