10 Reasons To Target A Niche Market With Your Online Business
A hugely important aspect of opening an online business is deciding what industry you'll service, and who your customer will be. Competition is fierce online, and it might at first seem like every possible business idea is already being done by someone else. But don't get disheartened so easily! Once you realize that even the smallest niche can have a market online, and how to find and research that niche, you'll understand that there's still plenty of space for your brand new business online.
You simply need to focus, laser-like, on a specific niche and exploit it properly. Below you'll find the 10 top reasons we believe going for a niche market is your first step into online mastery.
Targeting a specific niche will allow you to know exactly who your customer is: their demographics, preferences, and where they're likely to be hanging out online. This will help you greatly in building a website and products/services tailored to their needs, resulting in satisfied customers.
For example, if you know that your target customer is young male adults with college educations, you might want to tailor the voice and personality of the written text on your website to the way these people talk and interact with one another. Choosing the correct voice for your website can mean a huge boost in sales.
As a direct result of knowing your customer, you should now be able to target marketing and advertising efforts very efficiently. Whereas if you were targeting "everybody" it would be very difficult to decide where to advertise, what marketing material to use, and what the possible results of your efforts would be - going niche means all these decisions are pretty straightforward.
An online store selling women's perfume might target online beauty magazines, use marketing material that speaks directly to women and their various needs and hangups. A business selling wigs for balding men would easily be able to find the key players in the field, be it blogs, health-related websites and hair experts, and solicit their help by way of advertising, referrals and the like, to help grow the business.
When you take a niche-centric approach to your business, your customer automatically becomes the driving force behind product decisions. It makes practically no sense to create a product and then search for a niche who will buy it - it might not even exist! By making customer feedback and constant improvement an important part of the product/service lifecycle you ensure that you meet the exact needs of your customer.
For example in recently years there have been many complaints about the spraying of pesticides, poisons and the like by farmers on the food they grow in order to get rid of pests, make the food look larger/better colored, etc. The organic food niche has grown around the large demographic of people who prefer their food without these poisons, and are willing to pay more money to eat healthier.
Tailoring your business to the needs of a niche market means you will be able to build relationships with your potential customers, improving your products and services as a result of direct feedback, and improve your customer service. Over time your customers will learn to rely on you and purchase repeatedly from your business as you gain their trust and confidence.
The ROI from your marketing efforts will skyrocket when you take into account the lifetime value of each new customer, and not just their initial purchase.
Here's an easy question: would it be cheaper to put a one-page advertisement in the New York Times, or in a magazine tailored to Home Decor? I think it should be obvious that the Times will have all sorts of people reading their articles - anyone interested in the news in fact, while a home decor magazine readership will be mainly people who are currently interested in renovating or furnishing their home. This principle can be applied to any niche - when your advertising targets the specific people you're looking for and cuts out all the fluff, it will be cheaper and the ROI will be much higher.
There's no point in being greedy and trying to get everyone to be a buyer - focus on the high value targets first, and once you're making money you can expand you advertising's reach.
At the end of the day your business is about profits. I mean, that's why you decided to open up shop in the first place, right? Going niche is all well and good, but what will be the effects on the bottom line?
Well, if we take all the other points provided in this article, like lower advertising rates, higher conversions and ROI, lifetime customer retention and the like, it becomes plainly obvious that our profits are going to be much larger. Since we're tailoring our business to the unique needs of individuals, we can also charge more for our tailored solutions, and thereby increase profits as well.
Have you ever noticed that people naturally gravitate towards well-known brands, even if they aren't necessarily the best company out there? This is a psychological reaction and is an effect of "herding", meaning people will always prefer to go with what is popular out of a belief that others cannot be wrong in their choices.
You too can use branding to your advantage by becoming well known in a small niche, getting to know the experts in the field, and building your website with a strong identity that will be remembered. People will not only prefer to associate with your brand in this way, they will also feel more secure in referring friends and family, and returning to buy over and over again!
One of the main reasons to target a niche is that you're looking for unexploited business opportunities where the competition will be small to non-existant. As you probably know the internet has become saturated with online businesses, and large brands are starting to take a huge piece of the online pie. It would be foolish to try and go toe-to-toe with the likes of Amazon.com and Ebay, but if you target a smaller niche where these big businesses don't play, you'll find a lot of breathing room and opportunities which would otherwise have gone to the big boys.
Remember: it's better to be a big fish in a small pond then a small fish in the ocean!
One thing to beware of is finding a niche with no competition at all. You might have stumbled onto an opportunity that noone has yet thought of, but the more likely case is that others have tried and failed to penetrate the niche (or perhaps have discovered that it's too small or unprofitable to go for). Research is your friend, and you should make doubly sure that you have, in fact, discovered an opportunity and not a red herring.
When starting an internet business, the first thing you should do is research. You need to research your competition and how strong their brand and business is, you need to research your target market, which keywords they use to search for the products/services you offer, and you need to research pricing and ROI. This is a complicated step in itself, but it becomes infinitely easier once you focus your efforts on a specific niche. You will know where the people who will buy your product hang out, you will know who your competition is and how well they are doing, and you will know what the markup for your products are and how much you are expected to earn.
Never start an online business (or any business, actually!) without a good amount of research that will help you convince yourself and potential investors of the feasability of your business, as well and how to capture your target audience.