Carlee, an entrepreneur and student from Boone, NC, asked us this question:

“I need to start reaching more dynamic groups of people. How do I expand my customer base to include new demographics?“

Thanks for the question, Carlee! We know there can come a point in your business journey when you feel like it’s time to attract new customers. Maybe your sales feel a bit stagnant, or customer engagement has been dwindling.

No matter the reason, before you decide to expand your customer base, keep these things in mind.

1. Don’t be in a rush to expand unless your niche is too small to sustain the business.

Remember: The more diverse your customers are, the harder it will be to engage them with your brand authentically. That’s why keeping your customer base tailored is usually the way to go for a small business.

Let’s say you offer tax preparation services in your local community. While it can be tempting to market to anyone who pays taxes (a.k.a. everyone), you’ll be up against every other competitor in your line of work, including the biggest players in the space. But when you’re a niche provider targeting new veterans, for example, you’re then able to fully focus on the unique challenges and circumstances of your target market.

In a business as complex as taxes, it’s practically impossible to be an expert on everything. Your better bet is to become a trusted advisor and expert to some rather than a generalist to all. 

But if you’re finding that your customer base has become too small for your booming business, then yes, it might be time to look a little further outside your circle.

2. After you have success with a niche, experiment to find adjacent logical niches.

Once you’re solidly serving your core customers and things are humming along, you can (and should!) begin experimenting to identify new customer segments that feel like the next logical step for your business.

Ask yourself, “What are some other needs my small business can solve?” and, “Who else shares similar problems — that my business is great at solving — as my current customers?” And then pick up the phone (yes, you heard me right) and ask your customers!

Let’s revisit our tax services example from earlier. If you hear from most of your recently retired veterans that they’d appreciate help navigating GI Bill reimbursements, experiment with whether your business can do that. Choose a few “guinea pig” customers to work with, and make sure to get as much feedback from them throughout the process as you can. Specifically, you need to understand the value they’re receiving from you, as well as the value your business is receiving from them. Once you do, you can weigh this against other available expansion options you may be considering.

3. Carefully expand into those niches without neglecting your core niche. 

After all the experimenting, you’ve finally confirmed a few additional services that will deliver value for your new customers and your business itself. Now, your next step is to consider the impact expanding will have on your core customers. The caution here is to only add new customers and services that do not risk neglecting your core business. The one exception would be if you need to completely pivot your business model because your core business isn’t working.

For example, Teamwork started out as a digital agency that built websites for businesses. But when they realized they couldn’t find a project management platform to help them organize their projects, teams, and other work, they decided to make one of their own. They found a problem that no one else was solving for the business they were in. They pivoted their core business model because it wasn’t working for them. 

Whenever you decide to step outside your core niche — as almost every successful business owner does — just be certain that you’re ready, definitely don’t rush it, and make sure that your core customers (who made your business what it is today) are still feeling valued. 

This is a heavy topic, and it’s tough to cover wholly with one quick blog. Here are a few more resources to help you see the full picture.

• Discover your target audience by learning the fundamentals of who to talk to, what questions to ask, and how to turn responses into actionable steps with our Basics of Customer Discovery training.
• You can’t get anywhere with your small business if you don’t understand how to sell. Our Sales 101 training covers more ground on how to grow new customers (but also how to make sure they’re the right customers).
• Looking to step away from your natural bias to test your idea with brand new customers? Take a look at our blog, “How Customer Discovery Can Save Your Business & 5 Tips to Get Started.”