Diversification: Fueling Our Growth
The one question that I'm most frequently asked about our company has been: "How have you achieved this incredible growth and success in such a bad economy?"
While I try to carefully explain different strategies that we have put into practice, such as strategic planning, leveraging technology and attracting top talent, I tend to forget the most important reason for our growth: our diversified client base.
The reason I tend to forget it is because we began implementing the strategy 16 years ago when we first started the company. Recognizing that being 100% dependent on automotive clients (which we were) was not a healthy long-term position, diversification became part of our business plan from Day 1. Sixteen years later, we have achieved over 30% growth each of the last two years (growing from $8.1 million in revenue to $13.2 million).
Our automotive business is still thriving (and actually growing), but currently represents only 25% of our total client mix. By aligning ourselves with major retail, service and consumer product clients like Best Buy, Hallmark, Dominos Pizza, U.S. Bank and Hershey’s, we are much more affected by the national economy than the Michigan economy.
While the concept of diversifying may not sound like a breakthrough idea, the ability to successfully achieve it is very difficult, and is an important part of our story.
The first step in our diversification was having a good plan – being intentional with decision-making and understanding that every choice we make will impact our ability to broaden our client base. Obviously, the most challenging element of the plan was finding a way to attract non-automotive clients and having a strategy in place to grow them.
Attracting non-automotive clients
Our plan consisted of applying a "sought-after strategy," since each of us was a better market researcher than salesperson. There are many ways that you can become sought-after, but what worked for us was the following:
- Conference presentations and speaking engagements
- Authoring "white papers" (an authoritative company reports) and other articles
- Press releases
- Innovative methodologies and technologies
- Maintaining loyal clients that hire us when transitioning to jobs with new companies
Ironically, one of the most effective ways for us to attract non-automotive clients was to leverage the same advanced technology and methodologies that we developed for automotive clients. Methods such as Voice of the Customer Research (popularized through the 1990’s with interviews, focus groups and surveys) and building online communities (more recently) became valuable tools and were unique offerings that we could provided to non-automotive clients.
Growing non-automotive clients
Our most difficult challenge was developing the courage to remove top-level talent from our largest account (an automotive company) and encouraging them to grow smaller, new non-automotive clients. It was a risky strategy but it ended up fueling much of our non-automotive growth.
It is fairly common for small companies to have their top-talent working on their largest and most important accounts. By reassigning key people, it certainly hurt our ability to compete for automotive business in the short-term. Looking back, it was a short-term sacrifice that was well worth it.
Another integral part of our diversification plan was to engage in healthy conversations with automotive clients about the benefits to our company (and theirs) by broadening our horizons. The last thing we wanted them to believe was that we were trying to walk away from their business, or that they were not important to us. Instead, we stressed that diversification would make us a stronger, healthier company – one that will ultimately be a better research partner for them.