Sealing a business with a large client is an exciting opportunity for any business. It could mean a massive jump in revenue and a loyal client base.
However, relying on a few large clients has its risks. A VIP can have great demands, and losing them would deal a frightening blow to your business. When you lose a large client, you might be forced to do some serious cost-cutting.
Whether you’re setting up a company or running a franchise business, it’s tempting to take a large client. But how can you survive its risk?
Diversifying Your Customer Base
Just as diversifying investment portfolios minimize your risk, so does expanding your customer base. That way, your business survival doesn’t rely on one client. In case you lose a significant customer, others can still provide you with a revenue stream.
For example, let’s say you own a commercial-cleaning franchise business. Doing business with a large corporation certainly improves your revenue. However, consider forming relationships with other small businesses that need their workplaces cleaned. In case the large corporation finds another cleaning business or ends the contract, your business will survive.
Consider Hedging, Too
Another option for your business is hedging or opening your products or services to other industries. If your commercial cleaning business caters mostly to offices, you might want to consider warehouses.
One advantage of hedging your customer base is that your business can stay afloat, even in challenging economic times. If customers from a particular industry don’t need you, you’ll have other customers from other sectors to keep your business afloat.
Diversification and Hedging Strategies to Try
Diversifying or hedging your customer base doesn’t mean aimlessly looking for opportunities. Like all business activities, a strategy is necessary. Here are some you can try:
#1: Create a group specifically for your new customer base
Your existing sales team might already have their hands full with your current list of clients. Create a new team that will focus on new prospects.
#2: Ask for referrals
Your target audience will likely do business with you if someone they know recommends you. Talk to your current customers and ask them to refer you to other customers who could use your services. You can also ask them to create a testimonial for your website.
#3: Expand your offers
Consider if you can offer new products or services. Alternatively, you might want to consider tweaking your offers so it can appeal to different customers.
#4: Diversify your outreach strategies
You might rely on social media, but what if you want to expand your customer base to Baby Boomers and Generation X? That means you should also consider traditional ads like radio, flyers, and newspaper ads.
#5: Form partnerships with other businesses
Formal or informal partnerships with other businesses can expand your customer base. Working with someone as a supplier or vendor could earn you referrals to prospective customers.
You can also work with businesses that serve a demographic you want to target. Make sure that the partnership benefits both you and your partner. Swap email lists or promote one another in exchange for a deal.
Don’t rely on one client to give you the bulk of your business income. Diversify and hedge your customer base to increase revenue and growth. Make sure you have the right strategies to set up your business for success.