You have your product or service, you have your niche market, you have your targeted marketing strategy. Yet however successful your business is, market circumstances are always evolving and to thrive, your business must evolve too. The trick is in knowing how and where to find new customers, and even new markets, so that your order book is constantly showing a necessary injection of new business.
First you need to identify new markets that you could realistically diversify into. By their nature, these new markets are likely to be related to the markets you currently serve. Anything else is effectively starting a whole new business, even if you do brand it under the umbrella of the old one. Market identification takes a number of key steps:
1. Look at the most profitable markets and clients that you are catering to at the moment. List the customers who are responsible for the most sales. Given the truism of the 80:20 rule, you’ll probably find that 80% of your sales are coming from just 20% of your customers and it’s these customers you need to identify.
2. Now, just because they are responsible for the bulk of your sales does not yet make them your best customers. Take that list and rank each customer for profit margin and difficulty (as in, are they difficult to deal with). Your top customers are the high profit, low hassle members of the list.
3.Next, identify the specific niche markets in which these top customers operate. Follow that up by listing adjacent markets to those niches (e.g. if you specialize in legal advice to the music industry, an adjacent market is similar advice to the TV/movie sector; or if you successfully sell children’s sporting equipment, sporting goods for the adult market may be indicated) . These markets represent your best chances of solid diversification.
4. Now return to the list of top current customers and identify their key characteristics; this should give you a profile of what a good client looks like that you can use to prospect in your chosen new (adjacent) markets. The profile might include size, location, ownership structure, values/culture, future business strategy, and so on.
5. You now have a list of targeted customers in a new market ready for a concerted marketing and sales push.
As for what that “push” might look like, use the following activities as starting points when devising your expansion strategy.
Finally, however enthusiastic you might be, hold on taking action until you’ve made a plan. This should be a version of a business plan that lays out the reasons and goals for the expansion, the activities to realize those goals, and the timescales involved. Keep it structured and measurable so that not only can you make adjustments to your strategy you also know when those adjustments are needed.