Everyone’s heard of a “niche” market as one way to differentiate your company from others. Perhaps you sell business-to-business, and you sell only to schools, or to salespeople, or to entrepreneurs, or to HR Directors, or to manufacturers. Or you sell to consumers, perhaps to men, or to teens, or to lawyers or gardeners.You might consider each of those a niche, since they exclude many other possible customers. But in most cases you could significantly narrow your target customer, with better results.
Let’s look at some ways to create a powerful niche, one that will bring you increased revenues and higher margins.
Geography Often when you are small, you focus on your immediate area and gradually branch out to your state or region. But when you’re ready to take a big step forward, how will you extend your reach? If your answer is, “We can sell to anyone in our market, anywhere,” while that may well be true, is it in your best interest? Here are some advantages of deliberately targeting states, regions, or countries:
- Manage costs of sale by limiting the region you serve, until you need a bigger region
- Market effectively to statewide or regional associations to which your customers belong
- Manage costs of inventory, shipping, and returns
- Build your brand in a region where you can become well-known rather than scatter-gun across a large, diverse area
- Deliver services closer to home
- Work from a single office headquarters
- Become known for your knowledge of a specific industry, and then perhaps add another
- Focus on reaching professional men in their thirties, or teen athletes, or people who sell software products, or desert gardeners
- Affiliate with membership groups of very specific members, like fee-based financial planners in New Jersey, or merger-and-acquisition lawyers in Illinois
- Begin to do business in one new country, with one new language and one new set of business and social customs to acquire
Subsets and Conditions
- Can you best serve entrepreneurs who have recently founded a company, or those in a single industry, such as healthcare? Or founders of companies that have reached the $10 million revenue milestone and want to grow to $25 million? The more specific you are, the easier it will be to locate prospects and design your products and services to their exact needs.
- If you’re selling shoes to men, consider focusing on an age group, or a type-of-work or type-of-leisure group, or men who are hard to fit or who have trouble with their feet
- Who needs your product in a school district? Is it the curriculum coordinator or the principals or the CFO or the information technology leader or the individual teachers? All of them might be involved in a sale, including the superintendent and school board if it’s a large sale. Target your brand towards the group who will most likely use your service or product.
It is so tempting to offer your products and services to anyone who could use them–and yes, sometimes almost anyone could. But to build a distinctive brand–recognizable and known for something–a distinctive customer base is a significant differentiator.