Why New Zealand consultants and creative service providers resist the power of the niche
There’s a common narrative in New Zealand that businesses must be generalists to survive in our small market.
This may be a legacy of our colonial history.
Early Pakeha immigrants had to improvise and turn their hand to anything to get by. A can-do attitude was born out of necessity. Soon it became a point of cultural pride, our famed Number 8 wire mentality.
However, there comes a point in business where that ‘have a go’ approach stops being an asset and becomes amateur. For example, resisting a strategic niche market focus because it’s more comfortable to stay broad.
Failing to niche may also be a side effect of being a nation of small businesses.
97% of New Zealand businesses have fewer than 20 staff.
Entrepreneurs must be generalists, able to tackle everything from marketing to accounting. This often colours their approach to business development. Most start-up consultancies and service businesses will work with anyone to make a buck. And that’s how it rolls when you’re in start-up mode.
But because many New Zealand businesses remain small, their founders never quite leave that start-up bootstrapping mentality behind. Similarly, they may not evolve out of “we’ll do anything, for anyone” to a more considered strategic approach.
One man and his dog … went to have a paddle. I see this dude on my runs on the regular. Paddleboarding repesents a profitable niche market as do all weekend warrior leisure activities that require lots and lots of lovely gear.
How many clients do you actually need?
Businesses resist niching out of fear that they’ll miss out on business.
New Zealand’s too small, they say. It’s too hard to niche.
But if you’re a consultant or a creative service provider, how many people do you need in your community to have a successful business?
Anthropologist Robin Dunbar researched factors that caused social groups to thrive to identify the ideal size of a cohesive social group. His theory of Dunbar’s Number says 150 is the magic number of people any one individual can maintain relationships with. Groups exceeding 150 people tend to fragment.
Dunbar also identified other critical numbers. According to his theory, a human’s closest circle has just five loved ones. That’s followed by 15 good friends, 50 friends, 150 meaningful contacts, 500 acquaintances and 1,500 people you can recognise.
Matt Church, the founder of Thought Leaders Business School, built on Dunbar’s theory to identify the size of the community you need for business success.
He reckons that with:
15 close friends, mentors, and staunch supporters
150 clients
1,500 people who regularly open your emails (a list of 3,750 at a 40% open rate)
15,000 people in your social community
You can sustain a business that makes between $500,000 and $1.5 million per annum.
People migrate between these layers and people drop out of your community, so you need to replenish these communities for stability.
At the end of 2019 there were 546,740 businesses registered in New Zealand.
If you’re a consultant or a creative service provider that serves business clients, you can find a niche market of 150 clients from 546,740 businesses.
You can build an email list of 3,750, and a social following of 15,000.
Sure, it will take time (about three years), but it’s doable.
New Zealand is not too small a market to niche.
And as consultants diversify into virtual coaching, masterclasses, webinars, and books, your reach becomes global. You can serve your niche wherever they live.
Changes in legislation have made same sex marriage a profitable new niche for the wedding industry
The transformative power of a market niche
I first saw the power of niching for myself around nine years ago.
I worked for a creative agency going through a tricky time. After a period of international expansion and growth, we lost a key client in the US. Then the Christchurch earthquakes happened, and many New Zealand clients stopped spending. The business was in a precarious financial state.
A new CEO was brought in to save the ship from going down the gurgler. He had a background in destination marketing. Soon, we were on the up again.
Many of our new clients were destinations.
Initially this was a result of our new CEO’s contacts.
But then we made a strategic decision to focus on serving destinations, attractions, and adventures. This decision was responsible for the agency quadrupling its revenue in a few years and opening a third office in Canada. Niching paid off. At least until Covid came along …
This example does raise the question, what happens when your niche is annihilated overnight, just as Covid decimated international tourism? There isn’t an easy answer to this. But I believe the answer lies in how you define a niche.
