What is the Growth Dilemma?

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​You always want to grow your brand, but there's a dilemma: the more customer segments you target, the harder it becomes to avoid conflict between them. Sometimes attempts to court new customers can feel like a betrayal to your loyal base. Sometimes new customer segments rush to adopt your products and in the process unwittingly alienate your existing customers. And sometimes your growth strategy flies in the face of what your customers have decided your brand means to them. ​Brands must navigate these incompatibilities in order to achieve sustainable growth—or face losing more customers than they gain.

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In our work, we identify four types of segment relationships: 

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• Separate Communities: Customer segments want different things from a brand's offerings, and are unbothered by each other. Customers who buy John Deere utility tractors for heavy-duty farm chores want different functional value from their machinery than the suburban homeowners looking for a lawn mower, but both are okay with the other using John Deere for their farming or mowing needs.

• Connected Communities: In this type of relationship, the brand becomes more valuable as more customers use it, even when those additional users come from other segments. Social media platforms like Instagram, two-sided markets like LinkedIn and eBay, and shared platforms like Venmo and Microsoft Windows all have segments that relate as connected communities.

• Leader-Follower Segments: When one segment is attracted to a brand because another, aspirational segment uses it, then you have a leader-follower dynamic. Think: when amateur athletes (followers) wear Nike because elite athletes (leaders) wear Nike.

• Incompatible Segments: Incompatible segments derive different kinds of value from a brand’s offerings, but because they influence each other, they’re unable to comfortably coexist, leading to conflict between customer segments. 

 

By actively managing the relationships between customer segments, brands can avoid the pitfalls of pursuing new customers, build stronger and more resilient customer bases, and unlock even greater growth opportunities for their brands.