Learn how your business can reduce risk and transform its revenue streams with a more diverse customer base.
All business owners want to find the right clients: The ones who are easy to work with, have the right budget and who need and value the services you provide. But it’s also about the mix of clients. What you also need is a diverse customer base.
Developing a more diverse customer base mitigates risk and provides additional financial security and stability. It also gives you the opportunity to work on different types of projects, with different kinds of people.
As a business owner, your role is to find the mix of clients who will satisfy both your bottom line and your desire to do interesting work.
What Does a Diverse Customer Base Look Like?
Every business and industry is different. Multiple factors, including geographic regions and the current economic status of your city or country, can impact your ideal client mix. But there are some best practices you can start from:
1. Find the Right Clients
As part of your initial business plan, you likely completed an exercise that helped determine who your ideal and next-best client types are. That exercise is one you should go back to every couple of years. As a refresher, here are some tips on identifying ideal clients:
- Pinpoint the needs or problems that your services solve
- Find the clients that need what you offer, based on: industry, business size, location and budget
- Collect demographic information on the core users of your services
- Identify who’s buying from you, especially if it’s different from the person using your services
You can brainstorm the answers to the above questions, but make sure that you marry that information to what you actually know. Always look at your current client base and your analytics to learn more specific answers.
2. Establish the Client Mix that Works for You
How do you know what a diverse customer base looks like for you? Every business will have a different breakdown. But here are a few of the high-level types of clients you should look for. Consider them when building out your client mix.
Your anchor clients deliver consistent business. They have long-term contracts or retainers, and you expect the relationship to continue unless something unexpected happens. These clients provide the bulk of your revenue, and should be the client type you spend most of your marketing and advertising budgets on trying to acquire.
Many service-based businesses have clients with seasonal needs or needs on a specific schedule. These clients are reliable in their own way, but require extra attention to ensure you stay top of mind during their off-seasons. When possible for your business type, these clients should be a smaller portion of your overall client mix.
These clients are the ones that come to you with a specific need. You might not have pursued them on your own because they don’t fit your ideal customer definition, but are a surprising fit because they have the right budget, they present future opportunities, or it’s just a cool project. These clients will come and go more often than your anchor clients. Your portion of your client mix dedicated to opportunistic accounts can fluctuate depending on the types of projects that come in, and your capacity alongside seasonal clients.
Ongoing Small Accounts
Many businesses have a number of smaller accounts that don’t fit their ideal, next-best or opportunistic client definition. These accounts stick with your business because you have a good relationship, or the work is fun or easy. They’re also a great fail-safe in case a bigger client falls through. But keep an eye out for scope creep. Small accounts can balloon quickly when you aren’t looking.
3. Understand Not Every Client Is Right For You
Not every client that comes in the door is the right client for you. It can be difficult to say no. Turning down business rarely feels comfortable. But if a client or project isn’t the right fit—the budget is not right, the project has too many red flags or potential pitfalls—it’s OK to say no.
Learn more about saying no to the wrong clients in our blog post, “Honest and Direct: How to Say No Politely to a Client.”
What a Diverse Customer Base Does for Your Business
Having a diverse mix of clients, including:
- Big and small
- Different industries and sectors
- Diverse geographic areas
- Non-profits or publicly traded companies
….can benefit your company in a number of ways:
1. Risk Mitigation
Reliance on a few big accounts could put you at risk. Another risk? Working in just one industry or sector: An economic downturn in the industry might leave multiple clients with limited budgets. A diverse portfolio of clients and project types helps protect you if one or two go away.
2. Cash Flow Security
Having large, “anchor” clients helps to ground cash flow so that you meet a certain baseline each month. Smaller clients and one-off projects that fluctuate month-to-month can help boost certain months as well as ensuring different and interesting work.
3. Capacity Management
Reliable clients are for crucial time management. Having employees on staff who are under-utilized is stressful for them and for you. Your best clients give you and your team the confidence that you’ll have work available every month and that you’ll be able to effectively allocate your resources to existing and new projects.
