Before even reading this article, I want you to do the following.
Go to Amazon, and search for “self-improvement books and audiobooks.”
Take a second and look at the results for the search.
Did thousands of books, audiobooks, and other materials come up? Why do you think that is?
Now, I want you to do another search.
This time, search for “self-esteem resources for at-risk single men age 18-35”
How many results came up for that search, compared to the previous one of “self improvement books and audiobooks?” It should be a lot less.
This is one of many illustrations as to why a niche is so important when running a business, especially when it comes to selling services or information.
It is easier than ever to not only start a business, but also to sell entire catalogs of products, services, and information.
Because of this, certain fields and subjects will become very saturated, if they aren’t already.
This can be overcome by separating your brand from the larger crowds and extracting a target market from a much smaller one instead. Eventually, any given business owner will not have a choice but to do this because of how saturated things are.
What is a niche?
The answer to this question is simple: a niche is a much smaller, concentrated group that is related to a much bigger group.
In the example mentioned earlier, “self esteem resources for at-risk men aged 18-35” is a niche of “self improvement.” These are two different industries, only one industry is much more broad than the other.
Another niche would be something like “wedding gowns for overweight women.” The product is the same (wedding gowns), but the target market is much more narrowed down.
This works for something like investing as well. There are literally millions of books on investing. But how many books or webinars exist on investing for college students with $100 per week budgets?
The final example of this has to do with contractor and business software. Let’s say you have created software that can organize roughly all the numbers involved in a business. If you launch this software to a large market, it will likely go unnoticed.
But if you launch this software to specific businesses, the chances of these businesses purchasing, downloading, and installing the software will be much higher.
Why is a niche important?
As mentioned earlier, it is easier than ever to start a business. Whether it is a brick-and-mortar business, a Shopify store, or even selling self-published e-books, anybody with just a few hundred dollars can host a website and begin selling things online.
While it does take a little more money to start a brick-and-mortar business, banks are more generous than ever in loaning money to business owners. This allows almost anybody to start a business.
Saturation is a major issue in most of these cases, and that is why discovering and creating a niche is so important. If you intend to sell products, information, or services to a large market, there will be a lot of overwhelming competition.
This is one of many reasons why businesses fail so quickly. They have a great idea, have come up with a fantastic product that can help a lot of people, but they have placed themselves in a market where there already exists established businesses. Because of this, nobody knows about them.
Simply put, impending saturation among many markets is the reason why a niche is so important.
Advantages of having a niche
Logically, it seems like having a niche would not be effective. After all, if you are selling to a smaller market, wouldn’t that also mean you are limiting yourself in terms of customers, prospects, and conversions?
This objection seems to make sense, but the fact of the matter is that target markets for a niche can still be very large, and there are a lot of advantages to having a niche as well.
The first of these is loyalty. Not only has the market for many “catch-all” businesses become saturated, but prospects and customers in these markets have become extremely cynical, having a lot of trust issues when it comes to buying.
This mistrust is very much addressed when you have a target market that is directly in your niche. When you concentrate on a niche, you establish a much more intimate sense of credibility when it comes to your prospects and customers.
This makes them loyal to your brand and much more likely for them to be repeat customers. And as anybody in business will tell you, repeat business is just as important as converting prospects, if not more important.
The final reason why a niche is important
Being too general with your business will turn the business into a chore. It will not be enjoyable to maintain it, nor will it be enjoyable to innovate and update things.
All of this can be solved if you focus on a specific niche. You will be excited about the new product or service you will be launching, for the simple reason that you will be able to relate to it more and maintaining it will be much more enjoyable.
Marie Erhart is a Success Manager at FieldPulse, creators of field service software that lets you run your entire contracting business from a single app. She works with contractors to help them grow their business using best practices.