GROWTH IS MATHS
5 mathematical ways to grow your business
Business Growth is pure mathematics.
In the start up world it’s called user acquisition. In the FMCG world it’s called penetration.
It’s proven now conclusively that brand growth comes primarily from increase in penetration or the user base. This rule applies for most brands, in most categories in most markets, most of the time. Exceptions are few and far between.
If you are a digital platform like Facebook, Youtube, Twitter and the like your growth formula is
Revenue Growth = User Base X User Growth X Time Spent
As you get a wider user base, you have a larger pool of eye balls to monetize.
If you are an FMCG company like P&G, Unilever, Colgate your growth formula
Brand Growth = Households Using once a year X Household Penetration growth
How many more people can I bring into the brand every year ? People come in and out all the time even for brands which have high market share. Hence getting new customers to try your brand is the no.1 job of the marketer all of the time.
Penetration increase is between 2-5X more important than customer loyalty for most brands.
The simple growth formula is
Growth = Population X User %
The more complex growth formula is
Growth = Population X User % per month or per week or per day
So what can you do to increase G – Growth. Here are 10 proven ways to drive expansion for your business
- Go Global – there are 196 countries at last count. How many is your brand present in ? even if you are Coke you don’t reach 90% of markets globally. For most brands this number varies anywhere between 10-30%. Each year you can add 2-5 markets to your brand by entering directly or partnering with distributors. Note how Korean beauty brands continue to grow double digit year after year. They entered china, then HK and Taiwan, now across South East Asia. The world is your Oyster.
Growth = Countries X Countries Available
- Grow Across Channels– Distribution today is a multichannel environment. Offline there are 10 plus channels from Hyper Markets to discounters and offline has marketplace, platform based selling, vertical specialists in each category and peer to peer selling. How many are you present in and where do you have distribution. For most large brands 60-80% sales comes from 2-3 core channels and they don’t focus on the others. You may need to build a specialist e com capability or partner with an external agency. Look at direct selling as a channel, look at which offline channels are growing fast eg discounters but have been ignored so far. this lack of focus is why big brands may dominate offline but they fall well behind small upstart brands online.
Growth = Countries X Countries Available X Channels X Channels Present %
- Grow with Retailers – Once in a channel remember there are 100s of players – large, medium and small. How many do you cover ? there are estimated 1 million modern trade stores in the world. There are 500000+ small mom and pop stores in India. There are 50000+ convenience stores in South East Asia. There are 28000 starbucks, 37000 Mcdonalds and an infinite number of tea / coffee shops globally.There are 100000+ gas stations in the USA. Some shut down and others open up. How many are relevant and how many are you present in ?
Growth = Countries X Countries Available X Channels X Channels Present % X Retailers X Retailers Present %
- Grow with Stores – Once you list into a retailer it doesn’t mean you are present in all stores. You need to work with the retailers to drive throughput, activation and execution to ensure presence in all or most stores. Going from select doors to all doors can mean the difference of 2-5X sales expansion. You can also have select doors with the full range and all doors with your best selling SKUs
Growth = Countries X Countries Available X Channels X Channels Present % X Retailers X Retailers Present % X Number of Stores X Stores Present %
- Grow with Consumers – There are 8 billion consumers on the planet. 2bn are have lots, 5bn are have some and 1bn are have nots. The biggest mistake most markets make is they do customer recruitment at a launch or for a short period of time. Customer recruitment needs to be done all the time. Every month, every week and every day. How can you do customer recruitment
- Smaller trial packs
- A special invitation price
- Sampling in a store
- Free sample in store
- Free sample with a media ( magazine / newspaper)
- Free sample online via direct response advertising
- Cross sampling with another brand or product that has high penetration
- Door to door sampling
- Sampling at large events and gathering
- Direct Email Marketing using consumer databases gathered ethically and correctly
Growth = Population X Relevant Consumer Segment % X Consumers Trialled %
- Grow with Consumption Moments – how often is your product used ? how often can it be used ? in what situations can it be used ? can there be one for day and one for night. Can there be one at home and one when you are travelling. Once you look at the number of consumption moments and occasions your brand can have the same consumer can be used to continue driving the growth infinitely
Growth = Population X Relevant Consumer Segment % X Consumers Trialled % X Potential consumption moments X Number of consumption moments consumed %
Grow via Organisation and Focus – As you expand and drive growth you need teams to focus to drive the growth. Starting first with a country manager to begin a market, then to expand into different regions with region managers and channel managers and so on. The more you split and divide the teams, the more focus you will get and more growth will come.
Look at the growth equation = 200 countries X 20+ Channels X 100000+ retailers X 100+ stores per retailer X 8000000000 consumers X number of consumption moments. The number touches infinity !!
The growth opportunities for most brands are 10X 100X and 1000X if they follow this approach.
Use the equations. Growth is Maths.