Customer Dependency: Why Should You Steer Away From It?

Customer Dependency: Why Should You Steer Away From It?

Everyone likes a reliable customer.  They seem to offer stability and a steady revenue stream. But what happens if this reliability creates such customer dependency, to the extent that if one customer begins to cool off, the whole of the supplier’s business is in jeopardy? Businesses need a firm foundation to grow.  A full order book may promise this but the way to steering a more measured path to success lies in avoiding over-reliance and seeking out new markets.


The Restricted View

Customer dependency is an easy trap to fall into. No one wants to turn down business.  And if it keeps coming, then it seems to gather a momentum of its own. But what happens if there is an economic downturn and the orders begin to dry up?

“Where a steady income allows for a degree of stability, it can ultimately be quite limiting,” observes John Holmes of Core Business Solutions. “There is danger in developing a dependency on one key customer, or even a group of customers. Sometimes it means businesses have a restricted view of their potential market.”

This restricted view means that businesses are unable to adapt when they face changes, and prone to volatility that can be very damaging.

“The bumpier the ride, the less able a business will be to concentrate on development, because its too busy fire-fighting, and knocking on doors that are closing,” John says.  “It is a vicious circle that damages and restricts growth.”


Opening Up

The way forward is to take a detailed look at fundamental objectives.

“You have to ask yourself, what is your business really about?” John explains. “It’s easy to get bogged-down in day-to-day needs.  But this can mean that your vision is limited, that you can only see the next issue looming.”


“The idea is to open up a business conceptually, to look at what its potential markets are based on the value in what it can uniquely offer. This is particularly relevant when it comes to exporting

John Holmes, Core Business Solutions


“Developing overseas customers can offer businesses far more than another lifeline,” concludes John.  “It can make the whole process of business development less volatile, because it can provide a long-term strategy for survival”.

Plotting a medium course through the ups and downs of fluctuating demand and unexpected developments requires a steady hand.  Crucially, so does an understanding of what can differentiate a business from its competition. This enables businesses to simultaneously develop new overseas markets and protect themselves from volatility and margin erosion by steering away from over-reliance.

To discover how you can successfully navigate away from customer dependency and in to potential markets, please call Core Business Solutions on 01695 732 543 or visit their website.