I started an online writing service 5 years ago. It's a really competitive market and in as much as we've invested in designing a pretty good website and backend systems, our market has reached a plateau for a number of different reasons and we haven't grown much in the past year.
We are now investigating the possibility of diversifying. As we have a solid team of people, writers and a backend system we can readily adapt to a number of other related services.
Our weakness however is limited resources and inability to easily identify cost effective ways to acquire customers in our existing market and also with these potential new services.
My question is: if you're diversifying into a new market area, how do you investigate whether the market is viable, and how do you find cost effective customer acquisition strategies?
Nowadays it's relatively easy to design a good looking website, have good copywriting, and get Adwords running. But it's really hard (even if you have the people and systems) to acquire customers in a cost effective manner.
I'd really like to know if anyone has been successful at this, and if they can offer any advice.
Perhaps, rather than focusing on acquiring new customers in new areas, you ought to evaluate first what additional services your existing clientele pays (or might pay) others to perform.
If they come to you for writing but then go searching for something else, then perhaps you could efficiently offer them services in that other area.
That would be the low-hanging fruit.
You can reverse this pattern as well. What services have your writing clients ALREADY paid for by the time they come to you? If you were to begin offering services in that area, then any customer acquisitions could lead to follow-on services in your bread-and-butter field.
Services that precede or follow those you already offer would permit you to double what you offer without doubling the number of clients.
Nothing revolutionary in suggesting add-ons, of course. But thinking in those terms might help you prioritize options.
You don't *find* cost-effective customer acquisition strategies, but design one per your internal capability, external niche, and dynamic of your operational market. The intent should be to serve across your capability than getting lured by others' growth. Likewise, you diversify to leverage either the cross-selling or upselling opportunity. Anything beyond these two gets counted as alternative product, something akin to completely different from your existing service span.
Secondly, you choose market diversification only when you're convinced that Market Penetration, Product Development, and Market Development aren't going to be the viable options. We're talking about companies with budgetary constraint. The diversification could be either concentric diversification- leveraging upon your technology prowess, or horizontal diversification- new product or up-selling product. Because, it may require new skill sets- not only technologically but also around marketing/sales/operations process- it's riskiest of all the four options as mentioned above.
Thirdly, in my decade of experience working with startup companies, or the ones at status-quo, I have seen people often confusing marketing to sales. That's problem inevitably comes first on the priority list. Ironically, a number of times, the problem comes out to be inadequate market planning, strategy designing, and poor execution around the existing product/service categories. I am assuming you would have brainstormed enough to reach the conclusion to diversify.
And yes, marketing takes time to provide return on investment. There may not be cost saving way to marketing, but optimizing the marketing effort and tactics around your budget.
Hope above proves to be of some help. Need any input in particular? I am just a clarity away!!
The short answer to that question is to ask yourself or your firm what you are already good at, like what really are your core competencies. Once you have compiled a list then look for other industries and or markets that you can apply those competencies to that don't have insurmountable barriers to entry.