Selling to the same old customer base can be as comfortable as staying snuggled up in a nice, warm bed. But that strategy can limit your company's potential for profit and growth.
Just ask Bill Burnett, co-founder and president of Fippex, which supplies a B2B portal allowing companies to easily share files and other content with their customers, and gain information on those customers' interests at the same time. Fippex started out as a product for financial service customers to connect with their institutional clients. That's certainly a lucrative and large market. But the founders decided to branch out from financial services to other verticals anyhow.
"We found that as we evolved the company we needed to do that to grow faster," Burnett says. It worked. At the beginning of 2011, the Fippex client base was 100% financial services, and the service had 3,000 total users. Today, only 50% of Fippex business comes from financial services, with the rest mostly coming from the media, marketing, and healthcare sectors, and the service has 23,000 users.
How can you grow your own customer base into new market areas? Burnett recommends these tactics:
1. Look for the universal in your product.
Fippex incorporated a tool to help its financial services clients track how they were bringing in capital for investments. They were using those metrics to learn how to raise capital more quickly. Burnett realized that other companies could use similar reporting to track their own successes and shorten the sales cycle. "We started looking for other verticals that could use that same information in the same way," he says.
2. Take small steps into new markets.
Branching into new markets is tricky for an entrepreneur. With a small company's limited resources, you can't risk pulling your attention away from your core customers. "It's a gray area where you need to stay focused, but also seek out new areas," Burnett explains.
It helps if you enter new markets cautiously, with incremental changes. "When we decided to sell this to the marketing world, we didn't change our website or our whole direction," he says. "We took what we had built, and made very small changes to give it a different skin for marketing. We didn't go further than that until we had signed our first two marketing customers."
3. Look to the talent you already have.
How did Fippex get its first marketing customer? Burnett had worked for a marketing company so he made a sales call on his former employer. They bought, but not just out of friendship. Burnett had the marketing smarts to see the product's potential in that industry and create features he knew marketers would appreciate. As a result, "When we started to grow into the marketing sector it really took off."
Similarly, Fippex was able to sign up media clients because one of the company's salespeople came from a media background. "She said, 'This is a great product for media, have you thought about that?'" Burnett recalls. Because of her expertise, they were able to get the product in front of the Sun-Times Media Group, and they bought.
Burnett says he wouldn't have brought in a salesperson specifically for the media market before this happened. Now that it has, "It makes sense to hire someone with specific media experience," he says.