Five reasons why focusing on a niche can benefit your business: Phil Fraser
Niching in the business sense refers to the strategy of specialising in a specific market or industry segment. Instead of trying to appeal to a broad range of customers, niching involves focusing on a specific niche or target audience; the tighter the niche the better.
I always encourage business owners to niche down at least three levels. So for example a marketing agency might specialise in digital marketing (level one) for lawyers (level two) in Yorkshire (level three). The ultimate aim is to be known as a specialist in one thing so much so that your business ends up as a shortlist of one; in the above example if you were a legal firm in Yorkshire looking for digital marketing you’d immediately choose them.
Here’s five main benefits of niching;
1. Improved marketing effectiveness
By targeting a specific niche, businesses can tailor their marketing efforts to better reach their target audience. This can lead to more effective, focused and efficient marketing campaigns, reaching the right people with the right message, instead of casting a wide net and just hoping.
2. Reduced competition
By focusing on a specific niche, a business can reduce the level of competition it faces.
Instead of competing with a large number of businesses for the same customers, a niche business can target a smaller group of potential customers who have specific needs and preferences.
3. Increased customer loyalty
When a business specialises in a specific niche, it can better meet the needs of its target audience. Niching allows them to become experts in their field, and build a reputation as a trusted source of products or services within their niche. This leads to increased customer satisfaction and loyalty. Customers are more likely to return to a business that offers a specialised products or service, rather than a ‘one-size-fits-all’ approach.
4. Increased profitability
Focusing on a specific niche can lead to increased profitability for businesses. By becoming the go-to expert for a smaller, but more specific audience, niche businesses can often charge higher prices for their products or services. This is because customers are willing to pay a premium for products or services that meet their specific needs and preferences.
5. Opportunities for innovation
By specialising in a specific niche, businesses can identify unmet needs or gaps in the market, and develop innovative solutions to address them. By focusing on a niche, businesses can also devote more resources to research and development, which can in turn lead to the development of unique products or services that help stand out in the market.
However there is one big but.
If you are going to niche you will most likely have to turn business away. In our above example, our digital marketing agency could of course do work for any business anywhere in the country, but by doing so they lose their reputation as a sector/local specialist. So, by turning work away, they enhance their reputation. Counter-intuitive perhaps, but beneficial in the long run. Could you turn business away like that?
The benefits of niching can ultimately help businesses to achieve greater success and profitability and to thrive in their chosen market.
Phil Fraser runs the Business Sounding Board. www.philfraser.co.uk