Wondering what product growth strategy is and how to build it for your SaaS?

If so, you’re in the right place!

In this article, we discuss:

• Why you need a business growth strategy.
• Different types of business growth strategies.
• How can product teams choose the best strategy.
• How to develop a growth strategy.

We also look at a few examples of successful business growth strategies and show you how to use Userpilot to execute yours!

Let’s dive right in!

TL;DR

• A product growth strategy is a plan outlining how the company will pursue long-term growth using its product as the main driver.
• A well-defined product growth strategy can help you increase customer satisfaction and retention, reduce customer acquisition costs, and develop a competitive edge.
• The Ansoff matrix outlines four key strategies: market development (using existing products to enter new markets), market penetration (expanding market share with current products), product development (developing new products for existing markets), and diversification (building new products for new markets).
• The choice of strategy depends on your current market saturation, available resources, risk appetite, and organizational goals.

Here’s how to build a product growth strategy in 7 steps:

1. Conduct a SWOT analysis, customer research, and competitive analysis to deeply understand your product’s strengths, weaknesses, opportunities, and threats.
2. Set specific, measurable, achievable, realistic, time-bound (SMART), and challenging goals for your product growth strategy.
3. Track a North Star metric aligned with your main goals, auxiliary metrics for different product performance aspects, and counter metrics to ensure a balanced approach.
4. Use tactics like personalized onboarding and in-app messaging to drive adoption, retention, and expansion.
5. Leverage analytics tools to analyze user interactions, identify friction points, and measure the impact of your strategies over time.
6. Regularly gather qualitative feedback through in-app surveys and widgets to understand user behaviors and needs.
7. Continuously test tactics through experiments like fake door and A/B tests to optimize your product growth strategy.

• Slack offers a free plan to allow users to experience the product’s value.
• Calendly’s meeting scheduling functionality is easily shareable via links, exposing non-users to its value and driving signups.
• Userpilot reduces time-to-value with a frictionless sign-up flow.
• Cuvama provides a resource center within their product for self-service support.
• Dropbox incentivizes existing customers to refer new users by rewarding them with bonus storage space.
• Want to learn more about how to use Userpilot to build your product growth strategy? Book the demo!

Try Userpilot and Take Your Product Growth to the Next Level

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What is a product growth strategy?

A product growth strategy is a plan that outlines how a company will expand its market reach, increase sales, and drive long-term growth.

In contrast to traditional growth strategies that rely heavily on sales and marketing teams, a product growth strategy centers on leveraging the product as the main driver of customer acquisition, engagement, retention, and revenue expansion.

Why does your company need a business growth strategy?

A well-defined product growth strategy is not just nice to have. It’s vital for ongoing product success and helps the company to maintain a competitive edge. Here’s why:

Increases customer satisfaction and retention

A product growth strategy ensures that your product continuously evolves to meet and exceed customer expectations. This ongoing improvement cycle helps to keep your product relevant and valuable to users.

When customers feel that a product meets their needs and is easy to use, they are more likely to stay loyal. In practice, this means higher retention rates.

Reduces customer acquisition efforts and costs

Higher retention means that you don’t waste your resources on refilling a leaky funnel and can instead invest them into product development and innovation, which is essential for sustainable growth.

It gets better.

Loyal customers don’t just keep using your product and renewing subscriptions. They often act as product advocates, promoting it to their friends and colleagues. As WoM is one of the most effective marketing tactics, it drives further growth and reduces customer acquisition costs.

Provides a competitive advantage

A strong product growth strategy promotes continuous innovation, which enables your company to quickly adapt to market changes and stay ahead of competitors.

This is often done by offering solutions to unmet customer needs that enable your product to stand out in crowded markets and build a strong brand reputation and market position.

Different types of product growth strategies

Ever heard of the Ansoff matrix?

It was invented by a Russian-American manager, and it defines 4 main product growth strategies: market development, market penetration, product development, and diversification.

Let’s unpack each of them.

Market development strategy

Market development focuses on introducing existing products to a new market. And new markets can mean not just different geographical areas but also different customer segments.

Here’s an example:

Slack was built with the tech sector in mind. However, it soon expanded into new verticals, like education and non-profits.

This strategy works for companies competing in saturated markets. It enables them to reach new customer groups and diversify their income sources.

Market penetration strategy

Market penetration involves expanding your market share within the current market with existing products, for example, by offering a superior user experience or competitive pricing.

