Business Growth Concept Lecture Notes

Introduction

• Key concept: Business growth through a self-reinforcing system.
• Goal: Sustainable growth without continuous input of more effort/money.

The Growth Loop Process

1. Initial effort and money from founders or investors.
2. Get customers through advertising and sales.
3. Customers get results.
4. Results generate reviews and word of mouth.
5. Reviews drive new customers.

Common Business Issue

• Many businesses lack a good process to generate reviews and word of mouth.
• Result: Linear growth requiring continuous effort and money.

Tactics for Sustainable Growth

Tactic 1: Surprise Gift & Third Party Ask

• After delivering service, offer a proportional free gift.
  • Example: Mints for $20 purchase, dessert for $100.
• Use reciprocity:
  • Not the service provider, but a manager asks for a review.
  • Customer motivated to help the service provider by leaving a review.
• Reviews are critical for business reputation and growth.

Tactic 2: Merchandise Incentive

• Offer merchandise in exchange for multiple reviews.
  • E.g., T-shirts for reviews on Yelp, Google, Facebook.
• Increases digital and organic word-of-mouth.
• Suitable for B2C or recurring revenue businesses with brand affinity.

Tactic 3: Discount Strategy

• Offer discounts in exchange for reviews at the point of sale.
• Effective immediately instead of future discounts.
• Steps:
  1. Present price and offer discount.
  2. Verify review.
  3. Recalculate and finalize the price.

Tactic 4: Unlockables (Bonus Tactic)

• Unlock additional services or media content for reviews.
• Suitable for B2B or digital services.
• Encourages trial of higher service levels, potentially leading to upsells.

Importance of Reviews

• Reviews are critical for word of mouth, impacting search volume and customer decisions.
• The business growth system should:
  • Enable a loop: customer results -> reviews -> new customers.
  • Allow the business to be self-sustaining without continuous founder input.

Conclusion

• Implementing these tactics creates a self-reinforcing growth cycle.
• A business without this loop remains dependent on continuous input of effort and money.