A niche is a distinct business focus that allows you to achieve your goals by narrowing your area of specialization.
To create a well-balanced niche, you can consider 5 aspects of a good marketing strategy. Keep reading to find out what they are.
All About that Niche
I believe that business owners who choose to specialize and establish a narrow focus become much more successful than those who use a broad approach.
A niche, which means nest in Latin, is an environment that creates the best outcomes for your Ideal Customers, as well as the highest net profit for you.
Creating a niche marketing strategy can benefit your business in several ways:
- A niche serves very specific, unmet needs of a customer market.
- A niche offers well-defined solutions (services or products) that match customers’ needs.
- A niche provides a targeted and comfortable environment for customers.
- And a niche allows you (the business owner) to feel excited and satisfied.
There are many dangers that can happen when you pick a specialization. Here are 5 things to keep in mind as you navigate this decision-making process.
The 5 Elements of a Marketing Niche
To help you determine whether you’re in the right niche, consider these questions:
- What kind of competition do you face in your market?
- Does the specialization feel satisfying both professionally and personally?
- Can it generate a high profit?
- Does it solve a practical need for your customers?
- Is this niche something which customers want to pay for?
I’ll delve into each of these below.
1. Minimal Competition
How competitive is your industry?
Do you have a large number of competitors?
How successful are these businesses, and what are they doing differently?
What are you doing to stand out and connect with customers in a unique way?
To succeed in a crowded market, you only have 3 choices:
- You could do the work faster than everyone else.
- You could lower your prices (which I never recommend, since it is nearly impossible to compete solely on price).
- Or you could offer better quality.
The problem with these options are that they inevitably result in a lop-sided business. As you can see from the Tradeoff Triangle below (which is my version of the Project Management Triangle), any project is limited in three aspects: by time, by cost, and by quality.
We can only focus on 2 of any 3 sides at a time. Whichever two things we focus on, the opposite attribute will suffer.
The three aspects you can control in your business are whether you offer services that are Fast, Cheap, or Good.
You can realistically do 2 of these well, so:
- Fast + Cheap = Low Quality
- Fast + Good = Expensive
- Cheap + Good = Slow
- Fast + Cheap + Good = Scope Change (your customers need to change their expectations, or you must offer additional value).
Instead of trying to attract customers with the lowest price or the highest quality, consider a market segment where there is less competition.
This could be a particular group of buyers who aren’t happy with the services that are available.
It could be a group of new buyers, such as Gen-Z (older teens and young adults).
Or it could be a group that is looking for a solution (such as specialists in children’s food dye allergies [which—hint, hint—is something that thousands of parents are looking for!])
In the healthcare market, there are endless possibilities of under-served markets that larger institutions tend to overlook, such as:
- specific disease types (thyroid conditions, lupus, fibromyalgia, etc.),
- specialized modalities and techniques that are not as common in your area or field of practice, or
- a virtual or house-call delivery method that nobody else is offering.
2. Professionally and Personally satisfying
Secondly, a specialization needs to feel great to you.
Not only must your niche be in an area where you have qualifications and training, but it also needs to give you some sense of satisfaction from delivering the service.
Many healthcare professionals invest years of their life, and hundreds of thousands of dollars on their education, the startup costs to begin their practice, and the overhead costs (of which staffing is the largest)… only to realize that they absolutely hate getting out of bed each morning.
Your business is an extension of your own dreams, ambitions, and abilities… but if it does not make you feel satisfied, then it can affect your mental and physical health. If you feel like your business is crushing you with a load of regret and self-doubt, it is time to re-assess whether your marketing strategy is working. (Give me a ring to find out how to do this.)
Perhaps your business isn’t choking you, but you’re not quite seeing results year after year. If so, it may be time to assess your profitability, which comes next.
3. High Profit Potential
Does your niche generate a high enough profit to reach your ultimate goals?
I recommend that you start by making a list of every service you offer. Calculate the total cost of the service (which includes all expenses needed to serve the customer: overhead, materials, personnel, your salary, billing services, equipment costs, advertising, handouts, etc.).
Once you know the costs, subtract this number from the total sales you generate for each service.
Then divide the difference by the total sales. You will get a decimal, which you can convert to a percentage for the Profit Margin of that service.
Here’s what the calculation looks like:
(TOTAL SALES – TOTAL EXPENSES) / TOTAL SALES = PROFIT MARGIN
The final number is your profit margin, which is a percentage that represents how profitable your business really is. The total sales may be high, but that does not mean your business is actually doing well. If your profit margins are just 5%, you will likely be facing serious problems.