4. It Fosters Creativity and Innovation
Doing the same work over and over can leave you and your team feeling stagnant. Smaller clients in different industries present opportunities to try something new. As a marketing agency, for example, you might specialize in paid media campaigns for B2B software companies. But what if a local band asked you to manage their social media presence? They might not have the same budget as a big tech company, but it could be a fun and different project for your team excited to get excited about.
How to Build A More Diverse Customer Base
It’s natural to want those robust “anchor” clients. But the flip side of relying on just a few big accounts is the risk. You never know when one will decide to move on or close up shop, and if your customer base isn’t diversified, you might not survive the change.
But the question remains: How do you build a more diverse client base?
Let’s look at it by category of client:
1. Establish Anchor Clients
Anchor clients are likely to have started with you as something else. Maybe you did one or two projects for them to start. But eventually, they realized the value and reliability you offered and locked you into a more ongoing cadence of work.
But there are some things you can do to “encourage” that transition from “occasional” to “anchor”, including:
- Packaging Services: By packaging your business correctly, you can up-level the relationships you have with your clients. Offer monthly packages, annual plans and, when appropriate, personalized recurring projects. The easy, reliable nature of your business can make one-off or seasonal clients regularly come back for more.
- Excelling at a Niche Focus: If you establish yourself as the go-to for certain niche industries or categories, clients are more likely to vie for you and want to maintain ongoing relationships. E.g. if you’re the absolute best SEO agency in town and people know that’s work they don’t want in-house, you’re likely to have a good set of anchor clients.
- Predicting Needs and Gaps: As you work with your smaller, seasonal and opportunistic clients, you become familiar with the needs they have. To transform them from smaller into bigger accounts, keep track those needs and turn them into business opportunities. They’ll be grateful you’re supporting them, and you’ll have a loyal client base that trusts you.
2. Attract and Maintain Seasonal Clients
Some clients will come and go. But some come back again! To attract that sort of seasonal business you may need to prompt consideration.
To do this:
- Understand the Seasonality of Your Business: Many businesses have seasonal trends. Budgets are set at a certain time of year, or there are periods where specific kinds of work get done. There’s a busy season and a quiet one. Understand your own seasonality and make sure you’re resourced for those seasonal rushes!
- Maintain Relationships with Past Clients: Old clients can be new clients again. But make sure you’re top-of-mind for them. It helps to keep a schedule around reach-out to new clients. You can inform them of new services, products or even simply reiterate how much you enjoyed working with them in the past. This simple step might be enough to have them reconsider using you.
- Offer Referrals and Discounts: Your existing clients are a great avenue to new business. Offering referral fees and discounts can replicate the success you’ve already had with your best clients.
3. Be Discoverable for Opportunistic and Small Accounts
Those smaller ad hoc projects and clients will come to you through some mix of blind luck and concerted effort. It could be word-of-mouth. It could be the fact your website has top notch SEO.
Here are some of the top ways to help these projects “find” you:
- Embrace Targeted Marketing: Digital marketing lets you target on a deeply specific level, especially when using targeted advertising on platforms like Google and LinkedIn. You can advertise based on geographic locations, roles or titles, demographics like age or gender and more.
- Ramp up Your PR: Are you doing something news-worthy? Local publications and trade magazines are great places to share success stories. Public relations is a specialized area, however. Consider hiring a PR firm to help you maximize your opportunities.
- Join Associations and Organizations: Associations and organizations provide great networking opportunities, both for ideal clients and new types of business. Business organizations will help you connect with other businesses, in multiple industries, and your local chamber of commerce can help you network with other businesses in your area.
Embrace Diversity in Your Client Mix
Working with one or two anchor clients might look good on your bottom line today. But fostering a diverse customer base will ensure better financial health for your business long term. It mitigates risk if one big client leaves, presents new and interesting challenges for your team, and opens up future opportunities for creating more anchor clients down the road.
about the author
Josh Kern is a writer and B2B marketer based in Toronto, with client-side, agency-side, and freelance experience. Josh specializes in content marketing, and helping organizations determine the right content for their audience during each stage of the buying journey. You can find Josh on LinkedIn.