Experts often speculate as to why some businesses have been successful while more promising ones have not achieved their potential. Many have concluded that producing a great product or service isn't always enough to generate revenue, attract customers, or build brand awareness.
Without a strong set of strategies that help prepare for challenges and mitigate risks, it's difficult for an organization to thrive.
A business strategy is an overarching term that is frequently misused or ill-defined. Strategizing is not only about finding ways to make money or attract new customers.
It incorporates everything from pinpointing strengths/weaknesses to employing technologies that streamline workflows to allocating resources properly. Successful organizations frequently review and reassess their strategies to ensure they are useful in achieving long term stability and growth.
Read ahead to understand why business strategy and planning is so important, and which techniques are most useful for building a successful organization.
Examples of Business Strategy
A business strategy refers to the actions and choices made by an organization to achieve key objectives and maintain a competitive edge.
It is used to guide decision-making that influences everything from hiring practices to financial planning. Its purpose is to help departments maximize efficiency and productivity by collaborating to streamline work processes while ensuring that management makes decisions that facilitate this process.
A business strategy has several key components that include a vision, values, techniques, a resource allocation plan, and a metric system to measure performance.
Business modeling techniques such as SWOT (Strengths, Weaknesses, Opportunities, and Threats) are often employed to map out different workflows, find inefficiencies, and plan for potential risks.
Business intelligence tools are a necessary investment to perform data analysis that helps decision-makers learn from past mistakes.
Implementing a business strategy is important for several reasons, including-
- Planning - Strategic planning is implemented to determine the steps needed for an organization to achieve its goals.
- Strengths and Weaknesses - Using a business strategy helps to pinpoint and assess strengths and weaknesses. Stakeholders use this knowledge to take advantage of strengths and control/remove any inefficiencies.
- Productivity - A strategy provides a roadmap for management to distribute resources effectively to maximize productivity and efficiency.
- Leadership - A strategy allows management to effectively supervise and oversee business activities to ensure everyone is meeting goals that improve the organization's overall performance.
- Competitive Edge - Utilizing a plan to meet key objectives allows decision-makers to harness the organization's strengths to maintain a competitive edge.
Many businesses try to increase revenue by selling more products/services to their current customer base. While this strategy doesn't work for every industry, many retailers, banks, and office supply companies have found success with it.
By convincing customers to add more items to their carts, the organization can expand the average size of the cart. Just a tiny expansion can influence overall profitability without requiring the use of resources to target new clients.
2. Create a Cutting-Edge Product/Service
An organization can set itself apart by providing the most cutting-edge and innovative product/service. Within the business strategy, the organization will need to identify what it considers to be innovative and how it plans to achieve that title.
Businesses that market themselves as unique tend to attract curious customers, especially those who have been unsatisfied with status quo solutions.
3. Create New Products to Increase Sales
Investing in the research needed to create a new product can be expensive, yet a necessary component of a business plan.
Many businesses enjoy painting themselves as the first to develop a new product/service because it sets them apart from the competition. Startups with limited resources need to be careful not to over expend resources while investing in product development, though the reward may be worth the risk.
4. Improve Customer Service
Building a reputation for having strong customer service can help improve sales, generate new customers, and increase customer satisfaction.
Businesses may find it helpful to completely reassess their customer service strategy to find problem areas that are affecting customer retention rates. Utilizing a good BI tool to collect customer data can provide the insight needed to pinpoint bottlenecks and make improvements in the future.
5. Corner a Younger Audience
Many larger corporations are partnering or buying out a competitor to attract a younger audience. This allows a business to compete when it wasn't able to before by eliminating the threat of another competitor.
Smaller businesses that don't have these types of resources can still develop products and services that market to a younger audience. If the product/service is high-quality and appealing to a younger audience, a small business still has the opportunity to reach that segment of the population.
6. Differentiate Products
Businesses commonly employ product differentiation to highlight their unique attributes that deliver value to customers and investors.
Utilize marketing tactics and messaging techniques that pinpoint the organization's superior pricing, elements, or technologies can help to stand out among competitors. Both small and large businesses use this relatively inexpensive strategy to lure in new customers and maintain current ones.
7. Use Good Pricing Strategies
Employing a pricing strategy may be a complicated endeavor for startups that need to generate profit but still attract new customers. Businesses can price items low to gain new clients or choose to market themselves as a luxurious brand.
Low-priced items need to be sold at a higher volume because profit margins will be lower. On the flip side, upscale companies have to focus on maintaining the quality of their product/service to justify the high expense to customers.
8. Incorporate a Technological Advantage
In a high-tech world where everyone is looking for the latest gadget, companies that market their products as technologically superior have an advantage.
Of course, this requires the organization to invest in research and development to gain access to the type of technology necessary to generate the product. It also necessitates using good hiring practices to ensure workers have the unique capacity to deliver a technological advantage to the business.
9. Increase Customer Retention Rates
It costs less for an organization to keep its customers than it does to market to new ones. Utilizing techniques to improve customer retention is a good strategy that requires the organization to pinpoint best practices for maintaining customer satisfaction.
It also necessitates using a BI tool to finding and eliminating inefficiencies and problem areas, including poor customer service or bad pricing strategies.
10. Sustainable Branding Strategy
Sustainability is an approach that generates value by considering how the business functions in the ecological and social environment. It requires understanding the latest social, environmental, and political issues and curating products/services to market to the audience interested in those issues.
While this strategy may backfire if the organization takes an extreme position that turns off large segments of their target audience, incorporating a degree of sustainability usually helps to elevate the business, improve its reputation, and attract new customers.
In conclusion, here are the key takeaways to remember about business strategy and planning-
- A business strategy encompasses the choices and actions taken to increase revenue, improve brand recognition, attract customers, and maintain a competitive edge.
- Components of a business strategy include a vision, values, tactics, a resource allocation plan, and metrics that measure performance.
- SWOT analysis is employed to map out workflows, pinpoint inefficiencies, and prepare for challenges.
- A business strategy is important for planning, mapping out strengths and weaknesses, increasing productivity, streamlining leadership activities, and maintaining a competitive edge.
- Tips to improve a business strategy include cross-selling, creating a cutting-edge product/service, creating new products, improving customer service, cornering a younger market, differentiating products, using a good pricing strategy, incorporating a technological advantage, increasing customer retention rates, and building a sustainable branding strategy.