Consider whether the current focus of your business has the capability to generate more profit. What can you do to stay competitive?
Often, marketing experts recommend offering discount tactics like price-cutting and Groupon offers. The idea is that a discoutn will attract customers.
But the biggest problem with a low-price focus is that, as we saw above with the Tradeoff Triangle, price comes at the cost of either lower quality or faster turnaround time.
It’s nearly impossible to please customers when they are looking for a discounted service, especially if you aren’t charging enough to sustain a profitable business in the first place. I call these discount-minded buyers 80/20 Customers, because they demand 80% of your time and resources, while only providing a minimal amount of profit (if any).
Instead, consider which services are generating the highest profit, and how you could increase the margins.
What could you offer that customers believe is of very high quality, yet costs you little to provide?
Where can you cut expenses back? What would happen if you increase your rates?
Once you start thinking in terms of profit margins, you will find it much easier to adjust your cashflow and generate more profit from each transaction.
4. Solves a Practical Need
The fourth element of your niche involves solving a problem.
There is no point creating a service or product if you can’t get anybody to buy it, or if your potential customers don’t see a reason to invest their hard-earned money.
I call this the Field of Dreams Mistake.
In the 1989 sports fantasy drama Field of Dreams, an Iowa corn farmer named Ray (played by Kevin Costner) hears a voice telling him to build a baseball diamond on his property.
The voice says “If you build it, he will come.”
Ray invests his life savings and alienated his friends and family, all in the hope that his crazy dream might become a reality.
But while putting all your money to pursue a dream may work in the movies, it does not pay off for most business owners.
The “Field of Dreams Mistake” happens when we focus on the end result because it’s fun to do, rather than looking for the simplest and most effective way to eliminate a buyer’s pain or discomfort. As much fun as it can be to offer services you enjoy doing, this may not result in a functional and well-rounded business.
What is the simplest way to solve problems for your Ideal Customers?
I also encourage my clients to think about not-so-enjoyable services… the ones that few other practitioners want to deal with, but which patients suffer from nonetheless.
On the popular TV show Dirty Jobs, Mike Rowe shows how important it is to offer necessary services, even if they are unpleasant.
Mike has said,
Dirt used to be a badge of honor. Dirt used to look like work. But we’ve scrubbed the dirt off the face of work, and consequently we’ve created this suspicion of anything that’s too dirty.
– Mike Rowe
There’s a lot of money to be made in unpleasant tasks. Just throwing it out there.
5. Strong Market Demand
Finally, a great niche is one that is built around the demand in your market.
People want things for a variety of reasons, but we are all motivated by two things:
- a desire to feel Satisfaction (to feel better, achieve something, or hear praise), and
- a desire to avoid feeling Dissatisfaction (not wanting to feel pain, rejection, loss, or other fears we all share).
In healthcare, patients often seek both of these things in their desire to improve their health. They may want to be heard and have a comfortable experience in your office, as well as to relieve the pain or discomfort that brought them to you in the first place.
The more quickly and thoroughly they can get back to full functionality, the happier the patient will be.
However, the path to communicating the benefits and reasoning for your particular services can get murky. You may not be reaching patients who are the best fit for your expertise. Or they may have unrealistic expectations of the outcomes from treatment.
When patients are confused or don’t quite “get” your methods or message, they tend to find another option to get relief… even if that option isn’t as good.
Make sure your area of specialization is in an area that has a high patient demand—meaning that your target audience is aware that a problem exists, and that YOU are the right person to solve it. To do this, you need to have clear goals for your practice, a defined area of specialization, and connect with your Ideal Patients.
If you set up shop around an area of the market with very little demand (something obscure like “Crustacean Tongue Therapy”), you’ll end up being a highly qualified and trained business owner… with an empty waiting room.
I hope you have enjoyed this overview of which 5 elements are important when choosing a niche specialization:
- Minimal Competition
- High Profit
- Practical Need
- Strong Demand
If you want to know whether your marketing strategy is working, I’d love to talk. Sign up for a free 30-minute consult with me today, or check out my services here.
Grace LaConte is a Strategic Niche Marketing Expert who helps healthcare practice owners to develop a high-profit specialization in a crowded market. Using her experience as a Risk Officer and Marketing Director for hospitals and IT services, Grace shares a refreshingly honest approach to uncover hidden risks and opportunities. Learn more at laconteconsulting.com, or connect with her on Twitter @lacontestrategy.