Companies left and right are being slaughtered in the market by new agencies with a certain, competitor-killing edge. First up on the chopping block are companies that rely on single or point solutions for clients.

Diversifying your products is the key to kidnapping the majority of your local market, and cutting your competitors out of the picture.

The Risk of Relying on Single Products and Solutions

Let's face it: point solution providers are dying out—meeting a gnarly end when facing up against full-service agencies. A study by Cutter Consortium found that 60% of businesses are relying on SaaS solutions that have either platform capabilities, or platform and point solutions, versus only 40% selecting providers with only point solutions. They note that most SaaS companies seeking a strategic competitive advantage are developing more robust platforms and product toolkits to expand their share of the market.

Hello, high churn rate

Selling single solutions is a huge contributor to churn. According to the LSA, local businesses use over 7 marketing methods to promote themselves. And in truth, 70% of business owners want a single point of contact for all of their digital solutions, which makes offering services across the entire marketing stack all the more crucial in keeping your clients.

In fact, our study of over 100,000 SMBs found that selling an SMB a single product results in approximately a 30% retention rate after two years, whereas selling an SMB even 1 more product (2) will show an increase in retention rate by 50%. Further, selling an SMB 4 products results in approximately an 80% retention rate over two years.

Conclusion? It's time to diversify if you want to keep (and grow) your client base.

Local businesses are going to go to the provider who can do it all. They don’t want to have different vendors with 4 different solutions. IT costs, training, logins, points of contact—it quickly becomes too much to manage. This is a huge issue for local businesses. If you can be that one-stop, all-solutions provider, you’re going to retain clients and also steal clients away from competitors. Jamie Taylor

Demand Gen Specialist, Vendasta

Your agency can't rely on a single product to bring in all your revenue anymore, as local business needs vary and change rapidly.

For example, if you're a website-only agency, but your competitor offers website, SEO, and social media services, who do you think your client will prefer to partner with? By increasing the number of offerings you have, you'll stay competitive in the rapidly evolving digital market.

The Solution: Product Diversification

Relying on single products and solutions means your company isn't sticky as a business partner. With local business advertisers' needs changing rapidly, you need to be prepared to adapt with your solutions and services.

Your company needs to be able to a) defend your current clients from other competitive marketing companies, and b) attack the current market by offering exactly what local businesses need.

Introducing the competitor killer: your product diversification strategy.

competitor killer

If you want your revenue to live, you better diversify

What is Product Diversification?

A diversification strategy is a corporate strategy to enter into a new market or industry that you don't currently operate in. Product diversification strategies in business includes introducing new products, services, and solutions that serve that new market and open up brand new revenue streams for your business.

Product diversification is laid out in the Ansoff Matrix as a way for a business to increase revenue and profits through new corporate business strategies.

diversification strategy ansoff matrix

The Ansoff Product/Market Matrix

Why Should You Consider Product Diversification?

Diversifying your products allows you to grab brand new market share and ramp up your revenue with both new and existing clients, and tap into new revenue streams. By offering more products and services, you can cross-sell and upsell existing clients with additional services and attract local businesses looking for the solutions you don't currently offer.

The defensive product diversification strategy allows you to protect your revenue and client retention by expanding or adapting your products to better suit your current client base and competency. The more "skin in the game" a local business has with you handling their marketing services, the less likely they are to churn. They rely on your agency to bring them new business.

The offensive product diversification strategy is about seizing an opportunity in the market to grow and expand your client base and contract size by offering new solutions.

offensive defensive product diversification

Did you know that Google's product strategy is essentially multiple massive A/B tests? Once they've targeted a "problem" or pain point in the industry, they create several solutions to that pain point and test which one works best with the customer base.

A notable example is that at one point there were four different ways to text message on Google Android phones: Google Talk, Google+ Messenger, the SMS Messaging app, and Google Voice. Eventually, these four solutions were paired down and combined into the Google Hangouts instant messaging platform we know (and love) today.

But "because Google does it" isn't really a solid reason to adopt any new foundational business strategy, so let's consider some other key reasons, and review some diversification strategy examples from other businesses in the industry.

