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3 Stages of Business Growth and How to Navigate Them
From The Buxton Co Every company wants to grow their business, but growth can mean radically different things depending on your brand’s stage in the business life cycle. Each stage of business growth presents new challenges, but it also presents new opportunities for success. If you are seeking insights to guide your business through its current stage in the growth cycle, consider the following customer analytics-based techniques. Before we dive into each of these stages, a note: business theory offers several frameworks for classifying business growth stages. While the stages below are not comprehensive, they represent a summary of three of the major milestones in a retail, restaurant, or franchise brand’s development. Business Growth Stage #1: Emergence The Situation It’s the early days of a brand’s development. You have a few locations open, but they are mostly concentrated in a specific region. There may be a few early franchisees, but you are still laying the framework for a full franchise system. Owners and location managers wear a lot of hats – from site selection, to business operations, to developing and implementing local marketing strategies. Strategies for Success This stage of the business growth cycle is all about raising brand awareness. You need to build a customer base so you either have the revenue to fund future expansion efforts yourself or can prove to potential franchisees that your business concept is successful. Marketing truly is the key differentiator in this stage. How Analytics Can Help Customer analytics can help you to grow brand awareness through highly targeted marketing campaigns. Since start up investment dollars are limited, you need to maximize your marketing budget and make every dollar work harder. Consider leveraging local store marketing technology as a tactic for affordably raising awareness and driving qualified customer traffic. Business Growth Stage #2: Expansion The Situation In this stage of business growth, your brand is primed to scale – often rapidly. You’ve established yourself in your original markets and are ready to begin expanding into new markets. Business or franchise frameworks are being formalized and employees have started to specialize in a specific area of the business. Strategies for Success Success in this stage comes from solid market analysis. As you begin to invest heavily in real estate, now is the time to perfect your site selection strategy. Additionally, franchise concepts need to define their franchise territory potential so they can maximize development. The goal in this stage is to expand your reach and market penetration. How Analytics Can Help Customer analytics play a critical role in this stage of business growth. Studying your performance drivers and incorporating them into a site selection model allows you to identify home run locations and avoid less promising sites. You can also use the model to conduct a potential analysis to determine your next best markets of operation, how many locations those markets can support, and where those units should be placed. Business Growth Stage #3: Maturity The Situation The maturity phase of the business life cycle marks a unique turning point. The brand is established, well-known, and generating high levels of cash flow. It may seem like the company’s struggles are over, but many brands find that sustaining success is even more difficult than achieving it in the first place. Strategies for Success Brands who have reached maturity often struggle to know how to proceed. Growth is no longer defined by adding new locations. With markets at or near their saturation points, the incremental return on investment for a new location declines to the point that adding units is no longer attractive. Instead, companies need to shift their strategies to focus on maximizing the performance of existing locations and identifying new distribution channels – from catering for restaurants to e-commerce for retailers. Executing marketing campaigns to grow brand loyalty and strategically investing in sites to improve performance are strategies for success. How Analytics Can Help To strategically allocate resources and boost existing location performance, consider using analytics to conduct a portfolio audit. The audit compares actual location performance to expected performance based on the factors included in your site selection model. It can help you to pinpoint which locations may warrant additional investment and which ones should be evaluated further for possible relocation. Marketing also plays an important role in this stage. Mature brands can benefit from custom segmentation and targeted marketing models to acquire and retain customers. These analyses allow you to better understand the differences in your customer base and send marketing offers to the right households. The Bottom Line Each stage of business growth presents new challenges, but the right customer analytics solutions can help you to navigate each phase with confidence.
If you have an opinion on the retailing or retail real estate industries, take this opportunity to share your thoughts. Articles should run between 400 and 800 words. Topics can, be general in nature, consumer observation or specific to retail concepts or practices. Articles will be posted for at least one week and will then be placed in the Editorial Archives. All articles submitted will be read and considered but we cannot guarantee publication. Each published article will carry the submitters byline (if desired) and is a free service to our community. Article ideas and suggestions are also always welcomed. Contact PVS@PlainVanillaShell.com
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