When you’re in the thick of growing a business, it can be hard to know where to focus to get your growth on-track. Time and time again I’ve seen a tactical response to diminishing sales that may get results in the short-term, but you find yourself facing the same challenge a few months down the line.
Different stages of business growth face differing marketing challenges and pain points – you’ll see similar effects on sales and revenue growth, but the root-causes can vary hugely. Instinct, and a preference for action, can lead to short-term tactics to solve your growth problems, rather than unpicking the underlying causes and stepping-up to fix them. The latter takes longer, but it does unlock longer-term, sustainable growth.
A well-known brand example is Woolworths. Their response to declining sales was to resort to heavy discounting and sale events, giving them short-term spikes in sales, but eroding profit. Ultimately the underlying issues of changing customer preferences and growth in e-commerce weren’t fixed, and the business went under. Whilst this is at the mature end of the business growth spectrum, it does nicely illustrate that unless growth challenges are diagnosed at a causal level, the problem doesn’t go away!
This blog maps out the most frequent challenges you’ll face as you grow your business and how you should be responding.
Pain-points for start-ups
As a start-up you’re the newbie, finding it difficult to grab attention in what’s often an over-crowded marketplace, and money is tight. You need to find cost-effective ways to get your business out there and revenue flowing. At this point, you’ll often find yourself turning to digital channels – Google PPC and paid social media are the obvious places to start. You can control budgets, track your return on spend and pin-point audiences to keep targeting tight.
Seeing the impact of your activity and people’s engagement with your business and purchases is a great confidence boost at this stage. BUT, awareness of your brand and credibility is still low and you’ll have few customers who are shouting about how great you are.
You’re playing at the bottom end of the marketing funnel, with conversion rates challenged due to low brand affinity, and the chances are you’ll run out of audience to sell to, as brand awareness is limited.
What you’ll experience – difficulties building volume growth and increasing your marketing budget isn’t helping.
Marketing remedies – invest in your reputation, collecting reviews, building customer advocacy and tapping into ‘earned’ media opportunities. Try and leverage the power of other people advocating on your behalf to keep marketing budgets tight.
Now you’ve got customers, make sure you know who they are and what they like about you – you don’t always attract the customers you set out to target, and they may see new benefits that you hadn’t. Take time out to understand where the value in your proposition lies.
Growth stage struggles
Personally I think this is the hardest stage – you’ve launched, had some success and now have to scale. You need cut-through, on-point messaging and new ways to convince your audience you’re right for them. And, you’ve got very limited data intelligence to guide your activity.
Your attention should be turning to a ‘full funnel’ marketing approach. A buying journey starts with a problem that needs solving, it kick-starts a process. There’s a learning phase where you work out how to solve the problem – it could be quick, e.g. problem: I have nothing to wear for a wedding / solution: buy a new dress, or it could take months, e.g. problem: I need a single customer view of interactions / solution: buy a CRM system. You research the brands/businesses you think can help, before digging into the detail and finally making a purchase. At every step, brands and businesses are eliminated.
To get as much demand capture as possible, you need to have a presence at the top of the funnel – make sure you are in the running from the very beginning, and create awareness of problems people didn’t even know they needed solving!
Here’s an example of why it matters – stats taken from research in the B2B space shows companies change providers for various professional services around every five years – only 20% of companies are in-market for those services in a given year and just 5% in a given quarter. You need to get on their radar before they’re in-market to make sure you are being considered.
What you’ll experience – growth stagnates or levels-off, with marketing investment getting more inefficient.
Marketing remedies – translate the different needs and messaging of the full funnel journey into marketing activities. Adapt your messaging to different audiences to make yourself more relevant. Establish a clear point of differentiation to make sure you stand-out. Test new channels, but be clear on what you expect their impact to be and how effectiveness is seen in your performance metrics.
At this point you’re starting to build your brand equity, but be mindful that it’s a longer-burn play to invest in ‘full funnel’ marketing – it takes longer to convert, but it will unlock more volume over time, easing the short-term growth challenges you experienced as a start-up.
