Tag Archives: Niche

How Do You Diversify Your Customer Base? Four Suggestions

Situation: A CEO is concerned that too much of her company’s business is focused on two few customers. The loss of a single large customer can potentially mean a significant hit to revenue and profitability. How do you diversify your customer base?

Advice from the CEOs:

  • If current cash flow is good, the company should consider purchasing diversity by buying a company.
    • Consider acquiring a supplier that is in good shape, but with lower margins. They will have the infrastructure to run their own operation, and the purchasing company will have the additional profitability to make the combined entity more interesting.
    • Given the company’s existing cash generation potential, there are creative ways to finance such an acquisition.
  • Why is this a good strategy?
    • Purchasing another company can instantly expand the customer base.
    • Diversifying the company opens additional options to build long-term sustainability.
    • A purchase strategy can bring in a ready-made and smoothly running infrastructure in the form of the purchased company.
    • Diversification can boost the value of the combined company on a more diversified business base. It might allow the company to combine low volume, high profit lines with high volume, lower profit lines. There are advantages to each of these business models.
  • Where can such a company be found?
    • Look both inside and outside of the current geographic base.
    • A candidate could be a higher volume but lower profit supplier of one of the company’s current customers that does not compete with the company’s current offering. Alternately, look at companies with more diversified customer bases in a related industry.
  • Look at the niches that the company’s current customers serve.
    • What similar niches exist? Are there acquisition candidates there?
    • Look at the functionality that the company’s products add for its clients. In what other industries would similar functionality be of value?
    • As these questions are asked, look for candidates that have complementary customer sets, customer bases, and geographical reach.

How Do You Introduce a Product into a New Market? Five Ideas

Situation: A technology-based company has a very successful product in a niche market. The team has been brainstorming about additional markets into which the product could be introduced. The only experience that the CEO and team members have is with the existing market. While other markets are appealing, they lack the experience and contacts to penetrate new market opportunities. How do you introduce a product into a new market?

Advice from the CEOs:

  • Hire someone, either an employee or a consultant, who intimately knows and can introduce you to the new market. If you have more than one good candidate consider hiring them both.
  • Start with clients that you already serve in your current market but who also serve the new market. This can provide quick wins and proof of concept. Overlap is important because you will have a shorter sales cycle with these clients.
  • Another company moved from on-site consulting to turn-key services. They found the purchase process to be completely different. Originally, they were unprepared for this, so the transition took longer than it might have.
    • Talk to existing customers and learn about their companies’ purchasing processes to organize your fact gathering and strategy.
  • Read case studies of other companies’ experience moving a single platform between markets.
  • Another company moved from niche photography – holiday photos – to photos for Fortune 500 companies. This was the same expertise, but the market and decision processes were different.
    • Key to the successful move was understanding the people in Fortune 500s who were making the buy decision and the structure of their decision process. The CEO of this company registered for conventions attended by client prospects. This provided a quick way to meet and learn about key people and their decision processes.

Does Your Company Have the Right Focus? Three Alternatives

Situation: The CEO of a specialty service company is curious about whether they have the right internal focus to drive their business. Their internal focus statement is to the most competitive, most responsive company in their market with high profit per job. One school of thought calls this focus the Main Thing driving the company. Does your company have the right Main Thing or focus?

Advice from the CEOs:

  • Look at the tie between your Main Thing and your financials.
    • Determine an appropriate measure of efficiency – for example, billable hours per field worker per day.
    • Look at cost per field worker versus efficiency.
    • Ask what will generate the profit to grow to the level that the company has established as the revenue target.
    • If you can boost the gross margin on services, this provides far more benefit than merely cutting expenses.
    • Look for market niches that support higher prices without a parallel rise in either expense or risk exposure.
    • Do leadership and staff have the right skills and talents to support growth objectives? What can be done to enhance skills and talents?
    • Consider the following – By increasing efficiency and margins from 16% to 20% on $10 million of job revenue, the company can increase the operating margin by $400,000. If certain staff cannot work within a more efficient structure, you may want to move them to jobs that are less critical to the business. Having the right staff in the right seats is critically important to bottom line results.
  • Look at the company’s customer selection criteria. Using the 80/20 rule – 20% of customers generate 80% of revenue and/or profits. How do you improve customer selection?
    • Rank all customers on measures of profitability of their business, payment time, and most importantly future business potential. Focus on customers with the highest scores, and “fire” low scoring customers.
  • Focus on cash flow: Look at early pay options or discounts to speed payment from large customers.
    • Incorporate a schedule of values in all contracts as an addendum to prompt earlier payment.
    • In proposals, include a payment schedule and finance the receivables through a factoring company – particularly in the case of slower paying or less desirable customers.

