Growth strategy

Horizontal vs. Vertical Growth Strategy: Which is Best?

Written by Tyler Naples / March 12, 2020

As an Inbound Marketer at Lean Labs, Tyler concepts, implements, and manages strategic and growth-oriented marketing initiatives for industry-leading businesses and organizations. Tyler received a B.A. in English / Professional Writing from Kutztown University of Pennsylvania. Outside of Lean Labs, Tyler is an avid Philadelphia sports fan. Go Eagles!

The most successful businesses and startups commit to ongoing growth.

However, this is easier said than done. There are significant roadblocks that prevent even the most ambitious organizations from achieving their goals.

So, what does this all mean for your business or startup?

In recent years, horizontal and vertical growth have become go-to growth strategies for many of the world's leading brands. In most instances, these growth strategies have produced amazing results.

So, what's the benefit of a horizontal vs. vertical growth strategy, and which approach is right for your unique business or startup?

As an industry-leading growth team, we've helped deserving brands level up. We'll explain the pros and cons of horizontal vs. vertical growth so you can select the right growth strategy for your business.

Horizontal vs. Vertical Growth: Which is Right for Your Brand?

A recent study found that people tasked with remembering one digit made much better decisions than people charged with remembering seven digits. The takeaway here is that rapid business growth can actually be a bad thing.

You need to know that long-term business growth relies on slow, steady, and calculated decision making. Before you commit to one growth strategy over the other, it's going to take time to start seeing results.

Here are the major differences between horizontal vs. vertical growth.

Horizontal Growth Strategy

horizontal-vs-vertical-growth
 

A horizontal growth strategy means expanding products/services to new markets. This can be done by developing a new market or penetrating an existing market. Additionally, you might try to apply existing assets to a new business domain, such as transitioning from a product to a SaaS model.

Pros:

  • Highly lucrative
  • Better long-term ROI

Cons:

  • Challenges unique to new markets
  • Increased competition

Example: Uber launched in San Francisco, but later rolled out to thousands of locations across the globe. Additionally, the company launched UberEats.

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Vertical Growth Strategy

horizontal-vs-vertical-growth
 

A vertical growth strategy means scaling products/services inside an existing market. Typically, businesses add additional features or capabilities to existing products/services. You might also add products/services to complement existing products/services.

Pros:

  • Allows you to go deeper into existing markets
  • Most popular growth strategy

Cons:

  • Typically requires more money
  • Workforce capacity problems

Examples: Instagram is much more than just a photo-sharing app. This tool enables users to share videos. In recent years, they even rolled out a live video recorder.

Forge Your Path Towards Business Growth

Your growth strategy is only as strong as the team used to implement it.

For that reason, many industry-leading businesses and startups go out of the way to find a results-driven growth partner.

Over the years, we've had the opportunity to partner with a ton of deserving brands. From industry-leading tech accelerators to fiber internet providers, we've worked alongside some of the world's leading innovators. Is your business next?

 

To accelerate growth and dominate your market, your brand must become the leader in perceived value to your market. That cannot be achieved overnight. We take our clients through a three-phased approach to deserving growth: plan, build, & grow. New call-to-action