In Part 1, we covered why internal and external data need to be the backbone of your growth strategy. Spoiler alert: it’s not a growth strategy without data!
We’ve built and reviewed thousands of growth strategies, and we can say with complete confidence that your growth strategy will be a gamble if you don’t build it using internal and external data.
Recap from Part 1
If you followed Part 1, your team should have collected the internal and external data. You can also download this free guide and canvas to build your growth strategy.
Data is invaluable to your growth strategy because it should provide the answers to these four questions:
- What is happening in your market or industry?
- Who are your competitors, and when they win, why do they win?
- What customers do you (and can you) serve?
- How are we performing today, and where are the external opportunities?
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The answers to these four questions build the foundation for a truly strategic growth strategy using the internal data your organization creates or gathers from external sources to help understand what is happening outside the walls of your organization.
Think about it like this; without data, you’d just be guessing the answers to the four questions above; and how much could an incorrect guess cost you?
Honestly, you’d be better off putting your money on black at the casino than trying to build a growth strategy on a hunch.
Data Doesn’t Need to Be Expensive
We mentioned this in Part 1 of this series, but it’s worth repeating! There are many great sources of external data. But we know that it can be expensive to purchase Forrester reports, Nielsen data, and other industry-specific data.
You don’t need to spend a fortune to access good external data. As we mentioned in Part 1, there are great free or inexpensive data available through tools like SEM Rush, Statista, Alexa, and the Bureau of Labor and Statistics (just to name a few).
Depending on your growth potential and size, you may choose to spend a few hundred to a few thousand dollars. At minimum, tap into the free(ish) resources we’ve provided. If you have a multi-million-dollar growth potential, then consider investing in the relevant data that will help you strategically select the best growth opportunities.
How to Leverage Internal Data for Your Growth Strategy
As you collect and analyze internal data, there are several different outputs or use cases for each. Some of these are more obvious than others, but each output from your internal data sources can help create critical components of your growth strategy.
Use the canvas on the last page of the Growth Strategy Guide as a template.
Value and Output
Profit & Loss Statements
Operating costs, EBITDA by line of business, product, or market.
Use your historic growth rate to help determine your future growth targets and approach.
Define which segments are winning (and losing) compared to TAM (total addressable market); evaluate if you’re growing at the same pace as the wider market.
Product data provides some indication of potential strategies: how to grow within a segment and where there might be more growth by product.
Evaluate whether current products/services/lines are achieving an acceptable ROI and start the discussion whether more investment = greater ROI.
Decide if any products/services/lines need to be deprecated due to poor profitability and lack of potential.
Web traffic analytics, keyword performance, earned and paid media results, reported ad spending.
Approximate the addressable market and estimate your share of it.
Identify new customer or market segments you might serve.
Understand demand and unmet needs.
Sales Performance and Pipelines
Closed business, pipeline forecast, time to close.
Determine where you win the most business and why to inform your competitive advantage.
Kickoff the discussion of potential strategies to win more or different business. When you lose, why, and if/how you can close that gap.
Operations and Performance Data
Trended data like time to fulfill customer orders, up time, man hours/order or revenue.
Decide if growth can be achieved by reducing your cost of business.
Evaluate if a system, process, or capability investment will increase efficiency and provide cost savings.
Customer Insights & Analytics
Retention and growth rate, average order value.
Customer survey data: satisfaction, NPS, reasons for purchase/preference.
Define or refine your competitive advantages; what they are today, and what they ultimately need to be.1
Identify unmet customer needs you may be positioned to fill.
Determine how much growth might come from existing customers.
Employee engagement / satisfaction.
Skills assessment (evaluations).
Likely one of your largest costs of doing business: identify opportunities to improve retention/reduce recruitment costs.
Evaluate the potential within the talent and capabilities you have to support the growth strategy. Decide if growth can be achieved by cross-training, up-leveling skills, and career development, or if you need to hire talent to fill a skills gap.
You’re likely using tools to manage your marketing (like SEM Rush, Hubspot)—use them to size the market and understand your competition! Some of these tools offer aggregated data turning your inside data tool into an excellent, objective external data source.
Customer satisfaction data is great, but it’s made better if you have at least a sense of how your customer satisfaction benchmarks against the industry; no good strategy can come from assuming your customers are more satisfied than the industry standard.
Leverage External Data for Your Growth Strategy
The output from your internal data sources might be more obvious than the outputs from your external research. Because external data analyzes your macro-competitive environment and market, it can be more challenging to identify the purpose and output of external data.
To help, here are some of the common use cases and outputs from external data to leverage in your growth strategy.
Output or Use
Demographics, media consumption, behavior.
Identify the growth trends and potential by demographic segment, which can help you size an opportunity market.
Understand unmet needs to determine if there is a potential competitive advantage you can offer.
Labor market size and forecasts.
Informs target or market potential: is the labor market in one of your opportunity markets (e.g., manufacturers between $100M and $500M annual revenue) projected to grow, shrink or stay the same?
Market size and growth projections, consumer spending trends and forecasts.
Size your markets and the potential growth to inform either TAM or SAM (serviceable addressable market).
Identify opportunity markets.
Search traffic volume, addressable audience sizes, and industry CPC or CPA averages.
Estimate your competitors’ share of the market and growth rate.
Identify where the competition is playing and what type of customer they’re attempting to attract.
High search traffic volume can indicate demand or an unmet need to inform either a growth opportunity or a potential competitive advantage.
Supply Chain Data
Lead times, availability of product for manufacturing, shipping routes or times.
Identify an opportunity to competitively price a product or deliver more quickly.
Growth or reduction in metros, population by zip code, demographics by zip code
Important insights if your opportunities are geographically-specific: compare the trends and forecasts of multiple geographies to identify the best opportunities.
Forecasted commercial / residential values, market forecasts for rent, affordability indices.
Indicates if a geographic area is projected to grow or shrink, contributing to your decisions about which geographies to prioritize.
While you have your own internal data, sometimes it can be a more confident comparison to use the reported data for you versus your competition, e.g., when reviewing ad spend data, compare your competitors’ spend to your own organization’s reported spend, not your actual ad spend.
Use Data, But Don’t Get Buried in It
The data you seek is meant to empower your team to make the right choices about where and how to grow. Don’t think that you need every data point in the world to get there! Big data has given us troves of information, but spending too much time on data and analysis can create fear of making the wrong decision, sending teams into analysis paralysis.
Be thoughtful and thorough, but remember that the perfect data or having all data is unachievable. Gathering enough good data to make objective decisions will result in a better growth strategy.