Are you focusing your small business’s efforts on the customers that matter most? Are you focused on your niche?
For small businesses, every single customer represents a substantial portion of your revenue…
A big corporate behemoth can afford to let some opportunities slip by, but when every potential sale creates a measurable difference in your profits, it’s important to chase those sales down no matter what… right?
This is the conventional wisdom that many small business owners let guide them.
Unfortunately, they’re dead wrong. Here’s why…
Stop Toying Around With Your Unique Value
Here’s a true story…
A small, independent toy retailer in a relatively affluent town had products that could be loosely divided into two categories:
- The mass-produced, mass-marketed, high-volume, Made-in-China fare that could be found anywhere
- Higher-priced, harder-to-find toys, many of them handmade and found only in a handful of retailers around the world
When ecommerce got big, the toy store took a hit…
When a big box retailer moved to town, the store went on the ropes…
When manufacturers and distributors started delaying or outright cutting shipments to the store (and giving preference to their higher-volume customers), this small toy store in the middle of a well educated, upper-middle-class college town looked like it was down for the count.
The owner had two options:
- She could keep using the same strategy of trying to get every product and every type of customer through the door, staying in the ring with the heavyweights and trying to duke it out
- She could stop fighting, embrace her own competitive niche, and put herself on a pedestal where she couldn’t be touched
In other words, she had the option of competing with everyone – or creating a market of one.
You see, online and big box retailers couldn’t compete with the unique product offerings and high level of customer service available at this small toy store.
Personal service and higher-end toys attracted higher-value customers, who were specifically after the items they couldn’t find elsewhere.
Instead, the owner lowered her prices…
She moved to a lower-rent building….
She cut her higher-end offerings and tried to compete on price and selection…
And ultimately, she went out of business just two short years after Target came to town.
If only I would have had the opportunity to help her…
Sadly, another decades-old business disappeared because the owner tried to chase everyone instead of sticking to the niche she could serve the best…
“Instead of trying to appeal to everyone…”
“Quality vs. quantity…”
“Value over volume…”
“It’s not the size, it’s how you use it…”
No matter how you phrase it, it all gets at the same point: figuring out what you do well (and finding the folks who will pay for it) is critical for building a successful business.
Entrepreneur and business writer Peri Pakroo agrees:
“Instead of trying to appeal to everyone, a small business often does better by developing a specialty in an area that is not being fully served by other businesses… Think of a niche as a hook that will help you reel in the potential customers that you have identified as the most profitable and likely prospects for your business.”
100 people spending $10 each is fine…
10 people spending $100 each is a whole lot better.
Why?
Because those 10 people are showing a real investment in the value you provide. They’re more likely to keep buying, more likely to tell their high-value friends about you, and more likely to form a connection with you and your brand.
And once you find out who and where they are, it takes a lot less effort to reach those 10 perfect customers than it does to reach 100 mediocre alternatives.
Just ask Ermias Ashgedom, better known by his rap name Nipsey Hussle, who made $100,000 in a single day – selling a CD he also let people download for free.
I’ll say it again so it sinks in: he made his music available for free, and still made $100,000 selling his CDs – AT $100 EACH – in just 24 hours.
He found the customers who were truly interested in his product, his brand, and his unique value, and he charged them an unheard of premium for it, even while giving the product away to others.
And they bought it.
Scratch your niche, and your niche will scratch back. Ignore it, and it’ll become a real pain.
I devote a whole chapter to developing and targeting your niche in my book, The Predictable Profits Playbook – it’s that important. If you’re trying to appeal to everybody… You end up appealing to nobody.
In your corner,
Charlie
