Difference thinking concept.
Many business owners view a strategic pivot as a last resort. After all, if your business is on a positive trajectory already, why consider moving in a different direction? But pivoting isn’t just for startups on the brink of exhausting their runway.
Particularly in the modern business environment (which is increasingly shaped by rapid technological advancement and constantly changing consumer behavior), the ability to change direction quickly and deliberately is key to staying ahead of the competition. A pivot doesn’t have to be a 180-degree turn or a complete transformation of your business model. It could mean changing your marketing strategy or focusing your product development efforts on a feature that has generated the most traction with customers.
Of course, even a relatively small change in business strategy can be tough to pull off, especially if it runs counter to the existing expectations of investors and other members of your team. However, all of your stakeholders—investors, employees, and customers alike—will be more receptive to a proposed pivot if your new direction remains in line with the overall mission and vision you’ve established for your company. As long as your purpose is clear, you’ll find it much easier to explain adjustments to your approach.
Time to Make a Change
The decision to pivot shouldn’t be taken lightly and should always be preceded by careful thought and discussion with your team. If you do ultimately decide on a new course of action, don’t hesitate to pursue it. Instead, embrace the opportunities ahead and fully commit to seizing them. Your new trajectory could involve any number of initiatives. Here are just a few ways you can successfully pivot to achieve massive growth and long-term success:
1. Create a new product.
If your existing product has failed to achieve the traction you’d hoped for, all is not lost. First, try to pinpoint the major barriers to adoption. Start by obtaining feedback from current and prospective customers to gain a better understanding of their needs. You can do this through focus groups, usability testing, customer surveys, or one-on-one interviews conducted in person or over the phone. With customer input, you might find that a slight modification to your offering—the addition or removal of a particular feature, for instance—is all that’s needed to achieve product-market fit.
Feedback from customers might also reveal a significant need in the market that’s not currently being met. You could redirect your resources toward developing a new product or service that fills that gap or look for partnerships with other companies that could help you capture this underserved market. You might also find that customers are in fact already satisfied with your product, and that your lack of traction is simply due to a lack of awareness. In that case, it might be time to modify your marketing approach.
2. Evaluate marketing return on investment.
Not all of your marketing initiatives are going to succeed immediately, and effective marketing is often a process of experimentation. Austin Lyons, digital strategy manager at CMG Local Solutions, explains that business owners must continually evaluate their marketing tactics to ensure the best use of their limited resources. “Measuring digital ad spend is constantly evolving along with the marketing and technology landscape,” he writes. “And just because an investment in paid search wouldn’t have generated as much ROI in 2020 doesn’t mean it won’t in 2022. By measuring the ROI of each tactic in your marketing mix, you can see what is and isn’t working for you and make necessary changes to your campaigns to bring in more revenue.”
In general, aim for a 5-1 ratio when it comes to ROI on marketing spend. And if revenue is anything less than twice your current spend on marketing, then you’ll be hard-pressed to turn a profit, as the underlying costs of product development and distribution will likely lead to a negative return on your balance sheets. On the other hand, if your revenue-to-marketing spend ratio is around 10-1 or better, you likely don’t need a pivot because your marketing is clearly working as is.
3. Automate key business functions.
A pivot could entail making changes to internal business processes to make them more efficient and effective. Any time you can remove manual work related to accounting, payroll management, or other administrative functions, you give employees more time to focus on work that can more directly impact your business’s bottom line. Similarly, you could invest in marketing automation tools to expand your reach and allow your marketing team to focus more on strategies for growing your business.
Today, there are more technologies than ever that are available to business owners seeking to do more with less. However, don’t invest in software that you don’t need. Talk to your employees to identify the tasks that are taking up most of their time and decide whether it could be better spent elsewhere. If so, evaluate the tools available to determine which ones are best suited to fit into existing processes and workflows.
4. Modify your pricing strategy.
Pricing your offering is one of the most important decisions you’ll make as a business owner, as price will heavily factor into customer purchase decisions as well as your ability to turn a profit. You might consider bundling products or features, offering discounts to first-time customers, adopting a price-skimming strategy (gradually decreasing prices over time), or a range of other approaches.
Just remember that you aren’t married to your initial pricing model, and you shouldn’t be afraid to pivot your approach to pricing as circumstances dictate. That said, it’s always easier to reduce prices than it is to raise them. Mike Kappel, founder and CEO of Patriot Software, says: “Pivoting to a new pricing strategy may be worth your while if you effectively communicate changes to your customers, explain the value you’re adding (if you’re raising prices), and keep things fair. The last thing you want is to go from charging $10 to $100 for a product without changing a thing about it.”
Pivoting your strategy is often an essential part of running an effective business. If something isn’t working for you now, don’t wait to make a change. The sooner you adopt a new direction—whether it’s related to product, marketing, operations, pricing, or some other aspect of your business—the sooner you’ll find yourself on the right long-term trajectory.
Source by www.forbes.com