Finding new customers in new markets is a major element of any profitable business growth strategy. However, many companies struggle with how to do this successfully and as a result they keep mining the same markets and the same customers, even if neither are profitable anymore. This is a three-part series to explore proven ways to find new customers and explore new markets. The topics I intend to address during this series are:
- Identifying attractive new markets to explore: what works & why
- Identifying the best prospective customers in new markets
- Launching a successful sales & marketing campaign in new markets
During the past month my weekly column explored demand innovation techniques to find sustainable growth opportunities for your business focused on leveraging an understanding of customer problems and using your own hidden assets. These techniques are a key part of finding new customers in new markets, and I encourage you to review this three part series, which can be found at the Manufacturing Line Blog at AllBusiness.com.
How to Find New Markets
The first step in finding new markets is to identify the most profitable markets that you currently serve, because these existing markets can lead your business to identify profitable new markets to explore.
Start by forming a small internal team consisting of the people who are responsible for the following jobs: direct sales, marketing, finance, production, and engineering. Challenge this team to complete the following table using these instructions:
- Generate a list of all customers responsible for 80 percent of sales during the last three years ranked by total sales
- Identify the primary NAICS code or 8-digit SIC code for each customer using your local library or the Dunn & Bradstreet Marketplace Database
- Rank each customer subjectively by Margin and Hassle using a 1 = Best, 3 = Worst scale
- Identify the Potential your team thinks the customer has for the future, based on what your team knows about them today using a scale of ++, +, 0, -, —
Your table should look something like the following:
The Next Step
Now that your team has analyzed each of your largest customers over the last three years they can begin to explore which ones are really your Most Valuable Customers and which market segments appear to have the greatest potential for sales growth in the future by doing the following:
- Sort the list by those customers that ranked #1 in Margin and #1 or #2 in Hassle.
- Next identify which of these customers are expected to have good potential for growth in the future ( or ).
- This short list of customers represents your most profitable current and future markets.
- The critical next step is to look for “Adjacent Markets”, that are similar to the best ones you current serve. To do this, look at the NAICS list, which you can find at http://www.naics.com/search.htm, and search for markets near or “adjacent” to your current markets that may have potential to explore.
This is the first step in identifying potential new markets to probe for new customers. There’s plenty of research and due diligence your team will need to do before launching a sales and marketing plan, and you may need some outside help with market research. But you will be on your way to understanding how to continually identify potential new markets for your business.