A niche isn’t simply a demographic group, or an industry cluster. A niche has problems and aspirations in common. They have a common mindset. As you come to know your target market’s worldview intimately, you amass valuable insight. This comprehensive knowledge gives you valuable IP that futureproofs your business against change.
When you become a niche expert, you know your market well enough to tailor your proposition to their needs, even when those needs change radically in a few days.
So when Covid came along, my old agency used their intimate understanding of their major destination clients, to help them shift their focus from marketing to Covid comms.
Destination marketing. As niche markets go it’s a goodie. This spectacular shot of Queenstown courtesy of the lovely folks at Destination Queenstown, who have been friends and clients for a few years.
Choosing a niche from the beginning
When I started my own business in March this year, I decided to serve other consultants and creative service providers.
After 20 years in business development for agencies and 10 years copywriting, I have skills that help other consultants grow their business. And because I’m on a journey to grow my own copywriting consultancy, I can use the lessons I learn to help other consultants.
Right now, I’m working with two separate clients transitioning from successful 20-year careers to become coaches and consultants. Because I’m on the same path, I’m able to add strategic value beyond the copy I write for them.
Finding your niche can be transformative. Not only in terms of revenue, but also in terms of the satisfaction you gain from being able to enrich every conversation. When your competitors go broad, you go deep.
My niche market is consultants and creative service providers. I specialise in helping them overcome the exhaustion of the constant new business hustle using the black art of content marketing.
What is a niche?
A niche is a clearly defined set of people with problems you know how to solve.
Niche marketing experts believe that the more focused your niche becomes, the more likely you are to succeed in business.
This is because people want information, services, and products tailored to them and their needs. You increase your chances of making a sale by being highly relevant to your potential client.
If you talk to everyone, you end up connecting with no one.
If you serve everyone, your services aren’t as compelling, because no one sees themselves in your advice or your solutions.
Identifying your niche helps you:
Hone your messaging to be more relevant to a specific group.
Target your marketing. Unless you’ve a budget of squillions you can’t market to everyone.
Reduce your competition. There are a lot of generalists out here, but not many specialists. Stake a claim and own your market.
Become first choice for your target market, because you’re best at solving their problems.
Improve your conversion rate, because it’s easier for your niche to see how your advice and services benefit them.
Examples of niches are:
Creative service providers affected by Covid-19.
Marketing consultants struggling to crack $10,000 a month.
Creative agencies struggling to convert enquiries and proposals into sales.
A niche isn’t a broad group. Men, women, start-ups, and SMEs are all groups. Industries are also too broad to be a niche, because not all players in an industry are the same or have the same needs. So, dig deep and get specific. We’ll look at exactly how to identify your niche later.
There are nearly 10 million cases of dementia each year worldwide. Solutions that help our aging population maintain mental agility and services for people experiencing dementia are a growing specialised market.
Get paid, get laid, and live for ever. Why people buy
The reasons that people buy can be boiled down to two key drivers.
Alleviate pain. If people have a problem that they need solved, they will be highly motivated to buy. This can be a money problem (not earning enough, spending too much) a health problem, or an emotional pain point.
Gain pleasure. Things that people love doing are generally an easy sell. Hobbies, food and wine, travel, and social connection are all profitable niches, because they make people feel good.
Business growth consultant James Kemp defines four sales triggers for consultants:
You make people money.
You save people time and money.
You keep people out of jail.
You help people live a better life.
Your service may address more than one of these success factors.
For example, I help consultants make more money and live a better life, through focusing on serving their most rewarding clients by doing the things they love most.
Enthusiasts like birdwatchers are a pefect example of a profitable niche market that gives joy.
How to identify your niche
To identify your niche start by asking yourself a few questions.
Save your answers to these questions in a safe place, as you’ll come back to them when you’re crafting your unique value proposition, when you’re writing your about page, or whenever you’re telling people about why they should chose you.
What do you have a reputation for doing well?
What do you enjoy doing most?
List the problems you’ve solved for other people or for yourself. If you’ve solved problems for yourself in the past, you can solve them for other people like you.
