Why your business should target a niche – and how to do it
Why would an organisation target a niche industry to market and sell to?
The simple answer is that marketing and selling products and services successfully hinges on understanding the emotional behaviours and thinking of clients. If you can demonstrate that you really do understand a client, and you can actually understand their challenges, then you will win their trust.
For an SMB, this takes a huge amount over work, sometimes over long periods. So it makes sense to do this one industry at a time. It’s important that it’s not just Marketing that knows about your target industry but everyone in your business that has a touchpoint with your clients.
We were very lucky to have been invited to participate in a Microsoft initiative called the High Volume Programme with Sharka Chobot from Neural Impact, who has a PhD in behavioural psychology and neuroscience. Sharka taught us that a huge part of gaining trust and an emotional connection with prospects is about using terminology and understanding challenges that are relevant to their industry.
Talking your client’s language
For example, if you’re selling products and services to banks, they don’t necessarily always have the terminology like “sales”, “pipeline” or “leads”. They will think about savings and investments and they’ll have different terminology than, for example, a membership organisation that doesn’t call their customers “customers”, referring to them instead as “members”.
If you’re not using the right terminology, then you will struggle to connect emotionally with the customer.
These days, B2B customers are 60-80% of the way through the whole buying journey before you even talk to them. Most of the sales is happening when they are engaging with your brand before that first human-to-human conversation.
So, it’s important that when they look at your website, your content, your social media, and your thought leadership that they believe you understand their market. Don’t lose out on the only opportunity to achieve that emotional connection by going niche onto a particular industry.
How to go niche
You have to think about the customer’s processes, their unique terminology, and their unique challenges as they perceive them. There might even be some unique compliance challenges. In financial services, for example, there is a regulation called Know Your Customer (KYC), that requires professionals to make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. You’ll need to be aware of this if you’re marketing to financial services firms.
We’re a Microsoft Gold Partner with deep and broad relationships in the Microsoft community. Years of talking and networking with similar organisations has taught me that when a partner has no industry specialisation, their conversion of leads might be 10% to 20%.
If they invest their efforts targeting two or three verticals, they can expect that figure to be nearer 50%. But if they have a single industry target, they can expect a conversion rate of around 80%. Imagine how that number might transform your business! But how does this happen? One word: brand.
It’s all about brand
When you manage your brand, you’re taking control of what you are known for. When you target a niche, you can concentrate your marketing efforts in one area to have a greater impact.
Eventually, businesses in that field will begin to see you as the go-to provider of the product or service they’re looking for.
Of course, it works the other way too. On several occasions in my career, both as an employee and running my own business, I’ve been in the last two in a pitch situation. Despite pitching well and knowing we were at least as creative, experienced and expert as our competitor, we were pipped to the post. I learnt that this was because the other competitor was niche in the client’s industry and we had been at the time more generalist.
People are risk-averse and hearing their problems and challenges being spoken about in the language they would use makes the project investment seem less risky. Talking your prospect’s language gives the decision-maker an instant feeling of reassurance; a feeling that “they get it”.
Target a niche for financial return
Apart from selling more successfully, there are two other ways that targeting a niche can bring you a financial return. Firstly, doing so allows you to charge a premium for your work becuse focusing on one area gives the prospect the confidence that you’re an expert and people are willing to pay for expertise.
Secondly, you might be able to build reusable solutions. We are in Customer Relationship Management (CRM) and we build solutions based on Microsoft’s Dynamics 365 for clients. Because we are focused on a niche – manufacturing – we are able to resell versions of the tech we build repeatedly to address similar client challenges because it is likely to be relevant to our prospects in the same industry without much adaption.
How do you decide which niche to target – and what do you do next?
Here’s why we selected manufacturing as our market. First we analysed all of our clients over two years – around 180 projects. We classified them by industry and attached a revenue and a profitability to them.
We also factored in some softer metrics. For example, we identified the sectors in which we felt more confident working, those in which we felt we had the best client references and those in which we felt our networks and influence were strongest.
When we crunched the numbers, manufacturing emerged as the area in which we had been most successful over all. I must confess it was a surprise, but the exercise made us reflect and it quickly made sense – numbers don’t lie!
As soon as we’d settled on this, we asked ourselves whether we had gaps in the experience and expertise needed to push harder into manufacturing. We also knew we needed marketing collateral, case studies and thought leadership around the industry and the challenges it faces.
So we began educating ourselves about industry trends, tapping into the expertise within the team gained from working with our clients and learning more about the manufacturing industry business models, about the issues and challenges that keep manufacturers awake at night, and we quickly became experts.
We asked ourselves what products we had in our kit bag that served that marketplace and made plans to build what we didn’t have. We also asked ourselves who the decision-makers are in that industry and what their typical job title is.
Is a niche forever?
Resolutely not! There’s no reason, in my view, why you can’t pick another niche at a later date. But you shouldn’t focus on more than one at once.
To deploy an analogy: if you were training to be a professional sportsman or woman, you wouldn’t pick tennis and football. You’d try one and then maybe go want to do the next afterwards – it’s a similar principle in business.
For more information on how we work with manufacturing clients, or how we help our clients with marketing success click here.