The old adage “Don’t put all your eggs in one basket” applies to the business world too. One strategy for always staying ahead of the competition is diversifying your business. The better you can diversify your product lineup, the more you open up your business to new markets and revenue streams.
By offering a different type of product or service to a new audience, you create fresh growth opportunities. Your different offerings can potentially complement and enhance one another. They also lessen the risk of changing tastes or industry-specific contractions ruining your business.
But before you can explore new markets, you must first identify your potential audience, analyze them, and connect with them. To identify these key segments, you need to implement a strong marketing plan.
Below are a few steps to cater to different audience segments:
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1. Define your new audience
This sounds simple, but it can actually be the most difficult part of the process. To accurately define the audience for your new product or service, you have to figure out how it’s distinct from your original offering, how that change affects the type of consumers who will buy it, and what characteristics this new set of consumers will have.
As an example, let’s say you sell premium athletic equipment. You decide to diversify your business by offering equipment on the cheaper end as well. So now, the question is, who’s buying the cheaper equipment rather than the high-end offerings? Is it people that can’t afford the more expensive equipment, or simply hobbyists that are less serious about athletics?
Let’s say it’s hobbyists. Now, what separates hobbyists from more serious athletes? Are they younger or older? Typically male or female? What’s their average income? The more you know about your potential customers, the easier it is to define segmentation and send them targeted offers through automated e-mail tools, such as the kind Signpost offers.
The great part about asking these questions is you can refine your understanding of your original customers’ needs. After all, it’s important to make sure there’s not significant overlap, or else your new product or service could end up just cannibalizing sales from the original.
2. Find out what they value
Perhaps the biggest mistake companies make is thinking they can tweak small aspects of an existing service and be able to engage an entirely new audience. This doesn’t usually happen. Building a new customer base takes fresh approaches that address different audience needs, values, and priorities. You may need to rethink every aspect of your offering.
This could include design, functionality, integration with other products or services, marketing strategies, even the means by which your product is sold. Diversifying companies often tend to struggle against smaller startups because the latter are creating an ecosystem from the ground up to meet the needs of the market, while the former are attached to previous mindsets geared towards a totally different audience.
3. Test and refine
Odds are you’re not going to get it exactly right the first time. Understanding a new audience takes time, so you’ll need to gather feedback on your products, marketing, and customer experience to see where you’re hitting the right notes and where you’re coming up short. Be sure to gather as much data as possible in the early days. Marketing solutions, like Signpost, can help you do that research by automating the feedback and reviews you need to understand your customers better.
The more you can understand and tailor services to your new audience, the better you’ll be able to do so for the old one as well. One of the underrated benefits of diversification is that it can often generate insights that lead to innovation in the original line of business.
Trying to meet the needs of a new audience might push you to develop new functionality or overhaul the customer experience in a way that would also work with the original target market. For companies that have gone stagnant, diversification can be a useful way to not just boost profits, but also to get the creative juices flowing and start innovating again.