Every entrepreneur dreams of seeing his or her business grow, but business growth doesn’t happen overnight. And it won’t happen without a plan and a strategy.
We’ve collaborated with experienced business owners, and gotten their tips to help you learn how to grow your business using the most effective business growth strategies for eCommerce.
The growth hacking strategies that are most effective for online and eCommerce businesses are:
- Market Penetration Strategies
- Market Expansion or Development Strategy
- Marketing Strategy
- Product Expansion Strategy
- Diversification Strategy
- Acquisition Strategy
Market Penetration Strategies
The term “penetration” refers to how many units of a product have been sold compared to the total number of potential sales for that market. For example, if a business sells to 20 out of 100 possible people, then penetration would be 20 percent.
To grow a business, you must sell to a greater number of people than you do currently. In other words, business growth is correlated to increased sales and market penetration. So if you want to increase market penetration, ultimately, you want to focus on ways to boost sales for your business.
One of the most frequently used strategies for boosting sales and market penetration is to adjust the prices of your products. In most cases, this means lowering the prices of your products to make them more affordable and attractive to prospective buyers.
Another way to boost market penetration is to increase brand awareness through marketing and promotion. Depending on the nature of the campaign — whether it advertises a business, a product, or a temporary promotion — these campaigns can facilitate either short-term or long-term sales growth.
Besides pricing and promotion, you can increase market penetration by adding more distribution channels to your business model. For example, if your products are currently sold at one retail chain, finding another chain to sell your products will likely boost sales.
Most buyers will periodically upgrade to newer products from older ones; this purchasing behavior mirrors our innate desire for self-improvement. For this reason, bringing even small improvements to your product can also increase sales.
This strategy can be tricky because you don’t have control over how your buyers use your products. However, if you can find a way to increase usage rates for your products — which is easiest with consumable goods — you will likely see a sales boost from customers needing to replenish.
Market Expansion/Development Strategy
The purpose of expansion is to find new opportunities for growth once sales have peaked. To continue growth, market expansion strategy often sees the business move into a similar or related market. Since the new market is somewhat related to the existing one, the business can mitigate some of the risk that comes with exploring new territory.
Market development, on the other hand, is when a business creates a new market or technology. More specifically, the business identifies a trend or consumer need and attempts to capitalize on it.
With a market expansion or development strategy, the first step is to conduct research. From there, you can find the best opportunities for growth. After all, you don’t want to target markets that will end up costing money instead of increasing sales and revenue.
Targeted Marketing Strategy
Marketing is fundamental to owning and running a business so a more targeted approach can be an effective growth strategy.
Consumers are bombarded with marketing material on a daily basis. Advertisements clog their inboxes, fill up their social media feels, and interrupt their YouTube videos. But the problem with most of these advertisements is that they’re incredibly generalized. They don’t tap into something with which the audience can relate so as a result, the marketing content is easy for the audience to ignore.
Targeted marketing is when you tailor your marketing content to the audience. The idea is to deliver content that’s more relevant to the audience, resulting in more engagement and higher conversion. In turn, targeted marketing drives growth for your business.
The best thing about using targeted marketing as a growth strategy is that it can drive growth without requiring potentially risky changes to your business model.
In spite of the specificity inherent to targeted marketing, it’s actually a versatile and flexible growth strategy. But the forms of marketing that are particularly effective for driving business growth include influencer marketing, geo-targeted marketing, and affiliate marketing.
In short, influencer marketing is a way to promote products or services by partnering with social media influencers. How does it work, exactly? Katie Schmidt — owner and founder of Passion Lilie, an ethical clothing boutique — explains the benefit of influencer marketing.
“Work with influencers to get your products in front of a wider audience,” she says. “Because the review of your product is coming from a trusted source, followers of these influencers will be … more likely to make a purchase.”
In other words, influencers have built trust with their audiences, so you tend to see much higher conversion and business growth with influencer marketing. Meanwhile, you’re targeting audiences to which you may not have had access.
Many businesses that are using influencer marketing have seen immense increases in sales. In fact, Mark Tyrol, President of Battic Door Home Energy Conservation Products, saw a 50 percent sales increase from influencer marketing alone. So if you’ve not already considered influencer marketing as one of your business growth strategies, you probably should.
The advanced advertising platforms available today give business owners the ability to do geo-targeted marketing. With geo-targeting, you’re able to deliver your marketing content to the right audiences. In practice, it’s about making sure that the people who see your marketing content are the people who are most likely to act on it. For instance, ads for swimwear aren’t going to convert individuals who live in cooler climates.
