Too often, San Diego entrepreneurs stretch their social network to its limits trying to find new customers. Many don’t realize that instead of utilizing everyone in their social network to increase revenue, they could instead diversify. Diversifying is an excellent way to help improve revenue streams with an existing customer base.
Why Is Diversification Effective?
Offering existing customers new products or services is an excellent way to help build your revenue stream. You’ve already developed a relationship with customers in your pipeline. Diversification helps ensure that they stay there. Diversification of your products and services is similar to the diversification that you’d implement into an investment portfolio.
You don’t want to put all of your eggs in one basket because if those “eggs” fail, you’ll lose everything. Blockbuster is a perfect example. As the times changed and these businesses were unable to adapt or offer other services, they ended up failing. Giving your customers multiple options from which to choose increases the likelihood of longevity.
The Defensive Diversification Approach
When competitors enter the marketplace, the likelihood of customers from your social network leaving increases. The defensive approach calls for businesses to expand or adapt their product or service range to entice customers to stay. You can do this in a multitude of ways. Business owners could elect to modify existing products or introduce an entirely new line of products.
Preparing To Diversify Products
If you’re considering diversifying, you must weigh the long-term implications of doing so and whether you have the proper resources available. You must weigh whether the cost of developing a new product is less than the cost of marketing your existing products. You must also determine if your current product line is sustainable in the long run.
We recommend sitting down in your flexible premium coworking space and conducting a budget analysis to determine if it’s worth going forward with diversification. Diversification could be a risky strategy, but it could end up yielding considerable dividends in the long run for your San Diego business.