Business Operations

Supercharge Growth by Focusing on the Niche

Supercharge Growth by Focusing on the Niche
 

Marc Weiner discovered the power of focus when he first went looking for clients for his business-consulting firm. He sent out 15,000 written invitations to a seminar, but only 60 people showed up. After spending months and approximately $30,000 on the campaign, he yielded just a dozen or so clients. “That’s when I decided to completely reverse the process,” says Weiner, managing director of Niche Creator Pro LLC of Virginia Beach, Virginia. “The next time, I was very focused. I spent about $2,000 to acquire my next 10 or 15 clients.” He even changed the name of the company, originally Empowerment Associates, to communicate exactly what the firm does.

He also discovered that many businesses make the same assumption he had.

“Most people think they will make much less money if they build their business on a focused niche when, in fact, the opposite is true,” he says.

A business that emphasizes the impact a product or service can have on a customer’s specific challenge will inspire more loyalty than one that attempts a one-size-fits-all approach. The company-customer relation- ship has a strong foundation because customers feel under- stood before they even make a purchase.

For example, a shoe company that focuses on a specific purpose, such as golf or running, will more easily attract customers than one that doesn’t, Weiner says. However, a company that’s even more focused and sells running shoes with a specific benefit, such as preventing foot pain, will find potential customers are especially motivated to buy because they want relief.

A clear focus can help midsize businesses leverage their size and serve as an advantage over larger companies. Rather than attempting to be everything to everybody, they simply need to trust that their own best customers will guide them to growth, says Bob O’Connor, a marketing consultant based in Memphis, Tennessee. The key is understanding that the most loyal 20 percent of customers drive 80 percent of any company’s profits, he says.

“Understand your most loyal customers, and understand what adds value to them and what doesn’t. And
a lot of things companies do add no value
to their best customers.”–Bob O’Connor

“Businesses must find out, ‘What is it about our products or services that delivers value to our top 20 percent most loyal customers? And what doesn’t?’ Then the businesses must do more of the former and get rid of the latter, even if customers outside the top 20 percent complain,” O’Connor says.

One way to add value for loyal customers is to track how offers affect their purchases. In this process, O’Connor cautions against emphasizing how many new customers the offers generate. “Most new customers won’t be loyal. They’re price shopping, or they’re in the market one time, for example. Of course, getting new customers is important, but it’s getting loyal customers that really grows a business.”

To grow their customer base, businesses should seek out people who are just like those in the top 20 percent but not yet customers. Over time, these practices build moats around highly focused businesses.

Specialized businesses can charge higher prices and even reduce competition and marketing expenses, Weiner says.

“You may find you end up with little or no competition because not as many people are focusing in on the specifics that you are,” he says. “When you are known for what you’re good at, people will begin to come to you by referral, and you don’t have to keep throwing out marketing strategy after marketing strategy to see what sticks.”

For more information on competitive strategy, read our complete guide. Or contact your SunTrust banker today to learn more about the resources available to you to support your strategy and strengthen your market share.

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