How Do You Find Your Sweet Spot? Seven Suggestions

Situation: A company’s sales are bumpy. The CEO thinks that this may be due to a mismatch between products that they offer and their customers’ needs. They currently use online surveys to capture customer needs and input. How do you determine customer needs? How do you find your sweet spot?

Advice from the CEOs:

  • The most important first step for a smaller and growing company is to clearly identify the customer niche that they serve. This must be a niche where the company can out-serve their competition.
  • There are two types of niches to consider:
    • A product/service niche focused on a specific set of products and services – one where you can offer a differential advantage over your competition and become known for this, or
    • A customer niche – a specific set of customers that you dedicate yourself to serve in a way that provides a differential advantage.
  • An example of the product model is an individual who started an e-commerce site for lacrosse equipment – products not commonly stocked in sports stores. They offered a wide range of lacrosse products, built an online community, shared articles, etc. and became THE place for lacrosse players to get their equipment.
  • An example of the customer niche model is to focus on a population and build a concierge or member-only service. The niche here is the buying group. This can be employees of specific companies or government workers as examples. Costco grew using this model.
  • For an early-stage company, survival is about single pointed focus on that niche where you can provide better products/services or better serve your customers than anyone else. As you grow you can diversify based on the reputation and loyalty that you gained early on.
  • Look at competitors – how are they gathering customer preference information?
  • Look at your passion – is it products or people? Choose a niche that fits your passion.

How Do You Build Market Awareness on a Small Budget? Seven Ideas

Situation: A small technology company has a handful of major customers. They are very good at what they do and want to expand and diversify their customer base. The challenge is that they don’t have the funds for large-scale marketing.  As an additional twist, for now they prefer to stay under the radar of their largest competitors.  How do you build market awareness on a small budget?

Advice from the CEOs:

  • Start with the basics. Define your market niche and build from there.  Create a beachhead in this niche and generate strong testimonials from your current customers.  Segue to tradeshows and broader marketing opportunities as you build marketing strength.
  • You already have several marquis clients. Look for opportunities in other divisions within these client companies. The work that you have done for existing divisions makes you credible.
  • Network with your current clients to develop other opportunities. They won’t want to help their competitors; however, if you can improve what they receive from their other vendors they may provide introductions for you.
  • As a small company, focus on a single market where you have strength and credibility.  You don’t want to spread yourselves too thin.
  • Find a good customer and solve their problem well. Create an evangelist who will tell others about you.
  • Look for speaker opportunities at high visibility events within your market niche.
  • Consider webinars, these are inexpensive and if you promote them to decisions makers in your target niche you can quickly build credibility.

Why Do You Need Uberinfluencers? Four Factors

Interview with Skip Brand, CEO, Martini Media Network

Situation: Thanks to the rise of social media, the 10-20 million individuals who were the influencers with the most purchasing power have increased to 70 million. Within the influencer group, there is a sub group deemed “uberinfluencers” who have the most influence. How do marketers reach the uberinfluencers and why are they so important?

