As you might know, business success is no piece of cake. And a vital element of this is to have a good business strategy. This article will cover everything you need to know about business strategies. We'll discuss what they are, their levels, and how to develop them. We'll also give you examples of successful business strategies. These will enclose customer acquisition, user retention, sustainability, and more. Let's dig in!
What is a Business Strategy?
A business strategy is a plan or roadmap to help achieve a company’s business goals. This plan includes the guiding principles for the company. These will, in turn, affect the business priorities, decisions, and actions. There are various business strategies, depending on where the business focus lies. Some approaches focus on cost-cutting, growth, or stability.
What is the Purpose of a Business Strategy?
The primary purpose behind a business strategy is to create a vision for a company. This vision aims to provide direction or guidance. Further, it helps all members understand the company’s goals and objectives.
Business Strategy vs. Marketing Strategy
A business strategy tends to be a long-term plan for your company's future. Meanwhile, a marketing strategy surrounds how you actively promote a product or service. These two strategies are not opposed to each other but intersect, which is why they get mixed up. Business and marketing strategies (along with brand strategy) should work together.
Why is a Business Strategy important?
Business strategies help your company stay on track with its goals. These ensure company leaders remain focused on short- and long-term goals. Also, business strategies help them adapt to change. If well communicated, techniques help employees understand the overarching goals at every level. Every company member understands how they fit and why they matter. As a result, they will be more engaged and, thus, more productive. Also, business strategies help companies measure internal performance. Furthermore, it's a powerful tool for tracking competitors.
How to Develop a Business Strategy?
There are countless approaches to developing a business strategy. This section will focus on the five main aspects you should consider.
1. Vision and Goals. The first step to creating a business strategy is figuring out what you are trying to achieve. Here, you will define your business aspirations and values. These, in turn, will help you shape the company's vision and mission. It would help if you started thinking about how you'll measure success.
2. SWOT Analysis. SWOT stands for "strengths, weaknesses, opportunities, and threats." Therefore, a SWOT analysis is a type of self-assessment. It helps businesses to focus on resources and capitalize on promising opportunities. Also, it should give insights on improvement-needing areas and potential risks.
3. Target Definition. Now that you know what you're working with, you should focus on outlining your target segment. The target encloses all people who need or want your product or service. A proper target definition prevents investing in unsuccessful marketing campaigns. Also, it saves both time and money.
4. Resources Allocation. A big part of any successful business strategy is correctly dividing resources. This procedure defines who is responsible for doing what.
5. Progress Tracking. Putting the cogs in motion is not enough. You know what you are doing, who you are doing it for, and who is in charge of each task. You now need to find the best way to track your progress. Not only does this helps you to stay on track. Also, it informs you about any changes required on deadlines, goals, and budgets. Identifying the relevant Key Performance Indicators (KPIs) is crucial for this step.
What makes a Good Business Strategy?
Now that we've reviewed a Business Strategy's core pillars, let's take the next step. We'll help you identify the differences between a good and bad business strategy. Further, we'll check and suggest how often you should update yours.
Good Business Strategies
A good business strategy will first identify the problem to solve or get a diagnosis. Here, there's also the setting of guiding principles to address concerns. And finally, it will propose specific and coherent actions to execute those principles.
Bad Business Strategies
Lousy business strategies will not correctly identify or diagnose the problem. Thus, the company will need help to address it the right way. Another highlight of a bad business strategy is that it will mistake goals for strategy. Setting goals is not only positive. Also, it's vital for any business' progress. But a goal is a statement of desire, while a strategy is a plan of action to overcome obstacles.
Further, bad business strategies may contain wrong strategic objectives. These objectives don't need to address critical issues or be realistic. Finally, a bad business strategy tends to contain fluff. This fluff restates the obvious and includes some usual buzzwords. Often, it hides the fact that there is no real thought behind the strategy.
Business Strategy Reviewing
The common consensus is to look at your existing business strategies every quarter (i.e., every 90 days). It might seem too often, but change is constant, as we're sure you know. So, you should regularly review your business strategy to adapt to any changes.
What are the Business Strategy Levels?
There are three levels of business strategies: corporate, business, and functional. Let's take a closer look at these below.
Corporate-Level Business Strategy
Corporate-level strategies comprise a long-term plan focusing on a company's objectives. This strategy ensures that all departments or units work towards the same main goal. It also focuses on gaining a competitive advantage in primary industries or markets. Developing corporate-level strategies is often in charge of the CEO and top management.
