A product growth strategy can be very beneficial in many ways. A product growth strategy can be used to help companies develop products that are more attractive to customers, increase market share and generate more revenue. All teams will work well together if they are aligned around a product growth strategy. This blog will provide examples of the most effective product growth strategies.
What are product growth strategies?
Product growth strategies are a plan to increase sales and grow a company’s business. This could include new product development, new marketing campaigns, or expansion into new markets. This can be either a long-term or short-term strategy.
These components can be included in your product growth strategy:
- Your goal: What are you aiming to accomplish?
- People: How will this goal affect your employees?
- Product: Can the product help me achieve my goal?
- Tactics: What strategy should you use to reach your goal?
Your teams will be able to work together in a clear manner if they are clear about your product growth strategies. Mailchimp’s annual revenue is more than $700,000,000 because they had a clear plan.
Types of growth strategies
Every company, product, or service will require a unique strategy that is tailored to its specific needs. There are four main types of growth strategies you could consider. These are the four basic types of growth strategies you can use:
1. Product development strategy
This strategy, as the name implies, is about developing new products for your customers and growing your market share. The new product must solve a new problem, or help in solving an existing problem. A product development strategy also includes the creation or enhancement of an existing product.
2. Market development strategy
A market development strategy is a plan to identify new markets and/or geographic markets that the company is able to serve. You must increase your market share in order to grow your business. You can increase your product user base, or create a new customer segment. Sales are the basis of market development strategies.
3. Market penetration strategy
Market penetration strategy is a plan of action designed to increase sales or grow market share for a product or service. Market penetration is the goal to gain a greater share of the target market than your competition. A market penetration strategy can be executed in many ways. Most commonly, you will lower the price of your product or service to make it more accessible and attractive to potential customers.
You can do this by offering discounts, coupons, or other promotional deals. To generate interest, companies might offer free samples or trials of their products. You can also penetrate the market by increasing your marketing and advertising, increasing distribution channels, and improving your product or service.
4. Diversification strategy
A diversification strategy is a strategic plan to enter new markets or products in order to reduce business risk. Instead of focusing on expanding your current product or service, you focus on entering new markets. Although it can be risky, you can reap huge benefits if you are successful. We have now looked at different strategies for product growth.
Let’s take a look at some examples of product growth strategies now that we have covered the basics. These strategies can be applied by learning more about the customer’s lifecycle (e.g. activation, advocacy, and retention). You can apply a specific plan depending on where you are in the customer’s lifecycle. Let’s say, for example, that we want to increase customer acquisition so that we can achieve market development.
Examples of Product Growth Strategies
Every company has its own goals and requirements. So while we cannot copy-paste success stories into our own strategies, We can always learn from them, and then apply what we have learned.
1. LinkedIn grew its user base by inviting connections
LinkedIn introduced the concept of importing contacts back in 2004 when it was still relatively new. The Outlook plugin was built to search through the contact list of LinkedIn users and use email marketing to reach these contacts. You might have been one of the early adopters of this email marketing strategy.
This created a loop, where a new user signed in and synced their contact list, and the new set of contacts would then receive the email. LinkedIn discovered that there were four emails sent before a user signed up for the platform. LinkedIn was able to increase its user base by 500,000 to 2,000,000 in 2006 thanks to this strategy.
Also read: Top 10 Product Marketing Tools
2. Airbnb continued to scale by simplifying user reviews
One of the most famous growth hacking stories is that Airbnb founders Brian Chesky & Joe Gebbia created their own integration which allowed hosts to post twice as many ads to Craigslist and Airbnb simultaneously. They were able to get started, but they needed to expand their brand. User reviews were a crucial part of their success.
This review system was crucial in attracting new customers to their business and helping them grow their product line. Hosts with more than 10 reviews were more likely to receive bookings. They simplified the review or feedback process and encouraged users to leave feedback. This increased its authority and authenticity.
3. GitHub grows its users to 100,000 every year by nurturing network impact
GitHub, originally known as Git was a software development platform that allowed multiple developers to collaborate on a single project. The founders realized the problem wasn’t one of collaboration or software problems, but rather a lack of a community element. They decided to create the community component of the product. This is where they created an open-source repository. Coders could collaborate on projects and find solutions together.
GitHub became a social network for coders after the addition of this feature. It gained 100,000 users within a year of its launch. They were able to secure $100M of venture capital within four years. The tool improved with each new developer who joined.
4. BuzzFeed grows new visitors with their golden rules of shareability
BuzzFeed continues to produce content and receives 2.4 billion views each month. Their main product growth strategy was to promote virality in all they do. BuzzFeed CEO Jonah Peretti began listening to his users. Peretti realized that people wanted to share content with their communities and were disappointed when they couldn’t. BuzzFeed used two key metrics to measure success: traffic on social media and social shares. They created the Golden Rules for Shareability and analyzed viral content to create shareable content.
5. StitchFix grows algorithms with a personalized shopping experience
StitchFix wanted an online styling platform that would allow users to shop more personally. They asked users to complete a questionnaire as part of the sign-up process. This allowed them to gather data about their body, preferences, lifestyle, and other details. These data were then used to create personalized recommendations for customers by allowing them to understand their preferences. The product was based on facts and data but felt personal to users. Their active clients are increasing by 17% annually, reaching 3.5 Million in 2020 Q2.
Conclusion — product growth strategies
As you can see in the examples above, Each team was able to find a small loophole in their process or an area that could be improved and help them build their strategy. You can retain customers, or attract new customers. Find one area that you are interested in and create a plan. Listen to your customers and create a plan that works.