How to hone down on a niche market

Welcome back to the podcast for another episode.

And this week we're going to talk about niches, but more importantly, how to hone down and hone in on your niche.

And this comes through from a lady called Felicity who reached out to me and thank you, Felicity, for saying that she loved the podcast, which is great.

It's great to hear that people are enjoying what we're sharing.

And her question actually was really interesting.

So she basically was in a marketing role and has just set up a business.

Just looking through her message that she sent me, she just sent a, she set up a business and basically she's been struggling to hone down her on her niche and she's struggling to provide the return on investment for, for her niche.

Basically, from what I understand, she does a virtual, she does a virtual tour business and she's been trying to target or hotels and get some kickback feedback that sometimes it's not sort of right for those organizations.

So what I thought I'd do is I'll talk a little bit about understanding your niche.

I covered some of this stuff off in a podcast that we've shared or may be sharing around how to dominate you in a competitive environment.

But I'll talk a little bit about niches and what that sort of looks like and, and then really be in a position where we can start to test how you can hone down on your niche.

And the reason being, I've given a couple of examples in the past of organizations that have done incredibly well with regard to, to niches.

A good example of that, as I always use, is Beanie's Coffee or Little's Coffee.

There's a bit of competition there in that space, but both of them, the, you know, the coffee space was a really, you know, huge billions of dollar market dominated by Nescafe and Kenko and those sort of big corporates.

And yet these two companies built a niche within a niche doing flavored coffee and flavored coffee, if you've ever tried it.

And this is when I used to drink coffee.

Don't drink anymore.

But when I used to drink coffee, you know, their flavored coffees, their chocolate orange coffee, and they had Bakewell tart coffee and stuff like that.

They were brilliant and I loved them.

And it was a variation.

And what they'd obviously done is created a niche within the niche that was, that was useful for them to be able to build a sweet spot.

And so I guess the question is, how did you hone down on a niche?

And I think the first thing I'm going to say when I asked Felicity and she asked me a question, by the way, on LinkedIn and I replied, so one of the things I'll say to you is if you listen to this thinking, oh, I never reply.

I do reply, I do reply.

And I love listening to hearing stories about what people, people are doing.

And the reason being, you know, Felicity may never buy from me.

That's okay.

I don't care if people don't buy from me.

What I want to do is, is help you achieve your goals as a business owner or someone that's trying to be successful in selling.

And yeah, I want you to achieve results.

If you're achieving results, then you can come back to me and message me and say, hey, what you've done has helped me.

I'm good.

Right, that works for me.

And so, so I guess the question for me around, let's take a scenario, let's show you are starting off a business.

One of the quick things that I talk to people around about honing down your niche is, is to really dig into your audience and to make it when you're starting off.

One of the biggest mistakes people make is they become too general.

And I've done this and let me.

I said, oh, my target audience is small businesses.

And someone said to me afterwards, you know, and I say to myself after small businesses, like, there are 4.9 small, 4.9 million small businesses in the UK, that is not a target market.

Now if I'd have gone down and said, okay, I'm going to target accountancy practices that are small businesses, then potentially I'm thinking, yeah, okay, this is a bit more of a relevant audience.

If I'd have then said, I'm looking to target accountancy practices that provide financial director services, then potentially it's an even tighter niche within the niche within the niche.

So first thing I say to people is try and really focus, you know, be something to someone, not anything to anyone.

And so if you take an addressable market like I had with small businesses, there were 4.9 million of them.

Now, don't get me wrong, I'd love to have, you know, the eyes when I was doing the software business, like, oh, 4.9 million business.

I'd love to get, you know, 1% of that audience.

But 1% of 4.9 million people is, you know, is 49,000 customers.

And if I'd have got 49,000 customers in my business, I'd have been a multi millionaire.

Just the numbers would have been ridiculous.

So even 1% of my audience wasn't realistic for me to achieve what we wanted.

When we were at our peak, we had 4,000 customers and we were just under a million of recurring revenue.

So that's 0.01% of, of the, of the addressable market.

We would have been, we would have been able to deliver a far better business.

