Will Niching Down My Business Lose Me Money?
Oftentimes when we go into business, we do whatever we can to make money. Whether by offering discounts, doing work we’re not passionate about (or skilled in), or working with people who are not our ideal customers.
And while we may think money is money, it’s essential to set boundaries in your business and to follow those boundaries, one of them being to clearly define your target market.
A target market isn’t just the demographic of the people you serve, it’s their qualities and characteristics. They’re the specific group of people you want to work with.
It’s essential to define your target market, as you can better cater your offerings and marketing to reach and resonate with them.
A niche is both similar and different to a target market:
Similar: Your target market is so specific that it’s considered a niche.
Ex. My target market is female entrepreneurs between the ages of 35 and 55, but my niche could have the additional qualifying factor of female entrepreneurs between the ages of 35 and 55 who are photographers or who just started their businesses and are still employed full-time.
Different: Your niche is a particular offering.
A popular target market is female photographers between the ages of 25 and 45. Let’s say you offer client management software.
Traditional client management software is designed to work for all businesses, but your niche is that your software is tailored specifically to your target market, female photographers. Even better, let’s say your niche is female wedding photographers.
There are other companies whose target market is female photographers between the ages of 25 and 45, but their offer is different. They may be offering website templates. You share the same target market, but your niche offering is different.
The first option is more common, where your niche is a specific subset of a target market.
But doesn’t going specific limit the number of people you’re willing to work with, thus losing you money?
Nope!
A niche actually makes you more money. Here’s why:
A niche allows you to connect with your customers.
When your niche is clearly defined, you understand the exact problems your offer is hoping to solve. And since you know your niche market inside and out, you can write copy, design ads, and capture photographs that they will be able to relate to, thus building instant connection.
Your offer is more likely to be purchased.
Because your offer is designed for a specific niche, the people within that target market will feel like your product was made specifically for them- which it was!
The features and usability are designed specifically for that target market, making it easier and/or more effective to use. Because of this, a customer is likely to choose your offer over an offer geared towards a more general target audience making your sale easier to make.
Ex. If you’re looking for a health coach, would you rather hire a general health coach or a health coach who specializes in gut health, and you have Celiac?
You’re likely to choose the specialist because they understand your condition and can tailor a program around it.
Ex. Another example is doctors who specialize in a specific practice, such as cardiology. Their patients could be male or female and at different ages, but they all share the trait of having a heart condition. This is still considered a niche.
Your niche allows you to design better offers.
When you understand your niche, you understand the problem your offer is trying to solve. Not only will you be able to tailor your offer to the specific problem of your niche, it’s easier to conduct market research and discover exactly what that niche needs.
You can then take this information and apply it to current offerings or create additional offers.
While it may seem counterintuitive to reduce the number of people in your target audience, niches allow you to better serve those in your target market- and make more money!
Still not convinced? Click here.
Need some help determining your niche? There’s an exercise that guides you through creating your ideal customer in my online signature course, Self-Employed School.