You’ve grown a successful business and now want to expand, either finding new markets, or audiences. If you’re expanding internationally, you’ll be up against new cultural, regulatory and potentially language challenges and ‘lifting and shifting’ the same marketing channels and strategy to a new market/geography may not produce the same results.
New audiences mean a re-evaluation of your channel-mix and with broadening channels, knowing what’s working gets harder. And, with more complexity comes higher volumes of activity, needing tighter control, coordination and management of consistency.
At this stage, managing your reputation and the brand equity you’ve built up becomes critical. Losing hard-won trust can cause long-term damage to your growth.
What you’ll experience – knowing which levers to push for more growth becomes a challenge and marketing ROI is under pressure.
Marketing remedies – ensure you have a detailed understanding of your target audiences and their needs, map out their buyer journey and the channels they are frequently using to ensure you’re focusing activity and limiting budget wastage. Set-up market level metrics to track performance and introduce marketing automation to control and optimise your outputs.
Pay close attention to metrics which indicate any decline in customer satisfaction and check for marketing messaging being mis-matched to reality. Be proactive in managing your reputation, with customers, media and journalists, employees and investors – they all need to be bought into where you’re heading. Trust is a very real source of competitive advantage, so manage it well.
Heading into maturity
You’ve built your reputation, got a thriving business, but you need to stay on top. Complacency is your no.1 enemy. The market will be changing around you, with new companies, new ideas and new business models being thrown into the melting pot.
Your customers are everything. They decide whether they stick with you or go and try something new, but you’ve earned their trust and your reputation is meaningful to them. Keep them close – understand what they want from you (this changes over time) and keep evolving your messaging to stay relevant. You may also need to revisit your proposition and move it on to stay competitive.
A short-term tactic we often see at this stage is an over reliance on price promotions and special offers (my earlier example of Woolworths). Beware. It will work in the short-term to pull in sales, but you’ll start to see audience burn-out, with offers becoming less and less effective. In the meantime you’ve taught your customers to always be on the look-out for a deal and so full-price sales decline. Before you know it you’re on a downward spiral.
What you’ll experience – sales slow-down, with marketing not pulling in the volumes it used to. You could also see customers leaving or less repeat business.
Marketing remedies – retaining a customer is cheaper than acquiring a new one so focus on customer retention and reinforcing the value you bring, making sure your messaging is on point! Continually review and optimise your marketing-mix to ensure activity is cost-effective. Investing at a brand level can help reinforce your position in the market, but make sure it’s underpinned by a strong and relevant proposition.
Make sure you stay relevant and maintain your differentiation, even if that means revisiting your proposition and repositioning yourselves.
Revival & come-back
We all love a good rebound story, but in reality it’s incredibly difficult to achieve. There’s some great brand revival stories – Mini, Old Spice, Burberry, Tesco, Twinings – so it can be done!
Market dynamics shift, customer preferences change and you need to keep pace. Products, services, distribution and marketing strategies all need to change over time – what you offer has to be both useful and relevant for its buyer, so go back to basics. Know your customer, know what role you need to play for them and deliver the solution. Be prepared to question your legacy and start again.
Marketing reinvention – reassess everything, your audience, your proposition, positioning and potentially even your brand look and feel. Revisit your marketing strategy and look at your approach through a fresh pair of eyes. Consciously manage your existing customers – take them on the journey and be proactive in rebuilding credibility.
A new marketing strategy can be enough to reignite a brand, but it won’t be effective if the underlying proposition isn’t strong enough to fulfil your brand promise!
Whilst tactics can win you business and be effective at the early growth stages of your business, the road to growth will run out without a more strategic approach to your marketing. Solving the underlying causes of low or stagnating growth will in the long run serve you well, although I appreciate that at the time, it could feel as though it’s slowing you down.
If any of the above resonates, here at Open Velocity we love talking about marketing challenges, so feel free to reach out for a chat and we’ll happily give you our perspective, or take our 2 minute marketing appraisal to work out where you need to focus your marketing effort.
If you want to read more about why marketing strategy matters, here’s a link to one of my previous blogs.
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