Why you need a customer niche, in simple terms.
A niche market is the subset of the market on which a specific product is focused.
I have worked with a number of budding entrepreneurs and a big problem many of them have when it comes to progressing their idea forward is not having a focused target market, who they deeply understand. I have also experienced the perils that come with not having a specific niche market myself, so this post is based on lived experience.
It’s easy to fall into the lull of believing that everyone wants or needs your product. That way you don’t have to go through the process of talking to people to distil down who really wants it the most and who will pay for it. You also avoid having to making the hard decision to focus only on targeting that particular segment and putting aside the others for the meantime...which means overcoming FOMO. It’s no surprise that most people (including myself) resort to hoarding a wide theoretical customer base.
Don’t be fooled into trying to build something that can help everyone. You’ll end up not helping anyone particularly well.
You need to go through the process of defining your target market, as painful as it might seem. I can say with a high degree of certainty that if you try to build your product for everybody, you have a high chance of failing where you might have otherwise been able to succeed. Here are a couple of reasons why, which I’ll put into context throughout the article:
1. The more types of people you try to target, the more variables you have to consider. The more variables you have to manage, the more things you have to get right and the harder it becomes to start a business. It’s more expensive and more time consuming, and money and time are two things most startups don’t have.
2. The average person is exposed to over 5,000 marketing messages a day. You need to deeply understand your customer on an intimate level to reach them. It’s hard to deeply understand one particular group of people at the level necessary, when you don’t know what that group is. It also ties back to the variable point, because the more types of people you have to deeply understand, the more confusing and difficult the exercise becomes.
“If you try to target everyone, you will reach no one” — someone.
If you’re target market is females between 20–30, for example, there are a myriad of different personality types that fit into that spectrum, which to be successful you’ll need to understand at a deep level. It’s impossible to create something perfect for that many different types of people with very little money and very little time.
The 10x Rule of Thumb
You may have heard the phrase, to succeed a start up needs to be 10x better than any existing alternatives (not a hard and fast rule — it just means the it needs to be a lot better). It is a lot easier to make a significantly better solution when you are targeting and designing a product or service for a very specific group of people.
If I were to make a custom piece of clothing just for you I could pretty easily make it 10x better than a generic t-shirt you’d get off the shelf at a retail store. But it would be a lot harder to make it 10x better if I was designing the same thing for a wide range of people.
When you think about building a business in this context, and given that you’ve probably never done what you’re about to do before, it makes sense that the you need to be specific with who you are targeting. Going back to the clothing design analogy, if you’re trying to learn how to bedazzle, crochet, cross-stitch and sew all at the same time, so you can make a shirt that everyone likes, you’re going to have a hard time.
Start small
The problem with trying to start a business, is that most of the reference examples we look to are already well established businesses because no one knows about you until you’ve made it. So you don’t really see what successful startups looked like when they were babies. Looking at the first version of successful startups products and their initial target niche is a good reminder that you need to target a specific group of people.
The start-out niches of the greats:
Amazon — rarely sold books.
Ebay — intense interest groups, like beanie babies obsessives.
Paypal — ebay “PowerSellers” — the professional vendors who sold goods online through eBay’s action market place.
Uber — started as black car service app so people could feel like VIPs when going to clubs.
Airbnb — cheap accommodation specifically for conference goers in San Francisco, to take advantage of hotel room shortage.
Facebook — Harvard University students.
It’s hard to start a business, so every take every opportunity to increase the chance of success. You’re chance of success is higher when you start with a specific niche market.
How to figure out your niche
Find the group of people who have the biggest problem and are willing to pay you to solve it. Write down a number of potential target groups, then interview 5 people in each to narrow down who has the biggest problem that you have the ability to solve.
You want to go deep with your interviews to collect enough information to deeply understand your target persons — where do they live, work, shop, hang out (online & offline), what do they value, how do they want to be perceived by their friends, who do they want to be, what do they fear etc. It’s the deep stuff that you need to know to attract your ideal customer and build a product they will love.
I recommend having 1–3 specific niche markets. Create a customer persona for each, give it a name and think of them every time you make a decision in your business. It’s likely that one of them will be a previous version of you, if your business is built around a problem you’ve experiences.
GO FORTH AND NICHE!
If this has hit a nerve, and you’d like some help working out and understanding a niche market, please get in touch. I run workshops and offer advice on this topic.
Natalie
Founder, Mum’s Garage
natalie@mumsgarage.com
