Scale & Grow

Digital marketing is about promoting your brand to connect with potential customers using the internet and other forms of digital communication. This includes not only email, social media, and web-based advertising, but also text and multimedia messages as a marketing channel.

A bold statement, specifically for and from the context of Business to Business (B2B) growth businesses with annual revenues R1m-R150m

*Big brands, who can throw the most money at the platforms, tend to win in this space, and business to consumer (B2C) also has a different experience on digital.

Listen to Pavlo discuss his reasons on this podcast from The Money Show:

It’s a broken covenant or we’ve been duped by the giant conglomerates who run these platforms – Google, Facebook and Twitter

In the beginning we were told good content is king, so create good content and the platforms would support your growth by ranking you better and growing your audience and community. Your ads, if created well, would pop and generate response.

Then it all changed, after we’d invested deeply in creating content for our community These platforms listed, and turned from looking at us, the users, to looking at their shareholders, and delivering returns. And the algorithms changed to serve that audience. And for users, they keep changing. You can’t keep up.

Today, we create good content, we build our community, but discover that we’re only reaching a small percentage of our community – and to reach the rest we need to ‘boost’ our ad.

The context: A changing environment

In the old days TV really worked. In South Africa especially, there were only a few options – SABC, eTV and multichoice so you knew if you flighted an ad it would reach millions. But that ad costs millions of Rands so that was only an option for corporates.

Radio used to be an affordable and impactful option for SMEs but it has been hard hit by Covid as fewer people are in their cars, in traffic. Even before Covid,  it had taken a huge knock from audio on demand which has become accessible to almost everyone from Spotify to podcasts to youtube.

Print has been decimated by online, which allows us access to news from millions of sources.

So, who can help us?

It’s become so complex to understand the digital marketing reports and results and so we turn to agencies to interpret the stats, and act on them.

Digital marketing is a long and expensive game, and SMEs are impatient – they want to see results! So the agencies move up the ranks to serve corporates.

In addition, many of the agencies are affiliated to one or more of the digital marketing platforms, and are motivated to use those platforms for your spend.

Where to now?

There are 2 trends that Pavlo sees emerging to get results from digital:

1. Performance pricing

If you are an agency that is confident digital works – then consider getting paid on the basis of delivering leads.

2. Relationship marketing

Migrating good old fashioned relationship marketing into a digital delivery.

Growth carries great weight! The weight of winning it, the weight of servicing it and the weight…of understanding and leading it! Without it your business is on a death curve. It will harm your income growth, customer acquisition and retention, team and supplier relationships and your opportunity to one day exit your business. Think of it like a President who has lost favour with the party and population – nobody wants to stick around a lost cause!

Listen to the Money Show podcast of the discussion Pavlo Phitidis had about the 2 types of business growth:

1. Growth is a System.

Business growth is a system of activities, integrated to create an outcome. It doesn’t come from the product or service your business offers. It comes from the organizing the functional, commercial activities of your business into a single system. Marketing generates new leads, sales convert them, operations fulfil and service them and administration coordinates them – all work as a single system to create a great experience that customers than promote. The product or service you offer is what solves the customers problem; the growth system is what creates a good experience in having that problem solved for the customer.

2. Growth is designed.

You can build a ship to sail fast or slow. You can build a building to be small or tall. It all comes down to design. Being clear on what you want to achieve in your business lets you design the right system to achieve it. When building an Asset of Value™, design is premised on your companies positioning in the market. Once clear, a System of Delivery (the commercial functions optimized and integrated into a single system of coordinated activities) enables your positioning. With these two layers in play, you can then direct and organize your team to power and lead the system implementation. This generates two outcomes. Organic growth and time; time to lead next level growth.

3. Organic Growth

This is growth that sees your business grow revenues on a consistent, reliable basis, largely without you. The rate of growth depends on several elements including country GDP growth, sector and industry growth, life stage of your business amongst others. For example, if your country growth rate is 3%, your sector and industry is forecast at 5% and you are a 7-year-old business, you should look to secure an organic growth rate around 15-18%. If you are a 30-year-old business, you might adjust it to around 12-15%. Remember, this is growth that occurs largely with out you. It is driven by the System of Delivery and your team and is premised on your positioning.

4. Next Level Growth

With organic growth in play, and most valuably, your time released from daily operational activities, you need to turn to next-level growth. As the term suggests, next level growth sees a significant increase in revenue coupled by a moderate increase in costs. The level up is felt in profit as the “yawn” between revenues and costs widen.

