Sales funnel strategy and the Ansoff Growth Matrix

The Ansoff Growth Matrix (sometimes called the “Product-Market Matrix”) is a tool that businesses can use to figure out how to position and marketing new and existing products in new and existing markets.

For example, if you have an existing product but you want to enter a new market with it, you’ll need to adopt the strategy of market development. Or, if you want to introduce a new product into an existing market, you’ll need to adopt the strategy of product development.

That’s good in theory, but what does it actually mean for your business?

Each of these strategies calls for a change in the sales funnel. Here’s how each strategy impacts your sales funnel:

Existing market/Existing product
According to the Ansoff Growth Matrix, the best strategy a business should use is a market penetration strategy.
Here’s what it means for your sales funnel:

  • Since this strategy is all about increasing marketshare, you should find ways to increase the number of contacts in your Audience stage. By doing that, you’ll naturally increase the number of contacts at every stage in your sales funnel (because the ratios between each stage remain the same).
  • Improve your sales funnel even further by attempting to reduce the number of people who “fall out of your sales funnel”. For example, if you have Prospects who don’t buy because there’s an objection you can’t overcome, focus in on making changes to your business, your messaging, and even your product to overcome those objections.

Success with a marketing penetration strategy is all about increasing the number of leads in your existing sales funnel.

New market/Existing product
According to the Ansoff Growth Matrix, the best strategy a business should use in this situation is a market development strategy.

Here’s what it means for your sales funnel:

  • Identify the new market you want to enter and brainstorm the needs and problems of that new market.
  • List the features and benefits of your existing product or service and brainstorm to discover how it can solve the problems or fulfill the needs of the market.
  • You may have to set up an entirely new sales funnel to run parallel to your existing one. Although you might be able to share some of the infrastructure with your existing market, the messages you’ll use at each stage of the sales funnel will likely be fairly different.

Success with a market development strategy is all about creating a new funnel with marketing and sales messages that connect with your new market.

Existing market/New product
According to the Ansoff Growth Matrix, the best strategy a business should use is a product development strategy.
Here’s what it means for your sales funnel:

  • Your sales funnel isn’t just a map for selling to people. It’s also a listening device! Use the engagement you have with contacts at each stage of your sales funnel to find out what problems you can solve.
  • Whatever you do decide to do, there should be some synergies between your current products and your new products.
    As you develop a new product, make sure you always go back to the contacts in your sales funnel to see what they think. Consider using some of your existing Leads and Prospects and Customers to beta test early versions of your products or services.

Success with a product development strategy is all about listening to your existing sales funnel contacts.

New market/New product
According to the Ansoff Growth Matrix, the best strategy a business should use is a diversification strategy.

Here’s what it means for your sales funnel:

  • You’ll need an entirely new sales funnel so make sure you do as much research as you can before committing to this endeavor.
  • Start small with a very basic sales funnel. Treat this initial effort as a beta test and see what response is like. Are people responding? If so, you can always scale your sales funnel up.
  • Seriously consider building synergies with existing markets and existing products. If you offer something completely different to a completely different crowd, you may struggle if you’re trying to break into unfamiliar territory. And, if you already have an existing product that is sold to an existing market, the amount of effort needed for a new product to a new market could cost you in time and money.
  • In many ways, this approach is just like starting a new business. So treat it as such and consider setting aside members of your team to focus exclusively on this effort.
  • Don’t try to treat contacts in this sales funnel the same way you would treat contacts in your existing sales funnels. It’s tempting to do that to save time but it is a quick way to sink this project.

Success with a diversification strategy is all about starting over, starting small, and scaling up sensibly.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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