Reasons to Diversify Your Products

1. Protect your revenue

With the local business market changing so rapidly, it's important to respond to these changes just as quickly in order to hold on to your existing revenue and clients. The slower you are to respond to your client's new needs and demands, the faster they'll churn out.

Think about it: if you're a website-only agency, but your competitor offers website, SEO, and social media services, who do you think your client will prefer to partner with? By increasing the number of offerings you have, you'll stay competitive in the rapidly evolving digital market.

The first reason a business should consider diversifying their product offering and adding something new to their line is when they want to protect their revenue from a competitor coming in and taking it. Many times, we know that a competitor of ours starts working with our customers, there's a chance that they could capture some of the revenue that we are bringing in with the product that we're selling them. Aaron LeBlanc

Business Development Team Lead, Vendasta

protect revenue diversify products

2. Grow your bottom line

Attacking the market with additional marketing solutions allow you to grow your bottom line: both from new and existing clients. Each new product and service introduces a new potential line of revenue.

The second reason a business should consider product diversification is when they want to grow their bottom line. Adding a new product or service to your offering is a great way to get 100% growth on something that you've never sold before. Aaron LeBlanc

Business Development Team Lead

A BDC study of 1,000 businesses found that the most diversified firms experienced the fastest revenue growth and profits by far. While nearly 70% of fully-diversified firms achieved high revenue and profit growth over the past three years, less than 20% of undiversified firms were able to match that growth.
After 9 years of work and having gone from 1 product to 5 products, I can assure you that it was the BEST thing we did in our company!.

I understand when a startup starts first it should focus on 1 thing and do it well, but when a company grows, it can NOT continue to depend on 1 single product, the risk is huge.

It is for this reason that we chose to diversify and add to our portfolio of products that started with only car insurance, now have investments, travel, loans, and health.

The KEY that you must seek by diversifying is to be able to sell more than one product to the same customer. In this way, your income will multiply while your investment in marketing (customer acquisition with cross-selling) will be the same!.

Thanks to this strategy, our profits increased 34.7% (yes, AMAZING!) because we were able to keep our costs at the same level. Cristian Rennella


grow revenue with product diversity

3. Align and strengthen your current offerings

If you sell a service that could be improved by an additional service, then you should offer both. If you sell a service that aligns closely with another service, you should offer both. The more you can prove your value to your existing clients with your services, the better! In the digital landscape especially, there are many factors that can play into the overall success and ROI of digital strategy.

Many factors of a company's digital presence are interdependent on other aspects, so there are likely many complementary solutions you can offer alongside your current core offerings. SEO services tie into a website's strength, content creation and graphic design ties into social media and website—the list goes on!

For example, if you're offering social media management, the reach, following, and leads your clients see through social media could be greatly improved with some dedicated paid social strategy. Now instead of just selling Facebook page set-up and post content, you can sell a full Facebook package with advertising campaigns, custom content generation, page management—all of it!

Here's an example of that: if we're selling a customer social media marketing, we might also want to sell them a website because it is an asset that we own. Social media marketing and a website align perfectly together, so it's definitely something that we'd want to consider offering.

Additionally, if we're selling websites now, something that can enhance the website is search engine optimization or SEO. We want the ability for that website to be found in search and for that customer of ours to generate leads and traffic. Aaron LeBlanc

Business Development Team Lead

We run digital marketing agency and have found that building websites is essential to our revenue mix. First, websites are a kind of “gateway drug” for digital marketing. It is often a business' first step into the digital marketing world—you can’t do much without a website, after all. That’s where you want to drive your audience to through email marketing, digital advertising, etc. It puts the agency in a great position to help with those services after the site is built." Bill Peatman

Senior Content Strategist, Alaniz Marketing

4. Stay competitive in the fast-paced digital world

The biggest reason to adopt more agility and diversification in your business strategy is simply to stay competitive in this fast-paced digital environment. Your client's needs are evolving at a rapid pace, and relying on single static solutions is not a sustainable or viable business model.

What was vital to a company's digital marketing five years ago may not be relevant any more, so you need to adopt an agile and constantly-evolving product line to keep up with the changes. This also ensures that your revenue isn't relying on a single solution that may become obsolete in a few short years.

kill competition product diversity


Imitate common bundles

If other competitors in your industry commonly bundle certain products and service together, it's probably in your best interest to do the same. This is part of protecting your market share and ensuring your clients don't abandon your point-solution agency for a full-service agency. On the flipside, it also means you can steal business away from the other point-solution models once you diversify your products.


