Using real examples from our work each episode of One Good Idea provides a smart business tip to help you grow. This episode is based on work with a B2B customer who was looking to expand their business. In our conversation with the president of the company, we discussed employing a niche strategy as a way to achieve organic growth.
What is are niche markets? Niches are segments of a larger market that have own unique needs, preferences, or that makes it different from the market at large. For example, ice cream for vegans or virtual assistant chat bots for CEOs.
Companies pursing niches, need strategies that organize a product, associated content, and offers around this specific specialized segment. Pursuing a niche requires you to examine your existing or potential customers and delve deep into the data to identify something that makes them unique or identifying a unique unmet need.
Then it is vital to use this information to decide how to meet that need. Once you have this, the key is to select and implement a market strategy to engage with and acquire customers in this segment.
What You Need to Consider When it Comes to Niches
The beauty of niches is that create opportunities for growth. The first critical consideration is to determine whether there are enough potential customers in the niche to warrant a unique strategy.
Let’s use our ice cream example. Who would have thought there would be a need for vegan ice cream 20 years ago! Today there are at least a dozen places you can get vegan ice cream right here in Austin. That certainly indicates there is a niche market with a need.
The idea of niches applies nicely to the B2B technology customer who was successful in several verticals, such as healthcare. They had many healthcare customers, but they looked at these customers as one homogeneous group. There were however a number of niches inside this vertical that provide opportunities to expand.
If your company has a vertical industry focus, it is often helpful to dive deeper into the vertical and looking for niches can provide a good growth strategy as long as your solution is a good fit and truly meets the need. This is the second critical consideration.
This requires your organization to be a very customer-centric vs. product-centric technology company.
Take 3 Initial Steps Before You Deploy a Niche Strategy
If you are a customer-centric organization and you think tapping niches might enable you to expand take these three initial steps:
- See if you can parse your segment into micro clusters or niches.
- Determine how many customers you have in this group and the potential number of customers in this niche.
- Decide what if anything you would need to modify in your solution to capture more of these customers.
Did a niche strategy make sense for the customer we’re were talking with? Yes. They were strong in
a couple of niches and there were plenty of more potential customers with the same need. The beauty of niches is that you already know a great deal about the customer and solution. It is the nuances and distinctions that provide the opportunity.
With this clarity, we could craft strategies and tactics specific to the niches. This didn’t require making modifications to their solution, but it required modifying the positioning, website, and content. Calling out the niche was an integral part of the decision, like calling out ice cream for vegans.
Branding will become a key part of the strategy.
If you decide a niche strategy is right for you, you can see lots of examples that will help with your approach. The hotel industry helps illustrate this idea. Look at all the properties owned by a hotel company for example, each brand intended for a different niche/need, each with its own Marketing strategy and tactics, including website pages, content, etc. This is an important point.
We’ll leave you with this One Good Idea. If you have traction in a segment, consider how you might go deeper and tap niches for growth. Of course, smart business leaders know that this course of action requires developing a strategy and plan specific to the niche.