One of my biggest mistakes was that I didn't niche down enough.

So, so what I would, you know, and, and people say to me, one of the things people say to me is, oh, I don't want to be in a niche because if that industry has a big problem, then I'm, then, then I'm lost, you know, I'm cooked.

I can't move anywhere else.

The service that you provide can always be adjusted, I'm sure, to other types of companies.

But it's all about relevance.

And when you're trying to hone down on a niche, it's the audience and the people you're talking to.

People will relay back to the relevance of what is you do.

And you can focus on characteristics, what I would call demographic psychographic information.

But sometimes that's a challenge if you're trying to find people to market to.

So if I was, for example, going back to my business was trying to target accountants, well, I could go and get a database.

There are tools now that you can use that would enable me to go and find all the small business accountants with under 10 people in the UK.

I could probably do a request on that right, quite quickly using AI tools and some other database tools.

And they'd probably tell me there's 115,000 accountants like that.

So even though there are 4.9 million small businesses, if you want to focus on a specific small group of accountants with up to 10 people, you'll get a smaller subsection of the market.

So the first thing is, don't be afraid to break down that market further and further and further.

And you know, going back to Little's, they had the coffee market.

Well, they probably, you know, coffee market is a big market, but then they decided to go after people that had coffee at home or drank a lot of coffee at home, and then those people that were bored, for example, with existing coffee and wanted a variation or like flavors or like sweet flavors, for example, so they built the niche within the niche within the niche.

So in your case, in Felicity's case, what would I be looking to do is the first thing I would do when I'm looking at a niche like this for your service is what is it you offer and what does it take to create that service offering?

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Now back to the podcast.

One of the other things that businesses don't do, especially a lot of small businesses, the first question I asked them is, they say to them, what do you want to earn as a business?

So if your target for the year is to earn, I don't know, let's say £100,000, then the easiest way to earn £100,000 is one client at £100,000.

But that's obviously very risky and no one would want that because you put all your eggs in one basket.

So then the next best option would be to say, okay, all, I'd have two clients of 50,000.

Okay, good option, pretty good.

Or you could have four clients at £25,000.

Okay, that's pretty, that's better.

Because if one of them leaves, you still got three.

You haven't ruined your whole business.

Or Maybe, you know, 10 clients at £10,000 would be a really, really, really good business for you to build.

So the question is, you then say, okay, 10 clients of 10,000 would be, would be ideal because the client's paying a large amount of money.

You're getting a value, you know, you're delivering value for that and you're getting a return for what you do, depending on how much time you put in, which we'll.

But you're not got the risk of if one of those customers leave that you, you basically are ruining your whole business.

So let's, let's assume that you're going to offer a service that's £10,000, because you want to hit £100,000.

And by the way, again, I see a lot of small businesses that will say, oh, you know, well, I want to earn £100,000 and the service value is £1,000, which means they need 100 customers in that year to achieve their goal.

And I'm like, you're just not going to do that.

You're just not going to do that.

And the reason you're not going to do that in the first year is it takes time.

And more importantly, you need lots and lots.

In order to get 100 people at the bottom of the funnel, you're going to need probably 500, a thousand people at the top of the funnel, you're going to be having conversations with 500 people.

It's just not going to happen.

So one of the, you know, great ways to look at it is to say, okay, if I want to earn a hundred thousand pound, and I'm not sure, you know, Felicity, if you're listening to this, what the revenue number is that you want to hear, and obviously there's a revenue number and then you've got to take your costs off that.

But let's say you wanted to earn a hundred thousand, then, you know, you could say, okay, well, ideal would be 10 clients are paying 10,000.

All right, worst case scenario, 20 clients paying 5,000.

So firstly, work backwards and say, you know, look at what the target you want to achieve and then secondly, look at the service that you're offering.

How long does it take you to do so?

When you're going in to your customers, how long does it take you to deliver what it is you've got to put together that's going to then give them the result to solve the problem and challenge that they've got.

And you might think, well, £10,000 for one customer is too much.

But if that customer, if the work it's going to take you to do that is quite a large amount of time or a large amount of, you have to bring other people in to help you or other things, then that 10,000 isn't unrealistic.

