Reliance on one or two clients within a specific industry may sound fantastic as a specialization, leading to operational efficiencies in finding cost-effective shipping solutions. However, your business will suffer with limited opportunities to recover if that industry or client goes through a rough patch.
Whether it’s an investment portfolio or a Freight Agent client base, diversification helps spread risk across different investments or different clients and industries.
Here, we discuss ways to diversify your client base. This will result in increased revenue and reduced risk when faced with industry-specific market downturns and disruptions.
Key Factors for Client Base Diversification
While being all things to all people may not be the most efficient approach, minimizing your reliance on a single shipping approach or customer segment is wise. There are five key factors to consider as you diversify your client base.
1. Product Segment
There are a considerable number of ways to specialize in the shipping business. Some examples of product segments are fresh produce, frozen foods, rolled steel, and seasonal items like Christmas trees. Of course, your Christmas tree business is project-based and will be limited outside the last few months of the year, but it goes beyond that limited market.
For example, rolled steel requires specialized shipping methods, which you can bring to your steel customers and others needing flatbed hauling. The key is finding new customers and bringing your skill set and shippers to serve their requirements. As a result, you’ll find new customers whose industry’s ups and downs may very well offset those of the steel business.
2. Shipping Mode
There are certainly advantages to FTL shipping, but diversifying into LTL can bring significant benefits in opening up an entirely new set of customers. Adding shipping modes increases your versatility in meeting the growing needs of your existing book of business and helps you find additional customers. Learn more in our article Making LTL Work for You.
3. Geographic Location
It could be that you’ve elected to concentrate on local businesses. That can be a definite strength and bring significant benefits to your clients. However, economic downturns often happen in specific areas of the country due to industry shifts or disasters.
Reaching out to prospective new customers in different areas can go a long way toward diversifying your client base. As just one example, you may be serving clients in the meat packing business in Nebraska. Similar clients around the USA could no doubt use your experience and expertise to gain pricing advantages or even diversify their shipping partners outside of their regional area. Our friends at Concorde Logistics share their insight on their approach to prospecting new business.
4. Purchasing Process
As you investigate options for finding additional clients, one factor often overlooked is businesses that use a similar purchasing process, even though their shipping needs, industry, and location are quite different.
For example, some businesses must conduct open bids for purchases; others are open to sourcing work through a trusted and reliable partner without detailed bidding processes. Which type works best for your business? Once you have that assessment, start looking for companies with similar approaches to placing orders.
5. Existing Client Review
This may be counterintuitive, but it’s wise to look at your current clients and what services you’re providing them. There could be further opportunities with those clients to provide service for different products and shipping modes, even within large corporations’ other locations and offices. Not only that, but investigating these opportunities will help you determine how well you’re doing with existing clients and identify adjustments you need to make to keep and grow their business. The power of the referral is key to growing any business. Concorde Logistics share how important these existing client reviews can be to cultivating existing relationships and building new ones.
What’s Next? Building Your Agency for Growth
We’ve couched this effort with the goal of responding to economic downturns in different industries, locations, and with specific customers. But you should also consider that economic conditions go both ways — bust and boom.
Given that premise, your efforts at diversification are just as likely to find new winners as they are to find a haven in a downturn. But you’ll also need to be prepared to take on that additional business, whether from boom times or additional clients that provide the diversification you seek.
Find New Customers
The first task is finding those new customers. In our article, How to Prospect New Customers in the Freight Industry, we discussed finding new customers through customer referrals, personal networking, online search, and shipper lists, and closely examining your current customers’ competitors.
Once that assessment is completed, reach out through phone calls, emails, and direct mail. This effort isn’t a one-and-done campaign but needs to be ongoing, helping grow your business and providing diversification across new clients, new shipping modes, and new industries.
Develop New Expertise
The diversification list above included finding customers in new product segments, shipping modes, and geographic locations. Gaining those new customers requires expertise in each of those areas.
Unfortunately, the best process for learning and developing expertise is ‘trial and error.’ But that approach can be disastrous, especially when dealing with new customers. Our recommendation is to lean into the resources provided by your Parent Broker. They should be your partner in anything new you’re taking on.
Expand Your Services
Expansion results from new clients and services — the natural outgrowth of diversifying your client base. But it also means you’ll need more staff and systems to manage all that work. That’s the good news, but it comes with its own set of challenges.
Another helpful resource is our article 8 Ways to Grow Your Freight Agency. You should also ensure you have the best support and systems you need for the desired diversification and growth. That can only come from a top-level Parent Broker.
Find the Best Freight Agency Program
We’re biased. We feel that our Freight Agency Program is the best in the business. To see for yourself, look at our Agent Opportunities page. You can also hear directly from our successful Agents. Then, get in touch, and we can get started.
Call toll-free: 866.559.0203. Or complete the form at D&L Agent Requirements.
D&L Transport. Your Family in Freight.