To fully understand how niching down can lead to bigger profits, Imagine that two stores sitting side-by-side in a popular shopping district. One store is your go-to shop for just about everything. They sell garden tools, candy bars, T-shirts, car parts, makeup, and more. Whereas the second store is more niched. In fact, this store only sells chocolate! Belgian chocolate, Swiss chocolate, dark and milk chocolate, chocolate-covered nuts, and chocolate-flavored gummy bears, and more! Ultimately, If it is chocolate, this store sells it! And if it is not chocolate, you will not find it on their shelve!
At first glance, you might think that the chocolate store is limiting itself. After all, there are lots of other things they could sell, right? First off, the world is full of sweet treats that are not chocolate! And what about other items that complement chocolate such as greeting cards and candy dishes?
The truth is, though, if you are thinking that the first store—the one that sells a little bit of everything—is the more business savvy of the two, you might be mistaken. Here’s why.
The beauty of Niching Down
When you niche down and reduce your offerings to only those that closely match your business goals, you will be in a far better position to attract your ideal client. Not only that, but you will have customers lining up to pay a premium for your services.
Now do not be mistaken, the store/business that offers everything will have more traffic. Remember, no matter what you want, you can almost always buy it there. But because they stock so much and have to appeal to such a wide market, by necessity, their prices are lower.
The specialty shop may have fewer customers, but their average client is far more loyal, will spend more money per visit, and raves to their friends about their favorite delicious treats from that company! The average client at the sell-everything store? A single rumor of a lower price at a new store across town, and he or she is gone without a backward glance!
What does this have to do with your business and service offerings? Everything.
Whether you sell products or services, it is critical for you to know exactly what you want to provide, and to whom. If you simply create a hodgepodge of products with no clear direction and without a cohesive brand, you may make a few sales, but you will not gain a loyal following. Ultimately, you will be like that first store, always chasing after new customers, because the old ones keep wandering away in search of a better price.
Therefore, niching down is really important! To do so, take a look at your virtual storefront, and ask yourself:
- “Are the products/services representative of my brand?”
- “Do they instantly tell a new visitor exactly what/who I am/do?”
- “Are they priced in line with your market?”
Niching down will be so helpful! Do not be afraid to take a hard look at your current offerings and get rid of those lower-priced, fringe products that are diluting your brand! Focus on the core products and services, and work to make them better and more valuable, and before you know it, your brand will have a loyal following of high-paying customers!