Why you Should Diversify your Small Business Customer Base
Small business owners fight hard for their customers, and because of this, they often develop strong personal relationships with them that can last for years. However, one error that small business owners sometimes make is assuming that their customers will support them indefinitely, slacking on their efforts to attract new business and build the reach of their brand. Falling into the trap of working with a single big customer to the detriment of others is something that can befall business owners when they are trying to win a large client with great service, and in the same way that can happen, a group of regular customers can diffuse a business owner’s resolve to acquire new clients.
If you lose a major customer, how much of your revenues would disappear? Look at your numbers and determine just how big a portion of your business is represented by your best customers. The larger the share, the more important it is that you cover yourself by attracting more. A single customer that represents a major portion of the business that you do can put your business in a very difficult situation if they take their business elsewhere or are no l0nger able to pay off invoices or purchase your products or services.
Ask for referrals to keep your customer base expanding. When you have a strong relationship with your clients, you should make sure that you are inspiring them to share your business with others. Asking for referrals is an important part of capitalizing on the goodwill that comes from working hard to provide a great customer experience. As the referrals that you get in turn become loyal customers, you can continue the cycle to keep your customer base growing and avoid being forced to rely on only a few major clients to keep your business growing.
Determine the size of your market in order to get a better picture of your ability to attract new business. Knowing the size of your market is an important part of running a business, since if your market can’t support your operation you will not be able to grow. If you have not already researched the size of your target demographic within your area, you must do your research to figure out what you are working with. Depending on the market size, you may decide that the best way to get new customers is through targeted advertising, or that you can capitalize further on your current customer base by offering new services or products. The ability to serve a broader range of customers or provide a wider range of services can protect your business from becoming over-reliant on a handful of customers.
Photo Credit to Trevor Cummings on Flickr