The title of this article brings up an association with the famous J.K. Rowling’s book and movie, and this is not without a reason. The moral of “Fantastic Beasts and Where to Find Them” revolves around themes of acceptance, understanding, and the importance of protecting those who are different or marginalized.

In fact, it is somewhat similar to the process of looking for the ‘right’ development strategy for a business which needs to be supported and protected against fierce competition on the one hand and numerous external influence factors on the other.

In this article we’ll take a look at a few widely used business development (BD) strategies and outline their distinguishing features. Based on this information, you can decide which approach you’d rather choose in building the development strategy for your business. Because your business is unique and has it’s own history, it needs a smart, professional and strictly individual approach in planning its future. This can be compared with life and growth of a human child: as a parent, you need to invest a lot of thinking, effort and time, to say nothing about resources, into making decisions about the child’s education.

Okay, let us go.

As many of my recent experiences have been with client companies representing IT industry, I will use examples of software development businesses as illustrations of BD strategies, but in fact, these strategies are universal, which means they can be applied to businesses in any other domain.

In today’s world, expanding an IT business into broader sectors of the software development market requires a customized strategic approach that combines strong market insight, well-tailored services, and a good portion of innovation. Most frequently, business owners who seek for successful expansion of their products or services to new markets select one of these seven well-known business development strategies:

1. Vertical Market Expansion

This is a growth strategy where a company increases its presence within a specific niche or industry. This can involve offering more specialized goods or services tailored to the needs of that industry, allowing the company to deepen its relationships with existing customers and attract new ones. It differs from horizontal growth, which focuses on expanding into new markets or industries.

• Identify & Deepen Industry Focus: By focusing on specific industries (e.g., healthcare, finance, or retail) with custom solutions, IT firms can leverage their expertise to meet unique sector needs. Tailored solutions for regulatory compliance in finance or security in healthcare, for instance, can offer a competitive edge.
• Develop Specialized Teams: Building teams with industry-specific knowledge enhances credibility and enables companies to deliver solutions that are finely tuned to each sector’s demands.
• Case Example: Salesforce and its expansion into specialized CRM solutions for sectors like healthcare and finance is a notable example of leveraging vertical expertise for market growth.

2. Strategic Partnerships & Alliances

Strategic partnerships and alliances involve formal agreements between two or more companies aimed at collaborating to achieve specific objectives while allowing each party to maintain its independence. These arrangements can take various forms, such as joint ventures, resource sharing, or collaborative projects, and are designed to leverage the strengths of each partner to enhance competitive advantage and drive mutual benefits.

To set up a strategic partnership*, businesses typically identify potential partners that align with their goals, negotiate terms to ensure mutual value, and establish clear objectives and responsibilities for the collaboration. Effective communication and trust between partners are crucial for success.

It is advisable to conduct thorough research and analysis to ensure that partnerships align with your long-term strategic goals.

• Collaborate with Industry Leaders: Partnering with technology leaders, consulting firms, or other service providers helps create comprehensive solutions. Such partnerships offer both visibility and credibility in new markets.
• Joint Ventures & Acquisitions: Acquiring or partnering with companies that have a foothold in desired sectors helps IT firms rapidly gain market insights, brand recognition, and client base.
• Case Example: IBM’s acquisition of Red Hat allowed it to expand into hybrid cloud and edge computing markets with an existing strong brand presence.

*You are welcome to read the article devoted specifically to setting up partnerships in this blog.

3. Service Diversification & Product Bundling

Service diversification and product bundling are effective BD strategies that help companies expand their market reach and increase overall sales volume. Service diversification involves broadening the range of services offered to attract new customers and meet varying needs. This can enhance profitability and competitive advantage by reducing reliance on a single product line. On the other hand, product bundling combines multiple products or services into a single package, which can boost sales efficiency, increase customer satisfaction, and facilitate upselling and cross-selling.

• Expand Core Offerings: IT businesses can broaden their services by adding complementary solutions—such as cybersecurity, data analytics, or AI/ML services—to existing software products, which creates value and meets wider customer needs.
• Product Bundling: Bundling services offers convenience to clients, encourages loyalty, and may increase the total spend from each customer.
• Example: Microsoft Azure’s suite of cloud-based services, which covers everything from AI to IoT to DevOps, is an example of an IT giant bundling services to meet a wide range of client needs.

