Growing the business by penetrating its market more thoroughly is typically the first step a business takes to grow. Your experience with your business’s current markets increases the odds of succeeding using this growth strategy. Wise entrepreneurs carefully assess what untapped sales remain.
If answers to the questions in Market Penetration Opportunities indicate that growth opportunities still exist via market penetration, identify ways to eliminate internal barriers to sales and increase promotional and sales efforts to sell more to current customers or to sell to new customers in your current target markets. This growth strategy is particularly appropriate for start-up and early stage businesses. Keeping current customers satisfied is much easier and less costly than finding and cultivating new ones. For an example of one entrepreneur’s market penetration goal, read FMSI’s story below.
A Bold Goal
Financial Management Solutions, Inc. (FMSI) is gearing up to double its revenues for the upcoming year. “A bold goal, but a doable one,” says W. Michael Scott, co-founder of the Atlanta company that provides performance-management information services to help banks and credit unions schedule tellers, lower costs, and increase productivity.
A new marketing campaign is in the works, but first, FMSI plans to survey current clients from the past two years to better understand why they chose FMSI. That information will be used to craft the campaign and to improve FMSI’s products and services.
To further prepare for its new “big, audacious goal,” FMSI created a formal sales plan detailing individual and incremental steps needed to reach the magic number by the end of the year. As part of the plan, each salesperson knows what to do—including telephone calls to prospective clients and the number of demonstrations and closures required each month.
Still, Scott understands the importance of their existing client base. “We need to have clients as successful as possible because that makes us successful.”
Market Penetration Opportunities
Answer these questions to help you determine if you should consider growing by focusing on increasing
- Are sales increasing as compared to last year? Two years ago? Three years ago?
- What is your sales growth trend and how does it compare to the sales growth trend in your industry?
- What is your market share (if known)? Is your market share increasing or decreasing? Can it be increased?
- Are there additional customers in your market that you are not reaching, and could you target them?
- How can you increase sales to current customers?
- How can you sell to more customers in your current market?
FastTrac Kauffman Foundation