The Risk of One
By Neil Hocking On April 1, 2019 - Consultancy, News, Process
When you were growing up, chances are a wise relative once introduced you to the famous proverb: never put all your eggs in one basket.
In business, failing to follow this sage advice can lead to financial problems – sometimes terminal ones.
The Risk of One Customer
It is exhilarating when you land a big contract but it can be something of a poisoned chalice too. If you don’t manage things well, prioritising a big customer can lead to a drop in service for smaller, loyal customers leading them to look elsewhere. Big customers are also notoriously slow payers which can affect cash flow. If you then lose that contract you can be left with a hole in your finances and a dent in your reputation.
Suppliers to the construction firm Carillion will know just how quickly the rug can be pulled away. Those firms with alternative streams of income will have been better protected from the full force of the Carillion collapse.
Another example of vulnerability to a big client involved Manchester tech start-up Datacentred who provided data services for HMRC. I’m sure landing that fish felt like a big win at the time but HMRC were unable to resist the lure of Amazon’s cloud computing empire. After the sweetener of a 50% discount, the tax office switched over to AWS, a move which sent Datacentred under.
We’re all familiar with one-hit wonders in the charts and there is an equivalent in the business world: the one product wonder.
Take for example the Cabbage Patch Kids of the 1980s. Xavier Roberts’ iconic dolls managed 75 million sales, that’s more than one for every person in the UK, before fading into obscurity.
In order to stay in business, companies with one major product or service at least have to remain aware of the latest consumer trends. This will ensure they can adapt and diversify by bringing out new products.
From Polaroid failing to grasp the move to digital photography to Blockbuster ignoring the streaming trend, history is littered with examples of businesses losing big time because they insisted on continuing to do the same one thing in the same way.
One Marketing Stream
To be fair, most established businesses already know the dangers of dependency on one big contract or one product but many fall into the trap of relying on just one marketing stream.
For example, if you rely solely on unpaid (organic) search engine optimisation (SEO) you could be vulnerable to changes in Google’s search algorithm. In May 2014, Google released its Panda 4.0 update on to an unsuspecting market. This update targeted poor quality content so sites which had previously saved time with content aggregators found themselves slipping down the search engine rankings.
To build resilience to this, it is important to have multiple marketing streams (organic SEO, paid SEO, social media marketing, etc.) and to use and monitor campaigns effectively.
Another common mistake is relying on one social media platform to drive business your way. While the amazing targeting ability and audience of Facebook has had advertisers falling over themselves to place social media ads, there is the ever present risk of a rule change or cost hike that can change your marketing ROI in an instant.
This is particularly dangerous if you opt for automation and fail to monitor results. You could end up blissfully unaware as your costs triple and your engagement halves.
Smart Marketing with Vu Online
Whereas the risks of one customer or one product can be managed under your overall business strategy, the risks of one marketing stream or platform can be eliminated with a smart marketing strategy.
Smart marketing involves setting achievable goals, running effective campaigns, monitoring performance, tracking trends and reacting to opportunities.
The Vu Tribe packages were designed to cover all of these areas for businesses of different sizes and structures. To find out more, visit our dedicated Vu Tribe page.