Loyal customers or high-risk strategy? How Brokers can help.

Loyal customers or high-risk strategy?

Your small business clients have worked hard to build a loyal customer base. But do they have enough customers?

It turns out plenty of small businesses don’t.

Our latest research shows only around one in 10 (12%) small businesses are confident they have a sufficiently broad customer base.

It’s an area providing opportunities to brokers. Let’s dive in to see how.

“…one in ten (10.2%) small business owners say their enterprise is at ‘extreme risk’ of instability due to a small customer base.”

A surprisingly limited customer base

Over seven out of 10 (71%) small businesses in Australia admit the stability of the enterprise could be at risk from having a small number of customers.

More than one in ten (10.2%) small business owners say their enterprise is at ‘extreme risk’ of instability due to a small customer base.

Cameron Poolman, CEO of OnDeck Australia, says, “Our survey results highlight how common it is for small businesses to rely on a small number of customers.

“It’s known in the industry as “concentration risk” and it brings inherent challenges, particularly if, for whatever reason, an enterprise loses one or more key customers.”

Brokers can help – and grow their own client base

Cameron acknowledges that “not all small business owners want to scale up their enterprise”.

But he adds that by growing a customer base, a business can “significantly reduce the risk of instability” that tends to go hand-in-hand with a restricted customer base.

There are plenty of strategies for a business to grow its customer base and we’ve listed a few below. But for many enterprises, successfully growing customer numbers can hinge on access to funding.

That’s where our Lightning Loans® can make a difference.

Available for up to $175,000, Lighting Loans® are a fast, efficient source of funding for small businesses to market their products/services more broadly, explore new markets or grow customer numbers by expanding into new product/service lines.

Five cost-effective ways to grow your customer base

Cameron Poolman offers five low-cost strategies that can help a small business grow its customer base and reduce the risk of instability:

Expand product lines– Engage with customers to determine the additional products or services that are most likely to appeal to clients. Consider introducing complementary product lines.
Introduce loyalty programs– Consider customer loyalty schemes that reward repeat purchases and/or referrals to new customers.
Leverage customer data – Aim to capture customer details to facilitate direct marketing through low-cost means such as electronic direct mail.
Engage with social media– Utilise social media platforms such as Facebook, Instagram and LinkedIn to grow your brand.
Boost your online presence– Review the business’s website to be sure customers can find your enterprise online. Identify keywords/phrases that will drive targeted traffic to your venture’s website to grow your customer base.

“By supporting small business clients access finance for expansion plans, brokers are not only helping a small enterprise reduce the risks of a limited customer base, they are also expanding their own client base,” says Cameron.

“It really does make branching out into commercial lending a win-win for brokers.”

“…it has never been more important for brokers to explore ways to support their clients’ growth plans, while also diversifying their own enterprise,”

Even better, OnDeck’s Lightning Loans applications involve a simple online application form and just six months of business bank statements. From there, funds are available to approved applicants in as fast as two hours.

“As we head into a year that may bring difficult trading conditions for some small businesses, it has never been more important for brokers to explore ways to support their clients’ growth plans, while also diversifying their own enterprise,” Cameron adds.

If you’re thinking of expanding into small business lending, you’ll find plenty of support from our team of experienced BDMs.

About the Research

The independent research was conducted online in October 2023 by Octopus Group across more than 500 small business owners Australia-wide.

Important information from OnDeck:

* Loan amounts and loan terms are for illustrative purposes only, which the lender may adjust in its sole discretion without notice. Eligibility and approval are subject to a standard credit assessment and the applicants’ business circumstances which may include information such as industry, time in business, estimated revenue and other data. Not all loan amounts, term lengths or rates will be available to all applicants. Loans are subject to lender approval. Fees, terms and conditions apply.

^The timeframe required to process and fund loan applications may vary for each individual application. Factors such as the completeness and accuracy of application materials, verification processes, and external circumstances can influence the processing & funding timelines.

Loyal customers or high-risk strategy? How Brokers can help.