The company, once a thriving multi-media production house, had landed a “big fish” client. So far so good, right? The CEO, seeing an opportunity to streamline marketing and reduce the inefficiency of managing many smaller projects, embarked on a strategy to expand the scope of work to the big client. The change in direction led to downsizing (jobs unrelated to the big client’s needs were eliminated gradually.) The capacity of the company to respond to its original multi-media mission was diminished. But in the short run, with a narrower focus, they became more profitable.
Obviously our new entrepreneur is biased. He was a “victim” of change. But what do you think? Did his former CEO make a smart move or spark the beginning of the end?
The short answer is: this CEO is focused on short-term benefits. By creating a dependence on one major client, he has put the long-term value and growth capacity of his own company at risk.
All entrepreneurial ventures – freelancing to growing a business – involve risk-taking. As the saying goes, “nothing ventured, nothing gained.” It is a continous balancing act between pursuit of opportunity and the ability to deliver. That said, if you are focused on long-term growth, betting the ranch on one major client is as bad as completely over-extending oneself. That is why your goal should be to achieve a mix of customers AND a mix of revenue. The right variety of both will sustain you in tough times and maintain the independence to grow by your own terms.
Here are three steps to get on the path of diversifying successfully:
1. Don’t be a one hit wonder… OK, we all have some favorites in that category. Who didn’t “RELAX” with Frankie Goes to Hollywood? Sadly, if you care about putting food on the table you wouldn’t want to emulate them or any flash in the pan. So even if you offer one core product or service, make sure you plan to roll out extensions. The result will be an appeal to a broader range of customers, greater opportunities for sales AND additional revenue streams.
2. Offer customers choices… The simplest way to engage customers in a sale – and to actually be more accessible to different kinds of customers – is to offer entry-level, intermediate and advanced versions of your product or service. Vary the pricing and access to features and functionality. How about versions for dummies, for techies or for teens. Where possible, provide opportunities for personalization. Customers have preferences they like to express through color, format, size, shape, co-branding, naming, white-labeling, etc.
3. Repurpose content… Not ready to bring out your next innovative product or service? Build upon the expertise and material you already have to create new offerings in different forms. Are you an authoritative service-provider or social venture with a cause? On-demand digital downloads and mobile device applications are growing exponentially right now. If you are marketing a product to consumers, can you digitize it? Transfer your core messages to textiles or gift items? Both segments that are holding steady in the flat economy. Stay on top of what your best customers need from your company – ask, listen and respond.
Like all aspects of entrepreneurship, diversification is a process. Join other makers and marketers at the New Product Marketing Meetup on the first Thursday of each month. Sharing experiences and best practices with other folks who are engaged in commercialization can open paths to the marketplace for YOU.
Oh yeah, and along the way, don’t forget to RELAX.