If it's.

If it's going to take quite a lot of work to do, because if you're delivering a quality product or service that is really good, that's going to have a really big impact, then it's going to be okay.

Now, an example of that might be, and in Felicity's case, she works, I think, in the virtual tour space.

One of the things that maybe companies are doing, and I know this from working with an Old estate agent before is on very, very large expensive properties over £10 million.

They might spend £10,000 on a virtual tour of the house to give access to people that can't see it because those people might be overseas.

So it may well be that the house is £10 million.

Well, they might spend 10,000 to, to sell the house because they know they're going to make a really good commission.

Most commission of estate agents will make, you know, one, one and a half percent.

So you know, someone's selling a 10,000, sorry, a 10 million pound house is probably going to earn, you know, £100,000 commission.

Therefore spending 10,000 isn't going to be too bad for them to do.

So have a little think about your, your audience and a, what your target is.

You have a little think about your target you want to hit and what it's going to take you to do it.

Now the reality is there's a great, you know, element in business and sales and that sometimes doesn't have to take a lot of time.

It can be knowledge.

So I'll be honest with you, when people, you know, work with me, I'm not the cheapest.

There are definitely plenty of people out there cheaper.

But what they don't have is my knowledge over coming up to 50 years.

And by the way, on my, I've got a 50th birthday coming this year and I'm going to do an incredible giveaway for my 50th year, 50th year birthday giveaway on my podcast.

Stay tuned.

Subscribe to the podcast.

Just make sure, make sure you get access to that.

It's, I'm going to be giving away £5,000 worth of, of prizes basically for, for a competition there.

So stay tuned for that.

But you know, if, you know, I've got knowledge that I built up over time and I know what works and what doesn't work and that's what I charge for.

I charge for the fact that it's in my brain, I know what works.

And if people take a different path, they make mistakes and if they utilize the knowledge and experience and insights they give them, they don't make these mistakes that cost them.

So, you know, you can charge also for your knowledge as well.

But let's say you're charging for a service, a particular service, make sure that you've tallied up the time it takes you to do things.

And by the way, I often see business owners, you know, tallying up time and then not getting the value for that time.

So what ends up Happening is they, they give away their hours and they might spend 70 hours on a project and then they end up charging that hours to that time out to ten pounds an hour.

And I'm like, well, if you're working your backside off for ten pounds an hour, go and work in McDonald's or another, you know, organization like that.

Because you could earn more for having less stress as a business owner.

So I think, you know, if you're running your own business, I think minimum you should be taking a charge as a business owner for your use of your own time.

And to have the risk of running your own business is I think £50 an hour.

So therefore you might say if it's going to take you 70 hours to run, if it's going to take you 70 hours to do a project, and then if, let's say we times that by 50, well the minimum that you would want to charge for that project would be three and a half thousand pounds.

Because it's, you know, fifty pounds an hour times seventy is three and a half thousand pounds.

And then you might have some other costs for other people that you bring in or other elements.

So it may well be the total, you know, offering for what you do may well be, let's say, £5,000 for that, for that organization.

Now let's say you offer that for £5,000.

What you've then got to remember is the organizations that you're selling to, there's two things that are really key for them when you're selling that service to them.

The first is risk.

Okay.

And the second is return.

So let's get back onto the first point about risk.

And it's all about honing down on your niche to identify the right niche.

The first one is risk.

If you're trying to sell 5,000 pound service to someone that's never bought from you before, that's going to be a challenge.

I'm going to be honest with you and say to you, I think that's going to be a slight issue.

And the reason being is because when people are buying stuff for the first time, they want to test out the goods.

That's why car companies do test drives, that's why software companies do free trials.

That's why legal people do the first half hour for free.

If you're trying to sell something to someone for £5,000 off, the first thing you do, the first sale, I think it's a challenge, I really do.

And I think you've got to try and find a introductory offer, stroke product or offering that's about a tenth of that to get people sort of wet in the appetite, as it were.

And again, it depends on who you're targeting.

But if you're targeting.