Instead of partnering with influencers, affiliate marketing is when you partner with other businesses targeting a similar audience. The idea is to promote mutual growth by referring customers who have converted to partnered businesses while also receiving referrals from those same partners. This arrangement is attractive for those partners or affiliates, because they earn a percentage of every sale they refer to your business.
Depending on the strength of your brand and your industry, you could see considerable conversion from affiliate marketing.
Product Expansion Strategy
There are a number of ways to approach product expansion as a source of business growth, from adding new features to a product to tapping into new audiences. However, every approach comes down to broadening the audience for a product or service.
Mark Tyrol boosted sales for Battic Door Home Energy Conservation Products by adding more distribution channels for his products.
“Starting initially with my website, I began adding online sales channels and grew sales dramatically,” Mark says. He cited eBay, Amazon, Rakuten, Sears, Home Depot, Walmart, Facebook, Shopify, and other sales platforms that allow retailers to “integrate, manage, and optimize their merchandise sales across hundreds of online channels.”
Another approach to product expansion would be to find opportunities to appeal to new markets. A prime example is the Skin So Soft product line by Avon. After discovering the product repelled insects, Avon began marketing Skin So Soft to campers for outdoor activities. Since then, the company started a line of Skin So Soft products that are explicitly designed as insect repellents.
Simply put, diversification is about not putting all your eggs in one basket. The idea is to find multiple stable income channels to drive business growth. Meanwhile, you’re increasing your reach by broadening the target audience.
Mark McIntosh of LocalWear considers diversification to be the “holy grail for eCommerce.” According to Mark, “Some products can be hot at first but lose traction. So a healthy, growing business will have a few different growth drivers over time.”
Brandon Ackroyd, Head of Customer Insight for Tiger Mobiles, used live chat to increase customer engagement and sales. In fact, Brandon noted that “the number of people using live chat increased by 400 percent over six months” and of those who use the live chat feature, “20 percent of customers ended up placing an order.”
For larger or more established businesses, growth through acquisition is an effective strategy. By taking a separate business — with its product lineup, customers, and workforce — and rolling it into a larger company, you increase your market share.
Acquisition might not be a viable growth strategy for every business because it requires considerable availability of liquid capital. However, when it’s feasible, acquisition can drive growth by letting you expand into new markets, diversify your product portfolio, or increase your production capacity.
Words of Advice for Growing an eCommerce Business
As we wind down this overview of how to grow your business online, we want to leave you with some final advice. The following tips were provided by the helpful business owners and entrepreneurs referenced throughout this piece who have employed many of the above business strategies to great effect.
Try New Things
Tahnee Elliott — founder and CEO of T.C. Elli’s, a Texas-based eCommerce fashion retailer — considers willingness to experiment essential to business growth.
“In 2009, the financial crisis hit my business hard,” says Tahnee. Facing a substantial decrease in foot traffic, Tahnee “shifted gears by reducing price points and opening an online store.” From there, she experimented with digital channels. Advertising on Instagram and a brand ambassador program have been particularly successful for Tahnee’s business. Ultimately, her willingness to adapt and experiment is why T.C. Elli’s continues to thrive today.
The growth you want to see isn’t going to happen overnight or without time spent creating a plan. So Keval Baxi, CEO of Codal, emphasizes patience.
“Even with 100 percent determination, it can be hard without patience or a proper process” Keval says. “Without a proper process for implementation, and the patience to follow that process, businesses will not succeed.”
Stability Over Trends
Many entrepreneurs have made the mistake of jumping onto the latest bandwagon, but the most successful businesses are those that provide continuous value to stable, consistent markets.
“To grow consistently, you need a compelling value proposition that taps into a long-term customer trend,” says Rick Watson. “Think about the things that have staying power [and] will be true for the next five or more years.”
Rick owns and runs RMW Commerce Consulting, an eCommerce consulting firm.
Today’s consumers are savvier than ever and extremely skeptical of market content. For this reason, if you take the time to build trust with your audience, you’ll be rewarded with more sales. Trust is something especially important to keep in mind when it comes to content marketing.
“There’s nothing wrong with a little self-promotion,” Katie Schmidt says, “but shoppers grow to trust brands that offer them useful advice [instead of] just trying to sell to them. As consumers come to you for valuable content, they’ll begin to trust your site and make a purchase. Build trust and share knowledge with your audience, and you’ll win yourself some potential customers.”
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About the AuthorMore Content by Christie Chirinos