Who do you enjoy solving problems for most?
Who are you best at solving problems for?
Is there a problem in the world that really bothers you, that you feel called to solve?
Do you feel called to serve a group of people?
Imagine your dream client. This is someone you enjoy working with. You know you can help them; they need what you offer, and they pay you well. Write down who this dream client is, and what they need from you.
Another way to approach this is choosing an industry that you know, focusing in on a specific area that you excel in, then identifying a group of people you know you can help with your expertise.
This process looks like this.
Industry > Service > Group of people > Reason why they need this help
Business > Start-ups > Women over 40 > Starting their own business after children
Health > Wellbeing > Teenage girls > Struggling with body image in adolescence
Marketing > Websites > Consultants and creative service providers > Struggling to attract new business with their website
You know you’ve got the right niche when you have a deep understanding of who you’re speaking to, and a proven ability to fix the problem they’re trying to solve.
Vintage vinyl. It don’t come nicher. So niche that Nick Hornby wrote High Fidelity about it.
But what if I’m not an expert?
Expert is an intimidating loaded term.
When people think expert, many of them think about the 10,000-hour rule made popular by Malcolm Gladwell in his book Outliers: The Story of Success.
Gladwell says that if you practice a skill for 10,000 hours, you’re likely to become exceptionally good at it. That’s almost five years of doing one single thing eight hours a day, five days a week.
So, if you haven’t racked up your 10,000 hours, do you have anything to offer?
The good news is that you don’t have to be an 10,000 hours expert to make a market niche work for you. You just have to be expert enough.
This means that you know enough to help your market niche.
Understand your level of knowledge, then help people who know less than you. Because you know more than them you are qualified to illuminate their path ahead. You may not be a 10,000 hours expert, but you’re an expert to them.
The secret to making this work is to be scrupulously honest about what you know and what you don’t. You don’t have to pretend to know more than you do, because what you do know is enough. Pitch your solution at the right market and you have an offer with genuine value.
A consultant I know supports families with daughters to raise healthy happy, body confident girls.
How to check if your niche is profitable
Not every niche is commercially viable, so once you’ve identified your niche, check that it has the potential to be profitable.
Factors that indicate that you’re onto a productive niche for consultants include:
Successful competitors. This shows people are spending money on this service.
Solid organic search traffic for key search terms.
People paying to promote their business on social and Google search.
Publications, industry groups, and social communities serving this niche. This gives you a source of leads.
Tips for researching your niche
Do Google research using their keyword planner.
Plug in keywords related to your niche and see what other phrases are suggested.
Search volumes are low in NZ. Lots of phrases rank with only 10-100 searches a month. Don’t be perturbed. If businesses are making a living in your niche, it’s viable.
Google some of the keywords you find and look at the results.
You’ll likely find one of three things:
Lots of larger businesses competing. This may mean the niche is over-saturated. But it may also mean there’s lots of demand and lots of average players. Dig deeper and see if you can outperform your competitors.
Some sites are ranking but they’re smaller businesses, or they don’t present that well. This is a good sign that you can make your mark. Dig deeper. Look at your competitors’ clients and see if they fit your ideal customer profile. Consider how you can outshine the competition.
No sites ranking for these keywords. This is a danger signal, as it may mean that the niche isn’t commercially viable.
Competition shows demand. It’s almost always easier to go into an existing niche and outperform competitors than it is to niche from scratch and educate people about the value of your proposition.
To out-perform your competitors you can:
Niche harder.
Offer a fresh angle.
Provide higher quality services and products.
Offer more valuable content marketing.
Be better at marketing.
Skateboarders … an urban tribe that became a market niche.
Follow your heart or follow the money?
Some niches are more profitable than others. You’ll be able to tell this from the level of competition and the salaries people are paid.
You may have several skills that you could monetise with consultancy services.
You may be looking at a choice between a proven niche that you know will pay the bills and a passion project that feels risky.
Do your market research.