4. Global Market Outreach

Global market outreach is a BD strategy that focuses on expanding a company’s reach into international markets. This involves identifying potential opportunities in different regions, forming strategic partnerships, and effectively communicating and marketing products or services to new audiences. The aim is to capture value through customer acquisition and market expansion, ensuring services are positioned effectively in the global landscape.

• Expand Internationally: With the growing demand for IT solutions globally, businesses can benefit from expanding to regions where digital transformation is booming, such as Asia-Pacific, Eastern Europe, and parts of the Middle East.
• Localized Solutions: Offering products or services tailored to regional needs or regulatory requirements can build a competitive advantage in new markets.
• Example: Many companies such as Infosys and Tata Consultancy Services have successfully expanded by adapting their services for local markets in new regions.

5. Enhanced Customer Experience & Support

Enhanced Customer Experience (CX) and support are vital strategies for business development. Improving CX* helps in driving customer satisfaction, loyalty, and advocacy, which are crucial for sustained business growth. Effective strategies include gathering customer feedback, implementing improvement initiatives, and using experimentation methods to validate and refine approaches, ensuring that businesses meet and exceed customer expectations.

It’s important to continually assess and adapt customer experience strategies to align with changing customer needs and market trends, ultimately boosting business performance.

* A separate article in this blog is devoted to building Enhanced Customer Experience (CX) as a business development strategy.

• Develop Robust Support & After-Sales Service: A commitment to high-quality support helps retain clients and attract new ones through referrals and testimonials.
• Customer Success Programs: Offering value-added services, like dedicated account managers or consulting, enhances customer loyalty and can facilitate cross-selling and up-selling opportunities.
• Example: Zendesk, a leader in customer support solutions, has expanded its market reach by focusing on exceptional customer experience for businesses in various sectors.

6. Leverage Data-Driven Marketing & Customer Insights

Leveraging data-driven marketing involves using data analysis to inform business strategies and optimize marketing campaigns. It allows businesses to uncover trends, understand consumer behaviors, and make informed decisions to enhance ROI (Return on Investment). By analyzing customer insights, companies can tailor their offerings and engage more effectively with their target audience, ultimately driving sales and growth.

It’s important to continually assess how data is being utilized and to ensure that strategies remain aligned with evolving consumer preferences.

• Use Data Analytics for Market Insight: Leveraging analytics allows companies to track emerging trends, customer preferences, and gaps in the market, enabling them to position their services strategically.
• Account-Based Marketing (ABM): For B2B, ABM helps businesses target high-value accounts with personalized approaches, increasing engagement and conversion rates in new markets.
• Example: HubSpot uses data analytics to tailor its offerings to specific business sizes and sectors, driving targeted marketing campaigns that address each segment’s unique needs.

7. Continuous Innovation & Agile Development

Continuous innovation and agile development are increasingly recognized as effective business development strategies. The agile approach emphasizes flexibility, speed, and the ability to adapt to changing market conditions, fostering continuous innovation. This method allows organizations to implement incremental changes rapidly, ensuring they stay competitive and responsive to customer needs.

By combining continuous innovation with agile practices, businesses can enhance their ability to launch new products, improve existing ones, and respond to market shifts more effectively. Large organizations can also leverage these strategies to drive innovation without sacrificing their operational stability.

Make sure to double-check information from reliable sources for the best practices in agile and continuous innovation.

• Adopt Emerging Technologies: Incorporating new technologies like AI, blockchain, and cloud-native solutions into offerings helps attract innovative companies looking for cutting-edge solutions.
• Agile Product Development: By using agile methodologies, IT firms can adapt to customer feedback and market changes faster, enabling them to stay competitive and relevant in evolving sectors.
• Example: Adobe’s transition to cloud-based services with Adobe Creative Cloud is a prime example of innovation that attracted a broader user base and built customer loyalty.

By leveraging one or more of these strategies, your business can effectively expand into new software development sectors. By developing a system of smart actions based on deep expert research of all business processes and operations can help to strengthen your company’s market position and establish long-term growth across multiple industries.