Niche Marketing

Niche Marketing
A Strategic Approach to Defining Your Market to Match Your Expertise

There is a lot of talk today about “growing your practice.” But what does that mean to a small or mid-sized firm surrounded by large regional practices?

One thing it surely means is that firms must take the time to analyze where their business comes from, then build a strategic plan for future growth based on that assessment.

While the analysis process is not complicated, it requires a certain level of objectivity and honesty that can be painful, especially if the results contradict long-held perceptions about the firm.

The analysis allows a firm to determine whether it is doing a measurable percentage of its business in a specific industry or practice area. A firm can use that knowledge to guide its growth either in an existing niche area or in a new venue. These options are not mutually exclusive, but they require different strategies.

The Strategic Analysis Process

The strategic analysis process requires answering basic questions. What was your net income in the last two fiscal years? Where did that income come from? Which five clients were the top revenue producers? What services did you perform for those clients? Were all of these clients in the same industry? Who referred these clients to your firm?

The answers will show whether a firm has a service or industry niche that will be a natural expansion of existing practice. This information is valuable because it provides an objective view of where others think your firm’s strengths lie, and that tells you the areas in which your practice is likely to have the most opportunity for growth.

Existing Niches: Building on Strengths

The results of analyzing existing niches may not fit neatly into your perception of your firm and what it does. For instance, you may think you have 10 personnel-firm clients, but may discover that six of them are franchises of the same parent company. Or you may realize that instead of a restaurant niche, all of your food-industry clients are restaurant supply companies. You may find out that your receivables went up 10 percent last year, but that the increase was from one-time consulting assignments. You may learn that the 10 percent increase is due to a larger tax or audit practice.

In any event, proper analysis should help to show your firm’s strengths and point to opportunities. Such analysis can form the core of a strategic plan for growth in areas where you already understand the needs of a particular client base.

New Niches: Entrepreneurial Ventures

But suppose that the analysis does not reveal a particular pattern, or you simply decide you want to start a new niche. It is important to recognize that there is no guarantee that a niche will be successful for you simply because a competitor has built up a clientele in that area.

Launching a niche is similar to starting a new business. You need to research the market and assess whether it can sustain the growth you anticipate. You must understand the forces driving the industry, such as globalization or deregulation. You need a business plan that includes measures of return on investment and that addresses staffing and training issues. Finally, you have to allocate enough time, money and personnel to develop the niche and implement a system to measure the return on investment.
Starting a new niche may work for your firm if a member of your firm champions the niche, has a team willing to support the effort, and has the right credentials and access to good referral sources in the area.

There is no quick fix. Finding niches that will enhance your firm’s profitability requires carefully analyzing where most of your firm’s revenue comes from, assessing the skills you use to earn that revenue, determining where the best opportunities for growth lie, and turning that information into a cohesive plan that will lead to growth.

Getting Your Message Out

Once you have a plan, it is time to get the message out to the audience you have targeted.

Some things that need to be done are preparatory, such as making sure the bios of the partners involved in the niche service or industry reflect their expertise (including any special certifications or degrees) and writing a brochure for the niche so you have something to leave behind when meeting with potential clients and referral sources. Others are more specific, like promoting the partners as experts through the media, at professional organizations and at chambers of commerce. Direct mail, seminars, advertorials, advertisements and trade shows are additional examples of the types of marketing activities that can be used to promote a niche.

This is a very broad outline of how to identify market niche opportunities. If you honestly assess your firm’s strengths and have the patience and commitment to see the firm through the growth process, over time, you will see results.

Marsha Leest is an author and president of Practice Management Associates, a strategic planning, marketing and communications consulting service for professional service firms. She can be reached at 845-369-3224 or at PracticeStrategy@aol.com.