Maite Barón reveals why having a well-defined niche is crucial for business success.
It used to be common for businesses to market themselves as ‘one-stop shops’, places where you could find everything to meet a variety of needs and tastes. That made perfect sense when it was difficult to access a range of suppliers.
But, with the advent of the Internet and powerful search engines, all that changed. Suddenly, not only could you identify a myriad of different suppliers, but also select products easily based on price comparison.
So now, trying to be ‘all things to all people’, offered much less competitive advantage. Instead, becoming a niche supplier of services and products to meet the needs of very specific groups of people became a far better alternative.
And while niche businesses have always existed, to achieve success today, particularly online, this is the model that you will almost certainly have to follow, so significant are the advantages. In fact, ‘finding your niche’ is pretty much the most crucial aspect of setting up in business.
When you have a niche business, potential customers think of you as a specialist source of knowledge, ideas and products. That means they’re more likely to make you, rather than a more generic supplier, their first port of call.
And because customers see niche businesses as specialists, they are often more willing to pay a premium price for what they perceive will be a better product or higher level of expertise than they would get from a broad-based company.
Those higher prices mean greater profitability, making niche businesses a better ‘lifestyle business’, not just because their owner can earn more by doing less, but also because they can be shaped around personal interests, hobbies or pastimes. This makes ‘going to work’ a much more rewarding experience.
Offering more targeted products, niche businesses can also be easier and cheaper to set up, as you don’t have to carry the range of stock that a generic business would.
With a niche business, there’s also the chance to become an even greater expert on your area, as you’ll have more opportunity to learn about a smaller market sector than someone who runs a general business and who therefore has to spread themselves thinly across many areas. You can become the ‘go to’ guru, with a depth of knowledge that makes you the person the media want to talk to – great for PR and to attract joint venture partners who will be drawn to your expertise.
With your specialist knowledge of products and services, you immediately have a marketing advantage – for a non-niche business, knowing a little about a lot of things, is not a very convincing USP. This can make attracting customers easier, as you don’t have to resort to mass marketing methods to reach a widely scattered audience. With fewer, more focused marketing and communication channels, you know where to concentrate your efforts to best effect.
Being a niche business also helps your ‘online visibility’. Because you are focused on a tighter range of products or services than the generalist, the greater concentration of information on highly specific topics offered on your website means that Google and other search engines will see yours as an ‘authority website’, and therefore one well worth giving a high ranking to.
And once you gain traction in the market place, and customers become ‘raging fans’, then word can spread quickly to make you an overnight success.
What’s more, as a specialist you will also know your market place intimately and so be better placed to come up with fresh, innovative ideas that may open up new market opportunities and build your business faster.
Inevitably, some would-be entrepreneurs worry that setting up a niche business will reduce their potential customer base, but in large part that’s the point. With a broad-based business, you may well have more customers, but the likelihood of any one of them buying from you is low. The niche business may have fewer customers, but the chance of them buying from you is much higher.
If, however, you’re still not comfortable about niching your business, what about testing this idea? Take your generalist business, and divide it into niches, each with its own website. You still keep an overarching business, but now have satellite sites promoting different aspects of your business. So even though you’re not running a niche business as such, visitors will think you are, with all the advantages this brings. It will also help you determine which products sell well and which do not, that’s valuable ‘business intelligence’.
Of course, doing this will inevitably mean extra work for you and may require additional investment, but shifting your mindset from ‘trying to meet the needs of the many’ to ‘actually meeting the needs of the few’ will give you real advantage – today having a niche isn’t really an option, it’s an essential for business survival and long-term growth.
So what’s your niche going to be?