When it comes to growth strategies for a small business, sometimes you have to take a page out of the playbook of some of the biggest and most successful businesses in the world. In this post, I’m going to share how I adopted and adapted three big concepts from Amazon, Tesla, and AT&T to grow my own business. Keep reading to learn what they are and how you can apply them to your own operation.
Table of Contents:
- The Adopt and Adapt Business Growth Strategy
- How To Use The Adopt and Adapt Growth Strategy for Your Business
- How to Use Quotes, Proposals, and Contracts in Your Growth Strategies
- The Pricing and Consumer Psychology Growth Strategy
- Leverage Consumer’s New Attitudes
- The Free Phone Pricing Strategy
- A Hybrid Approach to Pricing
- High Profits and Making it Easy to Do Business Go Hand in Hand
- Use Systems and Templates for Repeatable Processes
- The Value of Ideas
The Adopt and Adapt Business Grow Strategy
When it comes to the adopt and adapt growth strategy, start by looking at large successful companies. Then consider how you can Implement the best practices from these companies, even if they’re not in your industry.
- Look at what you can change about your business model to be more competitive
- Mimic the way successful businesses market their products or services
- Adapt their ideas for organizational processes and structures that work well
It was with this mindset of observing other industries that I was able to grow my plant service company. Not only did my company grow but, it also made by business easier to run and, more profitable.
First we’ll look at the three growth strategies that I adopted and adapted from Amazon, Tesla, and AT&T to grow my business. Then I share how you can apply the adopt and adapt growth strategy concept to grow your business.
Amazon’s Growth Strategy: Make It Easy for Customers to Do Business With You
Let’s start with Amazon, the behemoth online retailer. One of the great concepts Amazon used from their beginning to grow so quickly was, and is, a relentless focus on making it easy to do business with them. To this day no one is as easy to do business with as Amazon. They have gotten so good at it in fact, it is almost at the point where all you have to do is just think about a product and it shows up at your front door the next day.
Tesla’s Growth Strategy: Create Templates for Repeatable Processes
Next is Tesla Inc., the manufacture of all-electric automobiles and other innovative products. Tesla was founded in 2003. It started as an innovative all-electric sports car manufacture by the engineers Martin Eberhard and Marc Tarpenning in San Carlos, California.
Since that time, the company has been taken over by it’s current CEO Elon Musk and now has factories around the world.
Tesla builds their large high-tech automobile plants called, Gigafactories at record speeds.
In Shanghai for example, the Tesla factory went from bare land to producing its first car in under a year!
And the Berlin factory at the time of building is expected to get under way even faster than the Shanghai plant.
How does Tesla build its Gigafactories so quickly? Unlike other manufacturers and one-off builds, Tesla created a template for their Gigafactories. Among other tactics, Tesla uses templates as a growth strategy. They know exactly what’s needed and how to put it together, every time. Buy having a proven template in which to build their factories they are not only able to build them at record speed, but the quality is more consistent and easier to adapt and control.
AT&T’s Growth Strategy: Structure Your Pricing Model Around Customer Lifetime Value
Finally, there’s AT&T the 100 plus year-old telephone and tech company. What I really want to share here is how AT&T sells their cell phone service. Which is how all cell service carriers sell their services. (tong twister!)
The growth strategy here is a twofold concept. It’s a pricing concept based on customer lifetime value and by lowering the financial barrier to entry it also makes it easy for customers to do business with them.
The question is, how is it that AT&T can afford to give away $800.00 phones?
Now, we know that an $800.00 phone does not cost AT&T $800.00, but it does cost them something. And as consumers we get excited about acquiring a cool new phone for free. Even though in the back of our mind, we know that it’s really not free. We know we’re paying for that phone somewhere in all those tricky numbers and contracts. But we’re willing to overlook, or not think about the cost because they have made it so easy us to get what we want.
So, the answer to how these service providers can afford to give away phones lies in the lifetime value of each customer. The service providers know on average how long they can expect a customer to stay with them. Using the average lifetime value of a typical customer they can calculate how much profit they’ll make from each subscriber. Can you adapt this growth strategy to your business?
In its simplest form the service provider starts with the cost for just the service, then they take the cost of the product (phone) and divide it by the number of months in the contract. They take the monthly cost of the phone and add it to the service cost for a single total monthly amount.
Free phone? Mmmm, not so much. Easy to get a cool new phone with service? Absolutely!
If you run an interior plant service business this might sound familiar. I’ll speak more about that in a minute. First I’ll break down how I used each of these growth strategies for my business. And hopefully give you some inspiration you can adopt and adapt to make your business easier to manage and more profitable.
Keep reading for the “How To” application of these strategies …
How To Use The Adopt and Adapt Growth Strategy for Your Business
This first one is based on Amazon’s growth strategy, Make it easy for customers to do business with you, plus, AT&T’s Structure your pricing model around customer lifetime value.
Don’t Make Them Jump Through Hoops Growth Strategy
Your prospects aren’t circus dogs. Just like you, when they are interested in something, they want the fastest and easiest rout to get it. From finding you, to understanding your offer, to contacting you and finally, doing business with you. One of the best growth strategies is to think of all the ways that you can reduce the barriers at each step along the way to doing business with you.
