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by Brad Langley | September 12, 2018

Brad Langley of AventriMany third‐party planners tell me they want to create new revenue streams. But they don’t know how -- or even if -- they should take the leap.

They ask: Is the timing right to introduce new products? Or, should I carry on business as usual with a single‐service focus? The answer is, a good diversification strategy can help planners gain market share, make themselves “stickier” for better client retention and safeguard their business against market shifts.

I know, I’ve done this. You see, earlier in my career, as president and COO of a meetings company, I led diversification programs. We increased revenue by launching two new products and repackaging services to meet changing market needs. Since then, I’ve helped dozens of planning companies grow through product/service diversification.

Planners find expanding their offerings with in‐demand services benefits their customers, too. Clients save time working with one expert team instead of several. Plus, it’s easier to ensure different parts of their M&E program flow smoothly, working in sync.

If you’re thinking about creating new revenue streams for your business, these five steps will help you evaluate this move.

1. Start with existing customers
Make sure your customers play an integral role throughout the process. Talk with them about areas they believe are underserved for insights into new services to meet their needs.

Focusing on customers not only enhances retention. It’s also the fastest, easiest way to grow. You’ve already earned their trust and a spot on their approved supplier list. Plus, you “get” their culture, customers, market and business goals.

Your options for growth with current customers are:
• Modify existing products. Let’s say you produce marketing materials for client events. Why not offer in‐house communications services as well? This tactic offers an efficient way to expand at minimal risk. You already have clients’ strategic content as well as proven success connecting with their customers and prospects.
• Offer new products. Or, provide entirely new services. For instance, a site‐selection‐only firm might offer mobile event apps or ground transportation as added services.

2. Decide if you want to build, partner or acquire.
Product diversification takes time and money. Carefully consider whether you have the resources.
• If you’d rather not develop products internally, think about distributing products from other suppliers. For example, a site‐selection‐only business might also provide event-cancellation insurance.
• Or, create strategic alliances with another company to co‐develop and co‐market products. For instance, partner with a corporate agency to manage their groups for a revenue share.
• If your company is in a strong position financially, consider acquisitions to gain access to products that align with your diversification plan.

3. Take a good look at resources
Next, assess the resources you’ll need to put your plan into action.
• Set a preliminary budget to cover development and marketing costs.
• Then, evaluate sales and marketing resources. Does your team have the product and market knowledge to achieve your sales targets? Or, will you need to train employees and hire specialists?
• Also think about how your program will affect supplier relationships. Will you need to take time and develop a new network?

4. Determine your risk quotient
Consider opportunities and threats. Then take action to reduce risk.
• Focus on services where the market is growing and nobody fully satisfies demand.
• Look for a product extension with a low cost of entry or one your team can develop between client projects. Choose a sound but less expensive option until the service demonstrates it's worthy of more investment.
• Do online research to understand likely competitors, their products and pricing. Are you confident your product provides value‐adding benefits that set it apart from the competition?
• Then, rank opportunities from the least risky to your biggest stretch.

5. Talk to customers (again)
• Conduct small‐scale market research to evaluate the potential of your new service. Get customers’ input to ensure it solves the problem you identified in the manner they prefer. Make adjustments based on feedback.
• Further analyze the cost of taking your service to market and prepare a final budget for the launch.
• Finally, after all your research is done, time to take the leap and pilot your new concept in the marketplace.
• Always be flexible. Continue to check and adjust to new opportunities as well as changes in customer and market needs.

Closing thoughts
These steps will help you streamline the process and offer a wider range of services that solve customer pain points.

When you provide new value‐adding services, you not only create additional revenue streams — you also balance your business to protect against market shifts. You deepen customer confidence for better retention, and you play a more integral role in driving their success.

Brad Langley, CITE, is a 30‐year incentive and travel industry veteran and vice president, third‐party market, Aventri (formerly etouches).