We all get into a comfort zone with our clients. We are always grateful when they refer others to us. Unfortunately, many times they are within the same industry. We are riding high thinking our client mix is good, no client too big. And then, wham, something hits a particular industry or two and you lose half or more of your clients.
When 9/11 happened, I was heavy into travel and tourism. I thought I was in good shape because not too much was with one company. I was wrong because I lost 80% of my business overnight. Took me years to recover.
And, when Covid hit, no one was prepared for that. Many of our customers quit everything. But we were diversified enough that some of our customers keep buying (not as much). While it was a struggle, this time we didn’t fear we wouldn’t make it. And our recovery was much quicker.
Maintain a Diversified Customer Base
I think it’s primarily because we work hard to have a diversified customer base that includes a wide variety of industries. I admit, it isn’t easy. Business keeps growing and your busy and you don’t realize that new referral customers have resulted in 50% of your sales coming from one or two industries.
So, how are your diversification efforts?
As we hear more and more talk about a recession we need to keep a firm grasp of our customers business and our industry mix. A lot of companies take the year-end to evaluate their successes and challenges from the past year. This year we all need to add industry diversification analysis to our plans.
No One Customer Should be More than 30% of Your Business
Currently, our customer mix includes 10 different industry classifications. And within most of the industries we have multiple customers. While I feel the company is stable, I still have two customers that have vastly increased their business with us in the past six months. They are now about 40% of our business sales and growing. Getting a little too close for comfort to being too big a piece of our sales pie.
Referrals and Outreach are Key to Growth
So, what are we going to do about it? Grow some of our other key customers and get new business in other industries. How? Referrals and outreach.
Now, it’s not to say you have to have industry diversification. I know many businesses that are highly successful niche marketers. However, it can be harder to thrive in uncertain times.
I have a good friend and fellow business owner that is a highly successful niche marketer. All her customers are from one industry. During the pandemic many stopped spending. She took the time to evaluate her product offerings and asked her customers, “what can I do better”.
Be the Expert if Niche Marketing
After many discussions with customers and researching trends she decided to design her own product line for the niche industry. She provides them with products and programs that help them grow their sales and their own customer diversification (and she grows in the process). Since the introduction of her new product line earlier this year she has grown her sales by 50%. She has not only added several new customers but has expanded her sales to her existing customers as well.
And, now that she has shown a more “custom” innovative side to her business her customers are asking when she is going to expand the product line further. Plus, they are bringing her in on their own product introduction discussions so she can assist with program development, packaging and more.
Is this recession proof? Probably not, but nothing really is. However, she is more confident than ever that her niche market will continue to prosper (with her help). They cannot buy her product line from anyone else. So, if they want them, they have to purchase from her. A monopoly so to speak of product offerings.
A great way to secure customer loyalty.
Grow your Network and Work It!
Since my customer base has gotten a little top heavy, my goal over the next few months is to develop a comprehensive list of our industry expansion targets. Research my connections on linked in and my own personal database to see who knows who.
After being in business so many years, I am fortunate to have a large network. And many of my customers have moved to new positions over the past couple of years. Of course, I reached out initially, but again, got busy and didn’t stay the course of keeping in touch. We will now.
We currently send a direct mail package to showcase themed products, packaging and printing capabilities on a quarterly basis to our top customers and a few prospects. Now we will expand to include even more prospects to the mix. And we will increase the frequency so when we reach out they remember us.
Business Development Efforts Should Be Top of Mind
However, as I mentioned, another way to decrease the percentage of overall sales for one company in the business mix is to continue to increase sales from other current customers. Asking for internal referrals to other departments is one my most successful tools. Just a few weeks ago I asked one of my growing customers for a referral. They were happy to oblige.
I had a meeting last week with the new department and because we were already a vendor-partner they were aware of our reputation of being creative and reliable. So, part of the “sales” job had already been completed! We were able to focus the meeting on how we could help their programs. It was a great meeting with new projects already on the calendar for 2023.
It’s a good business practice to always be in business development mode. But we are also human and many times it may get pushed to the back burner when we are so busy.
However, we need to be disciplined now more than ever. We don’t know what the economy of 2023 will bring. We need to be prepared to thrive no matter what is thrown at us.
Are you ready?