Often when a technology or e-commerce company is thinking long and hard about how to expand customer growth and sales, it falls into the trap of casting too wide a net. Sure, what company wouldn’t love to tap an enormous market and all the potential that represents? There’s just one problem: It’s likely that your competitors are doing the exact same thing. This means the cost of acquisition can be extremely high, and retention will typically be lower. In the end, your piece of that enormous market can be winnowed away to a fraction of a fraction as customer dollars spread out across you and your competitors.
Everyone wants a bigger piece of the pie, but when it comes to your business and the market that it represents, perspective is everything. In the 2016 film War Dogs, the main character famously says, “Everyone’s fighting over the same piece of the pie, ignoring the crumbs. I live off crumbs.” And while he’s talking about global arms-dealing, it’s a piece of insight that can apply to any business: Overlooked market segments, no matter how small, can be substantial on their own or combine to be substantial.
Identify Pain Points
A great way to spot a potential niche market is to home in on a larger product category and filter through the reviews and social media feedback to see what customers are saying. In the digital age, customers are constantly voicing their concerns and desires, and while a huge player in a market may no longer be attuned to listening to those voices, there’s an enormous amount of insight to be gained from them.
If you told a retailer 20 years ago that they could have almost unfettered access to everything their competitors’ customers liked and disliked, they’d have been over the moon. Just because certain things have become background noise in the digital age doesn’t mean there isn’t a huge amount of untapped value if you know what you’re looking for.
Know Your Target
One unsung benefit of targeting a niche audience is that you can greatly increase the efficiency of your acquisition spending when it comes to online marketing. The obvious reason for this is that your market is just downright smaller, but a savvy e-commerce operator knows that the truest reason is that you can identify your customers so much more clearly and target them with extreme precision.
Niche Products As Luxury
Another overlooked element of niche products and their customer base is the potential to command higher sales figures than the overall market average. This stems from the fact that not only do niche customers typically spend more per order than the non-niche customers, but niche products can also typically command a higher price point. Underserved market segments typically have a much higher sense of consumer literacy when it comes to understanding product value.
Turning A Customer Into A Marketer
Built into any business model for niche products should be an element of evangelism. Whether that’s through a referral program, a blog or a carefully crafted social media presence, the ability to turn your customers into your marketers is what separates companies that are surviving from companies that are thriving.
Assess Your Data
Like all e-commerce companies, you’re going to be acquiring a lot of data as you advertise to, acquire, and retain or churn out customers. This information that is so often overlooked is going to be the fuel that grows your business, particularly when it comes to niche audiences and understanding their spending patterns and which products most appeal to them. Also, operating periodic email campaigns or customer surveys can yield a wealth of knowledge, since niche customers tend to feel more engaged and vocal about the products that appeal directly to them.
The Lesson: Feast On The Crumbs
In the end, homing in on a niche subsegment of a market can often feel like a concession. As entrepreneurs, we tend to skew toward big thinking and having a dreamer’s mentality, but the fact of the matter is that pursuing a niche market can yield enormous rewards. It’s not easy and requires a lot of research, but underserved or overlooked markets exist in almost every category out there; it’s just a matter of identifying them and assessing their viability as a business. So, why fight over the pie when you can feast on the crumbs?Categorised in: posts