Advice from Skip Brand:

  • Uberinfluencers increasingly spend more time online, are twice as likely to make a purchase, and spend three times as much per acquisition when they do purchase. Also, they always share new product experiences with friends and family via different social media (Facebook, Twitter, Blog’s, etc). For the first time, consumers control a brand’s reputation and are able to set the brand’s tone and image. This is why marketers need to focus more dollars to get in front of this audience.
    • Uberinfluencers spend more time online than the general US population. They are brand savvy, digital savvy and socially networked.
    • They have diverse and specific interests and leverage the Internet extensively to connect with their passion areas. Niche sites appeal to this audience because of the specificity and existence of community. If you better understand where these people spend their time at work and play –you are better positioned to leverage their influence.
  • The company that wants to reach and leverage these uberinfluencers needs to be scalable, exciting and relevant.
    • For this audience, small is beautiful and also scalable. Let’s use the example of golf, a passion for many uberinfluencers. Your site should feature the highest quality courses and equipment if you want to reach 50% or more of this target audience. It must be easy to navigate, provide enough information to make them feel comfortable about product selection, and have a social component to help them broadcast your message.
    • Uberinfluencers spend time on sites that are exciting, engaging and which have a single share of voice. This means one focused ad per page instead of multiple ads.
    • Particularly in a recessionary market the site must work diligently to maintain relevance by continually enhancing site content to provide a fresh experience with every visit.
    • Marketers should put uberinfluencers at the center of their media buy and strategy.
  • To attract and leverage this audience you must maintain a maniacal focus. Reach out to them using social networking tools, which find uberinfluencers where they work and play on the web. Let’s illustrate this with an example.
    • Let’s say that your uberinfluencer is a digital media executive. You will find them on social networking sites because they are living what they are doing. Put the right message in front of them. If they buy they will spend more, but it’s even better if they tell 10 friends about you.
  • Once you start figuring out the keys that attract uberinfluencers, they will start telling each other about you and news of your product will spread across the web, in turn maximizing your revenue!

You can contact Skip Brand at skip.brand@martini-corp.com

Key Words: Strategy, Sales, Marketing, Uberinfluencer, Social, Network, Media, Purchase, Opinion, Influence, Online, Work, Play, Hobby, Niche, Scalable, Exciting, Relevant, Focus, Viral

How Do You Move from Early Adopter to Mainstream? Ten Thoughts

Interview with Russell Glass, CEO, Bizo, Inc.

Situation: A company has established market leadership in an emerging market. When you innovate in a niche, focusing on early adopters, eventually you run out of early adopters. The challenge is broadening the appeal to a larger mainstream customer base. How do you cross the chasm from early adopter to mainstream?

Advice:

  • The challenge is both messaging and cultural.
    • In messaging, you must support the new norm. This means convincing the customer that if they are not with you, they’re being left behind. You need to demonstrate that your established, proven solution is the new norm.
    • The cultural challenge is maintaining a culture of innovation and attracting the right talent while becoming a mainstream company. An attraction to new talent is that you are cutting edge – changing the world. This aura is critical to a start-up. You must maintain this innovative culture as you become the market leader.
  • How do you overcome these challenges?
    • Finding people who’ve been there and done that increases the odds in your favor. We hired a marketer who had helped take SuccessFactors through the same transition.
    • Hire for excitement, energy and enthusiasm. Quickly remove new hires that turn out not to fit.
    • Maintain a freedom to fail atmosphere. You need people who will take risks, but who will also step back and quickly change direction when the risk isn’t productive.
    • Decision-making speed is a great advantage of small companies.
  • Create an organization that celebrates innovation.
    • We have “Hack Days” when employees are free to work on projects of their choice. A new product that brings business audience targeting to social media came from a Hack Day project.
    • Keep everyone informed. We have company-wide daily stand-ups. Individual updates are quick – 30-45 seconds. This fosters open communication and awareness, and surfaces issues before they become problems.
    • Weekly, we send out full disclosure emails including key financial metrics, successes and failures.
    • Monthly we have executive-only stand-ups. These are longer, but updates are quick and focus on progress to goals, as well as next month’s goals.

You can contact Russell Glass at glass@bizo.com

Key Words: Market Leader, Niche, Innovator, Early Adopter, Mainstream, Crossing the Chasm, Messaging, Culture, Cutting Edge, Hiring, Decision-making, Communication