If you’re a small business practicing the Entrepreneur Operating System (EOS) and searching for an…
A Narrow Market Niche Can Lead to Preferred Sales and Profit
Most people will support the notion of having a narrow market niche as long as there is enough lead flow. Which sales person wouldn’t want to solely work with their ideal type of customer since it’s easiest to work with customers that appreciate the value and niche expertise they represent. It all sounds good until there aren’t enough leads. As a company or sales person are you tempted to reach outside your market niche to pick up some quick business, or do you stay committed to fixing the niche lead shortage? This is when you find out how committed you are to your focus or niche.
Narrow Focus Success Stories
If you’ve ever gone to purchase a chicken or breakfast sandwich at In N Out Burger you’ll be out of luck. They serve burgers, fries, shakes and pop beverages. In a day when most fast food restaurants have been caught in keeping up with the competition, In N Out has made it clear who their customers are, “People who want a burger now.” Of course they need to deliver on a good burger, price and turn around and I think they do. The focus is clear and they attract burger orders and are not tempted to make pizza. In my town, the In N Out lines are consistently longer than any other fast food chain. They have a narrow focus and it is paying off.
Travis Dillard, owner at Inflow Communications, is in the highly competitive “telecommunications” industry. In the last three years he has grown three fold. He has used a very clear and narrow focus to achieve this. His customers have 50 or more system users and are located in the Seattle, Portland or San Francisco Bay Area. Travis is very clear they work with companies who want a Unified Communication System, not simply a phone system. Sales people are taught to pass on smaller deals or larger opportunities that are not his niche customer. Their focus, but more importantly, their commitment to the focus, established them as a premier provider in their market place while other companies are shrinking and trying to be all things to all buyers.
Developing your narrow focus criteria
A narrow focus to one business could be considered wide to another. Each company needs to consider how narrow is best for them. The list of criteria below is designed to get you thinking about your focus. You don’t have to define each area and there could be other areas you should consider that are not listed.
- Size of business
- Industry or Industries
- Specific needs, pursuit, problems or goals
- Customer capabilities (to pay, to perform their part, to make a decision)
- Willingness to follow your process
- Specific roles you need to meet with
- Need or preference for your expertise by customer
- Buyer characteristics
- Compatible technologies
- Company cultures
- Only referred
Most small business marketing efforts will only filter and qualify leads so far. It’s then up to the sales person to complete the qualification process. This is an area where compromises are often made. Saying no to potential sales that do not fall into your niche is not always easy to do.
Working with a narrow niche and qualified prospects is a highly profitable proposition, both for the sales rep and the company. Rather than looking at 30% closing ratios why not consider 70%, 80% or 90%? This can happen when you work with someone who has been very well qualified to your criteria. The sales rep spends more time winning business and the company is not wasting resources on proposals or clients that are hard to work with.
Saying no to an unqualified prospect is not easy
In many cases, it won’t do much harm if you reach outside of your focus but it can take away from your profitability. If In N Out started making tacos and pizzas, it could complicate things and take away from their current efficiencies. If Inflow Communications started selling smaller systems because their reputation created this demand, they couldn’t leverage the technical expertise as they do today. Sure there is more business to be had, but at what price? Meeting sales and profitability goals are equally important. You can have both, but it will take a commitment to narrow your focus by working smarter and harder to locate those qualified niche customers.
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