Art of Small Business Banking
Leveraging Clusters to Develop a Marketing Strategy
In the previous article of this series we introduced the concept of small business clusters.
A cluster is essentially a group of small companies and supporting entities interacting
together, generally located in a common geographic space and often in the same sector.
Small companies within these clusters may be more capable of adapting to and surviving
‘shocks’ such as an aggressive new global competitor, an economic downturn, or a new
disruptive technology. In this article, we will look at how clusters can be used as a tool to
create a strategic marketing plan that will expand your small business portfolio while
lowering your overall risk.
If you follow the extended relationships of your existing clients, cluster patterns will
emerge. Types of possible patterns may include:
A company that has products or services that sell into multiple industries or
A company in one industry that offers a wide array of different services or
supports clients involved in every aspect of that one industry
Be In Business Go to
Stay In Business Market
-Legal Begin with Current Clients -Sales
Innovation & Bolts
-Design -Real Estate
Essentially, you are looking for firms with vertical depth or horizontal depth in one
industry, or leveraged competitive capabilities across multiple industries.
This is a more sophisticated marketing approach then simply targeting an industry.
Within any industry there are strong and weak players. By following the business
relationships of the strong players and proactively soliciting new clients from that pool,
you will lower your overall risk. If this is done early in the new client’s business growth
cycle, you will have a relationship that can grow more profitable over time.
In fact by doing this, you can expand your portfolio into different industries that might
surprise you. These may even be industries with which you have less experience. By
following these clusters, you will be able to dip into these other industries with less risk
and potentially higher profits than if you tried to get into this new industry on your own.
Let’s look at some examples to make this more tangible.
Companies involved in the gaming industry saw sales of traditional games recently
plummet. However, some of the stronger players already have footholds in the
expanding Apple iPhone and iPad market or in the mobile phone application arena.
Others have pursued the movement of the film and art industry into more sophisticated
digital animation. Still others have pursued new areas for video such as simulation
programs designed for military training or new markets like fitness and health. All of
these diverging strategies have very different partners, some of which no one would have
predicted a few years ago.
In a practice of doctors, one invents a new way doing a certain procedure. To do this
procedure, a device maker had to produce new tools. These devices require a new alloy
that makes them more flexible so that they can be used in very small laser techniques.
The alloy producer finds other industry niches that require this same flexible quality
setting those new niches up for growth. The device manufacturer expands beyond just
devices for this one procedure into other procedures that need the same type of equipment
just slightly modified. In order to expand, the device manufacturer needs to outsource
their auditing and payroll to a service bureau. Thus the cluster expands naturally. They
were all profiting not from the one doctor but from the creative innovation that the one
doctor set into motion.
Seeking to understand and lending to companies within these dynamic clusters leads to a
more diversified loan portfolio with potentially lower risk and greater profit. Clusters
that evolve are filled with companies that evolve. This minimizes the risk that they will
stay stuck in a market in decline. Innovation will allow the company to jump from rising
market to rising market.