There’s no magic formula to settling on which niche to target. I often get asked about whether I think selling to a specific market, or niche, makes sense, and the truth is, I wish I had this type of crystal ball. I could make A LOT of money if I did.
How To Determine Your Niche
Determining what market to go after is a decision that you need to make. I can’t give you the right answer about choosing your audience, or even promise that you won’t change your mind later once you finally choose one. (I’ve yet to meet one entrepreneur that fell in love with the first audience they identified and stopped there.)
I am certain of this: it’s more important to make a decision and start working on the 5-A Framework than to sit in inaction.
More than knowing who you serve, identifying an audience gives you clarity and direction when you wake up in the morning. And that clarity will help you invest with precision in marketing activities that put you in front of your ideal customers. So how do you identify a good one?
In my last blog, we split the market into four levels as they relate to your audience. Today, I’d like to share more about the third level, the customer segment.
Choosing a Good Customer Segment
As you think about which customer segment to target, ask yourself these questions:
- Can you easily reach this customer segment through existing ‘market infrastructure’ like blogs, podcasts, associations, and events?
- Does your target segment have compelling problems, opportunities, or needs?
- Do decision-makers in the segment have money to spend?
- Are decision-makers willing to spend money to solve their problems?
- Are there enough potential sales in your segment to support your business over time? (In other words, is the segment large enough?)
- Is your target market so large that you can’t effectively communicate with them? You want them to see your message multiple times.
- Can you compete to win customers?
- Is there too much competition?
- Can you own your market in the segment?
- Do you want to own your market in the segment?
- Can you develop repeat business?
Answering these questions will help you decide whether the customer segment you’re considering is a good fit. But if that’s too much for you, pull it back and consider these three questions:
- Where is the money? – Does your customer segment have money? More importantly, are you going to go after it?
- What captures your interest? – Notice I didn’t say what you’re “passionate” about. Passion is something that can grow when you’re interested in your work, and you’re getting results for your clients. But do you have an interest in this segment? Are there things about it that seem interesting to you?
- And what kind of results can you demonstrate? – If you’re looking at a customer segment, but you really can’t provide them any kind of results—or nobody wants or needs the results you can provide—then that’s a big problem.
Looking for Market Infrastructure
Now, before you go charging into a customer segment, there’s one more factor that should weigh before deciding whether it’s a good fit. Every good audience has existing “market infrastructure” you can tap into—events, publishers, associations, influencers, complementary businesses, and competitors.
You want to pay attention to that infrastructure because your customer segment is going to end up finding out about you in one of two ways: either through referrals/word of mouth, or because of whatever marketing and sales techniques you’re using to reach out to them.
Yes, referrals and word of mouth are great, but building your own audience from scratch so you can market and sell to them is a time-consuming proposition. Why reinvent the wheel? Instead, look to the infrastructure in your market.
Malcolm Gladwell, the author of The Tipping Point and other books, popularized the idea that every audience has “connectors” and “super-connectors.” These are generous social butterflies who freely connect their friends and colleagues with others who can help them.
When you find these connectors and super-connectors, you can simply “snap in” to their existing audience and leverage the power of the work they’ve done before you—instead of painfully building your own audience over many months or years.
Tapping into someone else’s audience can help your business get into the fast lane and help you overcome the “feast or famine” cycle that often accompanies referrals and word of mouth.
And that’s where market infrastructure comes in. When you deliberately connect with your audience where they are, you can build a pipeline of interest, an email list, and fans more easily.
For example, if I were looking to get access to lawyers in my market, I could pay a relatively small fee to attend an event or conference put on by my state’s Bar Association. This small investment could put me in the room with hundreds—or even thousands—of my ideal customers.
Compare that to the decades it has taken those Bar Associations to establish themselves as authorities in their markets. I imagine they’ve spent millions of dollars and countless hours building up lists of lawyers and convincing those lawyers to attend events. And all you have to do is pay a small registration fee, and you can get in front of them!
Being able to leverage this kind of market infrastructure for your business is crucial to success in a customer segment. So, ideally, you should be able to do an hour or two of online research and easily find “proof of life” within the segment you’re considering:
- Software providers
- Complimentary service providers
- Events and conferences
You might not find all of these easily, but you should be able to find at least some of them in order to green-light a customer segment. If you can’t, perhaps you’re thinking about your segment differently than it organizes itself, so it’s back to the drawing board.
In my next blog, I’m going to go more in-depth on one of the marketing levels of your audience: Your Ideal Customer. Knowing who your ideal customer is is critical to understanding and speaking to them.
In the meantime, I’d like to invite you to check out my new book, Get Rich in the Deep End, where I dive deep on each of the 5-A’s. It’s a great way to get started on the path to owning your market. I look forward to connecting with you then!