Narrowing your focus to a niche market helps your business find better customers.
Starting a business is an exciting time, and it's understandable that you want to introduce your new company to the world and believe that everyone – young or old, male or female, urban or rural, you name it – needs what you're selling.
As a small business owner, it's important to feel enthusiastic about your business and confident about what it has to offer, and you need to be the No. 1 evangelist for your business. But believing that everyone is your customer is counterproductive, because you'll spend a lot of time, energy and money trying to reach people who just aren't interested.
Think about some of the country's biggest companies. Though they're wildly successful and have very broad customer bases, even they can't claim "everyone" as their target market. Walmart, for example, focuses on budget and convenience shoppers, promising "everyday low prices" to deliver on its tagline to help its customers "Save money. Live better." Although it has more than 4,000 stores in the U.S. and sells groceries, electronics, clothing and nearly everything else you need to run a household, it doesn't carry high-end or luxury goods because that isn't what its target audience is looking for in its stores.
Just as everyone is not Walmart's customer, everyone is not your customer. Here's why that's OK: You can't please everyone. But there are people you can please, and once you figure out who they are, you've found your niche. The problem with trying to appeal to a too-broad customer base is that you can't possibly meet every need. Narrowing your scope to your actual and potential customers takes the pressure off "being everything to everyone" so you can focus on delivering the products or services that your real audience gets excited about.
Who is your customer?
So, if "everyone" isn't your target customer, how do you figure out who is? If you already have customers, you can analyze your customer data to find commonalities. With this information, marketing experts recommend creating buyer personas – fictional characters who represent your ideal customers.
Although they're fictional, their qualities should be based on your actual customers. In addition to demographic information, you should include details about them that give you insights into who they are, what they want, what challenges they're facing, what problems or pain points are driving them crazy, and why your business is a good resource for them.
Writing for Inc., MemberPress founder Blair Williams says to learn more about your niche market, spend time in the online forums and groups they use to find out what questions they're asking or what issues they're dealing with, and dig into social media to find out "what your audience is buzzing about in real time."
Alexa's marketing manager, Jennifer Yesbeck, provides additional tips for learning about your ideal customer and suggests interviewing your existing customers, asking your sales team what trends they're seeing in the market, and analyzing data from your POS system and web analytics.
After you identify your ideal customer, here are three things you can do with this knowledge.
1. You can narrow your marketing efforts.
Recognizing that everyone is not your customer frees you from chasing unprofitable leads. In a recent survey conducted by sales strategist Marc Wayshak, 71% of the nearly 400 salespeople surveyed reported that "50% or fewer of their initial prospects turn out to be a good fit."
Identifying your target buyers helps you pinpoint which prospective customers are good fits for your brand, so you can stop wasting your sales and marketing resources on people who have no interest or need for what you're selling.
Also, once you know who your customers are, it's easier to connect with them, because you know where they are and what they want. Yesbeck writes, "When it comes to marketing, if you're trying to talk to everybody, you're going to have a difficult time reaching anybody. Vague and generic messages are far less likely to resonate with audiences than specific, direct communication – which is why targeting in marketing is so important."
So instead of addressing your "everyone" customers in broad, vague terms, you can speak directly to your target customers and get into the nitty-gritty details that show them you understand their needs. Instead of guessing about the type of marketing strategy that will be the most effective, you know the best way to reach them – whether that means creating content that resonates with them on their preferred social media channel, running an email campaign, or following up with them on the phone or in person.
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2. You can become a specialist in your industry.
Knowing exactly who your customers are and how your business meets their specific needs and wants allows you break away from the pack and become a specialist in your industry. This is your competitive edge.
Chances are good that you're not going to be able to beat the Walmarts of your industry on breadth of product or service offerings, nor do you have the sales volume needed to win a race to the bottom. But you can offer specialty products or features that aren't available elsewhere – such as those that are suitable for enthusiasts or professionals – or a quality of service that isn't provided by other companies.
"When you specialize, you're able to provide your target market with a superior value proposition over companies that generalize in a related field," writes author and business consultant Larry Alton in an article for Forbes. "You essentially become a bigger fish in a smaller pond, as opposed to the other way around."
The advantage to this – having a unique selling proposition – is that you're no longer competing solely on price. Granted, pricing will always be a key factor for consumers, and this isn't to say that you can't include basic items in your mix or that you shouldn't strive to be competitive in your pricing, but when your business brings extra value to its offerings, you have more leeway with pricing.
A good example of this is the healthcare industry. General practitioners see patients with average health complaints, but specialists serve those that have more complex health issues. Because they have greater knowledge of their particular field and specialized skills, they can charge more for their services. Likewise, when your business is a specialist in your industry, you can charge more for your services or hard-to-find items than if you go head-to-head against mass-market competitors.
3. You can adapt as your customers' needs change or grow.
Once you're no longer selling to "everyone," it's easier to keep up with your customers as they change and adapt your offerings to anticipate their future needs. It's rare for an industry to remain stagnant; knowing your customers helps you pivot in the right direction as industry trends come and go, technology evolves, or your customers' needs advance or change.
"Maintaining the status quo will benefit you for a period of time, but it actually won't work for very long," Alton writes. "From Amazon and Walmart to Netflix and Apple, even the world's most successful organizations are forced to shift with the ebbs and flows of the marketplace."
Understanding your customers and their needs also helps you identify how to expand as your business grows. For instance, this may mean bringing on more employees so you can offer additional customer support services or investing in research and development so you can launch new products or add the new features your customers have been requesting to your existing products.