I'm working with a, as I say, I said this on another podcast, a large investment organization at the moment who, even though the proposal that I'm sending in and I've done a lot of work with other people in this industry, is for around about £35,000, I'm gonna do an initial workshop with them for 10 of that.

So three and a half thousand pound, which for this organization, based upon my history and what I've done, they're accepting of, I'll be honest with you, it's probably still at the top end of what you would charge.

But my history and experience and what I do and my brand has made them feel comfortable with that.

So you've got to make sure that you understand there's a risk for people to buy.

And the risk for the buyer is always what I'm buying is never going to give me the result that I want.

It will, or I might spend this money in it and it won't give me the result.

Which is why bigger the figure is, the more nervousness they have around doing that.

So our job should be to de risk that, to make it such that people go, okay, I'm going to spend, you know, in, in your, in the case, let's say I'm going to spend £500.

If it doesn't work out, okay, yes, it's a lot of money, but it's not going to be break the bank money for maybe some organizations.

Whereas for, for, and if, if it's an individual, they might only want to pay even a lesser figure.

So they're trying to de risk it, they're trying to sun check you out to see whether what you offer really works as a service provider.

So that's the first thing risk and the second thing is return.

So, and this is something I explained in the reply I gave back to Felicity, if the organization you're selling to, and she was talking about sending her service into hotels, I said, okay, well, let's say the hotel, let's say you're charging £5,000 for a service and the hotel is, is a nice hotel.

But let's say they make, you know, let's say they sell their service out for their room out for £150 a night.

And so £50 of that is cost, but £100, that is profit.

So if you're selling it for £5,000, then they've got to get 50 people that buy their hotel room for basically, you know, 50 people to buy the hotel as a result of this new service that she's offered for them to even make their money back.

And most organizations, when they buy or invest something, want to invest.

That's the whole reason why they invest.

They, you know, you, you don't invest.

You know, if you invested the same and put money in per month and got the same money back, you'd go like, why am I doing that?

So most organizations want to at least get a one times return on investment.

In most cases, three to four is the figure.

So if they're investing £5,000 in you, they're looking to get, they're looking to make 15 to 20,000 pounds in return.

Well, so if you look at 20,000, let's say it was four times a return and the hotel rooms, they make 100 pounds on the hotel room.

That means they've got to sell 200 of the item to make their money back on you.

And most people would look at and go, oh, 200, that could be quite a big number to get to.

Is that going to happen?

Oh, that's probably unlikely, which is why they're probably going to think it's not worth investing in.

So when you hone down on your niche, you've got to look at the return for the customer that you're selling to and ask them the question, when you sell your service offering, what's the typical average sale value that you have and how many of them do you normally have per month?

Because if you say to them the typical sale value is, if the typical sale value for the client you're talking to is £10,000 and they normally get two of those a month, then you can say, well, investing a bit of money, the £5,000 for your service, to get 10,000 means, okay, it's sort of reasonable.

And if your service can help them sell three or four of those per month, so instead they go from 20,000 to 40,000, then they're going to go, okay, this potentially can make more sense because the return is there.

And most organizations and most business owners don't think like that, but they don't think about the, what the impact that the buyer is going to have and buyers do eat, that's what they, buyers care about is If I invest £10,000 now, £5,000, £100, whatever that figure is, how can I turn that into a return?

Or how can it help me solve an issue in my business that's costing me more than that.

When you think like those things then that it makes a big difference.

So look really when you want to hone down on a niche, really try and identify what is going on in your market space.

What are the key challenges for those organizations?

What are they struggling with?

You know, what are the things, you know in, in Felicity's case I said to her, you know, what are the things that are causing challenges?

You know, for example, what who does need to bring, in her case she was doing virtual reality, who needs to bring their service to life.

An example of that could be a very, very like I say, a high end estate agent who sells product, you know, houses over 10 million.

Who for example are you know, for people overseas or where do in her case I was saying where don't pictures hit the mark?

So where are pictures of something not as good as video now?

One of the things that you might see for example is, you know, video now is very popular.

People with their phones, they can do things.

Where is virtual reality different?

