We’ve all been in those meetings when ideas for stimulating growth get tossed around. Before you know it, an entirely new growth strategy has emerged and everyone’s moving full speed ahead in hopes of seeing benefits sooner. There’s just one problem: by letting excitement take over, firms often don’t take the time to analyze risks and determine how likely a new growth strategy is to truly be successful.
However, there are a few strategies for growing a company that have been proven to work, time and time again. While every approach has some amount of risk, these strategies can deliver new growth without making dramatic changes to your process. Depending on your situation, one strategy may be a better fit for your firm than another.
Below are five of the most common growth strategies. Let’s go through them one by one, from lowest to highest risk:
1. Increase Market Penetration
This approach involves offering more services to the same client. Since it doesn’t require introducing anything new, it’s a relatively low-risk strategy that can be achieved fairly easily. For instance, let’s say your accounting firm offers auditing services, but few of your clients know about it. By making your current clients aware of your other services, your firm can increase your relevance and get more revenue from a market you’ve already tapped.
Now, it’s important to note that even this conservative growth strategy isn’t without risk. When you depend on a small pool of clients, you can’t afford to lose many of them. Further, convincing your clients to buy additional services can be an uphill battle. As we discovered in our research for our book Inside the Buyer’s Brain, most clients aren’t aware of a provider full range of services. In other words, clients have a tendency to seek out other providers for additional services — service that you offer — because in their minds they don’t associate those services with your firm.
2. Develop New Markets
Another relatively low-risk strategy involves finding new markets for your existing services. This is a common growth strategy in the professional services industry, as many firms seek to roll out their services to as many audiences as possible.
While the concept of “more buyers equals more sales” might seem logical, it has its potential costs, too. It can be time-consuming and costly to educate and nurture new audiences, so your firm runs the risk of underinvesting in potentially valuable markets while overinvesting in those with less opportunity. If you aren’t careful, this approach can dilute your brand and any industry specialization you may have developed.
However, if you approach new markets thoughtfully, this growth strategy can be quite effective. For example, if your law firm currently caters to small businesses, but a new Fortune 500 manufacturing firm is relocating to your area, a large corporate client could be a beneficial growth opportunity.
3. Develop Alternative Distribution Channels
While this strategy is less common in professional services, it can still be effective. By partnering with complementary — but non-competitive — service firms, your firm can widen your reach by leveraging alternative distribution channels. For instance, a firm might partner with a trade association to gain access to their membership. Or a law firm partner might partner with with an accounting firm to exchange referrals and even market together.
Because this strategy is fairly rare in the professional services, the biggest risk involves finding the right fit. Developing alternative channels can be costly, so it’s important to consider whether it’s worth the investment — particularly since choosing an alternative distribution channel can damage your brand if it raises credibility issues.
4. Develop New Services
In this strategy, your firm develops an entirely new service to address an underserved market. In a way, most professional services firms do this already. After all, no two clients have the same needs, so they customize their services to the particulars of a client’s situation. But as a market strategy, a firm has to think larger. For instance, an accounting firm might look beyond its traditional tax offering to offer a new service offering — internet security services or financial planning, for example.
Despite its potential to generate significant growth, this strategy comes with a number of risks. For one, developing a new service requires a substantial time investment, which can divert critical attention from the services you already offer. By broadening your service line, your firm also risks becoming a jack-of-all-trades — a generalist that stands for nothing in particular.
Further, it’s important to make sure that any new services fit your brand, don’t cause a conflict of interest, and don’t alienate your referral sources. They should fit naturally into your current portfolio of services so clients and prospects feel confident in your ability to deliver.
5. New Services to New Markets
Rounding out our list is the riskiest growth strategy of all: offering new services to new markets. In addition to the challenge of developing new services, this strategy also involves cultivating a new market. In order to justify the associated risks, the potential opportunity must be substantial.
In some cases, this strategy can be hugely successful. Take one of our clients in the consumer market research field, for example. They had developed a software platform to serve their already-diverse client base. Then they discovered that the software platform could also address a specific problem in the medical research field. They decided to create a new firm catering to medical researchers — which allowed them to take advantage of the opportunity without muddying their brand and confusing their current client base.
Assessing Risks and Determining Strategy
While each of these growth strategies presents certain risks, determining which approach best suits your firm requires assessing your specific situation. For instance, what’s a bigger risk for your particular firm: expanding geographically into new markets or adding new services within your existing markets?
Before you can move forward with any successful growth strategy, you need to gather insights that help you assess those risks. With the right research and careful thinking about your audiences, brand and goals, you can identify a growth strategy that makes the most sense for your firm.
How Hinge Can Help
Hinge specializes in helping professional services firms grow. From developing and implementing your growth strategy to facilitating your planning retreat to conducting market research on your firm, Hinge can take your business to a higher plane of growth and profitability with the Visible Firm Program.
- Learn how individual experts in your firm can grow from relative obscurity to eminence. Download our free book, The Visible Expert®, and start turning your best people into high-value industry stars.
- Discover how research can deliver the insights your firm needs to grow. Download the Professional Services Guide to Research
- Where can you get the marketing training you need to implement a powerful growth strategy? Hinge University is built exclusively to give busy service professionals and marketers the edge they need. Check it out and start learning now.