That’s exactly what Zoom leveraged to dominate the video conferencing software during the Covid-19 pandemic. One of their tactics was offering free access to premium features for educators, who heavily depended on video calls to deliver their courses.

Market penetration is a low-risk strategy because you operate in a familiar environment and don’t need to develop new products. You just need to figure out ways to steal your competitors’ customers.

Product development strategy

Product development is about building new products for existing markets.

This is a strategy that Userpilot has been pursuing consistently since its inception. For example, we have recently added a range of new analytics capabilities like custom dashboards to add value to the product and better serve customers.

For the product development strategy to work, your company needs commitment to innovation, robust product discovery, and idea validation processes. Otherwise, you risk burning your R&D resources on unwanted features and diluting the value proposition.

Diversification strategy

Diversification focuses on building new products for new markets.

HubSpot managed to pull it off with its Customer Service Hub. By expanding its product range, the company gained access to new customer segments.

This strategy offers substantial growth opportunities but carries significant risks. It diversifies your revenue streams and allows you to access untapped markets. However, it requires considerable investment in new products for unknown markets.

How to select the right strategy for your business?

The choice of the strategy for your SaaS depends on multiple factors:

• Market saturation: Start with market penetration until your current market is completely saturated and only then consider market development.
• Resources: Building new products or expanding into new markets can be resource-intensive, so if you’re short of cash, talent, or technological know-how, focus on market penetration.
• Risk appetite: Entering a new target market, especially with a new product, comes with a lot of risk. If your organization is risk-averse, stick to existing markets and product lines.
• Organizational goals and mission: Some companies, prioritize other goals over growth. For example, Patagonia is on a mission to build a sustainable and environment-friendly business model.

How to create an effective product growth strategy?

With the theory ticked off, it’s time for our step-by-step guide to creating a product growth strategy.

1. Understand your product thoroughly

To drive product growth, you need to understand what your product has to offer to its customers.

So, the first step is conducting a SWOT analysis. This popular tool helps you identify your product’s strengths, weaknesses, opportunities, and threats.

For example, if adaptation is your weakness, volatile market shifts could be a threat. Conversely, if you’re strong in the innovation department, rapid technological changes could be an opportunity.

To inform your SWOT analysis, conduct granular customer and market research, and competitive analysis. Map out the customer journey, focusing on major touchpoints, user goals, and challenges.

2. Define your goals clearly

With an in-depth understanding of your product and the markets where you’re operating, you can set meaningful goals for your product growth strategy.

Here’s an example: Increase monthly recurring revenue by 7% by the end of Q3.

To set this goal, I used the SMART goal-setting framework. SMART is an acronym for:

• Specific.
• Measurable.
• Achievable.
• Realistic.
• Time-bound.

For an extra twist, you can make your goals CSMART. What does the C stand for? Challenging.

SMART isn’t the only goal-setting framework out there. Other popular ones include BHAG and OKR.

3. Identify product growth metrics to monitor

To measure progress toward your goals, you need to track the right metrics.

These will normally include:

• A North Star metric: The main metric that guides the work of your teams and reflects your goals, like monthly recurring revenue.
• Auxiliary metrics: Ones that allow you to evaluate different aspects of product performance essential for achieving your main goal. For example, increasing retention rate and expansion revenue are key to improving MRR.
• Counter metrics: Metrics that ensure you don’t forget about other important customer experience aspects while chasing your goals. For example, you could track support ticket resolution time to ensure customer service isn’t sacrificed to maximize profits.

4. Implement different product growth strategies

Using your metrics for guidance, implement relevant growth strategies.

For example:

• To improve product adoption, you may focus on providing personalized onboarding to new users and reduce the time they need to experience value.
• For higher customer retention, you could develop secondary onboarding experiences which help users discover new and more advanced functionality.
• To drive account expansion, target users with upsell and cross-sell in-app messages.

5. Use data analytics to track the performance of your product-led growth strategy

To inform your product growth strategy and track progress, use data analytics.

These tools allow you to track user interactions with the product and analyze them for patterns and trends.

For example, tracking your MRR over time will tell you if your strategy is working on a high level, while other metrics will give you insights into the performance of different strategies, like onboarding.

It doesn’t stop at simply tracking trends.

With tools like funnel, path, or heatmap analysis, you can uncover friction points in the customer journey. Armed with such insights, you can implement strategies that help users achieve their goals.

For example, a hotspot may be enough to help users find a feature they need to complete a task.

6. Collect customer feedback to gather insights

In addition to tracking user behavior, use in-app surveys to collect feedback.

In particular, focus on gathering qualitative data that will help you understand why users behave in a particular way and how you can improve their user experience.

Run your surveys regularly, say every month or quarter, depending on their purpose. In addition, send contextually triggered surveys that zero in on specific user experiences or features. For example, you can use them to measure the success of new features.

Finally, consider embedding a feedback widget in the product UI to collect passive feedback.

7. Experiment with and iterate on your strategy continuously

Your product growth strategy and the tactics you use to implement it aren’t set in stone. As user needs and preferences change, so should your approach.

To identify the best strategies, run experiments.

For example, fake door tests are great for validating your feature ideas before spending any effort on their development, while A/B tests are an excellent tool for testing different onboarding flows.

By running two flows side by side and tracking their performance, you can quickly identify the one that drives the desired behaviors more effectively.

Try Userpilot and Take Your Product Growth to the Next Level

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• 14 Day Trial
• No Credit Card Required

Best growth strategy examples from leading companies

Now that you have an idea of how to create a product growth strategy, let’s have a look at examples of a few well-known SaaS companies and how they do it.

Slack’s freemium strategy

Slack is a well-known communication platform that’s taken the business world by storm. What’s its secret? It helps teams improve productivity and collaboration by improving information sharing and reducing the need for meetings.

To help users realize its value, Slack offers a freemium plan.

This way, users can use the product and experience the positive change it can bring to their working lives firsthand.

Of course, not all features are included in the free plan. To gain access to unlimited message history or app integrations, users have to purchase one of the paid plans.

Calendly’s viral growth loop

Calendly is a meeting scheduling app. It saves you time by eliminating the need for the endless back-and-forth that was traditionally involved when scheduling meetings. All you have to do is click on the link and choose an available slot that fits your schedule.

The best part? You don’t need to be a registered product user.

But it’s very likely you will want to be once you experience how convenient it is.

If that’s the case, Calendly makes it easy for you to sign up. Just click on the ‘Powered by Calendly’ banner in the top right corner of the calendar.

That’s how Calendly uses its customers to drive product growth with minimal effort.

Userpilot’s frictionless sign-up flow

Userpilot is a product growth tool. It caters to medium and large businesses and enables them to create onboarding experiences that facilitate product growth.

To reduce time to value, we have created a minimalistic sign-up process.

By collecting only essential information (first and last name, email address), we enable users to get inside the product as quickly as possible.

The sign-up flow isn’t entirely frictionless, though. For example, to register, you need a work email address, which enables us to prequalify leads.

Cuvama’s in-app customer support

Cuvama is a customer value management (CVM) platform. It enables B2B software companies to understand and communicate their product value to customers for improved sales, increased retention, and informed product development.

To support their customers and help them maximize their product value, Cuvama offers a resource center. It includes links to onboarding flows, how-to guides, a help center, case studies, and product announcements.

Thanks to the resource center, users can solve simple problems without relying on support agents, who are usually not available 24/7.

Dropbox’s referral campaign

Founded in 2007, Dropbox was one of the first online file storage platforms and still remains one of the key players in the cloud storage space.

Just like Calendly, Dropbox leverages its customer base to drive growth.

They do it through a simple referral program: users get rewarded with extra storage space when they refer a friend to the product, which is a win-win situation for all parties involved.

How can Userpilot help execute your product growth strategy?

As a DAP, Userpilot offers a range of tools that SaaS companies can lean into to drive product growth.

First, there’s an engagement layer that allows you to create in-app experiences. For example, to onboard new customers or drive upsells.

The engagement features include:

• UI patterns (tooltips, modals, banners, slideouts, hotspots, driven actions).
• Interactive walkthroughs.
• Onboarding checklists.

Here’s the kicker: you can create and fully customize these without writing a single line of code. All is done from the Chrome extension.

Next, there are Userpilot analytics features – that no other growth platform can match.

These include:

• User segmentation.
• Code-free event tracking and feature tagging.
• Heatmaps.
• Industry-standard reports: trends, funnels, paths and retention.
• A/B and multivariate testing.
• Custom analytics dashboards.

Let’s wrap up with the feedback functionality.

Just like the in-app patterns, Userpilot surveys are fully customizable without any coding. You can pick a template and tweak it in the visual editor to give it a native look.

