Aaron Hoos

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.

Starting businesses is fun. Growing them is also fun but it’s hard work too, especially if you want to grow them profitably.

One client of mine, who is a serial entrepreneur, has a handful of businesses in various stages of start-up and operation. But they were running out of time and money, worn ragged by demands of each business and unable to eke out growing profitability because they couldn’t focus on a single thing. Although I was initially focused on their sales funnel for two of their businesses (obviously), we ended up looking at the bigger picture of ALL of their business(es) to find ways to make them all more profitable.

Here’s a chart I put together to help my client analyze the demands of his time and attention on each new or existing business.

UNDERSTANDING THE TIME-AND-ATTENTION DEMANDS CHART
Across the top, the chart lists three key functions of the business: Administration, Marketing, and Deliverables. The three functions are divided up into 5 segments with “P” for passive on one side and “A” for active on the other. Down the left, are the businesses, business ideas, or projects/initiatives that are being analyzed.

For our purposes, let’s use the following broad definitions:

• Administration includes the various “housekeeping” functions that keep a business running.
• Marketing includes all of the sales and marketing efforts to move your contact through the sales funnel to the point of purchase.
• Deliverables include the things a business does to provide the products or services it sells, such as manufacturing, assembling, shipping, analysis, etc.

(Yes, there are other ways to divide up the business but this provides a quick-and-dirty thumbnail sketch that is suitable for our purposes.)

An example of a passive business:
A business might be passive in the Administration section if everything is outsourced and automated. A business might be passive in the Marketing section if they have a lot of word-of-mouth marketing or advertising that is running without much input from them. A business might be passive in the Deliverable section if they sell digital content.

An example of an active business
A business might be active in the Administration section if it requires a lot of hands-on delegation and management. A business might be active in the Marketing section if they have a lot of social media marketing that requires constant participation and engagement. A business might be active in the Deliverable section if they provide services that require the full attention of the owner – like consulting, freelance writing, or graphic design

I’ve created the above 2 fake examples below:

Now that you know what the chart is about, it’s just a matter of figuring out where the time is being spent for YOUR business. (Or, in the case of business ideas, it’s just a matter of figuring out where the time is GOING to be spent).

These are just estimates to get a general idea of your time. This isn’t an exact science but it is still revealing. Think of each of the five “P” to “A” segments as something like:

ANALYZING THE TIME-AND-ATTENTION DEMANDS OF MY CLIENT’S BUSINESSES
First we drew the chart for his 8 businesses (actually, businesses 1-5 exist and businesses 6-8 are in progress). In the example below, I have removed the names of my client’s businesses and just numbered them.

Then we went through each business and figured out how much time he was spending on Administration, Marketing, and Deliverables.

Administratively, he’s getting his business in order by trying to consolidate and automate his administrative functions. Unfortunately, it’s his marketing and deliverables that are killing him. He’s marketing almost all of these as separate brands with little cross-over or overlap. That means 8 different identities on Twitter, 8 different Facebook pages, 8 different identities in other marketing channels. And on the deliverable side, he’s spending A LOT of time delivering his services, with each business demanding his full attention to provide paid services.

This amount of active administration, marketing, and deliverables might be fine for a business that employs several people or is able to outsource more, but my client is an entrepreneur with some outsourced administration, but he loves to market his businesses himself, and it’s his expertise that is being hired. That means a lot of HIS time in marketing and deliverables.

I’ve highlighted the two key problem areas – he’s spending so much time trying to market and deliver services for 8 different brands.

No wonder he’s feel like he’s running around, and no wonder his profitability is suffering!

Of course, this time-spent is only one side of the equation. Cash flow and profitability should also be taken into account. Businesses that provide more cash flow or profitability to the business owner should be allowed to take more time and attention than those that do not.

So, here’s what we did to solve it this serial entrepreneur’s problem:

Businesses 1 and 2 provide the most cash flow and profitability. Those ones are going to be the key. We also determined that Business 4 could have a positive impact on cash flow and profitability in the near future.

Our goal there was to find ways to reduce the active demands of Administration and Marketing. (You can see our results where I’ve grayed out the previous demand and put the new one in blue. It’s not always possible but it can be done.

