One of the best parts of strategic planning/thinking is that it allows you to break from the past. Strategy work isn’t mired down with “what was” or “what has been,” it’s anchored to “what could be” or “what you’d prefer it to be.” In other words, just because you’ve historically gone after a specific target market, doesn’t mean you have to continue going after that same market.
In fact, switching or narrowing a target market may be exactly what you need to get your business (or organization) back on a double-digit growth curve. My favorite example of this is Kimberly Clark, which for decades was a paper company selling B2B. In the 70’s, as they saw margins for paper getting thinner and thinner, they decided to abandon the paper business and get into the disposal diaper business (a B2C model), and the rest is history.
On the other hand, sometimes it’s narrowing your market/niche down (vs. changing the market altogether) that’s required. For example, if you ask the average sole practitioner attorney what kind of legal work they do, they’ll often say, “Whatever work you need me to do!” The problem with that kind of answer is that when you’re for everyone, you’re really for no one. A better answer would be, “I’m a M&A attorney who helps owners of mid-size tech companies acquire smaller tech companies in order to rapidly fuel their growth.”
So, as you’re thinking about this question, here are a few guidelines to consider
1. Own That Narrower is Better
One of the biggest hindrances to narrowing a niche is the fear, “But then I’ll be losing business.” Well, guess what, you’ve already done that. No business is really for everyone. As wonderful as Apple is (and I’ve been a fan since 1982), not everyone has a mac. Their decisions about price, design, distribution, software, etc. have caused more than 89% of the market to say, “No!” In fact, my brother and father have both sworn to never own a mac :-). Yet, that 11% market share (plus their other revenue streams) makes Apple the most valuable company on the planet.
Similarly, you’ve made decisions about your business like where you’re located, where and how you market your services/products, what your price points are, how you’ve designed your products/services, etc. which have caused plenty of people to say, “That’s not for me.” So, first things first, you already behave as though narrower is better. The only question remaining is, “How narrow a market should you own?”
And for that, the answer is, “Who gets paid more, the specialist or the generalist?” Now, there’s nothing wrong with being a generalist. In fact, we all occasionally need a general practitioner as a physician. But the physician who really makes the money is the specialist who only does orthopedic surgery on rotator cuffs and elbows for professional baseball and tennis players.
So as you look at your target market, is it narrow enough?
If you’re having trouble narrowing, you might want to …
2. Try the Rule of Threes
Threes work for all kinds of things. If I say, “There are three things you need to know …” you’ll remember them far more than if I say I have a list of 22 ideas you need to implement to grow your business. Or, historically, we have statements like, “Of the people, by the people, for the people.” Or, you could take Julius Caesar’s famous, “Veni, vedi, veci” (I came, I saw, I conquered) and remember that threes just work!
Well, the same thing can happen with a niche. Take whatever your niche is, lets say, “Health and Fitness.” Now, take that and try to narrow it down three times. For example, you could say, “Exercise” is narrower than “Health and Fitness.” You could then do that a second time and say that “Kettle ball exercises” is narrower than “Exercise.” And then for the third round, you could say that “Kettle ball exercises for golfers” is narrower than “Kettle ball exercises.”
If you’re in the document management world, you could go after everyone who needs documents scanned and stored in the cloud, but you could also narrow it down three times. For example, you could go from the general market of Health Care to Hospitals to Rural Hospitals to Rural Stand Alone Urgent Care Centers (which is far more focused a group than simply “Health Care”).
So, using the rule of threes, is there a narrower niche/market that your business could become a or the dominant player in?
3. Evaluate the Opportunity
As with anything else in the strategy world, not only do you have to be honest with yourself, you have to evaluate the potential outcome of any strategic change/decision—which, by definition, narrowing or changing a target market would be.
To help you do that, here are a few questions to get your started.
1. Is this market, GROWING, stagnant or declining? (Note: If it’s not growing, it’s probably time to bolt or avoid)
2. Will this market be willing to buy/invest at the PRICE POINTS you’re offering to meet your financial goals? (Note: If not, move on)
3. Is this market strong enough and BIG ENOUGH to support your business for the next three to five years? (Note: forget 10-20 years. None of us in the strategy world think in terms of 10-20 years any more. The world changes too fast.)
4. Can you EASILY and profitably reach sufficient numbers of people in this market/niche? (Note: If you can’t easily market to the people in a niche, find a different niche).
5. Do the members of this niche/market have a clear and obvious/URGENT problem that they WANT solved that your company has the solution to? (Note: If the need isn’t urgent and/or they don’t want to solve the problem, it’s not worth trying to convince them they should, move on).
Now, obviously, we could spend hours and days on this topic, but at least these three ideas should get you moving in the right direction. If you want to grow your business faster, one of the key strategic decisions that can often fuel that growth is related to changing the market you’re going after.
So, are you going after the right market? Or do you need to narrow it? Or do you need to completely change it?
Remember, who you’ve been does not have to equal who you’re going to be. Just because you’ve gone after a certain market in the past doesn’t mean you need to stay there. In fact, a change in market just might be exactly what you need.
To your accelerated success!
P.S. If you have some other ideas on how to narrow your niche, make sure you add them to the conversation below (or click here >> if you’re reading this by email or RSS feed)