Plan Your 2020 Growth
Growth is an imperative for LSPs, yet 40% of providers struggle to profitably grow their businesses. The situation is bound to get more complex as CSA Research expects a decrease in market growth rates due to a variety of factors including the overall economic slowdown, the impact of Brexit on business between the United Kingdom and its trading partners, the fallout from trade wars, and the impact of technology such as neural machine translation. But even with all that, the growth rates we forecast remain healthy and would be enviable in many other industries. That’s why it’s important for LSPs to plan for sustainable and profitable growth in line with the overall market evolution.
When executives set growth rates, they sometimes pick a random number without being truly sure whether it is reachable or whether it will push their teams sufficiently to surpass the status quo. To grow sustainably, you need to systematize your approach.
- Start with your historical data. Collect at least three year’s worth of revenue data to document your past performance. Break it down by source of revenue and identify internal and external factors that have affected results. Gather data on significant outliers – such as big clients that represent a large portion of your revenue. Benchmark your performance against companies at a similar maturity level and in the same geographies or revenue ranges as your company.
- Then run some growth scenarios. If you target much steeper growth than what you’ve experienced in the past, you will need a plan to change how you conduct marketing, sales, and client care. On the other hand, if your growth forecast closely tracks your average, then consider whether it’s time to push a bit for more aggressive growth.
- Select the high-level strategies that you want to capitalize on. The Ansoff matrix, named after Russian-American Igor Ansoff, is a framework to evaluate growth options based on risk:
- Market penetration is centered on the concept of increasing your business’ market share by selling your existing offering to your current target markets. It is the lowest risk strategy in the short term because you already have a presence in the market and you know it well.
- Market development is the typical next step and is about taking the same offering and selling it into additional markets such as new industries, client types, or geographies. This approach involves investments to support the new initiatives, including the selection of previously unaddressed vertical markets, geographies, or sales channels. It is a riskier strategy than increasing market penetration since the LSP is trying something new.
- Offering development is usually the next move and it’s about introducing new products and packages to current markets. It’s a natural ally of market penetration, thanks to the support it provides in selling more to existing markets. However, it’s also a logical tie-in to market development when the needs of the new markets require some solutions tweaks, even if they do not require entirely new services or products.
- Diversification is a rather rare strategy in the industry because it carries two levels of risk. Under this model (and not the traditional meaning of diversification), it means providing new offerings to new markets. The markets and solutions need to be significantly different, otherwise they fall into market or offering development. For example, an interpreting-centric provider may venture into telemedicine applications sold to new buyer types within health care organizations.
Ansoff Matrix Adapted to the Language Services Industry
- Gauge the options against your readiness and capabilities. For example, think in terms of company strategy, typical sources of revenue, target markets, growth pipeline, new initiatives, staffing, sales culture, and M&A opportunities. Be sure to exclude past outliers that overinflate your numbers from this exercise. You’re best off doing an alternate projection model that removes them and then recombining your predictions with known data on the outlier account.
- Contextualize your future growth. Assess external factors that may boost or diminish your results. Consider elements such as currency fluctuations, political instability, or the impact of automation and plan responses to them.
- Test the new goal for feasibility. In CSA Research’s Sales Cookbook, we provide a detailed method for validating that your team can succeed at meeting goals. We rely on individual sales targets, average account size, closing ratios, and productivity metrics to help executives review the goals at a more granular level.
- Document your growth plan. It must be a three-pronged approach. Growth is the result of marketing efforts, direct sales efforts, and client service – which means production excellence, up-selling, and cross-selling existing accounts. You need to detail how each of these functional areas will go about meeting the goals. Take into account your growth pipeline and forecasted opportunities from existing clients when doing so to ensure the timing you have in mind is realistic. For example, pursuing a new market involves some ramp up time.
Don’t drown in the luxury of too many options. Sometimes, it can be overwhelming to decide which solution or direction to pursue. Each option requires research and therefore an investment in time. Too many choices can lead to analysis paralysis – that is, the failure to make a decision. Strategic planning is not just about eliminating bad options, but also some good ones that you just can’t pursue right now due to bandwidth or budgets.
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