There are two directions to grow your business, vertically and horizontally. Vertical growth is selling more to your existing market and expanding your share of that market. Horizontal growth is selling new
products or services experiences to your existing market and adapting your offerings to fit new markets. At least that’s the way I look at it. An MBA would tell you that horizontal growth is all about acquiring companies in other sectors. That’s not very useful to most small businesses.
When you start thinking about growing your business horizontally it’s really helpful to properly understand what it is you’re selling. Don’t get me wrong. I’m sure you have a masterful understanding of your products and the services you offer.
That’s not what you’re selling though. People don’t buy a drill because they want a drill. They don’t buy cold medicine because they want cold medicine. People buy drills because they want holes. They buy cold medicine because they want to stop coughing and be able to breath clearly.
You’re not selling products and services. You’re selling experiences. If you happen to sell drills you’re selling the experience of hole creation. That experience has real value to a variety of markets. Drills can be marketed to construction companies, whose work depends on making holes. They can be marketed to the do-it-yourself enthusiast, who finds great value in the freedom to create holes. As a final example, drills are valued by arts and crafts types because drills allow them to adapt and create new things that just needed a hole or two.
Each of these groups buys drills, but they respond to different packaging. The foreman wants commercial grade reliability and power. The do-it-yourselfer seeks economy and versatility. The crafts person might desire the ability to make small holes in delicate materials.
OK, enough about drills. What experience do you sell?
Restaurants sell a dining experience, where someone else does the cooking, cleaning and worrying. Consultants sell learning experiences that result in some sort of improvement. Cafes sell a variety of experiences without even thinking about it. They sell a social experience, a morning caffeine experience, a warm studying experience and more.
So, how do you turn that into horizontal growth? Package it.
A restaurant could offer a romantic dinner package, with champagne and a private candlelit table. For lunch they could offer a business lunch package with two lunch dishes, two sides, and two drinks, plus you get to sit at a four-person table even though you only have two.
Give it some thought, and I bet you can think of a way to package what you already sell so that it appeals to a type of person that isn’t already shopping with you as much as you’d like.
Another opportunity for horizontal growth is selling something you already have, but don’t sell. There may be a byproduct of your operation that has value to someone. For example, when coffee is decaffeinated the extracted caffeine is sold to make caffeine pills.
More likely, you have knowledge that you aren’t leveraging. If you own a plant shop then you should offer weekend gardening classes. Once you have that down, why not write a book or make an instructional DVD? It’s insanely easy to self-publish these days.
Whatever you end up discovering and packaging, you’ll need to market it. Email marketing remains the most cost effective method of reaching out directly to people. Direct mail still works, but can get very costly, especially if you want to purchase a mailing list based on demographics. Direct mail is pretty affordable if you just do a standard postcard. You can send a custom color postcard out to your customer base for about $0.50 per person. E-mail is more like 2 or 3 cents per person. Either way, when you launch a new package send out a limited-time discount or coupon to your list to get things rolling.
If you find a package that’s popular you can try repackaging it as a continuity program. You know, a something-of-the-month club. You could create a romantic dinner club, with easy monthly billing. Something-of-the-month clubs have been around a long time. The first that I know of is the Book Of The Month Club, which started in 1926. Today, if you google “of the month club” you’ll get 10.2 million results. Be sure to treat your customers fairly in your continuity programs. Do that, and it shouldn’t be hard to at least break even, assuming you already have the ‘something’ to sell each month.
This post first appeared in my monthly small business newsletter.