How to dig down and develop your niche
How does increasing your conversion rate from 1-3% to 5-10% sound? According to Gerard Boucher of Boucher & Co., niche marketing can deliver that improvement. Here’s what you need to know.
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Here's what we will cover...
- Understanding segments and niches
- Niche benefits
- Three key challenges
- Digital digging
- Evaluating your niche
Unless you have the budget of Amazon, trying to sell to the entire global market is futile. Even if you do make a profit, much of your marketing effort will have been wasted in the process.
Niche marketing involves narrowing down your target audience so that your marketing can be super effective. But how specific do you need to go to find a niche?
While there are no hard numbers that precisely define a niche, it can help to understand a little bit about market segmentation.
Understanding segments and niches
How do you carve up a market? Fortunately, academics have done the hard part for us and defined four broad marketing subsets: geographic, demographic, psychographic and behavioural.
- Geographic segmentation divides markets by location. This can be as large as continents or as small as individual streets.
- Demographic segmentation divides markets into groups based on external criteria such as age, gender, income bracket and marital status.
- Psychographic segmentation divides markets into groups based on attitudes, beliefs and other psychological factors.
- Behavioural segmentation divides markets into groups based on measured behaviour (e.g. using smartphones, buying books, eating out in restaurants, etc.)
Most segments are too broad to be considered niches on their own. However, combining segments is more likely to create a genuine niche market. And the more segments you combine, the more niche your market becomes.
As a simple example, let’s pick one demographic segment (teenagers), one location segment (Devon) and one behavioural segment (smartphone users). Your niche market would be teenagers from Devon who use smartphones.
If you are a visual person, it can help to draw (or imagine) a Venn diagram with each market segment of interest represented by a circle. Where those circles overlap, you have your niche market.
There are several benefits to niche marketing, especially for start-ups and smaller businesses.
- More focus. It is easier to run targeted campaigns when marketing to a niche. With a clear picture of who you are marketing to, you should find it easier to choose keywords and create relevant content.
- Less competition. A niche market is usually underserved. That makes it easier for you to wow your target audience with your unique value proposition (UVP).
- Brand awareness. With high relevance and low competition, your brand will become known far more quickly than if you were competing for a broader market.
- Industry reputation. By taking advantage of the first three benefits, you can open the door to establishing yourself as an industry specialist (if that’s your thing!)
- High ROI. It generally costs less to market to a niche audience and they are also more likely to buy – creating a win-win situation.
By the way, niche marketing doesn’t have to be a ‘whole business’ approach. It is perfectly feasible for a business to target a broad market while dedicating some resources for a more targeted niche marketing campaign.
Three key challenges
So if niche marketing is so great, why isn’t everybody doing it?
There are three main challenges that you will need to think about before deciding whether to embrace this approach.
- Market size (and revenue). The simple fact is, the broader the market, the more potential people there are to buy your product. If you narrow your audience too much, you might not have the level of demand you need to sustain your business.
- Saturation. Niche markets can easily become saturated. If you are late to the party, there may only be crumbs left to fight for. On the plus side, there are so many niches to choose from, you can probably find a similar niche ripe for the picking.
- Growth potential. In most cases, saturation also limits the scalability of your niche. Once you’ve risen to the top, you will need to add new niches if you want your business to grow.
So now you know what a niche is, how do you find a profitable one? Fortunately, there are many tools and techniques you can use.
Google is a great place to start when it comes to niche-hunting. To start your mission, you need only to use the Google search engine.
First, simply start typing in a broad search for the type of product or service you intend to sell. The auto-complete suggestions on their own may help to inspire you but if not, hit the Google Search button.
Scroll to the bottom of the page and you will usually find a list of similar search terms under the label ‘Searches related to…’
Next, scroll back to the top and click the ‘Images’ tab. Along the top of the results page you should see a row of buttons representing sub-categories of the search term you entered.
Despite its simplicity, this approach can be very effective. Not only does it provide niche inspiration, it gives a broad idea of potential demand since the suggestions and sub-categories are all generated from real Google searches.
Once you’ve got a few niches of interest noted down, we recommend using a more in-depth keyword tool. There are a wide range of options ranging from the free Google Keyword Planner tool to paid services like Ahrefs.
Whichever tool you choose, it should give you hard numbers on the number of average searches a month and the popularity or competitiveness of the keyword.
According to Boucher, the sweet spot for a keyword is between 1000 and 2000 searches per month. A low popularity rating indicates that few companies are paying to advertise to the niche online. This means that your pay-per-click (PPC) campaigns (see below) are likely to be more cost-effective.
For more specific guidance, we recommend hooking up with one of our marketing wizards at our upcoming Digital Marketing Training Course.
Evaluating your niche
Before jumping in with both feet, it is a good idea to test out your niche with some low-risk strategies.
PPC advertising (e.g. Google Adwords or Facebook Ads) are a perfect match for niche marketing because you can choose ultra-specific keywords and create hyper-relevant ads and landing pages to link them to.
By allocating a small daily budget over a short time period, you should be able to get an idea of the demand for your product or service.
If you don’t want to commit resources to developing a product or service that might not sell, consider creating a minimum viable product (MVP). An MVP is a basic version of your product used mainly to test demand and solicit feedback. Think alpha testing for computer games.