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Insight to the 4 Key Ways to grow your business
Thu 23 February 2012
Most of us, as business owners spend time looking at different ways to try and grow our business.
As someone who likes to keep things simple and targeted, then I’ve always been an advocate of Ansoff’s wise words – when he talked about 4 fundamental ways to successfully grow a business. Over the years many business gurus have agreed with these key principles too.
When growing a business, you can’t do everything at once, but understanding the 4 ways to grow at least gives you a framework to develop. It’s simply a case of doing a combination of many small activities, creating a cumulative positive effect.
So let’s take a look at the 4 ways:
1. Increase the number of customers - New customer acquisition - but importantly, only acquiring the type of customers you want to have.
2. Increase the number of times customers come back - It is cheaper to sell to an existing customer than a new one - so how can you get them coming back more often?
3. Increase the average value of each sale - Get your customers to spend more each time they buy from you.
4. Increase the effectiveness of each process in the business - Do more in your business, but for less cost and hassle.
Focusing attention on just one of the four ways will indeed be beneficial – but may take time. How you really start to leverage return is when you focus on implementing as many ways of the ‘4 ways’ as you can.
The Multiplier Effect
By implementing strategies that cover more than one of the ‘4 Ways to Grow’ you achieve a ‘multiplier effect’ - leveraging the benefits cumulatively.
For example: if you implement a strategy that achieves 10% more customers, and a strategy to increase purchase frequency by 10%, and another strategy to increase average spend by 10% - you achieve an overall 33% increase in business size!
So by making a simple improvement of just 10% in the 3 areas, a 33% growth in the business is generated, and as long as your costs don’t outpace the growth, you will be generating more profit.
My next blog posts to follow will focus on strategies for each of the 4 ways. So stay tuned...
Seem pretty simple don’t they. If you’ve got any views on any of the 4 ways to grow or tips and tactics you’ve applied. Do share. ‘Knowledge networking’ – is great too.