A Simple Strategy for Start-Ups to Kick Fortune-500-Butt
Would you like to outsell your biggest and worst competitors, all while taking a premium price for your products and building a life-long relationship with customers that are truly passionate about you and your offerings?
Even though it sounds like a fairytale - it's not, you just have to find yourself a niche. Luckily for you, that's exactly what this article is about. Let's kick things off by looking at what a niche really is.
Benefits from niching yourself
Choosing a niche gives you 2 major benefits that you can leverage to beat competition:
- Premium price - Because you don't have to offer something that suits everyone, you can create something vital for someone. Something they just "can't" live without, legitimizing a premium price. You can cause this "can't live without" vibe by either creating something people actually can't live without - special-built cars for people in wheel chair - or you can create something people want so much they just "can't" live without it - Apple's iPhone. Sure not everyone will feel this way about your product. In fact, many will feel utterly indifferent about it and think the price is just outrageous. Doesn't matter. When you're creating niche-products, you shouldn't care one bit about the people who don't want your product, but rather focus obsessively about those who do. By doing so, you can create a product that justifies the higher price and, as we'll cover next, your customers will feel passionate about.
- Passionate audience - Some people care about cell phones. Some about celebrities. Some even cares about cheese. It's called "hobbies" or "interest". We all have them. So we actively seek out information about them and become experts on cell phones, celebrities or cheese. There are 2 takeaways from this:
1) People actively seek out information about the products they're interested in and are thus willing to learn about your product if it's specialized enough to be of interest to them (think "stinkiest cheese in the world"). You can bring this to your advantage by starting a dialog with those passionate customers, building a life long relationship. You should also leverage that they're actively seeking out information. Be out there - at least, and perhaps also especially on the Internet -, be an active part of the communities that are relevant to your product. I'm not talking about spamming them, but rather providing good and solid information. Don't be afraid to link to your competitors from your website, both potential and current customers will love you for it (and they would've found your competitors anyways as they themselves are seeking out the information).
2) All people are experts on a few product categories so when their friends e.g. need a new cell phone they are very likely to ask these experts for advice and hold it in very high regard (think "value thousandfold your TV-ad"). This might just turn out to be your greatest asset, a sales force that doesn't require any wage and have ten times as much credibility with your potential customers as your own salespeople.
Fear of niching
Many people fear choosing a niche; the logic goes that the bigger the appeal, the more customers. Except it doesn't in reality.
As a start-up or a small business you can't start out by going straight to the top, or in this case mass market. You have to start out small, because most likely someone's already an industry-leader in your field and if you start fighting them spot-on you'll most certainly lose. Lets take just 3 out of the dozens of reasons why you can't fight them spot on:
- An average customer looking for a average product want to minimize the risk of making a bad purchase and therefore just buy a product from a brand they know, which usually is some big company that have existed for years and not your not-so-well-known-1-year-old business.
- You can't afford running at a loss for years in a row just to drive them out of business, they can however with you.
- They have spend millions of dollars and years to strengthen their relationship with key players on the market (large retailers, trade organizations, press and so on), a relationship you have to build from the ground up - and what happens when the big player threatens your distributors, suppliers or retailers to stop dealing with you?
Some examples
Let's look at a some companies whom have niched themselves;
Starting yet another cereal company is tough, but the German MyMuesli.com niched themselves by creating a concept of custom-mixed cereals, where the customer gets to choose every ingredient herself and with the click of a mouse gets the customized cereal blend mailed to her. Sure a lot of people would just stick with whatever they can get in their local grocery store, but breakfast gourmets will absolutely love to create their own blend. These customers will gladly pay the price of 7-13$ (plus shipping) for 20 ounces of their personal cereal blend. And you can bet they spend all day telling their friends about it. If someone can narrow their audience down to people who're just crazy about customized gourmet cereals and willing to pay more than 10 bucks for it, you probably don't have to worry about narrowing yourself down to too small an audience.- Bang and Olufsen (B&O) are producing exclusive and stylish high-end stereos and TVs. Fighting the titans Sony, Phillips, LG or Pioneer spot on would have been impossible, yet they aren't competing with the high-fidelity segments, that only cares about performance, either. By targeting such an (initially) small niche - people interested in TVs and stereos that got both performance and design - they now get to charge 10.000$ for a TV and have had a customer following that are collecting their products for more than 30 years now.
Expand later
So, stay small and find a niche. Don't worry, you can always conquer a new compatible niche once you're a market leader in the first one. And then, when you're the market leader in both, you go on to the a third niche. After a while, you'll will have accumulated so many no. 1 positions within specific niches, that you will be regarded as the no. 1 position in an entire industry. That's actually how Microsoft started out. They started out buy offering a programming language called BASIC for a specific operating system already on the market, later on they offered their own operating system, then a suite of productivity applications (Office), then an Internet Browser, then ... Today they're industry leader in many fields, and because most of the new niches Microsoft chose to conquer supports their initial niche, it has grown like wild-fire. They started out small and then went on to another thing. So don't worry by choosing a small niche, you can always expand later.
How to find your niche
The way you need to think is like this:
- Instead of starting a "movies web shop" start a "Blue-Ray movies only web shop" and cater only to people owning a Blue-ray player.
- Instead of opening a "pet shop" start a "parrot specialist pet shop for parrot enthusiasts on the east coast".
- Instead of being a "PR-consultancy firm" be a "communication consultancy specialized in launching software products".
Task
Now try it yourself. Fill in the [blanks]:
"We're the only [company type] that [something] for [someone]."
E.g. in the above example:
"We're the only communication consultancy that specialize in product launches only for software products."
Or, for this site it would be:
"We're the only marketing website that publish articles with video and tasks embedded for entrepreneurs and start-ups."
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