Userpilot offers event-based triggering so you can send them to users at a specific time.

Conclusion

A product growth strategy guides growth initiatives by giving them a clear focus. It enables companies to make informed decisions aligned with their high-level goals to better satisfy customer needs and offer them a better experience.

If you’d like to learn more about Userpilot and how you can leverage it to execute your product growth strategy, book the demo!

Try Userpilot and Take Your Product Growth to the Next Level

Get a Demo

• 14 Day Trial
• No Credit Card Required

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This post is a part of The Crisis of Disconnection, a thought leadership series examining the latest research and insights to uncover how businesses can meet their growth goals, even amidst unprecedented changes to the way we work.

Despite our hyperconnected world, reaching customers and target audiences has never been harder. And, as we continue to see a shifting economy, evolving platforms, and constantly changing audience preferences, unless we take action the Crisis of Disconnection will only grow in 2023.

In this blog series, we’ve brought you up to speed on the Crisis of Disconnection, while outlining how the growth challenges ahead for your business won’t be your average walk in the park. Now, with the daunting stuff behind us, let’s turn our attention toward the light at the end of the tunnel.

If you’ve been following along, we’re glad you’re back. If you’re just joining us now, we’re glad you’re here.

How We Got Disconnected – And Why Fixing It is Vital

Before we go any further, let’s recap the disconnection challenges that have been giving business leaders pause:

• Point solutions are expensive, incomplete, and create more complexity than clarity. 74% of CRM buyers feel their teams have to switch between too many tools to get the job done
• People feel disconnected from each other — whether they’re at home or in the office. Only 49% of flex workers in the U.S. felt their team was working effectively in a hybrid environment.
• Strategies that once worked to connect with customers are no longer working. More than 30% of marketers say that they are experiencing average-to-no returns on their digital marketing investments.

It’s true that disconnection between your business and your customers — fueled by disconnection among employees and systems — is slowing growth.

If there’s a topline takeaway from our Crisis of Disconnection series, it’s this: connection can no longer be an afterthought.

Scaling companies need to place connection at the center of their business growth strategies. Otherwise, navigating the ever-evolving consumer landscape in the coming years will feel like an uphill battle.

Luckily, our research demonstrates that businesses are up for the challenge. The question is — how can you forge stronger connections across all facets of your company?

How to Re-align and Re-Connect Your Brand for Growth in 2023

1. Focus on Customer Connection, Not Customer Management

Suffice to say, we believe that the flywheel is pretty important when it comes to growing your business. The purpose of the flywheel is to accelerate growth, and spinning the flywheel (and achieving that growth) is only made possible through a strong connection to your customers. Not just to the ones you already have, but also to the ones to come.

In a world where 68% of companies are selling remotely, meeting your customers where they are has never been more important. But modern consumers feel like they’re being overloaded with an abundance of content, which only works to push them away from forging meaningful connections with businesses:

• 65% of google searches end without a click
• The average blog growth rate is -1.6%

Overcoming digital fatigue and distrust is no small feat, but working to build a connected business growth strategy is well worth the time and effort. This starts by optimizing every stage of the buyer’s journey to foster greater connection and purposeful communication.

2. Let Data Take the Guesswork Out of Advertising

Work to advertise in the places where your target customers are spending their time. When data tells you that your audience is primed to make purchasing decisions on a given platform, put more eggs into that basket versus wasting advertising spend elsewhere. It also doesn’t hurt to partner with trusted influencers in the space who’ve already built a connection with your target customers that you can leverage.

• 93% of all online interactions start with a search engine.
• 58% of millennials agree that social platforms are better than online searches for finding new products.
• 60% of marketers believe influencer marketing is the most effective marketing trend.

Clearly, even though the search engine experience may not be a perfect one as consumers are overwhelmed with content and often give up the search before clicking on anything, it remains an important place to be since most people who do end up interacting with a business online start on a search engine.

However, that may change in the future as the experience continues to suffer and both consumers and marketers are shifting their focus to social media as a channel for discovery and connection.

Of course, these are general trends, and advertising performance will vary depending on your specific audience. We always recommend doing your own research before committing to an advertising plan.

The key thing to remember here is that data should be driving these marketing decisions. Guessing isn’t good enough anymore — do your research to learn which channels and platforms your customers are spending the most time on. You can accomplish this by simply asking customers, followers, and prospects for their two cents. Don’t be shy! This is where first-party data can be your best friend. Lean on it to gain a better understanding of customers and their purchasing decisions.