Next, we explored some ideas about consolidation. Business 3 is closely linked to Business 2 so there was an opportunity to combine them together. Both Business 2 and Business 3 had a lot of deliverable demands, and my client was worried about losing the income, but since he didn’t have a lot of time to provide the deliverable anyway, we don’t think he’ll see a significant drop. I think he’ll actually see an increase income because he can focus. Business 8 could also be consolidated into the Business 7 brand.

Then, we had a brainstorming session to explore how his new businesses should be focused more on passive administration and passive deliverables. And even if they required some initially active marketing in the beginning, the goal should be in the near-term to make the marketing as passive as possible, too.

The result? My client has gone from 8 businesses that were requiring a lot of his time to 6 businesses that are requiring moderate amounts of his time. This is not a perfect picture but it’s a step in the right direction.

The goal for every business is to move toward the passive side of each of these business functions. That doesn’t necessarily mean that the perfect business requires NO effort for administration, marketing, and deliverables, but rather that these are managed in a way that take less and less time and attention with the goal of providing greater profitability.

Tomorrow, I’ll give some ideas about how your business can increase the “passivity” of each of these three business functions.

When I was a kid, I wanted to be a detective. Detectives are cool because they start with a hunch and then put together the facts. The more facts they can put together, the more “airtight” their case becomes. The airtight their case becomes, the more successful they are when bringing the villain to justice.

If you want a successful sales funnel for your business — one that churns out one Customer after another — you need to be a detective.

Here’s why:

People have problems and needs and they are willing to spend money to solve their problems and fulfill their needs. But they’re also skeptical about whether a proposed solution will do what it says, and, they are reluctant to part with their hard-earned money.

People want to solve their problems and fulfill their needs but that skepticism and reluctance keep them from trusting and eagerly buying from you. As you use marketing and sales techniques to move your contact through your sales funnel, you will start to break down the barriers that the contact has put up. But you need to do a thorough job — you need to build a case in your favor and you need the eyes of a detective to look thoroughly at the situation and plug any holes in the case.

So business owners need to be detectives to build an airtight case that…

• ensures the product or service being sold is going to solve the problems or meet the needs of the contact
• addresses a contact’s skepticism and helps them to overcome it
• addresses a contact’s reluctance and helps them to over come it.

Build an airtight case about these three thing and your contacts will become Customers every single time. (Conversely, the fastest way to lose a sale is to not have an airtight case).

BUILD AN AIRTIGHT CASE FOR A CUSTOMER-GENERATING SALES FUNNEL
The first step is to create a 3-columned chart:

• In the first column, list as many problems, needs, or reasons that a contact has for buying your product.
• In the second column, list as many reasons that a contact has for not trusting you (i.e. they don’t know you; they haven’t heard good things about you; they don’t know of anyone else who has used your product, etc.)
• In the third column, list as many reasons that a contact has for not handing over their money (i.e. they don’t see the value; they aren’t sure if your product will work; they wonder what recourse they have to get their money back, etc.)

Make the lists long. Spend a few days on this and don’t worry if your lists get ridiculously long. The longer the better!

Once you have these super-mega-long lists, the second step is to think about where your contact is thinking about these things the most. For example, someone who knows they have a problem to be solved, but doesn’t know you yet, aren’t thinking about your guarantee. So make sure your guarantee comes after building a relationship. (That one was easy but some of them are harder to discern what comes first).

The third step is to address each one. If your contact doesn’t know anyone else who uses your product or service, get some testimonials. If your contact is a little worried about whether you provide value, give them case studies and lots of ROI measurements. If your contact is wondering whether the purchase is safe, make sure you highlight your guarantee.

The fourth step is to weave every single point on your three lists into your sales funnel’s marketing and sales content. So all that stuff mentioned above about the guarantee, testimonials, case studies, ROI, etc. should be created and integrated into your sales funnel.

The fifth step to watch your contacts closely to see how they move through your sales funnel. Are people hitting an invisible wall and no longer moving forward? Maybe there’s a problem with one of the messages you are using. Maybe it should go earlier or later in the sales funnel. Or maybe there’s a critical point you missed when you were creating your lists back in step one. Go back and rework those lists to build them out further.

A detective builds an airtight case by exploring every possibility and addressing it, and by finding gaps and researching diligently to plug those gaps. As a business owner, you can put on your detective’s hat to create a sales funnel that compels contacts to become Customers.