Let’s start with the most basic of the fundamentals: The goal of a business is to provide a product or service in exchange for money, optimally taking in more money than it costs to provide the good or service (you know…making a profit).
In pursuit of higher profit margins, businesses tend to specialize in just one or two things. Any variation will likely be in the same sort of category.
- Titleist makes golf balls and other golf-related gear.
- Michael Jordan will never be known as a baseball player – his specialty is basketball.
- Your gym probably doesn’t sell pet food.
Because nobody can be the best at everything.
And there’s only so much time in life. Businesses and people are at their most efficient when they’re utilizing their resources effectively. And a business’s most valuable resource is its people – it all comes back to the people on your team and what your team, collectively, knows.
You hired them for their expertise. Don’t have your graphic designer trying to operate a forklift. It won’t end well.
Scratch that Niche
And yet, this is just the sort of thing we see all the time. Agencies will show us their portfolio, and it’s all over the place – manufacturing, banking, restaurants, a barbershop…
It’s Cool If You’re Still Finding Yourself
Working with a lot of different industries is perfectly fine when you’re getting started and gaining experience. You have to start somewhere.
This sort of diversity in your portfolio early on can work like the first two years of college. You get to try a lot of things to figure out what you like, what you excel at, and what projects tend to bring in the most profit.
After that, though, you need to wedge yourself into a niche to truly grow your digital agency or any business.
When you’re a jack-of-all-trades, you’re competing with everybody.
And everybody includes agencies with proven track records for each different industry you try to take clients in.
You can argue that, no matter the industry, a website is a website is a website. However, clients have industry-specific needs, such as compliance considerations and integrations, which they feel more comfortable trusting to a digital agency which has developed an expertise in meeting those needs.
Niche Marketing Is Targeted Marketing
We’re not talking about just aiming your marketing weaponry in a general direction. Once you’re established in a niche, it’s like firing high-tech, automated guided marketing missiles at high-dollar target clients.
Non-specialized agencies are reliant upon targets of opportunity; niche agencies can actively ensnare and draw clients in almost at-will.
Of course, being focused on a niche doesn’t mean that you can’t take projects from other industries. If a client comes your way from elsewhere, that’s great! But your marketing will be more effective if you’re able to corner a section of the market for yourself.
If you are the only – or the dominant – agency for healthcare-specialization in a sizable region, then you’ll be able to secure consistent, profitable work for your agency, which ensures that your team has adequate work and compensation to keep them happy. More skilled potential team members and clients with open wallets are drawn to you. Suddenly, even a truckload of RoundUp can’t stop your growth!
Expensive Restaurants Have Small Menus
Specialization Breeds Expertise And Consistency. If you’ve never watched Gordon Ramsay’s Kitchen Nightmares, one of his most common critiques (well, of the legit, non-insult critiques) of these places is the size of their menu. Generally, a large menu means that the staff needs to know more and more techniques, which become increasingly obscure as items are less frequently ordered. Quality goes down and you can’t up your prices because everything is mediocre.
A slimmer, more focused menu means each item is truly perfected. You can use higher quality ingredients because you don’t need to throw away food no one orders. On top of that, you don’t waste time constantly training staff to prepare and serve a hundred options. Your business might not be as tasty, but it’s metaphorically the same.
The same thing applies for digital agencies. Think about the time it takes to set up projects:
- Scope of Work
- General team knowledge
- Compliance issues
- Industry standards
All of these are things that need to be considered when setting up for a new project. If you only ever work three or four types of projects in the same industry, or in adjacent industries, then setup takes a lot less time than if you typically hop from healthcare to automotive to government to public transit to whatever else. For each of those, you have to research a new industry. But with a streamlined focus, your cost of doing business is lower, which means that you can pass on savings to your client and still make more profit.
Your Niche Is A New Frontier of Opportunity
Most people think of niches as constricting. This is because you’re typically cutting things out as you niche down further. However, each niche is a microcosm of opportunity. Once you’re really in your chosen niche, you begin to find that there are a bunch of other businesses and opportunities down there.
In reality, your market expands.
For instance, if you decide to focus on restaurants, think about how many there are in your city. Think about how many there are in your state. If you can secure just one percent of the restaurants in your state, then you’ve won. That is a huge amount of money.
So don’t think about the nail salons you’re losing out on. Think about how you can expand within your niche, and you’ll have found the secret of success. You will never run out of business.
Unless you manage to create a bad reputation for yourself (don’t do that). But that’s a topic for another day. Thanks for reading!
As always, we would love to hear from you in the comments. What is your niche? What challenges have you run into while trying to establish yourself in a niche? How is your niche contributing to your evil world domination schemes? Let us know!