The most common mistake newcomers to business make is to think that by expanding their portfolio they will secure more business. Conversely, they think that by narrowing their market they will also narrow their chances of getting more business. In either case, nothing can be further from the truth.
A management consultant who I believe had a knack for human resources also offered bookkeeping services, thinking that having more to offer will keep her busier — she then wondered why she wasn't getting any work!
The truth of the matter is the fact that specializing and narrowing your focus as much as possible will increase your likelihood of getting more business.
An accountant specializing in car dealerships will get more business than a general accountant will. An advertising consultant specializing in print media strictly for home furnishing stores will get more business than a typical advertising agent will. A photographer specializing in weddings will get more business than a regular photographer will. And the list goes on and on.
Over the years, this has been referred to as “niche” marketing. Today, niche marketing is fast becoming increasingly necessary. Why? If we go back to the two major shifts I mentioned earlier, you'll remember that the explosion in both competition and information are changing the entire business landscape.
As more and more businesses get started and more and more people jump into home-based and self-employed opportunities, the less time, energy, and money people will have to spend in choosing those with whom they will do business. This is not only related to new and repeat business but also to referral business. Brand loyalty is harder to fathom than ever before.
Let's say you have two friends who are both in car sales, and you're thinking of referring clients to only one of them. One of your friends is just a typical car salesperson. The other, however, specializes in first-time car buyers (e.g., students, young drivers, newlyweds, late bloomers, etc).
For example, she offers special creative financing methods for those new to credit, additional car-specific driver training information for new drivers and copies of rate comparison charts that suggest insurance companies with the lowest premiums for new drivers. Now, let me ask you this question…
… To whom do you think you will refer more people?
This is the awesome power of narrowing one's focus. Think of a laser, which is basically a narrow beam of highly concentrated, amplified light. You want to focus like a laser on your niche and, when you do, you will consequently burn yourself into your prospects' minds. Now that's branding!
When you get down to it, as a consumer you will choose, when you have a choice presented to you, to go to a business that specializes in a unique area in which you have a specific need. Specialization is in itself a fundamental marketing system, for it helps to project an aura of superiority.
When you deal with a specialist, you will automatically assume that he or she has greater expertise, has greater knowledge about the field and offers greater service since, by catering to a unique market, it implies that he or she will have somewhat of a better understanding of your situation, needs and concerns. In short, specialization implies superiority.
Niche marketing is the wave of the future. And the greater the competition will become, the greater the need for more specialists. Why do you think there is a trend in specialty stores these days? There are stores selling only dry foods in bulk. There are vitamin and food supplement stores. There are electronics and computer stores. There are toy stores. There are specialty crafts stores. There are even mothers-to-be and baby-only clothing stores!
The need to specialize is obvious. Here's an example. Today, you can get a toaster from a department store, a home furnishings store, an appliance store, a kitchenware store, a grocery store and a drugstore. Even a bank!
With all these stores storming you with information, your very limited time to be able to shop around for the best product at the best price will more than likely cause you to go the one that pops into your mind the moment you have a need for a toaster. I mean, all you want is a toaster!
But, if there were a store like “Toasters-R-Us,” you'd probably go there first!
Nevertheless, your goal is to find your niche, to narrow it down as much as possible, and then to hit it with all you've got. The narrower your market, the more business will come to you. In fact, the narrower your market, the broader your chances of success in an hypercompetitive, overcommunicated society. It's the paradox of “Thou shall find more with less.”
If you're new to business or hesitant about narrowing your focus since you want the ability to offer different products or services, focus on a specific niche to start, or create one as a “division” of your main business or focus.
And then, as business creates enough cashflow and confidence for you, look at expanding at that point. However, be careful. Expansion does not mean extension. If you expand outside of your area of expertise, you will fall down like a house of cards and will have to rebuild from the ground up.
We will deal with this further, but for now, focus on your niche. And as stated in Commandment #2, become the specialist by appointing yourself as one!