Taking the Eggs Out of the Basket: Diversify Your Customer Base

Ever heard the phrase “don’t put all your eggs in one basket?” In the business world, we adhere to this through a process called customer diversification. In short, it involves making less than 15% of your total sales with one client, spreading your metaphorical “eggs” into several different “baskets.”

Relying on a single, huge sale on a regular basis seems like an easy way to pull in a profit. It simplifies invoicing, you’re always prepared for the order, and you have the chance to really focus on relationship building. But if you don’t diversify your customer base, you’re at risk of losing everything in one fell swoop. When your client partner suffers, so do you.

So, what’s at stake when you depend on a single client or a couple of clients to pay your bills each month?

Lower profit margins are a major possibility.

When one client is purchasing large orders, they often feel entitled to bulk discounts, free shipping, or service bonuses that you probably wouldn’t offer if you weren’t afraid of losing their business. Major clients know when they’re paying the bills and will ask for pricing concessions that result in net loss.

You suffer when they do.

If your client’s company takes a revenue downturn, your revenue is going to be affected too. Vice versa, a company that suddenly has a major spike in revenue is going to be more demanding of your ability to output goods or services. You’re going to want to give in to this pressure because they’re the ones keeping your lights on. Being hyper focused on the ebbs and flows of a business that you don’t even own is frustrating, to say the least.

You may be neglecting other sales opportunities.

In your pursuit to funnel all resources into your major client, you could miss out on other lucrative options. When you can depend on one customer, you’re probably not pouring a lot of energy into finding different clients to add to your sales roster. But once you’ve got the ball rolling on a regular, large client, you should start to flex your business muscles and seek out new opportunities. After all, that is how you’ll grow your revenue stream.

If your business is starting to feel a little stagnant, or you notice that you’re depending on a couple of people’s orders month after month to pay the bills, it’s time to diversify your customer base. That’s not to say that you shouldn’t continue giving your loyal clients love, but spreading out your sales sources ensures that if your proverbial basket tips, it won’t spell the end of your business.