How To Find A Profitable Niche

How To Find A Profitable Niche

How To Find A Profitable Niche

Niche down. Find your niche. Focus.

There’s no shortage of brand and marketing experts telling you to find a niche. They’re not wrong. Focusing your attention on a specific group of people is key to success, but it’s not easy. 

Intentionally cutting out a portion of potential buyers is tough. I’ve struggled with niche execution for my business. We get interest from folks in a wide range of industries. Deciding where to place our bets and which people to ignore was agonizing—and we’re a branding agency that gets paid to find niches. 

I’ve seen the same struggle with countless clients. They know they need to niche down, but they’re afraid. That voice in their head is screaming, 

“What if I choose the wrong people?” 

The solution is in understanding niches, not avoiding them. A niche doesn’t just mean who you’re targeting. This is a common misconception of niches. The phrases “target audience” and “niche” are used almost interchangeably, but they’re not interchangeable. 

Your niche is a combination of who you’re targeting and what you sell. Some businesses put more emphasis on the who part and others put more emphasis on the what part. These are two unique strategy options and neither is right or wrong. Let’s dig into each option to see why they work. 

Niche Option 1: Emphasis on Who You Target 

Solve a problem or fulfill a desire for a very specific group of people. Businesses that fall into this bucket use focus on who is buying to their advantage. They have a tightly defined target buyer and they don’t stray from that buyer with their products or marketing. You’re either going to see them as the perfect option or not for you at all. 

With this approach, the company often develops a reputation for having expertise in a category and can offer a broad range of services or products within that category. Think of the difference between a snowboard brand with boards, jackets, bibs, gloves, hats, and lifestyle wear versus a shoe brand with shoes for all types of activities, but they don’t have one specific audience. The snowboard brand is the one that falls in our option 1 strategy. 

If possible, I’d recommend this route when starting a business. I believe it makes everything easier if you can go narrow and deep rather than wide. Whether you’re selling gluten-free food to people with celiac disease or marketing services to banks, focusing on a particular buyer works. It’s far easier to make a product and create marketing that resonates with people who are very similar. 

Niche Option 2: Emphasis on What You Sell 

Emphasis on a small audience doesn’t work for everyone. Sometimes your product has broader appeal than one small group. Where most people get caught up is in thinking your who has to be a specific demographic profile or tightly defined industry (if you’re B2B). 

That’s not true at all. The more important aspect of defining your audience is building a psychographic profile. Define why the people you’re targeting are like each other and different from everyone else. What’s the trigger that’s making them turn to you? 

However, if you have a broader market you must have a well-defined product. You can’t offer a wide range of products to a wide range of people. That’s a recipe for a generic business that will struggle to get traction, sales, and grow. 

Businesses using the option 2 camp focus on what they sell. They offer a tightly defined set of products to a wider audience. 

Designers that specialize in visual identity work are a good example of emphasis on what you sell rather than the market. Most designers will work with clients in a range of industries because the principles of design translate across cpg, b2b, SaaS, etc…

The thing that separates the best visual identity designers is that they focus on identity design and not UX/UI, motion, and several other disciplines. They niche down by service, not market. You’ll find this same approach in every industry from consumer products to SaaS companies. Sometimes what you sell creates your niche more than who is buying it. 

Bonus Option: The Combo 

This third option takes mastery level focus. Only a select few can pull off the combo. If done well, this is the most powerful strategy. 

An example of this would be a friend of mine who owns an Amazon agency that only works with natural food brands with over $5 million in revenue. I helped them clarify their message to express this on their site. Go take a look and you’ll see why they immediately close any food brand that wants to get on Amazon. 

Their who is natural food brands with over $5 million in revenue. Their what is Amazon services. It’s tough for a competitor to stand toe-to-toe with them when a prospect is a natural food brand looking for Amazon services. 

I’m jealous if you have the Jedi-level restraint it takes to go down this path. It’s not easy narrowing in on both who you’re selling to and what you’re selling.

Focus Is The One Necessity Of A Profitable Niche 

All three of the above options will work. Pick based on some competitive and customer analysis. Look around at the competition and see where there are holes in their strategy. Are they neglecting a specific group of customers? Be the option for those people. Do they have a weakness in one service area? Be the best at that one thing. The only absolute requirement is that you must find a niche where your business is going to live. 

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