We want to consider adding a new product when a product that we're selling is typically sold with something else. When we're selling listings solutions we can also sell Google AdWords, because it's something that every business that wants to get local customers should be investing in. Listings, Google My Business, facebook, Yelp—they are only to get the business found in search, Google AdWords will make sure that we're actually generating traffic and leads to their actual business profiles and website. Aaron LeBlanc

Business Development Team Lead

Meet the needs of your clients

With the marketing landscape changing rapidly, you'll want to evolve your product offerings to stay ahead of your clients' evolving business needs. The more of your clients' pain points you start solving, and the more you can become their single point of contact for all of their needs, the more of their marketing budget you'll grasp. Beyond that, the more pain points you can solve for any business, the more market share you'll grab up.

When it comes to product development and diversification, there is only one thing that should guide you—the market and the audience you are aiming to target. At SEMrush, our business journey started with conquering the SEO universe. We’ve built our brand, its strength and affinity, based on SEO audience and what it needed back in the days. What we see now (for a while now, really) is that the SEO and digital marketing space has dramatically changed—it is getting harder and harder to distinguish SEO from content, paid digital marketing tasks and Social Media, and so on. So we needed to face the new realities and build our product around these changes.

Moreover, our biggest market advantage comes with our culture—we are heavily focussing our development on user feedback and close interactions with our customers, who often guide us through all the choices we make as a business. We are currently going through a significant shift—we are diversifying our product offer, growing the company from a purely SEO-focused toolkit into a bigger concept—an all-in-one marketing suite. Our development and marketing departments have been diligently working on providing our users with an all-in-one solution to their marketing needs: in addition to SEO, we are building tools for content, paid advertising, social media and so on.

Everything is becoming interconnected, so we want to build a space where all marketing job roles and entire marketing teams can find everything they need for their marketing/SEO efforts as you cannot really have a great performance without employing various channels all at the same time.

There is also another reason for diversification, or, at least, it was in our case. We knew for sure that our customers were paying for various tools to build, organize and analyze their everyday SEO/marketing activities. And the sheer amount of places they had to go to in order to organise their duties was increasing with each year - you can now get a tool for pretty much every single aspect of your job. But going from one place to another, exporting and analyzing data from different tools is often a time- and money-consuming activity.

So, the all-in-one strategy we are now pursuing is a logical extension of both the market needs and our customer feedback. Eugene Levin

Chief Strategy Office, SEMrush

[clickToTweet tweet="According to@eugeniy_levin, @SEMrush product diversification is based on market needs & client feedback." quote="According to@eugeniy_levin, @SEMrush product diversification is based on market needs & client feedback."]
[With product diversification] we're able to serve our customer base more effectively by helping them with additional pain points. It helps us build brand loyalty and shows that we're proactively working to solve problems our customers face on a regular basis.

Our blog management and social marketing solutions have been a huge success with our customer base, and we've recently started selling them a la carte.

This also opens the door to new markets and audiences.

By reaching business owners that are looking for content and social media solutions, we're able to generate leads that we would have never otherwise been exposed to. This is a huge win, and one that any SaaS model can replicate. Sam Warren

Director of Marketing, RankPay

6. Reduce risk factor

By adding more solutions to your business services, you're not placing all your eggs in one basket and leaving the fate of your business in the hands of that single solution. As mentioned before, it's dangerous to rely all of your services on one aspect of technology when the landscape changes so rapidly.

The more revenue streams you can add to your business, the less you'll rely on any single one of them and therefore protect your bottom line stability for years to come.

By diversifying our service offerings, we've accomplished a couple of goals. First, we're hedged against highly unlikely but potentially catastrophic SEO-related developments. Imagine Google goes off the deep end and decides to get rid of organic entirely, and just show paid results.

