If you’re a business owner today, no doubt, you’ll have heard the statistics around business failure, where it is estimated that only half of businesses make it past the five year mark and just one third make it past ten years. Part of this high failure rate is that businesses don’t differentiate themselves with a strong unique selling point that is intrinsic to their business, as sometimes this can be difficult. Whilst a highly innovative tech start-up can rely on its fundamental uniqueness it could be argued that there is little differentiation a pizza takeaway can have, meaning its core strategy is ofen to enter into a price war.
The problem with building your business around price, rather than differentiation, is that you are subject to ever diminishing profit margins (as others lower their prices in order to gain market share) and you don’t have anything unique about your business that means it will stand the test of time. This article explores a number of ways you can make your business stand out from the competition by positioning yourself as an expert within a particular niche and becoming a specialist rather than a generalist.
What is a niche
A niche is a focused subset of a particular market group. If you were to think about a personal training business, for example, there are many generic personal trainers that help all people with the goal to lose weight… and given the sheer number of personal training businesses out there – this generality makes the business feel somewhat of a commodity, where one would look either to price or qualifications to make a decision whether to engage that that business.
If, however, we were to look at a personal trainer for new mum’s this has a compelling reason for new mum’s to get in touch, because this personal trainer is a specialist – meaning she has a huge appeal to a particular target market, rather than a mild appeal to everyone. It means this personal trainer is viewed as a specialist in her area of expertise, and can build her business around a set of core competencies – where she is known as the “go to expert” rather than a generalist.
Why Having a niche is important
In the rapidly expanding area of ecommerce, where competitors are only ever a click away, positioning yourself as the “go to expert” in your industry, where, essentially you are viewed as the solution provider to one very specific challenge (e.g. in the example above, the challenge would be new mum’s seeking to get their bodies back in shape after giving birth) – when you offer a specific solution to a specific problem, people will engage with your business in a completely different way to that of a generalist provider.
Often, the broad markets are very crowded and well established. If you think of this from a marketing spend perspective, you obviously want to get the greatest return on investment, and in spending money on advertising such as Google Adwords the cost per click for an advert relating to “losing weight” is going to be much higher than the cost of “personal training for new mums” because the search term is less competitive.
The other major benefit is that the person clicking through is likely to be a more relevant customer looking as they are looking for your particular solution. The thing is, you don’t want thousands of people clicking on your adverts because each time they click, it costs you money – you only want qualified prospects. The more focused your marketing is, on solving a specific problem, the better the conversion rates (meaning people clicking on your advert and then going onto purchase from you) resulting in a much higher return on investment.
In summary, the most important thing is that you stand out from the competition, and there’s no better way to do this, than to focus on solving one particular and very specific problem – so that you are perceived as the “go to expert” in that area. When you stop focusing on the product you offer and start focusing on the solution you offer to a particular problem – you begin to stand out from the competition in a way that is much more sustainable than competing on price, special offers, or the fact you have a huge colourful banner outside your shop window. The key tip is to start focusing on resolving a pain or struggle your customer faces and market your business in a way that marks you out as the solution provider that can solve their pain, and give them what they want, in very specific “end result” terms.