Double and triple digit growth is not uncommon in the direct and interactive marketing industry. When you read case studies about companies that have astronomical growth rates, it is so easy to envision comparable success for your company. Growth is necessary to remain competitive and attract talented personnel. Too much growth can cause your company to implode. The challenge is to achieve growth at a rate that doesn’t destroy the infrastructure.

The mindset of the dot com explosion was “grow or die.” The post mortem of many companies that failed should read “Death by Extreme Growth.” Successful growth is a result of careful planning and balanced management. Focusing solely on the top line usually ends in failure.

There has to be a strong foundation for your company to sustain high growth. It requires top-notch personnel, processes, and systems. While they can be added or modified in the interim, you have to recognize the need before it moves into crisis management. Signs your growth rate is exceeding your infrastructure:

• The work backlog is creeping upwards even though key employees are working extremely long hours without vacations and holidays. Time that was once spent following industry trends has been redirected to crisis management. This reduces their effectiveness as managers and leaders.

• Profits are diminishing more than expected. There is a tradeoff between growth and profitability. It should be planned, carefully monitored, and revised when needed. If you plan a year where profits are sacrificed to stimulate growth, plan the next year for profitability. 

• Service quality is decreasing in a steady trend. Early indicators are increases in order turnaround, abandoned calls, and backorders. There will be variances in your benchmarks because the growth will immediately impact your service. If you correct the issues, the service will improve. Manage your growth so you have the time and resources to correct service issues.

• Productivity ratios are steadily decreasing. Initially, volume and productivity should increase simultaneously. The additional volume will fill in the gaps. There will be a brief decrease as new personnel are added, and then the continued growth should increase productivity. If the ratios are declining without a correction, then you are overstaffed and under managed.

• Response rates are declining significantly. When you expand your marketing into broader categories and borderline names, there is a natural reduction in response. This should be projected and expected. Large declines, especially in strong segments, indicate that customers and prospects may have had a negative experience with your brand. It could be too many mailings, poor service, or bad timing.

Balance is key in everything we do. There has to be a balance between growth and profitability for a company to be successful. High growth is exciting, fun, and addictive. Plan it carefully so you avoid the growth trap.

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