The Consumer’s Path to Purchase
Following is a list of the essentials for making it easy for customers to do business with you. Starting with your customer’s initial awareness of your offering, to the moment they make a purchase.
Start with your brand message. Your brand message should be the number one strategy you use to grow your business. It is foundational to everything else you do. So, be sure to get it right.
- Make it clear who you are, the customers you serve, problems you solve, and the results you get.
If your prospective customers don’t know about you they can’t do business with you.
- Develop a referral network
- Have a strong SEO presence
- Include your phone number in your meta description
- Create a complete Google Business Listing page with reviews
- Consistently use your graphic and message branding everywhere (vehicles, business cards, website etc.)
- Use social media
Prospects don’t and won’t dig through your website to find the basic information they need.
- Provide everything they need on the first screen they see (above the fold area)
- Include Who you are, what you provide, how you help them
- Call to action
- Phone number
- Contact form or button
How to Use Quotes, Proposals, and Contracts in Your Growth Strategies
Note: I am not a legal professional. Nor am I offering legal advice. It is recommended you have all contracts and service agreements reviewed by a qualified attorney before offering or entering into an agreement.
When it comes to growth strategies quotes, proposals, and contracts are areas not often thought of. But think about how you can remove barriers that might cause hesitancy to move forward from your prospective customers. Consider the following.,
- Offer several options to get in touch and get a quote. Online, phone, in-person, email, text
Don’t make the prospect wonder how to get started. Give a complete proposal with everything they need to start right away. In your proposal package in addition to listing the product/service and price be sure to Include:
- Product Pictures (if applicable to your business)
- The contract
- Total amount due (ask for the total amount upfront instead of a deposit. This removes one more step for you and the client plus, it improves your cash-flow)
- List the type of payments you accept (and accept several types of payment.)
- What they need to do. (sign and return contract with payment etc.)
- Tell them how to pay
- Let them know what to expect next (delivery times, who will contact them, and when etc.)
- Minimize the number of pages on your contract
- If you offer a service consider offering a month-to-month agreement rather than longer terms. If you provide good service and most of your customers stay with you for a long time this shouldn’t be a problem. And it reduces any hesitancy the prospect might have in doing business with you. An exception to the month-to-month agreement would be when you have to cover cost over the term of the contract. Like a lease or rental agreement for example.
The Pricing and Consumer Psychology Growth Strategy
” It’s not the price you charge that matters as much as the consumer’s perception of the price. “
Talk about a growth strategy!
Large companies spend millions of dollars on research and consumer psychology around the subject of pricing. The pricing approach you use will depend on your product/service and the market you serve. For example, luxury items that are expressed in whole dollar amounts are perceived to be more expensive then fractional or odd amounts. $500.00 is perceived as expensive vs. $497. Or even $497.95. Luxury items are expressed in whole dollar amounts because people buying them like the status of being able to purchase expensive things. For most other items, consumers like to feel they are getting a bargain.
If you are competing against other contractors offering the same items, price your products like this:
- Avoid rounded dollar amounts. Use $697 vs. $700.00
- End your dollar amounts in odd numbers and mix it up $597, $363, $489.
- Use fractional dollar amounts like $497.95. It shows the buyer that you worked hard to give the best price possible.
Leverage Consumer’s New Attitudes
Before buying products online was common practice, a contractor would ask for a deposit up-front, then the balance would be due upon or after installation. But thanks to Amazon and the online retail world, people have come to expect to order a product, pay for it in full, then wait for it to arrive.
Because people are used to paying in full before receiving their order why not do the same with your business?
I can tell you from experience that it works and, it does wonders for your cash-flow.
So, with knowledge of pricing psychology and consumer behavior in mind, look at how you can use them to make it easier for your customers to do business with you.
The Free Phone Pricing Strategy
In my example here I’m using an interior plant service company. If you are not an interior plantscaper, think about how you can adapt this growth strategy to your business.
Most interior plant service companies will offer the customer the option of purchasing the plants and pots and then give a separate price for monthly service. Or they will lease/rent the plants and pots listing both the monthly rental amount and the service amount.
A Hybrid Approach to Pricing
Consider this hybrid approach. What if you could offer your customers free plants (product) when they subscribe to the regular plants service, and at the same time have all of your out-of-pocket expenses paid, Up Front?
Yes, give them free plants (product) as a growth strategy. Not a rental or lease. And still have all your expenses covered before you ever deliver the products. This will not only give you a huge competitive edge and improve your cash-flow but, you’ll also receive strong profits over the life of the client. As your client is likely to continue service with your company even after the initial service terms expire.
Here’s how it’s done:
- Write up the estimate showing the full retail amount for the plants and pots
- Give a credit equal to the full dollar amount of the plants
- Note the credit on the estimate as “Free Plants”
- Charge only for the pots and delivery
- Charge enough for the pots and labor so that the profit will cover your cost of the plants, labor, and a little left over.
