There are so many good reasons why small businesses should focus their offering on a clearly defined niche. One of the most compelling is that niche strategy not only helps you attract more clients like a magnet, but it does so more profitably, boosting your profits and putting more dollars in your pocket!
The Riches are in the Niches
Before I tell you how to find the riches in the niches, I want to define what I mean by “niche strategy.” One way to define a niche is by the people who comprise it. Niche marketing means that you target a specific, definable, identifiable group of people with your product or service. You can also create a niche product or service – something that is specialized to meet the needs of your niche population, making your strategy even more profitable.
For example, let’s say I teach Yoga classes. Anyone can theoretically do Yoga. But I have chosen new mothers as my niche market. My next step is to really get to know this market, so that I can also provide a specialized product offering that is geared specifically to the needs of new mothers. I now have a niche product for a niche market. Namaste.
Less is More
It might seem counter-intuitive, but narrowing your market and your offering in this way will significantly boost your profits. How’s that work, you ask? Let me tell you….
1. The return on your marketing investment will increase exponentially.Marketing is about creating familiarity and recognition. It works best when you repeatedly appear in front of the people you want to attract, with a message that they care about, until they actually notice you. The rule of thumb used to be that your prospects needed to see you 7 – 10 times before you become familiar enough for them to know, like, trust and try you. Today, with all of the noise on the internet, the common wisdom has upped that number to 12.
Imagine that you do not have a clearly defined niche. How hard would it be for you to figure out where to show up with your marketing, so that your prospects see you enough times to make an impact? Pretty hard! You would have to be everywhere. Your marketing budget would be huge, and your cost of acquiring a customer would be huge too.
On the other hand, imagine that you have a very clearly defined niche. You know exactly where to find your ideal clients, and how to get in front of them. You can now concentrate your marketing dollars and networking time in very specific areas, gaining massive exposure to an audience who will become so familiar with your company that you feel like an old friend to them. You spend less time and money to gain more clients, and your cost to acquire a customer goes lower and lower.
At the same time, your marketing and sales messaging will be more effective, also increasing your marketing ROI. As you get to know your target audience better and better (because you have such a clearly defined niche), you will know exactly what they want and need to hear from you in order for you to stand out from the noise and get noticed. Your messaging can go from generic and meh, to specific and spectacular, as if you were reading the minds of your most desirable customers.
2. Experts make more money. When you specialize in working with, or providing products to a specific market, you have the ability to dive deeper and deeper into their challenges and the solutions to those challenges. You will get to know their aspirations and dreams and how to fulfill them. You will have the ability to become the recognized expert, the go-to company, for your niche market. You will stand out from the crowd, and receive more unsolicited referrals. Your target market will FIND YOU, instead of the other way around.
People will pay a premium to purchase a product or service from the go-to expert that answers their needs. Charging a premium is certainly more profitable than having to cut your prices in order to compete with the other generalists.
3. Your investment in developing nifty new products and services will be more likely to succeed, and more profitable if you are using a niche strategy. As you work with, observe, and get to know the specific wants and needs of your community, you will become very aware of the gaps and how to fill them. And you will know exactly who to consult with and test your new offering ideas on. You won’t have to waste your time and money sending out general surveys that no one ever really fills out, or having to bribe people to respond. You will have a tribe of fans who are happy to give you the feedback and advice you need. On the other hand, researching and developing new products becomes riskier and costlier as you cast a wider net.
4. When you focus on a niche market, you can develop systems and processes to create efficiency in your business. Efficiency leads to profitability. If you are constantly reinventing the wheel for every new customer, you are less efficient, it takes you more time to deliver your product or service, and we all know that “time is money!” The faster and more smoothly you can deliver your offering, the more efficiently you use your resources, and the more profitable you are. Also, when you can implement a process, you can create a consistent result, which leads to happier customers who come back again and again (A.K.A. raving fans), and who refer more customers just like themselves to you.
So, there you have it! Choose a niche market and create a niche product, and you will not only grow your sales, but you will boost your profits as well.