Company always think to grow in such a way so that their business will be sustainable, for this they have always problem which growth engine they have to use. Growth engine helps company to evaluate what customers want and how company will deliver their product to customer’s end. By proper use of growth engine with strategy company not built their product sustainable but also make it to profitable business.
So there are three engines for Company growth:
Sticky engine of growth
Sticky implies that how many customers really want your product and always stick to your product during lifetime. But the problem arises when your product delivered to customers will customer become fully dependent on your company for that product. So to make this growth engine success companies have to track churn rate (The fractions of customers who fail to stick with the company’s product) and new customer acquisition rate. For success of sticky growth engine, always new customer acquisition rate is more than churn rate. If this is happening for your company, then it means your product will grow.
Viral engine of growth
Viral implies that how early your product is becoming famous across customers. For making this engine success you have to make viral loop more fast by single mathematics viral coefficient. The higher this coefficient the faster the product will spread. Viral coefficient measures how many new customers will use the product as consequence of each new customer who sign up. For example, for a product with viral coefficient 0.1 means one in every ten customers will recruit one of his or her friends. So to make product grow always try make viral coefficient greater than 1.0 so that Product will grow exponentially.
Paid engine of growth
Paid implies how much money company invest to attract customers in various distribution like marketing advertising. So to make this engine success company have to think as long as the cost of acquiring a new customer (Marginal cost) is less than the revenue that customer generates (Marginal revenue), the excess (Marginal profit) can be used to more customers. So to make your company to sustainable always try to achieve more marginal profit.
So every company who think to grow fast and make their business sustainable they have to use this engine growth carefully.
Where does Growth come for a company?
For any company to get success growth is always measurement whether they succeeded or not. There are two types of growth related to company.
Jump start growth
This growth related to company at that time when they entered in market how many people adopted their products. Sometimes this growth gives early advantage to company, but to grow company over decade they have to make this growth into sustainable growth.
Sustainable growth
For this growth company have to try gain those customers who give long term impact. This growth make company to get sustain themselves over decade and decade without any block.
Simple rule to get sustainable growth
“New customers come from the actions of past customers”
There are four ways by past customers drive sustainable growth:
Word of mouth
Embedded in most products is a natural level of growth that is caused by satisfied customer’s enthusiasm for the product. By this when past customers are satisfied with product they will tell or refer friends to use this product.
As a side effect of product usage
When you see someone dressed in latest clothes or driving a certain car, you may be influenced to buy that product. This is true for so-called viral products such as Facebook and PayPal when someone sends money to friend using PayPal, the friend is automatically exposed to PayPal product.
Through funded advertising
We know how company use their money on advertising to gain new customers this will always remain valid till the cost of acquiring customers (Marginal cost) is less than the revenue that customers generate (Marginal revenue), the excess (Marginal profit) can be used to acquire more customers. The more Marginal profit, the faster the growth.
Through repeat purchase or use
Some products are designed to be purchased repeatedly either through a subscription plan for example Cable company) or through voluntary repurchases (Example groceries or light bulbs). Some product and services intentionally designed as one-time events such as wedding planning.
“Always remember 80% profit always come through 20% customers so working on this principle you will not get past customers, but also you will get new customers.”