Putting all your eggs in one basket isn’t only applicable to stocks, bonds, and mutual funds. It’s also a great piece of advice for anyone running a startup business. Here’s the thing: if losing one major customer, or a group of customers, would cripple your business, it’s time to diversify your client base.
This move is especially beneficial now that the world is dealing with a pandemic. Running a business amid a pandemic or global recession isn’t an easy feat. For one, customer behaviors are changing. Many people now prefer placing their orders or hiring services online. That could significantly impact your revenues if your business relies on face-to-face interaction. Small businesses also often rely on building strong client relationships, making them overly reliant on long-standing accounts. However, these customers may reduce their orders or downgrade to a lower service package as they, too, deal with the financial impact of the coronavirus pandemic. But you can overcome these challenges by reaching out to a new market.
Here are some strategies you can adopt to start building a more diverse customer base:
Offer existing products to new sectors
Consider marketing your existing products and services to different market segments or locations outside your current operations. For instance, if you are a furniture company in the hotel sector, you could start targeting residential customers. You could also cater to interior designers who need to stage houses or set designers who continue to shoot films, shows, and video ads in the “new normal” environment. You could even sell furniture pieces to clients in a different state or country with the right shipping partner.
But how can you effectively sell your existing products and services to a new sector?
- Do market analysis: Assess your new market’s needs. Who are they, and what are their motivations? Then, create new buyer personas for your current products or services. Also, analyze the size and potential of that new market for better targeting and campaign strategies.
- Choose your priorities: Say you performed market analysis on three new client bases. Focus first on that one market that will likely welcome your brand or is easiest to reach, depending on your resources. Take, again, the furniture company example above. If you have relevant experience or network on a local real estate industry, dominating stage houses in your state may be a good move rather than trying to pull all the stops to sell your furniture across the globe.
Expand your offerings
Can you build on your expertise to develop and offer new products or services? If yes, this is another way to generate new customers from other markets and boost your existing client relationships. You can accomplish this in several ways, including:
- Invest in new equipment: It isn’t easy to build a new product if you don’t have the tools and other necessary resources. Say, you run a local woodworking shop. You have a team of craftsmen who can build anything from bed frames and wall shelves to wine racks and wooden utensils. You can expand your customer base by adding a single piece of equipment: laser engraving and cutting machine for wood. With this tool, your team can create quality signages and engraved plaques. Pretty soon, you will start adding new customers to your client portfolio.
- Partner with another business: If you have developed strong networks, tap on these contacts to collaborate with another brand that can help you create a new product or offer a new service. Think of how Nike and Apple did it. These two big brands created Nike+, an iPhone app that tracks athletes’ performance through transmitters built into Nike shoes and armbands.
Forge strategic partnerships
Business partnerships don’t only work on creating new products—these can also lead to:
- Joint marketing campaigns: Marketing can be expensive, so you want to make the most of the money you spend in every ad or campaign you launch. Get more leads without spending more by working with another brand. Co-branding campaigns work—GoPro, Red Bull, Spotify, and other known brands can testify.
- Referral programs: Collaborate with another brand and build a win-win referral program together. This way, every time a customer looks for a service you can’t provide, you can refer them to your brand partner, and vice versa. Offering complimentary discounts and sharing contacts can help you generate high-quality leads in a sector that you won’t usually tap.
Ideally, no single client or customer group should account for more than ten percent of your total sales. But diversifying your client base doesn’t mean aimlessly seeking any opportunity. With the strategies above, you can look at what makes the most sense for your small business to thrive in the new normal.
