Advice on Finding and Targeting a Niche for Small Businesses
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Narrow Your Focus, Grow Your Sales

How is Hooters different from other restaurants that serve wings? Do Hooters’ wings taste better? Do they have low prices? No? Then why do people go there for wings? Hooters built a whole business around the one thing they know their target market – twenty-something men – likes. (And, it’s really not wings, is it?) The company has alienated a large swath of the population in the process but, judging from their jam-packed parking lot on a Friday night, it hasn’t hurt them a bit.

Advice on Finding and Targeting a Niche for Small Businesses

Walk into Chuck E Cheese’s on a Friday night and you won’t see any sign of the twenty-something Hooters crowd. Everything about Chuck E. Cheese’s is designed to repel that group, but it attracts another group: children. Yet, neither the kids nor their parents will tell you they love the pizza or the prices.

Sport Clips is flourishing in this economy by creating a hair-cutting experience where, “It’s good to be a guy.” The “manly” environment created by this national franchise includes sports memorabilia and big screen TVs. Sport Clips was named top hair care franchise in 2009, and it got there without mentioning price or the experience of their stylists.

How can these businesses thrive when they don’t offer the best product or the lowest prices? They have identified a target market and customized their business to attract patrons that fit within that target – even if it means alienating or repelling other potential clients.

Every purchase decision that any of us makes is a blend of a variety of factors. None of us is as rational as we want to be in this process. The truth is that we make emotional connections with products and services, then we consider everything from price and quality, to the environment, what the buying process is like, or even whether we like the salesperson to justify that choice.

However, when we are selling, the buyer doesn’t give us as much feedback about those qualitative measures (like how they like the buying process, or how the suit you are wearing makes them feel more at ease), as they will about the “hard” measures of price and quality.  The buyer wants us to believe that those are the only factors. Yet, every day your clients choose to do business with people who didn’t bring them the lowest cost bid or the highest quality product.

If you want to find a market where you can sell premium-price offerings without beating your head against a wall of competitors, then narrow your focus. Find a market niche in which the quirks and differences that your company have are exactly what they want.

First, we need to identify one or more target markets. What is your business best at? What type of prospect could walk into your business and you would be 100% confident that you could help them? Each of those could lead you to your target market. One great tool that can act as a guide is a simple Venn diagram with three domains:

  • Work that you love to do
  • Work that you are great at
  • Work that pays well

The intersection of these three circles is your ideal engagement.

Once we’ve identified a target market, we need to define their buying criteria. Unfortunately, prospects can’t usually provide this data in response to direct questions. Imagine asking a middle-aged guy to describe his ideal hair-cutting experience … would he have even imagined a place like Sports Clips? The best ideas come from observing clients and prospects as they work with a service provider. While you are observing them, ask yourself:

  • What bothers you about this?
  • What is great for you about this?
  • How can we make this experience more customized to your concerns and motivations?

Fortunately, you are probably working with many of your target clients right now, so you can conduct this research by listening to your own clients and observing them as they buy other services or products.

But, some of your clients may not be your target clients. Maybe you are attracting too many small clients, or clients with problems that you aren’t excellent at solving. This is a more difficult challenge! Once you identify what you’re doing that’s attracting these less desirable clients, can stop doing it. Many times, what is attracting the less desirable clients may even repel the more ideal clients.

This doesn’t mean you a have to turn business away from less ideal clients. But as you seek new ones, act in the way you believe will attract the more ideal client.

Lastly, align your processes to that ideal market. Having identified some unique customer needs, make an effort to consistently and regularly communicate that insight and how you are different to the marketplace. Don’t be afraid to say, “Where other firms like us do things this way, we do them this other way.” Be different.

If you are successful in honing in on a path to your target market, it can pay big dividends for your business. As the percentage of your prospects that fit that ideal profile go up, you will be closing more business – more profitable business, that is. You will have more confidence going into meetings with prospects, knowing that your expertise can help them. Ultimately, your sales process will become more efficient so you are spending less time selling and more time leading your business. Now that’s a target worth aiming for!

Photo credit: shioshvili

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