Probably never going to happen, but if it does, we won't be immediately out of business. Sam Warren

Director of Marketing, RankPay

diversify risks with product diversification strategy

The Risks of Product Diversification

1. Vendor clutter

One risk to consider when dealing with product diversification is that adding new products and services can often introducer vendor clutter and disorganization. Working with multiple vendors and solutions will sap ROI in no time, as it's expensive, time-consuming, and extremely stressful. Integrating new products and services can be a massive, slow, and expensive effort that your company undergoes just to increase number of services offered.

2. Spreading support resources thin

When you diversify your products and introduce new vendors and solutions, the resulting vendor fragmentation sucks resources away from your core offerings and can confuse your relationship with your clients. Each new vendor requires additional IT support to either integrate or handle in-house, as well as additional onboarding support.

Many third-party solutions may not be very intuitive, and there's a lot of fundamental educationing and practical training that needs to take place to get clients up and running with a new product. Not to mention the hours you need to train your internal sales team on the new products so they can speak intelligently about them with prospects.

3. Breaking brand

There has to be strategic thinking behind any product diversification strategy: why does this expansion or addition make sense for your brand? It's not just about maintaining your brand image either—if the diversification goes sideways, then it could hurt your reputation.

product diversification risks

The steps you take to diversify your product and business will determine the success you achieve, and the new revenue and growth you unlock for your business.

How to Conquer Product Diversification

Your business needs to be flexible and offer a variety of solutions across the entire marketing stack to become that "sticky" agency that businesses can rely on—without introducing unnecessary vendor clutter. At the same time, diversifying your store of solutions will reduce churn and improve client retention.

When considering product diversification, each new opportunity should be examined in terms of its:

  • Brand Fit
    The opportunity should be a logical fit with the existing parent company and its core brand identity
  • Leverage
    It should give the parent company an edge in the new category
  • Revenue Opportunity
    The opportunity should have potential to increase revenue and generate significant sales

[clickToTweet tweet="Consider #diversification options in terms of #brand fit, #competitive edge, and #revenue opportunity!" quote="Consider #diversification options in terms of #brand fit, #competitive edge, and #revenue opportunity!"]

Here's how to apply this in your product diversification strategy.

1. Find your clients' largest pain points (that you aren't currently solving)

It's easier to keep new clients than to acquire new ones, which means that it's easiest to solve existing similar pain points with customers than to randomly start adding solutions—as you'll already have interested buyers without having to attract new customers. This will also help mitigate client churn. If you start solving more of their problems, they'll happily stay on as your client!

Reduce churn and stay competitive in the marketing and advertising space by adding more products to solve more pain points that your clients are experiencing.

This will hit two birds with one stone: allowing you to bring in new customers with these new solutions, and increase the "stickiness" of your company by offering more solutions to existing customers and overall reducing client churn.

Talk to them

People love to complain—especially when it comes to their struggles as a local business owner. When your clients are asking for help in specific areas, it's a key indicator as to where your biggest opportunities lie. Listen to what your clients are complaining about to determine what new products you might add.

Keep note of what issues are continuously coming up with your clients—specifically the larger clients. If you can tackle an issue a large client is facing, you'll nab up more of their marketing budget and also avoid a catastrophic dollar churn if they abandon ship.

Use a needs-based analysis approach

Similar to business prospecting, use a needs-based analysis approach with real client and prospect data to determine where local businesses need the most help. This will help in your hunt for the biggest and best diversification opportunity for your business!

We always start with Vendasta's Snapshot Report as a diagnosis of strengths and weaknesses for a business. From there, choosing what services to provide is largely dependent on budget. While snapshots definitely paint the ideal combination of services that will benefit a company most, many small business owners are particularly concerned with costs. When a budget is the biggest constrictor for a client, pinpointing the most cost-effective solution becomes the most important challenge to overcome for us.

Working with Vendasta's Partner Success Team and the client, we try to maximize the number of different products/services without breaking their bank. In terms of specifics, determining which exact services we will deliver really comes down to assessing what core aspects they are missing such as a website, listings or social media. If a client has a solid backbone of online marketing channels, then we will focus on more specialized and harder punching solutions such as paid targeted advertising, deeper SEO strategies, Wi-fi marketing and more. Lee Yates

Digital Marketing Director

You can perform an easy needs-analysis on local businesses with nothing but Google, or use a tool like the Snapshot report to quickly generate a "report card" of a local business' marketing strength and weaknesses.

client pain points

Steps to find problems to solve with diversification

Related Reading: How to Slash Your Customer Acquisition Cost

2. Assess the potential revenue opportunity

When you've found multiple new products or solutions to add to your product line based on your clients' pain points, the next step is to narrow it down by assessing the associate revenue opportunity.