Business-Level Business Strategy
This strategy focuses on a specific goal that will, of course, align with the company’s mission. Business-level strategies revolve around a particular industry, market, or business unit. Middle managers are usually in charge of establishing the business-level plan.
Functional-Level Business Strategy
A functional-level strategy plans how the company uses its existing resources. The focus here is on achieving goals in specific areas. It's behind the day-to-day work needed to carry out corporate and business-level procedures.
User vs. Customer in Business Strategy
A customer is who pays for a product or service. Meanwhile, users are the ones making use of a product or service. The thing is, "customer" and "user" can refer to the same or two separate entities. There may also be companies that only have users.
We'll give you an example to make things easier to understand. Let's say you have a mobile game. If it's free, whoever downloads and plays the game is a user (if there's no payment involved, there's no customer). If that person decides to make in-app purchases, they also become a customer. Yet, this might be a children's game where the customer is the parent and the user the child.
User and Customer Acquisition
User and customer acquisition stay vital throughout the life of any business. As user acquisition costs get higher, having a successful strategy is critical. We may be leaning more toward marketing here. Yet, it's worth covering as it's essential to any business strategy. In this scenario, approaches may vary. Some include Content Marketing, SEO, SMO, paid advertising, and referral programs. Let's look at two successful cases.
User Acquisition Examples
● Dropbox used a referral system to offer free extra storage. Users had to invite friends to join the platform to access it. In this scenario, the benefits helped both the sender and receiver. This approach helped Dropbox increase its users by 3900% in only 15 months!
● Shopify offers potential customers a free business name generator. This interactive content strategy is an excellent way to generate leads. Also, it does wonders for brand loyalty.
User and Customer Retention
A good user/customer retention business strategy can help you maximize resources. At the same time, it minimizes costs and efforts. The better your customer service, the more new customers you are likely to get through word of mouth. Let's review two real-life examples.
● SugarCRM is a software company that implements customer surveys to get customers' feedback. The company makes a great effort to hear its customers. Later, it uses this feedback to improve its products and processes.
● Spotify has created a fantastic user retention strategy by providing personalized content. The company uses predictive analysis to customize playlists for users.
Product Differentiation
This strategy centers on setting your products apart from the competition. Here, the focus can be on the product's unique features, design, price, or quality. Product Differentiation helps make products or services more attractive to customers. In turn, it offers a competitive advantage. Let's look at a couple of successful product differentiation strategies.
● Apple is one of the leaders in product differentiation. Its products have a distinct style and unique features. Also, it's well-known for its high quality.
● HubSpot runs an annual marketing event called INBOUND. The reason why the event stands out is that it includes non-marketers as speakers. In contrast, these speakers share personal stories. As a result, the conference is more than a standard marketing event.
Technological Advantage
Staying on top of cutting-edge technology is also a great business strategy. The focus is on research and development and implementing the latest point-of-sale systems. Also, it encloses acquiring tech companies or employees with unique skills. Next, we'll mention two companies that exploited their technological advantages.
● Facebook acquired Instagram back in 2012. This strategy helped the giant to corner the image-sharing market. Also, it gained a technological advantage over its direct competitors.
● Amazon has another example of a technological advantage business strategy. The company invested in delivery drones and launched Amazon Prime Air. In turn, it took a giant leap ahead of the competition.
Sustainability Strategy
All businesses want to make it long-term. Yet, in today's world, this goal encloses sustainability-related strategies. This approach can reduce energy costs or reduce overproduction. They're also an exciting method to create partnerships with non-profit organizations. A sustainable plan not only benefits companies. Also, it's helpful for the community and the environment. Let's see some examples.
● IBM is a prime example of a sustainability strategy. Since the 1960s, the tech giant has been investing in environmental stewardship. Its focus also involves corporate social responsibility. Also, it eliminates single-use plastics and relies on renewable energy.
● Adobe has built LEED-certified offices. Further, it devotes to reducing physical waste and cutting transportation emissions.
Conclusion
Business strategies are at the core of any successful endeavor. Good ones take time and effort but, as we've seen, can reap great rewards. We hope this article serves as a stepping stone. Further, we hope you can rely on it when planning your next business strategy! Are you ready for what's coming next?
