Understanding organic growth can help your organization reach its revenue and performance targets without external help.
What is organic growth?
Organic growth is a business strategy that seeks to increase growth from the internal efforts of a company. It is a vital performance metric that proves an organization can increase its earnings, revenue, customer base and market share through efficient management and industry best practices.
Organic growth requires the effective and efficient use of in-house expertise, capabilities, skills, experience and brand visibility. It depends on an organization’s ability to expand its business with existing customers and add new clients. Organic growth reflects the quality of leadership and a firm’s commitment to long-term development goals.
Organic growth differs from inorganic growth, which depends on mergers and acquisitions, takeovers and other strategies that increase a company’s assets, liquidity and liabilities. For organic growth to occur, the expansion must come from within the firm’s existing businesses. Successful companies pursue organic growth with multiple strategies and have extensive capabilities to achieve strategic objectives.
Why is organic growth important?
Organic growth is a critical success factor because it motivates an organization to gain the skills and expertise it needs to grow its business from within. This can translate into a broad range of benefits, including:
- Increased output: Since organic growth requires using available resources to grow a business, firms who use this strategy must increase output to meet the varied demands of their customers. To increase output, organizations need to identify target markets willing to pay for their products and services.
- Customer base expansion: Organic growth requires the expansion of a company’s customer base. The organization pursuing this strategy will increase its business with existing customers. It will also create improved promotional and marketing tactics to reach more leads and convert them to buying clients. This increases the firm’s brand visibility and boosts its ability to meet and exceed revenue and profit targets.
- New product and service development: An expanding customer base means more agile product and services development to better serve the unique needs of specific market segments. Organic growth objectives help organizations improve their research and development efforts, understand their customers’ needs and create products and services that solve the market’s problems.
- Improve investor confidence: Sustained organic growth can increase investor confidence in a company’s ability to deliver growth and meet shareholder expectations. Organizations that can use resources to meet business goals often attract investors and enjoy higher stock market values.
How to increase organic growth
Generating organic growth requires the efficient use of available productive resources and capital, sound management and an in-depth understanding of your customers and industry. Here are eight proven strategies to increase your company’s organic growth:
- Know your customers.
- Define your target market.
- Create a unique brand image.
- Invest in existing high-growth activities.
- Create new offers.
- Improve performance.
- Track key performance indicators.
- Identify your core strength.
1. Know your customers
An important strategy for increasing organic growth is to research and understand your ideal client. Having a clear understanding of your market makes it easier to make informed decisions during product and service development. Your marketing efforts will also be more effective because you can focus your campaigns on the preferences and needs of the target customers.
The information you generate from client research can help you craft relatable brand messaging and improve your market position. It can help you exploit gaps in the marketing efforts of your competitors, develop high-value product and services offerings and create powerful sales plans that address the main concerns of a willing market.
2. Define your target market
Increasing growth organically requires identifying target markets and focusing on niches that are most likely to buy your business. Selling your products and services to every market can waste marketing and sales resources.
A more effective approach is to focus your marketing efforts on target segments of the market where your business has a record of success. Targeting people in the same demographic or interest group as existing clients can increase your customer base and revenue.
Directing marketing efforts at niche markets can help you create distinct products and services that will best serve different customer preferences. You will also be able to design more specific marketing campaigns and engage each buyer segment on the right platform to improve communication and get actionable feedback to improve customer satisfaction.
3. Create a unique brand image
A great way to increase organic growth is to differentiate your company’s voice and brand image from competitors. A unique brand differentiator sets your business apart from competitors through distinct products, services, features or benefits.
A unique image allows your firm to develop a distinct brand voice that highlights the value clients can get only from your company. This can put you ahead of the competition and increase your market share, boosting revenue and profits.
For your brand differentiator to deliver increased organic growth, it should be factual, provable and relevant to the target market. Your messaging will provide verifiable evidence of the value customers will get from your products or services. It will also demonstrate how your expertise solves clients’ problems and other features that make you the best solution for their challenges.
4. Invest in existing high-growth activities
One of the best paths to increased organic growth is to reallocate resources from different aspects of a business to existing activities that deliver higher returns. This can involve investing in a bigger factory to improve the quality and quantity of a product that enjoys a wide acceptance among customers.
The company may also redirect resources from traditional marketing to digital advertising to better target its customers on their preferred social media networks. For this strategy to yield positive results, the organization needs to analyze its operations and identify those that will deliver better results with increased investment.
5. Create new offers
Another effective strategy to improve organic growth is to create new products, services or business models. This requires an in-depth understanding of the company’s target markets, their needs, preferences and interests. The data from client research will help identify the various market segments that use the company’s products and gaps in customer expectations.
You can use these inputs to design and develop improved products and services that address the unique needs of specific customer segments, gaining more buyers and increasing revenue.
Organic growth can also come from new business models. Improvements in technology and consumer behavior provide more ways to serve the market. Try to identify or create new business models and gain a significant market share before the competition.
6. Improve performance
If you have identified your customer base and developed products and services that meet their needs and expectations, improved performance can also result in organic growth. The company can reinvigorate its sales strategy to increase repeat business and gain a higher market share in other regions. You can also create new pricing systems that better address the customers’ spending habits, financial status and period of life.
Organic growth can also come from rethinking your marketing strategy. It can involve cutting resources from classical marketing methods and spending more on digital advertisements that allow you to target specific customer groups with precision.
7. Track key performance indicators
Measuring performance metrics is an important aspect of organic growth. This activity allows you to identify successful and underperforming campaigns, products, services and business models. You can scale high-performing offers and stop or adjust others to improve results.
A key function of performance metrics is data analysis. You need to know how to collect data from multiple sources to assess your firm’s health. The organization should also be able to analyze the data and draw actionable insights that will improve decision-making and the achievement of business objectives.
8. Identify your core strength.
A company can use a single path or multiple strategies to achieve organic growth. Some industries allow firms to increase internal expansion with resource reallocation, creation of new offers and improved performance. Others may only choose one method to boost organic growth. To create sustainable growth from within, identify your organization’s best strengths and continue to improve them until you become a market leader.
Examples of organic growth
Organic growth can result from a firm’s investment activities, creation efforts and performance metrics. Here are examples of organic growth:
- Investment: A 10% increase in investment in research and development efforts in the second half of a company’s fiscal year is an example of organic growth. The company will often give reasons to justify the allocation of more resources to a division. It will also provide details of how the investment has helped the organization move closer to its goals.
- Creation efforts: Another example of organic growth is the development of new products. A company in the food industry might create organic growth by producing different varieties of vegan meat substitute to tap into the growing market for plant-based animal protein alternatives. It will provide figures about the growth in customer base and revenue through the new products.
- Improved performance: A 25% increase in online sales is an example of organic growth if the company achieved this feat through internal efforts.