While the question used to be, “How many channels are you active in?”,  the more important question to be asking yourself today is, “How unified are those channels and are they providing a consistent, personalized customer experience?”. In order to give your organization the information it needs to develop deep connections with customers, you must connect:

• With the right customers using segmentation based on real-time, clear, and clean data.
• In the most convenient place using an omni-channel approach
• At the optimal time – whether that’s now, later, or somewhere in between
• With the right context using first-party data to add personalization to all of your interactions.

Once you’ve nailed down where your customers are, it’s time to figure out how to attract and delight them. 62% of consumers say a brand will lose their loyalty if they deliver an unpersonalized experience, so make sure you’re offering something that is relevant and valuable to each specific consumer. Remember — what works for one buyer persona may fall flat with another.

In the past, businesses looked backward to get a sense of what worked. We believe the future is about looking forward, finding ways to analyze real-time data to understand not only how well you’ve connected with customers up until now, but also how to optimize those customer connections in the future.

3. Make it Easy to Buy

Buyers expect their experiences discovering and buying B2B and B2C goods and services to feel the same, regardless of who they’re buying from. Naturally, you want to provide easy payment solutions and options for how your customers buy.

But just like it’s important to personalize content for each buyer persona, so too is it important to cater purchasing options to the particular needs of your audience. Whether that means working through a sales representative or buying through an online portal, understand what your consumers want so you can give them the experience they desire.

• Just over 50% of SMBs still rely on disparate solutions to manage payment data, averaging five tools per purchase transaction.
• 83% of buyers say convenience while shopping is more important compared to five years ago.
• Only 19% of consumers prefer to message a company’s chatbot when reaching out to a company online. 45% prefer a human representative.

Updating your old go-to-market strategies for the new world requires you to connect with your customers on a more meaningful level. Of course, building those connections hinges on the connectivity of your people.

4. Near, Far, Wherever You Are: Help your Teams Connect

As you can imagine, it’s much harder to connect with customers when you’re having a hard time connecting with the people across from you — whether that be in the office or over Zoom.

Disconnected teams create silos within your organization, and a disconnected business is one that’s not able to reach its full potential.

23% of businesses cite difficulties with communication and collaboration between teams as one of their top business challenges. 45% of workers say that the number of people they interact with at work decreased, and 57% of people say that they engage in fewer social activities these days. All that’s to say, connecting with one another isn’t as easy as it used to be. However, a fully remote or hybrid work model doesn’t necessarily have to equal disconnection between your teams.

Take HubSpot, for example.

Even before the global pandemic, we believed in building a company where people could do their best work. For some, that’s in an office building. For others, that’s from a home office. With the goal of making work-life harmony a reality, we committed to being a flexible, hybrid company that ties culture to our values, people, and mission, not locations.

In the words of our Director of Culture, Eimear Marrinan, “Culture does not need four walls to thrive.”

While the old ways of working may never return, it doesn’t mean it’s the end of company culture as we know it. The key is to ensure teams can buy into a common goal, and are able to work together as one to reach it.

Build a social connection that motivates your teams and enables them to foster better working relationships, even if it’s in a remote setting. 59% of people would like to keep working remotely as much as possible going forward, so building a culture that thrives in a hybrid work environment should be top-of-mind for businesses.

The times may be a-changin’, but the craving for community is still consistent throughout every workforce. There’s no one-size-fits-all approach to being a hybrid company, and getting it right may take some time.

At HubSpot, we’re always learning how we can improve the way we work. Focusing on the critical ingredients — flexibility, empathy, communication, and inclusion — when building your work environment will inevitably put you on the path toward growth and success.

With all that said, we still haven’t gotten to another central, and sometimes overlooked, element of connection when it comes to your business — your systems, tools, and data. Pulling off all the above won’t be possible if you don’t have connected solutions in place to keep people and processes working in harmony.

5. Spend Less Time Configuring, and More Time Connecting

The average scaling company has 242 SaaS tools today. If that sounds like a lot, you’re right!

Expecting better relationships with customers and greater connection between teams when this many tools are in play is wishful thinking. In reality, less is more.

You need more than data. You need context.

You need more than content. You need connection.

You need more than contacts. You need community.

Hitting these goals largely depends on the connectedness of your internal systems, data, and tools. Your teams should be able to move away from focusing on building connections in a technical sense and towards fostering more meaningful connections on a human level.

