I want to tell you about Jay Abraham’s Three Ways To Grow A Business.
This is very different from the famous Ansoff Business Growth Model which can be thought of as the four ways to grow a business.
The Power Of Business Models
One of the big advantages of uses a “business model” is that it helps create a shared view of the way the business works and the way it can be improved. That’s the same when you use a strategic model to look at the environment like Michael Porter’s Five Forces.
I make this point in my Profit Tipping Point Report but there is a tendency to over-complicate business and focus on too many tactics without getting the bigger things right.
The Three Ways To Grow a Business
The three ways to grow a business are:
- Increase the number of customers who buy
- Increase the average sales transaction value
- Increase the number of times a customer buys
It’s a very useful framework because often when you look at strategies to grow the top line, the automatic focus is winning more customers (method 1) and little attention is given to getting more sales from the existing customers in terms of selling more and more often.
The Three Ways To Grow A Business Video
Here is a link to a short video of Jay Abraham explaining the three ways to grow a business on YouTube (sorry it can’t be embedded into my post).
The Three Ways To Grow A Business Model Helps You Look Beyond Getting More Customers
If you don’t have many customers, then attracting more will inevitably be your main focus but if you already have a large number of customers, it’s well worth looking at the second and third ways of growing the business.
How Do You Use The Three Ways To Grow A Business Model?
You sit down and brainstorm the two questions:
- How can we persuade customers to increase the value of what they buy? This will lead to answers ranging from “have a price increase” to cross-selling existing products in a much more structured way through to adding new products into the range which your customers will buy before, at the same time or after they buy your main product.
- How can we encourage customers to buy more often?Your answers will depend on whether you meet primary demand (where customers are free to buy from you as often as they want e.g. a restaurant) or secondary or derived demand where they only need to buy when they sell (parts for original equipment manufacturers). The restaurant can encourage customers to visit more often by having special events and experiences, the OEM parts supplier needs to looking at ways to win more share or find some way to help the OEM sell more.
Jay Abraham’s three ways to grow a business model has been around since Jay became established in the eighties. It is well proven and underpins many of the consultancy/coaching frameworks, even if we’ve tried to give our own unique approach to it.
Paul Simister is a differentiation coach who helps small business owners to profit from differentiating their businesses, being distinctive in the eyes of their customers and standing out in a crowded marketplace.