- Divide the retail cost of the plants by the number of months in the service terms (12 months, 24 months) and add the amount you calculated for the plants to your monthly service amount
- Receive payment in full up front
Doing this lowers the barrier of doing business with you significantly, making it easy for the customer. Plus, all out-of-pocket expenses are covered. And it gives you a huge competitive edge while at the same time giving you a great profit over the life of the customer.
At this point you might be thinking: “What if I give products for free and they cancel service before I make a profit?”
For starters, remember you have all your expenses covered up front. Worst case scenario, you break even if they cancel early. But if you look at your history with clients you’ll likely see on average they stay with you long enough to make your full profit. In fact, with this example, you are profitable by the second month of service.
However, the key to locking in profits and lowering your financial risk is found in the contract (service agreement).
In your service agreement be sure to include terms for the length of service, 24 months or whatever they need to be to make your full profit.
Then, include an early cancellation policy that states: If the client cancels service before the agreed terms, payment is due in full for any credits given for the plants (or other product). In other words, if they cancel service early they need to pay the full retail price for the plants. Thereby lowering the risk of cancellation and if they do cancel you’ll make your full profit.
High Profits and Making it Easy to Do Business Go Hand in Hand
I have two things to say about making it easy for customers to do business with you.
One is the Philosophical and the other is the Practical.
The philosophy is this:
” If you make it easy for people to do business with you – A lot will “
The practical proof that it works is this:
Once I adapted and began to use the pricing and free product growth strategy described here two amazing things happened.
More Business and Compounding Profits
The first is that I won about every proposal I gave. And the second big win is that most customers would stay with the service long after the initial terms expired. And that meant every year after the initial terms, my profits would compound. Making if more profitable with every passing year. It also meant I didn’t have to raise service rates very often and that gave clients another reason to stay with the service.
You’ll need to workout the details to make this work for your business but, it’s well worth the time and effort it takes.
Now that we’ve covered what we’ve learned from AT&T and Amazon let’s look to Tesla for our last growth stagey.
Use Systems and Templates for Repeatable Processes as a Growth Strategy
Earlier I mentioned how Tesla Inc. builds their Gigafactories at record speed by using a template. Now we’ll look at how you can use the same growth stagey to get your business running like a well-oiled machine.
The philosophy of a “Systems” run business is this:
” Let Systems Run Your Business – Hire and Train People to Run the Systems “
5 Steps to Create a Systems Run Businesses
A systems run business is an overall growth strategy that effects every area of your business. Systems offer several benefits that make running a business less stressful, more efficient, profitable, duplicatable, and immensely more valuable than a non-systems run business. With systems in place, you and your team will stay focused and continually get better. And you’ll manage your time better giving you more control over your business and personal life.
The strength and longevity of buildings, and businesses is based upon the stability of the foundation. Therefore, it is in your best interest to take the time and effort to shore up the foundation of your business. And that foundation starts with vision, values, and mission.
- Start With Your Vision, Values, and Mission
You can have all the growth strategies in the world. But without clear vision, values, and mission statements set in place you’ll make growing your business more difficult than it has to be.
Your vision, values, and mission statements are your true north. Every decision, idea, policy, or process must align with them.
Vision, values, and mission statements keep the whole team focused and moving in the same direction. They also allow team members to make decisions that will advance your business without being micromanaged.
Your vision, values, and mission statements will make it easier to,
- Create systems and processes
- Train team members
- Make decisions
- Hire the right help
- Evaluate performance
- Create your brand message
- Connect with prospective customers
2. Record Your Current Processes
After you have your vision, values, and mission statements in place, create a separate document for each of your processes.
Start with writing down what you currently do to complete the processes for each area of your business, such as accounting, sales, purchasing, deliverables etc..
For example, how do you receive payments, acquire products, or what are the steps you take to perform a sales call? All of these operations need to be recorded step by step.
3. Make Simple Checklists
An easy way to record your processes it to make a checklist for each task. List each step that it takes to complete a task. This is one of the easiest ways to ensure consistency, reduce mistakes and keep everyone moving in the same direction.
4. Evaluate and Improve
Creating processes is never a one-and-done task. Maintain a mindset of constant improvement. You want to ensure that your business is as efficient, profitable, and as enjoyable as possible. Here are a few ways you can evaluate and improve your processes.,
- Seek feedback from the people that perform the tasks
- Evaluate the strengths and weaknesses of your business and individual team members including you.
- Try new ways of doing things and evaluate for effectiveness
5. Keep learning
In business and life, the learning never ends. There are several great books and courses on growth strategies to help you build your business. Additionally, look to other businesses and industries. What else can you learn, adopt, and adapt to grow your business?
The Value of Ideas
Ideas are a valuable commodity, no matter the size of your business. By looking at what other companies in different industries are doing and adapting those growth strategies to fit your own small business, you can give yourself an edge over the competition.
I’ve shared some great ideas that you can start using today to grow your small business, but I want to hear from you too.
What tactics have you borrowed from other businesses or industries to help fuel your own growth?
Let me know in the comments below and be sure to share this post with your fellow entrepreneurs!