The importance of niching
My last article on niching was the first in a series. I had some great feedback on how to become a niche agency and hopefully, some of you are returning for Part 2. In case you missed it, find Part 1 here.
As you can tell, I’m an advocate of agencies’ niching their offer. It’s always been a viable strategy, but the market is more suited to specialist players than ever before. There are far too many generalist agencies and even more generalist digital agencies. I except, however, that the decision to niche is hard and the ability to deliver a niche offering is even harder.
In my last piece, I focussed on presenting the case for why marketing agency owners should niche their businesses. In this article, I’m going to explore some of the mistakes that people make. I’m then going to explain what niching really means.
We all make mistakes…
You’ll not be surprised to hear that the first mistake I think people make when niching is they don’t do it at all (or at least they don’t do it properly). Here are some other common mistakes I see when people are considering niching (and how to avoid them).
- They don’t go far enough – They consider focussing on a few industry sectors as niching. To make a difference and be transformational, niching your agency has got to feel uncomfortable. If it’s in your comfort zone, you’re not going far enough. Specialising in Sports Marketing is not a niche. Specialising in marketing football clubs is getting there.
- They believe that the niche is the entire market – Your chosen niche is just your target market, it’s not your total market. Other clients outside or on the periphery of your niche may choose to buy your services. N.B. Rest assured they will (!)
- They consider only industry sectors – When people think of targeting a niche they usually focus purely on industry sectors. There are many nuances and ways of cutting niche propositions. For example, you might choose to focus on clients that want a specific result (regardless of their industry).
- They consider it a marketing comms or worse a cosmetic exercise – Niching must establish a change in your entire agency. If it’s just a few words on your website it’s not going to achieve what you want it to.
- They don’t do it early enough in the agencies life-cycle – If you’re a young agency and you’ve survived the first year in business, now is the time to be thinking about niching.
- They don’t see the wider benefits – Niching is not just about winning clients and growing revenue it’s about developing expertise, sector knowledge and a brand.
- They try to be too unique – We’re not looking for unicorns here. Differentiation is the goal, not complete uniqueness. If you try too hard to be the only one in the market then you’ll never find that elusive gap or make the decision.
Niching is Positioning
As I explained in my last article, niching is not something to be afraid of. It’s in essence choosing and achieving focus. The tighter the focus the better. It’s the ability to appeal more intensely to a smaller group of clients. In a highly saturated market, it gives your agency an instant competitive advantage. You become an expert in your field.
More importantly, niching is just another way of looking at market positioning. Many of you will have worked with a crosshair positioning map where brands are placed on the axes relative to their positioning in their market. BMW as premium drivers’ cars versus Ford as a more mainstream functional vehicles for example.
Put simply, positioning is determining the distinctive place that you want to occupy in the market, relative to the competition and in the minds of your target customers.
The most effective positioning lives at the intersection of relevance (fit with your customers’ needs) and differentiation (the difference between your business and the competitors).
Whilst most agencies use this as a tool for supporting their clients, many fail to give it a second thought when thinking about their own businesses. Most agencies place themselves firmly in the centre of the crosshairs. Wanting to deliver everything to everybody.
If the issue of positioning is talked about within agencies, it’s usually thought of as a marketing problem or activity. The outputs are usually the fabled crosshair model, a positioning statement and maybe even a couple of options for straplines.
Positioning is often treated as purely a marketing concept. In reality, it’s more fundamental than that, it’s about your business model. It’s not just a marketing decision, it’s arguably the most important business decision you’ll ever make.
Finding your niche positioning
You can spend hours analysing the market, your competitors, the economy, trends and/or trying to predict the future. Some of this is useful, but it rarely uncovers a clear niche which everybody in the organisation subscribes to.
As with many things, I find starting with the end in mind is the best approach. What is the outcome we are trying to achieve? I also find a template or formula saves time and works well too.
A niche positioning is of no use if it is not captured and communicated well. The way we communicate our positioning is through a Positioning Statement and/or Value Proposition.
This is the outcome we are trying to achieve.
The Value Proposition and Positioning Statement
Almost as important as finding your niche and committing to it, is communicating it.
As poor as many agencies are at targeting customers, they usually find similar challenges in communicating with them.
The process of moving from the language of “award-winning team of committed individuals that specialises in X, Y, Z and A, B, C” is a big hurdle. It can be helped by summarising the positioning of your agency in a Value Proposition or Positioning Statement.
The terms Value Proposition and Positioning Statement are often used interchangeably. I think Value Proposition is a more modern term (I certainly don’t remember it from my degree!)
Technically there are differences:
Value Proposition (VP) – A short compelling statement that describes what customers can expect to receive by using a product or service.
Positioning Statement (PS) – A similar statement to the VP, but with more of a focus on how your brand performs and what advantages you have over those of a competitor or competitors overall. And why these differences matter.
Crucially both focus on benefits (to the customer and over the competition respectively). This is important as so much marketing comms from marketing agencies focuses on features not benefits (how many awards won, people employed, number and type of services etc).
You can have both a VP and a PS of course, but I prefer to keep things simple. I also prefer to focus on the Value Proposition. I believe marketing agencies spend too much time looking inward and/or comparing themselves to other agencies. Bizarrely this results in most agencies looking and sounding the same. The PS tends to fuel this a little.
A VP is more client-focused. I like the fact that it zeros in on what problems clients have (both from a brand and personal perspective) and how your agency solves them. you need to know the problems and you need to know how you solve them and how effective you are at doing so.
Clients, like all customers, are most interested in what you can do for them. They’re not bothered about your view of why you’re better than alternatives. That’s for covering later in the sales cycle (if it’s necessary at all).
A formula for success
A quick Google search will reveal many formulas and templates for creating Value Propositions.
I like to use this version:
- We are for…(who your target clients are)
- Who are dissatisfied with… (ideally the clients’ problems but could also be current alternatives to your agency)
- We…(what you actually do and deliver – Tangible Benefits and Logical reasons to believe)
- By…(how you do it)
- Because…(why you do it and what you believe in – Emotional reasons to believe)
Practice what you preach
If you complete the formula above you will end up with a list of bullet points. You can then create a paragraph of text if you wish.
In the interests of showing an example and to prove I try and take my own medicine I created the following for Beyond Noise:
We are for ambitious joint-owners of established independent marketing agencies who are between 10 and 50 people. They are dissatisfied with the performance of their business (but want to grow not exit). We provide growth advisory services including business strategy, marketing strategy and performance optimisation. We do this through mentoring agency owners and their senior management teams. We believe that enjoying the journey of growing and running a profitable agency is as important as an exit. We are also keen to promote gender equality in the sector and are particularly keen to work with female agency owners.
This is by no means perfect and it will evolve over time. I really want to niche further into a specific type of agency. For now, though this has really helped me to focus on my niche and sell my proposition.
The words are chosen carefully. For example, the people I want to work with must be ambitious (they want to make big changes). They must want to grow and not be desperate to sell (yet). They are ideally joint-owners (they get more clarity and traction, and I get more satisfaction, from working with partnerships than I do with sole owners). I’ll not go into further detail as this is not my point.
The real question is can you describe your agency’s positioning in these terms?
In Part 3 I’m going to unpack the Value Proposition formula above and give some examples of how I’ve applied it to agencies and how you might do the same.
If you don’t want to miss it, sign up for my email updates here.