CEOs can no longer rely on market expansion as their primary growth strategy. Instead, impending concerns of recessions and less favorable markets are causing CEOs to rethink their approach to revenue growth. Those who are ahead of the curve are planning to grow by taking market share, and they have a plan in place to move to this new growth model quickly.
The 2019 fiscal year is in the rearview mirror, and 2020 has officially started. Strategic planning is finished, and plans to get off to a fast start in FY20 are in motion. For many CEOs, the strategy and approach used for growing revenue in FY19 will be changing. The macro-environment is in flux, thus making expansion into new markets more difficult. Given that, a trend is emerging amongst companies with aggressive growth goals; that is, more and more companies are planning to grow revenue through market share capture (i.e., competitive displacement) in FY20.
Top-performing companies are preparing for this new growth strategy to thrive in the next recession. Take SBI’s Revenue Growth Maturity Model Diagnostic to assess your recession readiness.
It’s one thing to decide your revenue strategy in FY20 will be to take market share. But what if your revenue strategy in FY19 was market expansion? What changes in your Go-to-Market approach are needed, and where does one start?
There are 3 primary areas a company needs to focus on when shifting from market expansion to market share gain as their GTM model. We will dig into each below.
Change #1: Defining the Market and Competitive Landscape
It becomes even more critical to have a firm grasp on the market and competitive landscape as companies move to a market share gain growth strategy. It first starts by defining the market – where is the company going to focus its share gain efforts, resources, and time. Companies who were previously focused on market expansion likely had a clear definition of the market they were going after. As a company pivots to market share gain, they need to redefine the market(s) they will play in. This should be based on multiple inputs – potential, alignment to corporate strategy, and ability to win are just a few.
After the market has been (re)defined, companies will need to figure out the new competitive landscape. Market share gain inherently means capturing revenue or wallet share from your competitors. So having a clear understanding of who the competition is – both traditional (i.e., industry players) and non-traditional (i.e., “do nothing”) is critical. Once this is known, top-performing companies begin developing “plays” that they run to beat the competition. These plays are aligned to the different competitors types and are executed with cross-functional support.
Change #2: Cross-Functional Interlock
As just mentioned, moving into a new market is not the sole responsibility of a single function. To generate revenue the product, marketing and sales functions must all be aligned on the strategic plan and objectives. Capturing market share often requires these functions execute a different set of activities and have a different set of capabilities. Top performing companies define this prior to changing their growth strategy and address any existing gaps.
As this comes together, the product, marketing, and sales function must also revisit their interlock. What is the optimal operating cadence and what are the inputs each function needs from the other to be successful? How are the functions communicating with one another? And critically, how are the leaders of those functions aligning their success and efforts with the other?
To win in a market share gain environment, these three functions must be operating in unison and have clearly defined roles when it comes to executing.
Change #3: Go-to-Market Execution
On that note, it’s important to highlight how executing a market expansion strategy is significantly different from executing a market share gain strategy. For one, gaining market share means capturing revenue from your customers which currently goes to a competitor – whether traditional or non-traditional. That is a stark contrast form market expansion where the emphasis is largely on capturing new clients or logos.
When it comes to what to do differently, there are both small and large tactics that a company can execute on. Here are some more examples companies making this shift can consider:
Tying It All Together
Companies entering 2020 are gearing up for a different environment. The days of market expansion and focus on new logo growth are giving way to a heightened focus on gaining market share and growing the base. For organizations, it’s not as easy as just declaring the new growth strategy be market share gain. Rather, organizations need to make a few significant changes – redefining the market and competition, aligning the commercial functions and changing the execution tactics – to ensure they are set up for success in this new approach for growing.
Source: Sales Bench mark Index.