THOUGHTS OF THE DAY: Congratulations! You have the right small-business marketing strategy: providing new products to old customers and attracting new buyers with tried and true old products. Maximize the company’s opportunity for growth and profit with the right mix. You can build new products or services, or buy them to sell, or partner up with other providers. If instead it’s time to dilute the mix of customers then focus on getting more strangers to buy what you already make.
Customers who know and trust your company are more likely to cut you slack as you try out new products or services. Afraid of mistakes on pricing? Struggles to provide the right level of service? Issues with new products? Existing customers will usually work with you to get through problems, at least for a while.
New customers are generally much more anxious about their new working relationships. They want to know that they’ve made the right purchase decision. If you make mistakes early on, that makes the buyer nervous. Don’t subject new working relationships to difficulty by testing out new products on new customers.
Now that you know the right thing to do in terms of new/old product and customer mix, it’s time to figure out how much of each you need. Evaluate your existing customer portfolio. Take a look at how concentrated it is.
If the company’s portfolio is made up of recently acquired customers each representing less than 3 percent of total revenue, then it’s time to come up with more products for them to buy.
If any customers exceed 8 percent of total revenue, if many customers are approaching the age where they start to drift away or if your top three to five customers make up 25 percent or more of your total portfolio, then it’s time to focus on getting new customers.
If it’s time to get more products or services out to the market, look at what your company is good at doing by asking a few questions. How many new products or services has your company successfully taken to market? Does your company have an experienced research and development arm? Do you regularly test new ideas that turn into revenue-producing opportunities?
If you answered “yes,” then focus on developing the next set of services or products. Test new ideas on existing customers. Pick several to focus on. Test prices. Get the products or services into the market. Get some references. Then evaluate profitability, and, if necessary, adjust pricing for the next round.
If you answered “no,” meaning you’re not good at coming up with new things to sell, consider doing an acquisition to pick up something your customers will latch onto. Or partner with another firm that’s interested in tapping into your customer portfolio and develop a joint venture.
If instead it’s time to get more customers, look at who else might want what your company already sells. Take a booth at industry-specific trade shows that attract your customers. Put testimonials on your website. Buy a list of prospects in the same SIC code as existing customers and send out mailers. Try attractive introductory pricing to get strangers to bite.
Marketing is the most important function in any company and often one of the most overlooked. Turn it into your secret growth weapon.
BOOK RECOMMENDATION: “The 1-Page Marketing Plan: Get New Customers, Make More Money, And Stand Out From The Crowd” by Allan Dib.
Andi Gray is president of Strategy Leaders Inc., StrategyLeaders.com, a business-consulting firm that teaches companies how to double revenue and triple profits in repetitive growth cycles. Have a question for AskAndi? Wondering how Strategy Leaders can help your business thrive? Call or email for a free consultation and diagnostics: 877-238-3535 or AskAndi@StrategyLeaders.com. Check out our library of business advice articles at AskAndi.com.