There’s bumpy growth and there’s consistent growth. There’s volume growth and there’s value growth. Are you chasing the right kind of growth for your business at the right time?
Bumpy growth versus smooth growth
I think I can confidently say most business owners are striving for continual growth. Whether that be for a bigger impact on their community or a bigger figure in the bank, there’s a common need to get more people in the door.
When it comes to growth, there are two main ways to achieve it – bumpy, unsustainable growth or smooth, sustainable growth. One is not better than the other but they are two quite different strategies and they result in different outcomes.
This is the type of growth sometimes referred to as unsustainable or inconsistent growth. Bumpy growth is when the business experiences rapid periods of large growth in short amounts of time. The reason it’s sometimes referred to as unsustainable growth is that it’s usually short lasting and results from a particular strategy that has massive impact all at once. It’s sometimes quite draining on the business or business owner from an energy or a financial perspective and therefore isn’t something that can be maintained for long periods of time.
This isn’t a bad thing per se but it does need to be taken into account.
Examples of bumpy or unsustainable growth could be being featured in a major publication, being interviewed on television or running a major seasonable marketing campaign. These types of activities tend to create rapid, short term growth which subsides shortly after the hype has worn off.
Bumpy growth is not a bad thing and it can be important at the right times in a business’ journey. Businesses affected by seasonal trends throughout the year need to rely on this bumpy growth strategy at the times when they know sales are going to peak. A business looking to scale upwards may also rely on a period of bumpy growth to reach the levels it needs, to achieve the next phase of it’s business journey.
Smooth or consistent growth is the other means by which businesses grow. There are many benefits to having a smooth growth strategy. In most areas of business, some level of consistency is essential and a smooth growth strategy can be a reassuring way to gradually have a greater and greater impact on your goals.
An example of a smooth or consistent growth strategy is a customer loyalty and referral program, regular social media advertising or consistent flyer / catalogue advertising.
The right strategy for your business will depend on the type of business you have and your goal. There will be various factors influencing the right strategy for your business including daily or monthly operating requirements, staffing obligations, customer turnover rates and supplier demands, as well as many other factors.
The right strategy will also depend on how you function as a business owner. If you’re a highly stressed, anxious person who worries about the ups and downs of business and you become concerned if sales are not steadily increasing each month, you would be much better sticking to a smooth consistent growth strategy with an aim to gradually increase turnover each month.
Whether it’s bumpy growth or smooth growth, we can go one level deeper to understand that both of these types of growth can also be achieved in two ways. There’s volume growth and there’s value growth.
This method of growth is about increasing the volume of customers or the volume of sales. If the revenue per customer or revenue per transaction stays the same, in order to increase income then the business simply needs more customers or more transactions.
But there’s also a method of growing your business where the customer numbers stay the same. In this case, increasing the bottom line can be achieved by increasing the value of each sale. You can do this by increasing your price, increasing the value of each sale or by reducing your costs.
“Would you like fries with that?”
Upselling is a great way to increase the value of each transaction. We all know how well McDonald’s uses this strategy and more and more businesses are realising the potential of simply asking for more sales. It really can be as simple as the old cliche “if you don’t ask you don’t get”.
Don’t forget also that a way to increase the profit of each transaction is by reducing costs. So even if the customer numbers stay the same, the number of transactions stays the same and the value of each transaction stays the same, benefits can still be gained by lowering costs and overheads so a smart business owner will always be aware of their numbers and be on the look out for ways to reduce costs.
Here’s some examples of marketing strategies combining the types of growth mentioned:
Bumpy, volume growth – this is where the business would be looking for a rapid increase in the number of customers or sales. An example would be a marketing plan to take advantage of a seasonal spike in traffic such as a florist taking advantage of Mother’s Day.
Bumpy, value growth – this would be where the business is looking to achieve a quick increase in revenue but does not have the ability to quickly increase the number of customers. An example of this might be a local coffee shop increasing their prices.
Smooth, volume growth – this type of growth would see a business gradually and consistently increasing their customer base. An example might be a personal trainer using a monthly customer referral strategy.
Smooth, value growth – this last type of growth might be where the business aims to improve their sales strategy over time to achieve a higher sales amount per transaction. An example might be a take away food restaurant investing in staff training to help improve sales skills to be able to up sell more effectively.
For most businesses, the reality is that there are benefits to both bumpy and smooth growth strategies and growth doesn’t just have to be about getting more customers. So pop your thinking cap on, be strategic with your marketing plan to achieve the right type of growth for your business and start chasing those business goals.