Niche Marketing, and Creating “Profit Loops”
The image above is one of the case studies from my slide deck.
I usually tell the story in the image above as an example about how testing a headline can improve your sales. (It’s one simple tweak I can make to a client’s website that can immediately lead to a 5% to 80% increase in sales.)
But the REAL story behind this is about the power of niche.
At the time, the client (Joshua) was running a website that sold information about relationship skills.
He’d already established a foothold in the relationship skills market – mainly working with men. But he understood the value of customer segmentation and niching, so he set up a separate page for women.
At this point, he tested seven headlines that might appeal to men, and seven headlines that might appeal to women.
The headlines tested for the “men’s” page did not increase signups. (His site was already selling to men pretty well. So it’s no surprise that he couldn’t find a better headline than the one he was already using.)
But the headline tested for the “women’s” page led to a HUGE spike in leads.
With this one tiny tweak, Joshua was suddenly getting 24% more customers than ever before!
And he hadn’t paid an extra cent towards his advertising budget.
Is Niche Really Worth The Effort?
One of the big reasons why people don’t niche is because it’s perceived to be far more effort.
This is true if you’re trying to target several niches at once.
But if your focus is to target a singular niche at any one time; establish a foothold in that niche; and then target another – then you invest no more effort, and get far better results.
This is what Joshua did in the case study above.
He began by working to become successful at selling to men in his relationships niche – but later split his marketing so that he could promote more effectively to women – and increase his foothold in the marketplace.
Niche Is The First Step In A Bigger “Invasion”
In Crossing the Chasm, Geoffrey Moore writes about what it takes to make a product effective – and why many products (particularly tech products) fail to gain mainstream appeal – even though they may be popular with early adopters.
It’s become a bible for disruptive tech products in Silicon Valley.
The book shares how early adopters have different needs to the early majority (pragmatists).
Pragmatists avoid risks and choose to buy from market leaders (like Microsoft) – but early adopters are happy to try out new and unproven technology (like they did with Twitter in the early days).
But how do you become a market leader in a broad market?
If you’re targeting a mass market, the chances of you becoming a leader in that market – and “crossing the chasm” between early adopters and mainstream appeal – are slim.
Moore describes the process of niching as “establishing a beachhead for invasion”, and recommends that you:
“Target a specific market niche as your point of attack and focus all your resources on achieving the dominant leadership position in that segment.”
By doing this, you can much more easily find a burning need to meet – and establish yourself as the market leader in that (smaller) market segment, instead of getting lost in a sea of options all competing for your customer’s dollar.
From there, you can leverage your position into other segments.
Niche Doesn’t Mean “Small”.
Niche means “specific” – targeting your customers as individuals.
There’s a great story about how niching can even work for stablished mega-brands.
For over 30 years, global consumption of Coca Cola has been falling.
In fact, if it hadn’t been for their acquisitions and expansions into products like Vitamin Water and bottled water brands, Coca Cola would be in serious trouble!
But in 2011, an Australian ad campaign reversed the trend.
This was the year that Coke removed their treasured red and white branding from cola cans and bottles in Australia.
What they replaced it with was something very niche – your name.
Of course, I don’t really want a bottle of Coke that says “Share a Coke with Mary”.
But I will buy a dozen if I see “Share a Coke with Brent”!
And this was what led to the HUGE success of the “Share a Coke” campaign.
When it was rolled out in the USA in 2014, it reversed the 30-year trend of declining soda sales – and Coca Cola reported a 2.5% increase in revenues directly as a result of this campaign.
This 2.5% figure represents an extra $1.15 billion dollars in revenue!
What speaks volumes about this campaign is this…
For decades, Coca Cola has spent more on advertising than ANY other brand.
They’ve hired the GREATEST advertising minds for generations – and had some of the most memorable ads and brand campaigns in the history of marketing.
But the ONE ad campaign that reversed a 30-year trend of declining sales speaks volumes about the effectiveness of niche marketing.
Niche Is Cheaper
Coke spent a substantial amount of money on their “Share a Coke” campaign.
But the truth is, niche DOESN’T need to cost more.
In fact, niche typically saves you money.
At lunch with a colleague yesterday, we discussed Adwords strategy – and how having more specific keyword targeting for your ads can immediately lead to 20-30% reductions in ad costs in some ad markets.
And similar is true for SEO – where targeting more specific keyword can help you get rankings faster, easier and more effectively.
Niche Has A Compounding Effect
If niche means you can acquire leads cheaper…
…And if niche means you can turn more of those leads into customers, far more effectively…
These two factors have a compounding effect.
This creates a profit-loop:
You can buy more leads, for less
You make more money out of those leads
So you have more money available to reinvest into advertising.
So then… [repeat from the top]
If you’re interested in increasing your influence (as a leader, marketer, or salesperson) using quality, make sure you’re subscribed to receive the next part of this series: