Our reseller web hosting customers understand the importance of finding a niche within a larger industry. This is because web hosting, like many online industries, is a profitable yet incredibly competitive business. Therefore smaller companies need to do something different in order to get ahead. Big businesses have the majority of the market share because of the length of time they’ve been in business, large marketing investment and brand awareness. Small businesses can work at all these avenues, but its a long and slow road.
When setting up a small business the sense of ambition and enthusiasm wills us to be the best at every facet of the business. Suddenly, the humble bookstore we dreamed about starting wants to challenge Amazon, momentarily forgetting the years of work and considerable fortune it took for them to reach such a position.
The reasoning that if the product or customer service is of a high enough standard that customers will eventually come is, unfortunately, unrealistic. These things are great but convenience or just as likely, awareness, will work against you.
The best way for small businesses to succeed is to find a niche. This could mean a niche industry or, more applicable, a niche corner of a broader industry. Wherever you live, there will be thousands of small businesses and several large businesses competing for some, if not all, of your market share. This is why striving for a broad appeal can be ultimately flawed.
Additionally, you have to consider that each of your competitors is investing time and resources into marketing and developing their business the same as you. This highlights why getting into an arms race is at best an inefficient way to develop as a company, even more so if you’re new as you’re that much further behind.
Aside from gaining distance from competitors finding a niche can also make it easier to market your products and services. For example, a business specialising in high end leather products will find it easier to advertise “hand crafted leather jackets” compared to simply, “leather goods”. When you use a platform such as Google Adwords, for example, this is especially true. Broad, generic search terms are almost without fail more expensive on a cost per click basis then longer, more descriptive search terms.
In online marketing, descriptive keywords or phrases used, in particular, for cost per click advertising are known as long tail keywords. Generally speaking for competitive industries long tail keywords are a much more efficient use of a limited marketing budget. Some of the generic keywords for our primary industry, web hosting, are terrifying, exceeding £10 per click. Whilst, by comparison, some long tail keywords are less than a tenth of the cost.
How to find a niche within your industry
The most common starting point for niche finding is based on the assumption that it must be a fundamental aspect of your business. For example, a hardware store that only sells screws. In reality it doesn’t need to remotely as all encompassing as this. Anything you can do to differentiate yourself from your competition counts.
Good starting points will focus on specialisation in some form or other. This is achieved in a number of ways, some more applicable to your situation than others. For instance, you can:
Offer a specialty product range
This should include where and how it’s manufactured. More specifically you could ask is it hand crafted and by whom? And what materials is it made from? The answers to these questions can work towards defining your niche
Change your area of operation
Some products will be more readily available in your area of the country than it will in others. In this case there can be good business to be done selling to those places where it’s a rarity.
If the high street is full of high priced, luxury goods then obviously there exists an opportunity for a budget retailer to provide a less expensive alternative.
How you do business
You can differentiate your business based on how you sell your products; two for one, package deals, subscription or one off payment, for example. Alternatively, why not choose a niche target audience and aim your products at a narrower, more specific customer base.
Finding a niche is more important for competitive industries and areas. It is possible to out compete larger, more well established businesses if the quality of your day to day business operations is high, however operating within a specific niche is typically more efficient and likely to yield results more quickly.