Trying to make your myriad of disparate systems work together can feel like you’re swimming upstream. Instead, turn around and invest in a connected platform that streamlines and seamlessly connects your data.

Putting in the time and effort upfront to integrate a connected platform is well worth the long-term savings. One in four businesses today believe disconnected data and systems are among their chief concerns as they grow. And the ever-popular point solution approach brings with it its own set of problems.

Point solutions end up exacerbating silos across teams, which is ultimately not the point of implementing new tools and software. In reality, your teams work together closely, and giving them the means to connect and collaborate seamlessly largely hinges on the systems you put in front of them.

The time is now to prioritize “best-in-connection” solutions versus best-in-class tools. A platform that has connection at its core enables your teams to access data, collaborate with one another, and work through their responsibilities with no bumps along the way.

The trickle-down effect of disconnected systems negatively impacts your people, which ultimately impacts the customer experience. Making customer connection a central pillar of your business growth strategy starts by prioritizing a best-in-connection, all-on-one platform that delights employees and customers alike.

Time to Get Connected

That’s a wrap on our Crisis of Disconnection blog series! We want you to know that this is a concept we’re still deeply investigating, so while this is the end of this particular blog series, we’re just getting started talking about connection and how to optimize your business for it. Stay tuned for more on how HubSpot is actively working to address the Crisis of Disconnection!

In the meantime, be sure to check out HubSpot solutions, like our Free CRM or our Marketing, Sales, Service and CMS Hubs, which can help connect your team and grow better in 2023.

The post Solving the Crisis of Disconnection: How to Unite Your Brand Around Growth [Expert Tips & Data] appeared first on ProdSens.live.

When you’re considering a new venture, one of the first things you should do is determine whether there is a valuable market for it.

Imagine putting in months of hard work to realize that there are only 100 people in the U.S. who will potentially buy your product. Knowing this early on will enable you to make educated business decisions and decide what’s worth pursuing.

Discover the methods to calculate your market size and accurately measure your business’ revenue potential.

There are several reasons why every business should spend time sizing its market:

• It helps you determine if it’s a worthy investment – Say you have a great idea for a product but there are currently only 100 people who would buy it. From there, you can decide if that population size is worth the cost of manufacturing, production, distribution, and more for your product.

• It helps you estimate maximum total profit – If you know how many people your business has the potential to reach, you can estimate how much revenue you can generate. This is valuable for both business owners as well as investors.

• Who you’re marketing to and what their needs are – No business can succeed without marketing. Knowing your market size is the first step in understanding your target market and their needs.

Market Sizing Methods

Top Down Approach

The first is a top-down approach, in which you start by looking at the market as a whole, from a bird’s eye view, then refine it to get an accurate market size. That would look like starting from your total addressable market and filtering from there.

Market Sizing Example

Let’s say you want to launch a wine company. First, you’d want to determine how many liquor stores are in the United States — this helps you figure out the total market to which you could theoretically sell your product.

After your research, you discover there are 50,000 liquor stores in the United States. Of that total list, you only want to sell to the New England area — including Massachusetts, Maine, and Rhode Island.

You determine your target market includes the 1,000 liquor stores in the New England area. From here, you conduct research and speak with alcohol distributors to determine there’s a roughly 40% success rate for wine distribution.

Using this as an example, we’d calculate the market size using the following formula:

1,000 liquor stores x 40% = 400 liquor stores

Then, if you assume each liquor store will result in $20,000, you can figure out potential revenue using the following formula:

400 liquor stores x $20,000 = $8,000,000

This means you stand to make $8 million if you penetrate 40% of the total market in the New England area.

Bottom-Up Approach

A bottom-up approach is the exact opposite – starting small and working your way outward.

This looks like first identifying the number of units you can expect to sell then considering how many sales you anticipate from each buyer and finally the average price per unit.

Market Sizing Example

Using the same wine example – Say you found recent data showing that the average cost of a wine bottle in New England is $10. A survey shows that the average consumer buys one bottle of wine a week, or 48 bottles a year. This means that the average consumer spends $480 per year on wine.

Next, you discover that the number of consumers (or households) you can expect to reach in the New England area is 16,000.

As a result, your market size is 480 x 16,000 = $8,000,000.

It’s important to note that both methods ignore the existence of competitors, customer churn rate, and other factors that impact sales. With this in mind, you’ll want to remain conservative when estimating how much of the market size you’ll win and use this as a starting point.

How to Leverage Your Market Size

You have your estimated market size — now what?

Market size helps your business answer the following questions:

• How much potential revenue can we earn from this particular market? In other words, is it even worth our time and energy?

• Is the market big enough to interest us?

• Is the market growing? Will there still be opportunities to earn revenue from this market in 3, 5, 10 years?

Market size is a critical number to know when you’re looking for funding. Investors are going to need to know how much money they have the potential to make from a given market. Additionally, it’s vital to recognize whether the potential revenue you can make outweighs your business’ costs.

Once you have market size, you’ll also want to consider how saturated the market already is with your competitors’ products.

Ultimately, you can’t capture the total addressable market (TAM) — some of those people will choose competitors’ products over yours. So you’ll need to determine whether you have a shot at earning enough consumers out of the TAM to make this a worthwhile venture.

Editor’s Note: This post was originally published in April 2019 and has been updated for comprehensiveness.

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Do you remember when you were introduced to long-division in grade school? You found yourself needing multiple steps to solve a single problem. It probably seemed like a very daunting and impossible task before your math teacher showed you a hack that broke down your seemingly endless series of steps into only a few.

The same can be said about business. Initially, we all have to go through “long-division” level processes, procedures, and series of daily tasks. These might include entering a new marketplace, testing out new messaging and branding, pushing for new profit margins, or onboarding new clients.

But we can convert the long-division within our business into short-division, making our efforts much simpler and more manageable.

How, you may ask? Through the power of strategy.

I’ve had plenty of experience helping companies scale — in fact, I’ve launched over 35 brands and generated over $175 million in revenue for clients worldwide, and I currently host the Webby-nominated top 100 marketing podcast iDigress, which provides actionable insights to help businesses grow.

Here, I’m going to walk you through the three reasons many business strategies fail — and how you can succeed.

Why do so many business strategies fail?

When you have the right business strategy or series of strategies in place working for you, it will have you screaming “I have the power” like He-Man.

But if everyone supposedly has a business strategy in place already, why are 65% of businesses still failing during the first ten years, according to the U.S. Bureau of Labor Statistics?

The culprit for most business strategies failing comes down to the 3 Cs: complexity, confusion, and complications.

They are slowed down by trying to implement complex processes. The roadmap, messaging, and foundation upon which the business strategy is built are confusing. The business can’t act decisively because the strategy is overly complicated.

The three primary reasons your business strategy probably isn’t working:  

1. It’s undeniably not working for you, but you refuse to change it.
2. No one understands it and therefore cannot execute it properly.
3. You’re doing a ton of tactics and calling it a “strategy” when it’s not.

So now that we’ve addressed the elephant, how do we get rid of it?

Piece by piece.

There are three components necessary in creating a successful business strategy that can serve as our “short-division” hacks to growing our business: simple, sustainable, and scalable.

We will expand on how to incorporate these three components into developing business strategies that do work while also including episode references throughout from the Strategy Hacker’s podcast iDigress, which is part of the HubSpot Podcast Network.

How to Create a Successful Business Strategy, According to the Strategy Hacker

1. Start simple. 

The quickest route to success is a straight line. A straight line, in its purest form, is simple. We must embrace and integrate the power of simplicity within our business strategy.

An easy way to do this is by simplifying the structures, systems, and steps involved in creating and executing your strategy so that everyone can understand it.

For example, let’s imagine your current process for determining how marketing is performing is by reviewing a series of reports. This takes a ton of time and energy, and the people who review the reports don’t always understand the terms or references included in the report. To make matters worse — even after all of that, you still aren’t sure about why things aren’t working.

When you simplify and streamline your processes, the time it takes to understand, make decisions, identify weaknesses, amplify strengths, delegate tasks, and execute is significantly shorter.

By incorporating a higher level of simplicity within your business, things naturally become more effortless. Look at all the areas where the team spends the most time. Maybe you have friction points in using expensive, ineffective software or creating multiple reports that no one understands.

Instead of keeping things as is because “we’ve always done it this way” or “this process worked in the early days,” allow yourself to get basic with everything.

Simplifications lead to making smarter decisions. Create S.M.A.R.T. (specific, measurable, achievable, relevant, and time-bound) goals using a unique set of criteria to ensure your objectives are attainable within a specific time frame.

