Diversification is all the rage in the current economic climate.
Companies are trying to branch out in new areas, trying to target new customers with new offers or to repackage or rethink existing products for new audiences.
But its a bold, high risk strategy to protecting and preserving a business in difficult times. The obstacles to conversion are huge because there is a need to explain who you are, sell your competance and convince cold and lukewarm customers to switch to you from established suppliers. And it risks your clarity of proposition.
Evidence suggests that this strategy rarely works without research, preparation and investment. Apple are one of a few companies that create products and services in new markets, meeting both unmet needs and previously unknown needs in customers.
Most of us can’t do that and should instead focus on share of wallet from those we know and those they know.
Pareto’s 80:20 rule has stood the test of time for a reason. Focus on the people that know and like you. Segment your existing customer base and establish which ones are the rising stars and cash cows. Then see what else can be added, bundled to create additional value for your customer and revenue for you. Example used cars: You’ll already offer finance, but what about car insurance, breakdown plans and aftercare plans through carefully selected partners?
Then map your customer universe to see who you could approach next. Create a wishlist of companies you want to be introduced to and use your existing customers to help you. You’ll be surprised how far you can get if you just ask. You still get to do a little bit of something new but maintain clarity in what you are doing.