Deciding Whether or Not to Niche

sam hollis

Sam Hollis is a Web Designer, Business Owner, Dad,  Digital Marketing Expert and Podcaster

‘I’m always happy to chat and advice is always free’

Niching could be a great strategic choice for your business, but it’s a big decision that can impact your web marketing among many other things. So I decided to go through the issue and provide a bit of advice.

A niche is a specialised sub-sector of a bigger market for a particular type of service or product. These products often appeal more to a particular group of customers withing the larger market for a particular reason. For example, within the groceries market butchers appeal particularly to customers buying meat because they know the products, have a wide selection and offer meat products that supermarkets don’t.

Types of niche

  • Geographic
  • Customer type
  • Service or product type
  • Industry focus
  • Demographic (e.g. children’s books, elderly health insurance)
  • Cost

Questions to ask when deciding whether to niche

Deciding whether niching will benefit you is important as it could affect your business significantly going forward. Here are a few questions to ask yourself when doing so.

How many competitors would I have? A big part of entering a niche is reducing the number of viable competitors you have. That is, competitors who your prospective customers might think are a good alternative to you. If you enter too broad-a niche, you won’t benefit from the reduced competition. Too narrow, and there won’t be enough customers for your business.

How strong are the competitors? If I decided to focus on the social media niche for example, I would have fewer competitors, yes, but I would be up against the likes of Facebook and LinkedIn. This is even worse than having many competitors. If your direct competitors in the niche are too powerful for you to compete with, you will be drowned out.

How do I stand out? This question needs to be answered in any market. If you’re entering a niche, how will you set yourself apart from the competition. Will you be better, cheaper, or have an important focus for example?

What type of niche suits my offering? Consider your skillset, current customer base, objectives, strengths and weaknesses. Balance these against things like the demand and competition in particular niches to find the right one for you. If you’re making a lot of money from customers in a particular niche, it may be worth focusing your efforts there for example.

The advantages

If I want to buy a powerful, high-end laptop, I could go to Amazon or a hardware superstore, but I probably wouldn’t. It’s more likely that I’ll go to a dealer who specialises in high-spec laptops because I will be sure of a good array of options that meet my needs and I know that the provider knows their stuff in this particular area. That’s the main advantage of being a niche provider, shown from a customer perspective.

Ultimately, if a purchase or service is important to the buyer, they will be more likely to go to a niche provider, and they are likely to pay more for that service. Here are a few more advantages.

  • Go from being a small fish in a big pond, to a bigger fish in a much smaller pond.
  • Get found more easily on Google and pay less for targeted advertising clicks.
  • Reduce your competition.
  • Become an authority in the particular area.
  • Become a first choice in that area.
  • You can often charge more.
    • Specifically, you can often charge more for the increased knowledge and focus that comes naturally with niching.
  • Word of mouth spreads faster within a smaller industry, market or interest group.

The 64,000-dollar question: But won’t I loose work?

I would be willing to bet that everyone who has ever entered a niche or considered doing so has asked themselves this question. In fact, I bet that all of you readers who have thought about this strategy came upon this question fairly quickly.

It’s an important one and, although the answer is usually yes, it can be difficult to get to grips with. Here are a few pointers to look out for so you can be sure that you won’t lose work by entering a niche.

  1. There is a lot of demand within the niche.
  2. There are few competitors focusing on that niche relative to the amount of demand.
  3. There is a lot of added value to be offered by companies within that niche.
  4. You can demonstrably offer that extra value and differentiate yourself from competitors in the niche, as well as the wider competition.

Let’s say for example that a Leeds-based photographer is looking to enter the corporate portraits niche. There would be a lot of demand in the niche in Leeds, as opposed to rural North Yorkshire for example. For pointer two, a quick search of Yell reveals no corporate portrait photographers, one corporate photographer, 30 commercial photographers and around 250 photoraphers in total in Leeds. So this niche is much, much less competitive than the general market. Knowing some corporate photographers, I’m aware that there is a lot to be added artistically, functionally and from a promotional point of view to a photographic campaign by an expert commercial portrait photographer. The only question remaining would be whether our example photographer had the skill to add these things and turn them into real, valuable extras in the niche, and that’s a question for each business to answer themselves.

Ultimately, if they decided to enter the niche, our photographer would need to demonstrate their extra, specific value on their website, usually in relation to a very specific and clear offering. There’s no point niching in this way and then just stating that you’re a good photographer. It’s important to be clear that you offer the extra value that is essential in this individual niche: That you can capture someone in a professional way that reflects well on, and characterises, their business.

If someone looking for a commercial portrait compared this one focused provider of this valuable service, offering a lot of expertise and value, to the many, many general photographers who might squeeze them in between weddings and pet photos, they would almost certainly go for the niched photographer. The same is true in most other industries.

Niching can be a powerful strategy choice for a business, making it sharper, more focused and more authoritative in its area. Perhaps most powerfully of all, it can place your business above all the general providers for a particular offering, increasing your customer conversion rates and the amount you can charge for your extra-valuable service. If the niche is chosen and approached correctly, the strategy can pay serious dividends for the company.

Again, as long as the niche is chosen well, it will usually result in success. Problems usually only happen because companies choose niches where numbers three or four on the list above aren’t true. That is, either there is no significant extra value to be added for the customer, or the company don’t have the competency to offer that value.

If that doesn’t answer your question, remember that you don’t have to turn down work from outside your new niche.

Decide carefully and good luck

If I could give one overall piece of advice it is to choose your niche with care and an eye on the long term. Jumping in to a particular niche can be enticing, but a bit of due diligence is important to ensure your business benefits from the decision in the long run.

Aside from that, good luck.

If you liked this article, you might find these interesting