Additionally, many business strategies don’t work because business leaders haven’t removed unnecessary roadblocks. These might include too many audience profiles, too much data, too much busy work that doesn’t produce results, or too weak of a brand positioning.

When you remove complexity, confusion, complications, and clutter from the business equation, you’re left with clarity. And that clarity can help you generate consistent business conversions.

Clarity is a powerful thing to have, but how do we align clarity into a solid business strategy? Below are a list of some episodes that can help:

• Ep 29: How to master the three modalities to growing your business

• Ep 24: How to activate the power of strategy to achieve business success
• Ep 43: How to define your number to achieve your business goals this year
• Ep 37: How to build trust currency: a masterclass on increasing brand equity
• Ep 33: How to determine if you’re the Tylenol or chocolate cake to your audience

2. Focus on sustainability. 

The most efficient business strategies are the ones that don’t just work today but continue to work tomorrow, next week, and even six months from now.

When you’re developing and implementing a strategy, you can’t set-it-and-forget-it. Strategy is a living and breathing system that requires constant evolution to continue to be effective. Create strategies with the end in mind.

The friction you typically hear from many businesses struggling to develop and enable true strategy is that they are always busy, and always in “go-mode.” They would rather execute blindly out of the need to do something, instead of strategically planning out their moves — which leads to a higher chance of success.

Sometimes, it’s not that your efforts won’t work. It’s understanding the bigger picture of what efforts are most essential to focus on right now to position yourself for true sustainability first, and then scaling second.

You can’t scale if you aren’t stable, and some business leaders’ full of zeal forget that.

When was the last time you looked at your customer journey through the eyes of your ideal customer? Is your journey optimized and systemized to give the right value at every stage? Are your marketing, branding, SEO, and selling initiatives in alignment with where you are in your business right now?

Some businesses’ customer journeys and initiatives are stuck on awareness mode when they need to switch to sales, acquisition, and conversions mode. So which mode are you? Ep 34 of iDigress shares a 5-point customer journey blueprint that can be modified to fit your current business situation and address all of these questions:

1. Awareness
2. Interest/Attention
3. Conversions
4. Relationship Building
5. Advocacy

Sustainability requires a certain mindset and level of tenacity accompanied by patience, poise, and persistence.

3. Ensure your strategy is scalable. 

Consistency is key for sustainability, but in order to scale one must be willing to fail. Unlike sustainability, scalability requires a different focus, and a little more risk tolerance.

When you’re evolving your business strategy to pursue next-level growth, your mindset has to expand to see infinite possibilities.

You will need to identify, isolate, and innovate. For instance, you’ll want to:

• Identify your ideal customer profile, what’s working, and what’s not working
• Isolate the best opportunity for next-level growth
• Innovate your offerings to meet the additional needs of the consumer  

The business strategies that generate the most money and continue to work are designed as living, breathing plans of action that can be expanded to handle high-level growth and capacity.

In order for your business to scale effectively, you must have a clear path on what you need to do to make that leap in growth. Ep 48 of iDigress reflected on the four lessons Kieran Flanagan, SVP of Marketing at HubSpot, attributes to HubSpot reaching one billion in ARR and the business, marketing, and mental approach necessary to start achieving disruptive growth in your specific marketplace.

Scaling business growth is all about leveraging strategies that can scale to generate consistent revenue growth without adding a ton of extra costs. This keeps your profit margins high.

Any campaign, business, or movement that scaled quickly in a very sustainable way probably…

• was easy to identify, understand, and share
• was attractive to the eyes, heart, and soul
• was so social it transcended audiences, countries, and languages
• was there at the right time, and used the right platform and distribution methods

One way to improve your odds of scaling astronomically, which we discuss in Ep 44 of iDigress, is by embracing the E.A.S.T. framework with your efforts. Here’s how it works:

• Step 1. Make it Easy
• Step 2. Make it Attractive
• Step 3. Make it Social
• Step 4. Make it Timely

Applying E.A.S.T. may seem very simple in scope. However, many still fail to implement this framework successfully when it comes to marketing, branding, sales, and communication.

Strategy serves as the pen and paper to create the story you want for your business.

With strategy, you can map out the business you want to build, remove anything you don’t like, and add anything that you desire to create the organization you want. But it’s not instantaneous. It takes time. Yes — even with “short-division” hacks.

It all builds on top of each other. Simplicity lays the foundation for sustainability, which lays the runway for scalability — and, all the while, you can use strategy as your guiding light to help you navigate as you continue to level up.

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