Expanding your portfolio of work
Expanding your portfolio of work is different at the various stages of business growth, but nevertheless securing ideal clients is key to the success of a business at any stage, both in terms of profit generation and longevity of the business. Early stage businesses virtually seek any customers they can get. As they acquire a customer base, they will want to refine who they work for, which they will do by determining exactly what differentiates them. For a business which has a client base, then defining which customers to seek in the future becomes a higher priority. External changes in the market impact upon what work is available, the business must decide what is enduring and what is becoming less attractive. Similarly, as a business grows, clients who were once attractive, become less so and new clients need to be found to replace them. So, how do you go about defining your ideal client in the future, so you can begin to target them?
The following factors should be considered when managing your portfolio.
1 – Back to your roots – what is the purpose of your business?
It sounds obvious, but what transformation will a customer get from buying from you? What need will you satisfy and is there a real need for what you provide? In the competitive world we live in, what you do, and how you do it, is not a sufficiently compelling reason for people to buy from you and not a competitor. You should be clear about what makes you stand out and what transformation you make for customers. If you are unsure about “why” people should buy from you ask yourself, “what do you do?”, and then in reply to the response, “and what is the benefit of that?” a minimum of seven times. By the end you will have clarity on the purpose of your business and what makes you different. From this you will be able to define what your ideal customer is seeking and hence workout the best channels to market to them.
2 – Segment the market
Given that services and products are ultimately purchased by people, it makes sense to design the promotion of the service or product to match the target market and communicate the proposition via a channel they will use. Traditionally, this has been carried out by segmenting the market by demographics e.g. age, gender, occupation, social class, marital status, family life stage, family size, income, education, home ownership, ethnicity and religion. In the case of business to business you can segment the market in a way that is most suitable. Examples of segmentation are client type, procurement route, sector and geography. You will then need to identify the “role” of the person who buys in a business and target the role. The advantage of segmenting your market is that analysis can be carried out by slicing and dicing various ways.
3 – Who are the most valuable clients?
An analysis of your customer base from the management accounts should be carried out. If the records do not exist, then these will have to be created or a means of creating them devised going forward. The types of information you should collect for each client or project is profit level, number of times purchased, average order value, payment record, ease of doing business with, sector, type of work, the potential growth of the customers business and its stability.
Where there is a good relationship with a client the aim should be to offer them more of your services as they already trust you and are more likely to use you than go elsewhere. Where you have a profitable activity, the aim should be to replicate this with new customers by highlighting the relevant experience. People prefer to buy from you if you have offered the service, they require to someone else before.
The analysis of the client’s importance to you should then be compared to what is going on in the wider marketplace. Check whether the market is now mature, and you can continue to milk it, or if it is a rising or declining market. If it is a declining market, then you should be prepared for that work to slip away overtime. With a rising market you should aim to increase your exposure. The trends for client’s attractiveness can be gained from the management accounts.
4 - Routes to market
If you have segmented your market sufficiently and have clarity on who your most valuable clients are you should be able to work out the most appropriate means to contact them. With the advent of the internet the number of communication channels continues to increase. That said, the fundamentals have not changed. Choose your market, carefully segment to identify targets and then use the most appropriate communication channels to create awareness or start a relationship. The internet has simply added several hundred more channels, but your targets will only be using a small number, so identify them and don’t disregard the pre-internet channels, lots of people still use them e.g. networking, exhibitions, referrals etc. As targets use a limited range of channels it will make your marketing more productive when the best channels for your service or product has been identified.
5 – Getting the price right
Businesses quite rightly are very focused upon their position in the market, in terms of how they differentiate themselves. With differentiation comes the ability to charge more. In fact, if the customer is concerned about price then you probably offering your service to the wrong person, or they have misunderstood the method you have used to promote yourself.
Having a good handle on pricing and having the ability to gain feedback on both successful and unsuccessful sales is key to maximising your price and still securing a sale. Small percentage changes can make a difference to the success rate, so having a reliable pricing feedback loop will reduce the number of failed sales. Having no failed sales means you are pricing too low and you will be overwhelmed with work. Delivery quality, customer satisfaction and staff engagement will deteriorate in a ruinous cycle, damaging your brand. Decide what an acceptable success/failure rate should be and work towards it.
The whole process from identifying potential clients to recording the pricing information and ultimately the customer satisfaction levels should be recorded in a CRM system. Having the complete story to hand, makes looking after the customer and analysing your market a lot easier.
To extend your portfolio of work in the most advantageous direction, in terms of the wider market, your most profitable clients and your personal aims, you will need a good understanding of the management accounts and the wider market conditions. If you would like to discuss these issues, and see how they can be aligned, then please contact Peter.Searle@ba4cs.co.uk