The “yawn” is an essential indicator of next level growth. Ramped up revenues that are tracked by ramped up costs grows your business. It also grows complexity, points to a failure to scale effectively and increases your risk.

In an Asset of Value, next level growth that yields the “yawn” is gotten by finding opportunities that maintain the positioning of the business, require little adjustment to the System of Delivery and don’t stretch your team way beyond current levels of comfort and capability. These opportunities can be in new product development, new market entry or acquisition, new investment in plant, equipment, space, digitization, marketing, and talent.

Essential, vital, critical to the choice we make as business owners (and the single biggest investors in our business) is not to stall or disrupt organic growth. Landing a next level growth opportunity that stalls organics growth simply pulls you back into daily operations and takes your eye off the opportunity, further exposing and risking your business to harm.

5. Valuation

Growth, the history of growth and the future promise of growth are one of the biggest factors impacting your business valuation. A buyer or investor into your business does so either because they see growth potential unrealized in your business and will offer you a few dollars, or because the growth in the business makes it worth man, many more dollars. My first few business I bought were priced at a dollar each. They had served their founders well over the years and time had made them complacent. The complacency was fatigue which came about because of 30-40 years of running a business that centered around their everyday involvement in daily/weekly operations. Without them there, there was no growth. That was obvious to me and the bargain price of dollar had liabilities attached to it plus no growth. A fair price…. right?

6. Virtuous Cycle

Business growth suggests opportunity to talent. Everybody wants to attach to a winner. Is also suggests value to customers, growth to suppliers. It holds the promise of growth in turn to funders. All are roll players in further driving your growth.

Your business growth is never yours alone! It also attracts unwanted attention from competitors if you become complacent because of it. Complacency, a sense of “having arrived” reduces vigilance and the relentless attention to growth that sustaining it requires. Competitors entering your domain, when vigilant, provide opportunities to invest in sustaining innovations and further can educate and grow a market of customers that your incumbent leadership can access too.

If you are not growing, you are dying. Pursuing growth without having built or designed your business to sustain itself risks everything. The goose that lays the golden egg (organic growth) needs to be solid and secure before you charge ahead into the market looking to become bigger for the sake of it.

Business growth increases complexity: More customers, more locations, more employees, more suppliers, more money, more inventory and….more risk.

Where does risk come from?

1. You start to doubt whether you have the skills to run a complex business. That seed of doubt can fester and become self-fulfilling
2. The business you loved becomes demanding, a nightmare, all the excitement you felt when you started it – goes away. And you think that you do not want growth as it’s too hard, But if you aren’t growing… you’re dying.

Is there an analogy we could use to understand it better? 

Listen to Pavlo discuss a couple of analogies in this episode of The Money Show:

Pavlo argues that using the idea of the chassis of a car – the framework that bears the weight of the vehicle, is a strong analogy for building the framework of your business to support increasing complexity.

In a business, the chassis is everything that is needed to consistently deliver to their customers, to solve their problems. It is all of the systems and processes that you need to fulfil your promises to customers. Your business chassis needs to be strengthened to prepare for the growth that is coming so fulfilment is not compromised as you get more and more customers and orders.

Another way to think of it is how human beings grow: When you’re born, until 20 or so, you grow in spurts. A baby is born, then it grows in height, then there’s a filling out phase, then more growth, and so on. As we grow in height, all the energy in our bodies is going into making our bones taller. Then there’s a lull but during this time the muscles and tissues are building to hold up the next spurt of bone mass. It’s preparing the body for the next phase of growth.

When we find our business in chaos, we need to pause growth to build the muscle to support the growth. Get your systems in order.

 How do you get it right to grow without the risk spoiling it all?

 Choose a sport that you want to excel in – let’s take shotputter and a long jumper.

The two will be very different to look at. The shotputter will be solid and heavy and strong. The long jumper will be lean and long and flexible.

Figuring out which sport you’re in is the same as positioning your business… it determines every decision from then on.

What they both have the same is internal organs: lungs, kidneys, liver etc. In business these are your business systems. Procurement, finance, HR, operations etc – they are consistent across all businesses.

To take these athletes to Olympic heights, you have to ensure the organs are healthy and functioning optimally. Regardless of their particular sport. And then build the muscles needed to be a shotputter.

Finally – measure that performance to check constantly what is responding well, what is working and what needs work.

This data, both in terms of what is coming down the pipe, and the capacity of the business to deliver on it, will be critical to maintain your growth rate.