Niche marketing is all the rage these days, but what exactly is it? More importantly, is it right for your small or midsized business?
A niche refers to a specific, focused and easily identifiable market segment. A business cannot be all things to all people; it may be more successful to aim to be the "go-to" resource for a subsection of a larger population. By focusing on a niche, a business can generate deeper, longer-lasting loyalty, identify specialized products or services and exceed expectations for customers with a specific need that can be fulfilled by the company's services.
3 Steps to Identify Your Niche
Niche marketing hinges on identifying your company's unique opportunities to market to a certain group. To do this, follow these steps:
1. Determine your best customers.
You can determine your best customers by examining your sales database. Review the data to see if there are any common characteristics among your best customers. Some businesses assign lifetime value scores to customers based on their purchasing history. These figures may lead you to discover that your best customers fall within a specific niche group.
2. Refine your product or services.
Once you've discovered your niche, you can maximize potential sales by refining your product or service offerings. Look for ways to increase the number of products or services that will appeal to your particular group. Adding on more may make sense if you think the niche has potential to grow or if such additions can be profitable.
3. Test the niche.
After identifying your niche and products that appeal to it, it's time to test whether it's right for you. Test your advertising or marketing materials to the targeted group. If your guess is correct and you've found your niche, sales should be stronger to that group based on your ability to match your business to their needs.
Is Your Niche Too Targeted?
Small businesses may not be in the best position to serve a niche market if the identified group is too small for effective sales. Consider your target customer group and your average sale. If you sold to every single member of that group at the average dollar amount of a typical sale, could you still make a profit?
As the numbers of possible sales in the niche drops, gather your best estimates of gross and net profits. While it's true that successful niche campaigns can engender strong customer loyalty and repeat sales, if there aren't enough potential customers, it won't be worth your time.
Successful niche marketing campaigns enable you to focus your marketing messages on a smaller customer group. With enough customers, you'll find your message resonates strongly with them. Repeat sales, increased business and higher profits are all signs you've successfully found your niche.