Some questions to ask yourself here are:

  • How will I fulfill this service?
    • Do I need to hire new staff to fulfill?
    • Do I need to hire new support staff?
  • How many existing clients will purchase this solution?
  • How many new clients can I attract with this solution?
  • How easy is this product to market and sell?
  • What's the ROI like for my clients on this solution?
  • How easy is it to measure and provide proof-of-performance for this product?
  • What kind of margins can I expect on this offering?

You'll want to consider how much training your sales team will need to speak intelligently about this new offering, as well as what kind of proof-of-performance you can offer in your sales and marketing of the new product.

These should help determine which of your considered solutions will have the biggest revenue benefit for your company. You'll want to consider how much training your sales team will need to speak intelligently about this new offering, as well as what kind of proof-of-performance you can offer in your sales and marketing of the new product.

Read more about the six criteria for assessing new business opportunities from Chron to help analyze your product opportunities.

3. Find easily-integratable third-party solutions

Reduce the resource waste on integrating new vendor products and solutions by removing overhead on product speed-to-market. Look for solutions that are easily integratable into your existing offerings that offer rapid speed-to-market and enable you to start selling quickly.

The more easily-integratable a new solution is, the better the accompanying revenue opportunity as well. The more complex an integration is, the more of a resource-suck it will be, which translates to time and people costs.

When integrating third-party solutions, research solutions and partner companies with that have proven track records when it comes to training and support. This will reduce the amount of manual effort required down the road to train, educate, and onboard with new tools and services.

4. Conduct thorough product and solution research

In order to keep your brand reputation positive and stable through a joint venture or third-party vendor integration, I have to emphasize the importance of thorough partner and product research.

Continuing to build trust through the product diversification strategy relies on your business only adding high-quality and best-in-class solutions.

Build trust by adding only high-quality, best-in-class offerings. Conduct thorough pre-integration research into available solutions and continue to curate a store of high-quality solutions to your existing and prospective clients.

vendor market research


Vendasta's Product Diversification Solution: The Wholesale Marketplace

vendasta marketplace new products

You can easily add best-in-class marketing solutions to diversify your product line with Vendasta's Wholesale marketplace. With foundational digital marketing solutions—from advertising to websites and SEO—you can solve the main pain points of your clients by building your ideal online store.

From the Marketplace, you can easily bundle and package core products, services, and add-ons to solve each client's biggest pain point with all the right solutions.

Our Marketplace also lets you easily build public stores right on your website for your clients to browse and select the solutions they need. Plus, if your team is too tight on people resources, you can offer fulfillment to your clients through Vendasta's white-label marketing services fulfillment team.

Here's a quick breakdown:

1. Choose your products

Select the products you'd like to put in your public store. Bundle, package, and price as you want!

2. Choose your fulfillment type

Select the fulfillment option that fits your team size and resource constraints.

  • Do It Yourself (DIY) for smaller businesses with more time than money
  • Do It For Me (DIFM) Task Manager solutions for businesses with more money than time
  • Do It With Me (DIWM) for businesses that wanta hybrid approach

3. Go & grow

Launch your public store and wait for the new leads, clients, and revenue to roll in!

For us at Reeder Media, we benefited greatly from a software like Vendasta that follows this simple, yet all-inclusive strategy. In our experience, every client we have met with and signed was looking for something that was not only specific, but uniquely different from anyone else. Luckily with all the different products that Vendasta offers, we could meet every unique problem with an equally unique solution. Lee Yates

Digital Marketing Director


In conclusion, diversifying your products is the competitor-killer you need to conquer your local market, grow revenue and brand trust, and stay competitive in the fast-paced digital marketing environment.

What weapons will you arm your agency with, what diversification strategies will you explore, and what products will you add to your store? Go browsing in our wholesale marketplace to find new solutions to add at the touch of a button!