It is possible to follow your passion and fall on your face because there isn’t a market for what you love. If there are no competitors, and no publications, industry groups, and social communities you can leverage to promote your business, this is a good sign you should think again. Unless you have a substantial budget to pour into market education, you’ll be struggling to make it pay.
Equally it’s possible to pick a highly profitable niche and fail, because you simply don’t have the chops to master your competition. If you don’t know enough to out-niche, outperform, or out-market your competitors, consider if you have something of value to add to this market.
The ideal situation is a niche that you know and enjoy that is also profitable.
When you know your subject matter, it’s easier for you to add value. When you know your stuff it’s easy for people to trust you, and trust leads to sales.
Teenage boys demonstrating why they’re a primary niche market for video game manufacturers.
How to own your niche
It’s a cliché that if it’s worth doing anything it’s worth doing it well. But it’s a cliché for a reason. Mastery makes us feel good. It makes us confident. It makes us happy.
So, if you’re going to serve a market niche, don’t set out to be an also-ran. Be the leader. Be the best at what you do.
Here’s how to own your niche.
Know your customers intimately
You don’t have to spend mega bucks on customer-research to know your clients well. But you must be prepared to spend time getting to know them.
Customer interviews are a excellent investment of your time because they help you understand your clients’ pain points, aspirations, and needs, and they double up as a soft sales intro to potential clients. I wrote a detailed guide to customer interviews for you over here, in case that’s handy.
Find your angle
You need something that makes you stand out from your competition. Something that gives people a reason to choose you over them.
It’s about having a unique angle, something no one else in your niche is doing, or something you’re doing much better than your competition.
To find this angle you audit your competitors to find their gaps and their weaknesses.
Review your competitors’ websites and take a note of:
Their customers. Who do they say they serve?
Their services and products.
Their key messages. Tagline, intro, and any brand promise.
Their marketing channels. Are they using e-marketing? What social channels are they using? Are they using paid advertising? How strong is their marketing game?
Their content marketing efforts. Do they have a podcast? Are they blogging? Are they running webinars? Are they doing lots of video on LinkedIn? Are they using lead magnets? Content upgrades? Are they consistent with their content marketing efforts?
Their content marketing topics. What subjects do they explore?
The way they present themselves. Is their branding polished? Is their imagery authentic? Is their writing conversational and enjoyable?
Your job is to identify gaps and opportunities to dominate. Is there a niche your competitors aren’t serving? Are there products and services you can offer that no-one else is? Is there a marketing channel no one else is using? Are they simply shonky marketers, and you can outshine them with a bit of effort?
Use your unique skills and their weaknesses to identify your success angle.
Win the content game
The smartest way to dominate your competition is to win the content marketing game. Content marketing is based on the principle that the most effective way to promote your business is to add value to your customers’ lives.
You give value to build trust and affinity with you and your brand. You give value by creating and sharing valuable content to help your customers resolve their problems and meet their goals.
You can do this by:
Empowering your customers to solve their problems and attain their goals.
Educating your customers so they can do what you do.
Entertaining your customers so they grow to know you and like you.
The best content marketing achieves all three goals.
Content marketing wasn’t always called content marketing. It was called building strong client relationships, or creating customer loyalty, but it was the same principle. Add value to create a stronger, more profitable relationship with your customers.
Then the rise of organic search, combined with the rise of mobile, made content marketing the main game for smart businesses.
Search engines reward sites that are expert resources. To become an expert resource, you must publish lots of detailed content on a certain topic. The more high-quality content you create on a topic the higher your site will rank as a resource on that topic. That’s pretty much SEO in a nutshell.
As you build your content clout, your organic search traffic will increase. Compare this to paid digital marketing. When you pay to play, as soon as that money tap turns off, you’re outta juice. Content continues to deliver.
Combine this with the rise of mobile. People demand information on a topic instantly. If your business doesn’t show up, you won’t get a piece of the action.
