By Bryan Driscoll
Niche marketing, sometimes referred to as segment marketing, is the practice of business owners using pointed and specific advertising to reach a narrower -- but profitable -- target audience. The strategy is directed toward a smaller number of potential clients or customers, with the objective of creating a base of continuous business.
Products considered to be niche are marketed to achieve survivability in a competitive market, and staying power for a long-term duration through core customer loyalty. If you have an established broader customer base, the goal of a niche, if at all possible, shouldn’t alienate non-niche patrons. Our clients have found the best results by introducing the new niche like t-shirts by pairing it with their most popular pair of pants. As the company begins to target the new t-shirt niche more heavily, their established customer base who already enjoys their pants are encouraged to join the new t-shirt niche rather than being alienated.
Some key things to think about when figuring out your niche:
- Is the niche market profitable?
- Do you have a high level of owner expertise?
- Which audience are you going to target and is your establishment prepared to run at maximum efficiency?
- Who are your competitors?
- How can you differentiate your product in just the right manner to gain a competitive edge?
- How can you avoid excluding clients who don’t fit into the niche?
Once you begin evaluating, you will find yourself focusing on a tactic that will end up as a finely tuned machine; one that zeroes in on a specific demographic and will help start building your base. If you have done your research and understand how to produce your wares at maximum profit and efficiency, the right customers will begin to fall in place.
Advantages As you build that relationship with the niche clients, you will also build a mutual trust and good faith. This will help in solidifying those customers, which in turn enables your ability to maximize your marketing and advertising dollars. You will spend less on unknown or risky group demographics, money that can be better spent on the niche product and enhancing the good faith between business and buyers.
When considering niche marketing, you have to learn the niche in great detail. The most successful niche marketers are the ones who take the time to research their niche completely, engage with their customers and find as many details as possible to help them provide exactly what that market needs in the most efficient way possible.
And let’s not forget the power of word-of-mouth. Patrons of a niche product firm are some of the most loyal. And when customers are happy, they tell others who might be looking for that specific thing too.
Niching as a Differentiator
Since a niche commodity is specialized, small business owners can become leaders in that specific area. This will grant you street cred and simultaneously drum out competitors. As a result, your pricing power also gains strength because the knowledge and expertise have proven to cement genuine respectability and leverage among your base.
Here’s a scenario that illustrates this idea for a financial planner:
A lot of firms don't like to hear the word “niche” because they worry about it being an exclusionary business model. But the best way to differentiate as a financial planner/advisor is to niche down and be specific about who you help and what you help them achieve (and how).
Financial advisors are all saying the same thing. What they think is a differentiator isn't anymore. For example:
“We’re different because we individualize financial planning, customized to the needs to our clients, with a progressive/aggressive/whatever-adjective-investment-strategy. We have recognized credentials and we’ve been doing it X amount of time with X years of experience."
What a financial advisor looking to enter the retirement planning niche could say is:
"We have spent the past X years helping local customers plan their retirement plan down to the very last detail. We specialize in retirement, so you don't have to!"
This conveys that they are experts in the specific area of expertise the customer needs. They will be much more likely to get the business of someone looking specifically for retirement planning.
Start by doing away with the mindset that casting a wider net is best practice. If you want to be everything to everyone, what is your realistic expected close rate? If you position your business to be exactly what five percent of the people out there need (for example, financial planning for Gen Xers), you'll make an instant connection and that closing rate is going to be much higher.
Mass marketing forces a business owner to spread their focus across a wide array of customer demographics. A niche product allows for a more highly concentrated target audience, where familiarity earns leverage and a highly efficient merchant/client dynamic.
Pitfalls
Logically then, the most apparent disadvantage on the other side of the coin is that by concentrating on your niche, you’re limiting clientele outside of the niche. But, like I mentioned in the above scenario, if by casting a wider net you realistically only expect two out of every 100 people will become customers, are you really losing that much?
Is there a threat of being “too niche?” Yes!
Use tools like SEMRush to research keyword search traffic. If your niche has too little traffic, you won't be able to reach the number of customers your need, no matter how excellent your product. If you take the time to do your homework in terms of planning, it can be quite lucrative. Being the go-to business for specialized products and services has been proven to be invaluable to niche markets.
Small business entrepreneurs looking to tap into a specialized niche market must do their homework well ahead of any type of investment. The most pivotal and critical of components need to be approximated in advance, as an owner planning for long-term success will adhere to short-term specifics to build the foundation for success years down the road.
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Bryan Driscoll is the founder of Think Big Marketing & SEO expert helping businesses grow their brand, improve Google rankings and generate more sales.