How To Calculate The Cost of NOT Niching
A Niche is defined as a “distinct section of the market” by dictionary.com. Think of any business and consider what market it serves. Even the large companies like Bunnings for example, serve a niche market, which for Bunnings is the DIY home handyman. Sure they sell to the tradesmen too, but their niche is the DIY market.
The best example of niching can be found in the medical professions. The specialist medicos have a distinct section of the market, their speciality. Even the GP’s tend to now be specialists who love working with young families, or the elderly and so on.
Have a good hard look at your business and identify whether you are niching or not. If your business provides services and the vast majority of your clients come from a particular industry, then you have successfully niched your business. If your clients are all from different industries, then you haven’t niched.
If your business sells products, consider who you sell to. Are there similarities or common traits in your customers that could be considered a niche? Then look at how you promote your business. If you aren’t promoting your business to a targeted market then you aren’t niched.
To calculate the cost of not niching, we need to start with considering the benefits of niching.
Some of the Benefits of Niching:
- Targeted marketing – means a better return on your marketing dollar
- Systems and procedures that can be replicated easily to different clients or customers in the same market
- Streamlining and efficiency of workflow within your business
- Potential new clients or customers will self-select your business when they are in your target market
- You don’t have to try to be all things to all people
- You build a higher level of knowledge about your target market and can speak their language
The Cost of Not Niching:
- Marketing costs will be higher
- Return on marketing spend will be lower
- For service businesses, different clients will have different needs so you need to expand your offerings to cover more services
- You will have potentially multiple procedures for similar processes to deal with nuances of different markets
- You can focus on what you do well and do it better
- It’s easy to say no to potential new work which is out of your area of expertise
- You need to know a lot about everything, but in doing so become a Jack or Jill of all trades and a master of none.
I’ve seen businesses that were not niched that were doing ok. They then went into a niche that they felt an affinity for and then bloomed into an awesome business doing extremely well and having new work flooding in the door.
The biggest fear people have about niching is in turning away business. The old adage, any business is good business, is ringing loud in their ears and they just don’t have the guts to say no to any new client. The strange thing is that when you are marketing to a niche and are doing great things with a niche, you will attract those types of people to your business and you won’t have to be saying no, because people in other markets won’t be knocking on your door.
Seriously, if you’re not already niched, take the time to work out who you want to be working with or selling to and start to market to those people. You will find over time that you will have built a niched business that you will enjoy so much more and be making more profits too.
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