6 second take: Growing your business requires careful planning — here are a few guidelines for using your previous success when expanding into uncharted territory.
Why does expanding your business feel like you’re starting your business from scratch even though you’ve been in business for over 10 years and have tons of happy customers?
There are different reasons that as a business owner you could decide to offer news goods or services. You may be ready to extend your brand because your existing market is getting saturated and this is your next growth opportunity. Or, industry forces could be at play and your existing offer is becoming obsolete and you need to pivot to stay alive.
Whatever the reason, entering a new market requires the same dedication and commitment to learning the customers’ needs, pains, and desires, that you went through with the markets you’ve been serving for years.
You are in effect starting from scratch with this new market and you have to figure out all the nuances that go along with the value proposition they care about, the pricing strategy they’re comfortable with, etc.
Once you start down this path with writing new marketing copy for a brochure, by making calls to set up trials, and testing out new social media posts to see what resonates, you quickly realize, this ain’t easy.
Here are five ways you can leverage your existing business success when expanding into a new market.
1. Ask Your Existing Clients for Leads
If you’ve been in business for a while and have built strong relationships, your clients likely know your business as well as you do. When it comes time to offering something new, they will provide a network that you want to tap into for leads into this new market.
They may or may not think of people off the bat that are an exact match, especially if their main business circles are other people in their same market.
Help them help you by describing the new market and giving examples of what behaviors these people may have, and where they may hang out to help your client explore the areas of their life they may not be thinking of.
Additionally, existing happy customers can vouch for your quality. While the new clients may be looking for different characteristics than your existing clients are, there are some basic traits everyone cares about. Find the overlapping needs with a Venn Diagram of your various target markets and seek testimonials that speak to those areas of interest.
2. Develop a New, Different Ideal Client Avatar (ICA)
One of the hardest parts of entering a new market is learning about and getting to know the new customer as intimately as you know the ones you’ve been selling to for years.
You’re basically starting from scratch with people you’ve never sold to before and their perceptions could be wildly different from your “regular” customer.
The interesting thing about this, is that the same exact person can represent two different markets and value your services different based on context.
Let’s take food as an example. Let’s say you’re a private chef who cooks for dinner parties. Each client has a party every six to eight months.
The client cares about every detail, how their guests are going to feel, they don’t want to run out of food, they want every flavor to burst, in other words, their main concern is the quality of the night and the food is big part of that. For this, they are willing to pay a premium rate.
Now say the same exact family now needs help cooking for their family on a regular basis because they realize they don’t have time for meal prep on their own. So they call you in for this totally different service that is still cooking dinner. Now that it is more routine and not once or twice a year, they want to pay less.
To the customer, it’s not the same; the needs are different and therefore, they value it differently.
In this example, you see the attributes of the ICA are different for the different services.
Take the time to document and draw a picture of the new ICA so that when you are putting together your proposal, you take into consideration what they care about in this different situation. If indeed the new market is willing to pay less than the existing market, you will want to alter the offering and adjust for the costs you incur to provide the service.
3. Create a Prototype
The reason you know so much about your existing clients that you’ve been serving forever is because you have experience with them using your product or service.
Over the years, they’ve given you feedback and you’ve incorporated it into the offering. There’s been a collaboration that has enabled you to improve the service, the features, and the delivery; as a result your marketing is dialed in. You know the magic words to say when you’re dealing with a new prospect. You know the questions to ask to get them to “Yes!”
You have to go through the same painstaking process with the new market if they are to become as successful as the existing one.
This all starts with a prototype. Give your early adopters something to respond to, something to give you feedback on so that you can develop and sell your minimum viable product or service.
4. Test the Pricing
It’s never about the price in a vacuum, however; the market will compare your price to the price of their best alternative solution. Price comes in many forms, time, money, and value.
Determine what you think the right pricing model is based on the inputs and play around with it for your first couple of sales. If you want to charge a set-up fee and you aren’t sure if people will pay for it, put it on the first customer’s bill and comp it so they don’t pay it.
This can be a conversation starter where you communicate why this fee exists and that you’re giving them a break since they are one of your first customers.
Telling them you’re giving them something for free will also make them less likely to ask for further discounts. If you do give early discounts, market those as introductory prices and let them know that the next time, it will be full price.
With the feedback from clients, you’ll get an understanding of what they consider to be the competition and what they value, and you can finalize your pricing.
5. Meet the New Market Where It Is
Don’t try to force the initial design on folks. It may still need vetting.
Just like with the pricing, the core value proposition may be different from what you initially thought.
Be open to where this item can lead to and listen attentively to insights your new market shares with you as they experience this offer. When you hear recurring themes, you know you’re on to something. This information allows you to tweak the offer and the brand messaging.
Measure Progress with One Carefully Selected Metric
When you’re launching a new offering, it can be overwhelming because of all the uncertainty, and the sheer amount of time, energy, and money it takes to figure it out if it will succeed. To manage through this stress, find one meaningful metric that you can you use as a guidepost to help you stay on the right track.
This one metric can change as you progress through the various stages of bringing the offer to market, so when the metric is no longer serving the progress, change it.
For example, the first metric may be, “Number of people you speak to about this new offer.” You can define “people” and “quality of the conversation” any way that best serves your purpose.
The number will be key and specific to each owner. Some people will have difficulty in finding time for 15 conversations, while another person can have 100 quality discussions. Pick a number that’s right for you and set a deadline.
You’ll track the research you gather and after you complete this milestone, you’ll set a new metric.
At the end of the day, no matter how successful you’ve been with your business over the years, entering a new market requires dedication to the process, if it’s done well.
Don’t take shortcuts on this or you could end up with the wrong product at the wrong price, and defeat the objective you started out with.