If your business isn't making the money you expect, it's a good chance that you haven't figured out how to find a niche market. You've probably identified a targeted group of potential customers but you may not have identified a targeted group of customers who aren't spending money for what you're offering. In other words, people simply don't want what you're offering the way you're offering it.
The solution to this problem is simple, but it isn't easy. Finding a niche market is a mix of both art and science, intuition and data. Once you've learned how to find a niche market, you'll be able to repeat the process over and over again.
Today, I'm going to give you a practical primer on how to find a niche market. You're going to read some of the items on this list and think that they won't work or apply to you, but don't be so quick to dismiss them. These tips can apply to everyone, in every industry. That said...
Focus on specific people with specific challenges.
It's counterintuitive to think that by focusing on a smaller market you may actually make more money, but it's true. Real money is found in targeting and identifying a market niche found inside the intersection of wants, trends and frustrations. The biggest mistake most business owners make is stopping their search for a niche too soon.
The secret to finding a niche market is to finish this sentence: My product or service helps (what kind of person) when they (specific situation or challenge). Here are a few examples:
- My product helps new moms when they are trying to lose weight after having a baby.
- My service helps working couples who don't have time to make nutritious meals at home.
- My product helps high school students when they want to apply to multiple colleges.
Now sit down and generate at least seven of these kinds of bullet points for your product or service. What you'll get when you're done is a series of demographics and emotional desires or challenges. Your goal is to select the best one.
After you've selected a particular market niche, look at what they want. Wants are emotional desires. Wants are the reason behind the product. They go far beyond the basic benefits. For example, women who have recently gotten divorced may be attracted to a variety of different products such as coaching. They aren't really buying the product; they are buying how they want to feel.
Select a popular market, industry or conversation.
It's standard marketing practice to look for an empty space and fill it. But this isn't always appropriate for every product or service. Notice car dealerships, retailers and even food trucks are most successful when they go to a place where there are lots of people already spending money. At that point, they don't have to find an audience; they only have to stand out and attract those people who are most attracted to their offer.
The easiest and quickest way to do this is to visit Amazon.com and search the best-sellers in your topic area. If there are thousands and thousands of books on that topic, you are on to something. Another way to find out quickly if there is a thriving conversation around your product or service idea is to simply search on Google for your topic. If you don't see pages and pages of blogs, retailers and forums, then this is not a good niche.
Finally, check out Facebook's advertising manager. By simply going through the process of creating an ad, Facebook will ask you to select an audience. You won't believe the hundreds of ways that Facebook groups people; those celebrating an anniversary in the next 30 days, Gen X, Millennials, and so on.
Research trends, frustrations and wants.
Trends are another important aspect of finding a niche. You're looking for ideas, behaviors and products that are trending up and growing in popularity. Mobile devices are a trend. Social media is a trend. Reality TV is a trend. If you're at a loss, just head out to a neighborhood sporting event and watch kids and families interact. What are they talking about, what products are they using? Again, don't differentiate between B2B and consumer because these lines are fairly blurred these days.
Finally, the most powerful buying trigger: frustration. Frustration is a function of the frequency, intensity and duration of a circumstance or event that just irritates your customer to the point of distraction.
To put these into perspective take out a piece of paper. On the top put a picture of a person that represents your target market. Draw three intersecting circles and label them wants, trends and frustrations. Then inside each circle draw icons that represent each of those elements for your audience. This will activate your brain to think differently and connect with that audience.
Use a marketer's mindset.
The first thing you will have to do is stop looking at your product or service like a consumer, and start looking at it as a marketer. Consumers get snared and engrossed by the message and don't see beyond the purchase. Marketers are focused on understanding customers' needs, wants and deeper desires and then delivering on those in the form of an offer. Focus on your ideal client and explore how your product or service will help them achieve those deep desires and wants. Don't snicker. If your product is technical or industrial, remember that B2B customers are people too. Explore what your project means to them, will it help them get a promotion, be a hero, invent or develop something new? Think bigger and beyond the tangible.
Follow the money.
Another terrific way to help succeed at finding a niche that makes money is to find everyone in that space and do an analysis of how successful they are, who they are attracting and how they are succeeding at attracting people who spend money. Notice the advertising, the headlines and the offers. Critically examine their marketing messages and the customers that are attracted to them. What is it about those messages that pull customers in?
Explore and implement a money-making model.
Running your business in reactive mode eats into your profit margins. Simply making, selling and delivering a product or service isn't enough to keep your head above water. You need to create a money-making model that attracts and moves the most profitable customers through your pipeline.
Sometimes your money-making model can actually become a profitable market niche. Online marketers have perfected money-making models. They've carefully crafted landing pages that attract specific markets, they give tons of free educational information and they've turned the upsell into an art.
Make the time to explore and evaluate online marketing offers and then adapt those practices to your business.
Pretend you're an alien.
How many times have you had that “whack-on-the-side-of-the-head" moment of “Why didn't I think of that?!" While some entrepreneurs are naturally wired to notice what's missing, the rest of us can do it too, we just need a little practice stepping outside of what we already know.
One simple and fun way to find a market niche is to observe the world around you from the perspective of … an alien—a space alien who has just landed right where you are standing. I got this idea from a short art film that featured an alien landing on Earth in the middle of a large highway system. This alien assumed that CARS were the primary inhabitants of Earth and that humans were merely parasites. This is a great example of how you can see the world differently by stepping outside of what you already know.
Ask, “What's missing?"
If pretending you're a space alien is too far a stretch for you, try asking yourself “What's missing?" This is a game you can play with yourself no matter where you are and it will give you practice in observing where specific people are having challenges. Those “As Seen on TV" products are a perfect example of “What's Missing" thinking. The only skill you need to have is the ability to step out of your preconceived notions and become a third-party observer.
There are many, many businesses out there that are outrageously successful. If they are successful and making money, you have that opportunity as well. Take a critical marketer's look at your business and use these tips to further define your niche and develop a model that gives this audience exactly what they want and desire. By finding a niche that works for your business, you may not only build profitable sales, but you may also bring joy and satisfaction to your customers.
A version of this article was originally published on November 1, 2011.