Seven Strategies for the Second Growth Curve (Part 1)

What is the second growth curve? How can we use the second growth curve to achieve growth breakthroughs in the fierce competition? If you want to know more about the second growth curve, please come and learn more!

Many industries are becoming more and more involuted, prices are getting lower and lower, and traffic costs are getting higher and higher. How can we achieve a simultaneous increase in volume and price in the fierce competition? Today, let's talk about how to use the second growth curve to achieve growth breakthroughs?

1. Concept Analysis

What is the second growth curve?

Growth is an eternal proposition for enterprises. When our main business, main products and main channels show signs of sluggish growth, we must open up new formats, new battlefields and new performance.

The second growth curve has seven strategies, including three tactical and four strategic ones:

Tactical:

The second growth curve includes: starting from the end, making the hidden visible, and making the curved straight ;

Strategic:

The second growth curve includes: small as big, low as high, light as heavy, and wrong as right .

2. Tactical Second Growth Curve

1. Begin with the end in mind

No matter how loud the brand slogan is, most of us merchants are product-centric and customer-assisted. When growth is sluggish, we need to make three changes:

1. Shift from product value to customer value;
2. Transform from product selling point to customer buying point;
3. Transition from industry classification to mass category.

Why do I say so?

From the perspective of the capital market, whether a company is ultimately worth investing in does not focus on the conversion rate and GMV of a single transaction, but on the customer journey map, customer life cycle, and customer lifetime value. When we have 100 SKUs and are desperately looking for traffic, channels, conversions, product promotion, and sales promotion, we may fall into what Lei Jun said, "using tactical diligence to cover up strategic laziness."

Because customers don’t need our products, they need solutions to their problems. In other words, we should not use product value to cover up customer value, which is what customers need most. It is not important how much our product value is, but how much customer value is, which is the key to the problem.

We have an empirical data:

• When we are able to extract product selling points from the customer's perspective, our sales will increase by more than 2 times compared to without core selling points;
• When we can extract the customer's buying points from the customer's perspective, our sales will increase by more than 4 times compared to just introducing the product's selling points;
• When we are able to extract popular categories from the customer's perspective, our sales will increase by about 10 times more than industry categories that do not have the attributes of popular topics, self-propagation and conversation.

2. Using the hidden to make the visible

Programmers have an industry term called "fault tolerance". It's not enough for us to write the software. How will the customer use it? If the customer enters letters in the mobile phone number column, will the system make a mistake? If the customer writes the amount in RMB instead of USD, will the calculation be wrong?

Similarly, when we make products, we always think positively and don’t pay much attention to customers’ hidden needs. Let me give you a real example: Haier washing machines have a very high complaint rate in Sichuan. After field investigation, it was found that local residents used washing machines to wash potatoes. This is very strange because it is not a product function, but a customer education category. But Haier does not think so, and they have developed a washing machine suitable for washing potatoes.

Innovation is a typical way to develop customers' hidden needs.

Customer explicit demand is the root cause of product homogeneity;

Customers’ hidden needs are the source of corporate innovation.

To achieve the transition from explicit demand to implicit demand, three changes need to be made:

1. From capturing traffic conversion to capturing customer churn;
2. From capturing customers' concerns to capturing customers' worries;
3. From capturing customers in the same industry to capturing customers in different industries.

The cost of developing a new customer is equivalent to the cost of maintaining 7 old customers. Why do old customers churn? It is mainly due to hidden demand.

So where is the hidden demand? First of all, it is in the churn rate. The churn rate can be divided into three types : positive churn, zero churn, and negative churn .

1. Positive churn means that customers have a good impression of the business, but then they don’t buy from the business. What is the reason? The main reason is that they can’t find the memory. It is similar to the scene when we look for a car at the airport or shopping mall. If there is no sign and memory point on the scene (lack of a mental medium), we can’t find the car at all.
2. What is zero-point churn? It means that customers have no impression at all. Just think of developing a photo. When the same picture is exposed multiple times, the photo becomes blurry. If the merchant is talking about the industry selling point and all the peers are talking about it, then there is definitely no impression.
3. What is negative churn? Obviously, it means that customers are dissatisfied. In order to close deals, merchants only talk about what customers care about and avoid what customers worry about. In many cases, our definition of customers is too narrow, thinking that only those who pay directly are customers. In fact, those who do not buy our products but help us promote are also customers; those who can achieve partial delivery in a large solution are also customers; those who do not buy our products but our technology can be used are also customers.

3. Make the crooked straight

For entrepreneurs with rich practical experience, it is impossible to reach the top of Mount Everest in one step along a straight line. Depending on the matching of ambition and ability, they often have to establish a base camp and several camps in a roundabout way to achieve the goal.

The core of turning the curve into the straight line is to achieve three major transformations:

1. From grabbing market share to grabbing scene share;
2. From grasping functional requirements to grasping behavioral sensations;
3. From grasping the professional height to grasping the mass breadth.

Market share is a result of competition, and its essence comes from scenario share: the brand's penetration rate in the product market, content market, and mind market.

For example: it accounts for 15% of sales in a shopping mall (product market), 23% of keyword search weight (content market), and 30% of the first mention rate without prompts (mind market); for example: when you mention elderly shoes, sauce-flavored latte, and zero sugar and zero fat, which brands do you think of respectively?

Many products are not rigid demands or pain points, so why do customers still buy them? And why do they buy our products? In other words, customers’ decision-making motivation to buy our products may not be that strong at the functional demand level. So we ask the opposite question: for these low-to-medium desire demand products, where should we start to improve the conversion rate?

The answer is behavioral sensation.

An example of behavioral perception: The Boston Symphony Orchestra found that many customers left after only coming to listen once. It was finally discovered that the reason was not because of the bad product but because of the difficulty in parking.

Many professional products are not selling fast enough, and many mass products are not selling expensive enough. This seems to be a typical paradox. Now it is different. Both are going in two directions. Professional products increase brand potential and professional status, while mass products are dimensionality reduction and increase gross profit. These two are exerted at the same time. Just like the same origin of medicine and food, medical skin care, functional food, etc., they all follow this principle.

3. Tactical Second Growth Curve

When the frontal attack is blocked, the main channel is too crowded, the main products are homogenized, the main business enters a plateau period, and growth hits a ceiling, we need to change our perspective, optimize operations, and find a breakthrough in performance.

Here we introduce three major strategies for the tactical second growth curve:

1. Starting from the end in mind means increasing customer value and providing social communication-based reasons for self-purchase.
2. To use the hidden to make the obvious means to expand single products based on customer satisfaction, and expand product categories based on customer dissatisfaction.
3. To make the curve straight means to target low- to medium-demand needs and to increase leverage and physical sensations beyond the product.

In the next issue, we will introduce the four major strategies of the strategic second growth curve: taking the small as big, taking the low as high, taking the light as heavy, and taking the wrong as right .

Author: Cao Sheng, public account: Grayscale Cognitive Society