If you’re reading this, you probably own your business, or you head up marketing for an SME. You’re time poor and cash poor. Your biggest marketing question is how do you invest your time most wisely?
The best answer I know is to invest your time in building a body of valuable content that empowers, educates, and entertains your potential customers. Build an attraction engine for your business that will become more powerful over time.
Fundraising advice for New Zealand non-profits from Barrer & Co.
Examples of NZ businesses who’ve niched
Although generalists abound in our business culture, there are examples of New Zealand businesses niching with success.
Ngātahi Communications
Communications for purpose-driven businesses.
Ngātahi exist to amplify the kōrero of Aotearoa’s changemakers, working across the not-for-profit, and social enterprise sectors.
Pure Peony
Soothing skin products for people with eczema, psoriasis, rosacea & sensitive skin.
The Pure Peony range is made in Nelson from peony root extract. The founders are obsessive about the purity of their natural ingredients.
Beany Limited
Online accountancy services for small businesses.
Beany use smart technology to offer accountancy services to small businesses online, for a cost-effective fixed monthly fee.
Barrer & Co
Helping not-for-profits fundraise.
New Zealand fundraising specialists Barrer & Co support and empower not-for-profits to significantly improve revenue generation, sustainably.
MetOcean Solutions
Numerical modelling and analytical services in meteorology and oceanography MetOcean serve the offshore and maritime industries, regulatory, defence and government agencies.
Ngātahi Communications specialise in comms for purpose-driven businesses.
Why niching is a smart move for New Zealand business
Paul Callaghan, a New Zealand physicist specialising in nanotechnology and magnetic resonance said: “Our future lies in the niches of a world economy 500 times bigger than our own … We will be good where we happen to be good. We will creep up on our competitors in the odd spots.”
He identified the knowledge economy as New Zealand’s greatest global opportunity. A sector where we’re not limited by our small population or our remote location. “There is no limit to the numbers of such companies,” he said, “except to the degree that our brains and enterprise make such businesses possible.”
Yet as a nation, we are hampering our own potential in this area.
The OECD’s 2017 review of New Zealand’s economic performance identifies low expenditure on R&D as a key factor in our poor labour productivity, which is well below that of our global competitors.
The key takeaway from this for consultants and creative service providers is invest in research and innovation. The OECD identified that New Zealand businesses are particularly weak in this area, saying “Innovation, including through R&D, can boost firm productivity, but there can also be spillover benefits beyond individual firms.”
If you invest in research and innovation, not only will you leave your competitors behind. You’ll also contribute to the elevation of New Zealand as a player in the knowledge economy. And because SMEs are so negligent in this area, even a basic competitive audit, like the one outlined above, can give you a significant competitive edge.
MetOcean serve the offshore and maritime industries, regulatory, defence and government agencies.
But does niching really work?
Kjell Toften and Trond Hammervoll’s 2013 paper on Niche marketing research: Status and challenges, reviews research on niche marketing between 1994 and 2013.
They state: “The reported benefits of pursuing niche marketing are numerous, particularly within the areas of increased profits, prices, sales, growth, market shares and competitiveness.”
They raise a caveat: “However, it is important to keep in mind that most of these reported benefits or performances of niche marketing are based on perceived benefits and not actual or tested benefits, therefore, it is difficult to verify these findings. However, the share amount of beneficial reports is rather convincing.”
In summary, there has been little large-scale research that proves beyond doubt the benefits of niching. But the anecdotal evidence of benefits is sufficient to be compelling.
My take is that a niche strategy makes sense logically and intuitively.
From a marketer’s perspective, the most effective communication is one-to-one. Selecting a well-defined niche enables you to recreate those conditions for all your marketing communications. You understand your market so well, that you can communicate with them as you would a close friend.
I’ll leave the last words to Ralph Waldo Emerson, who wrote: “Successful people live well, laugh often, and love much. They've filled a niche and accomplished tasks so as to leave the world better than they found it, while looking for the best in others, and giving the best they have.”
Word, Ralph.