If you really want to go into a detailed, particular, specific part of something.

So is there an engineering company for example that has a really detailed, specific way of met their, their machines operating that could give comfor assurance to a buyer overseas, for example or where for example, is there a product or service that someone really needs to visualize and to see in order to then feel comfortable making that decision?

And an example of that again could be a really high end if you are going off to the hotel space, really high end hotels that offer a really bespoke service, maybe for weddings or for big functions, for example.

So you've really got to really know your audience and also link that back to what I was saying about your target on what you're charging this for.

So build a niche of the niche of the niche.

So in your case for list it could be on targeting hotels.

Well hotels are hundreds of thousands of hotels in the UK, 95% and they're not going to buy a service that maybe, let's say it does cost.

I don't know what your service costs, but let's say it does cost, you know, a few thousand pounds.

It's probably going to be the top five star hotels that are going to do that, that are charging higher rates for their, for their rooms and therefore okay and evening.

It may well be that they, they do for rooms.

It May well be that it's their conference facilities that you might want to then do the virtual tour for.

Because people, let's say top five star resorts, people that are buying event functions from overseas, might then want to see what each room looks like and what do guest rooms look like and what do the breakout rooms look like.

Ra flying over to go and do that.

If you could provide that virtual tour together, you know, into the conference facilities and what it looks like, that may well.

And again, just use an example.

Made them think, okay, this, this is, this is the type of thing I'm looking for.

But that hotel needs to be able to see the return on value and investment for them to then think, yes, it's going to work.

So they can then take that out to their audience.

So sorry to interrupt the hub cost, but if you've got a sales issue at the moment that's really hacking you off, challenge me, I'll help you solve it.

Reach out to me.

Drop an email at hello Amesworth Business, and I will help you solve your sales challenge.

There's not one I don't think I can't handle.

There's no sales issue that I can't resolve.

I've seen them all over my career.

I want to help you solve yours.

So reach out to me.

Let's make sure we handle your sales challenges and fix them so you can get back to smiling again.

Now back to the podcast.

So really just try and be understand that when you'll be building a niche.

And again, the bigger.

You know, there's a great book by a guy called Mike Mikalovich.

He wrote called the Pumpkin Plan.

And Mike's book, I interviewed him for, for a my previous business and he talks a lot about how, you know, the best way to, to really dig into a niche is to eat a public.

The way big American farmers grow pumpkins is they put 50, 50 seeds in a field and after two weeks they'll look and after, let's say, you know, four, four weeks, they'll look at which of the pumpkins are the biggest and the ones that are smaller, they'll cut them off.

So what they do is they, you know, they started at 50, then they get down to 30, and then four weeks later they look and they're.

Then they're down to 15 because.

And what they do is they cut off the smaller one.

The bigger ones get more of the irrigation and the fertilizer and all the things that are helping them grow.

And the whole idea of that is once you start to cut off some of the stuff that doesn't make sense, you can really focus on the organizations or the pumpkin, his case, the pumpkins that get bigger and you focus more and more on those to work with them.

So start to dig into your audience, start to look at your customer base, start to ask the questions around what are the real challenges they're facing?

What are the real issues they have in their sales process?

Where would a virtual reality solution really help a buyer further down the funnel?

Sometimes it's not just at the top of the funnel, we have to think it's at the middle or at the bottom of the funnel.

So really trying to hone down your niche and talk about those problems with them, you ask them, what big an issue does that have that someone can't see what you do?

How big a concern does that cause you?

Where does that stop you from doing business with someone?

And really dig into their world before you engage.

Well, if I said to you, are there a hundred top quality venue resorts, the five star resorts in the UK that sell high end event services to overseas clients, There probably is.

So if you start with that hundred, what you can then do is you can make the content and the communication and the things you do very relevant to them.

Your message automatically becomes different.

It becomes, you know, you know, top end a guy.

Five ways in which five star venues that target overseas clients for events can showcase their, their location.

Suddenly if I'm the event director or the company director in that company and I see a piece of content that's really relevant to me, I'm more inclined to open it it.

Relevance is key in sales.

We have to make sure our message is relevant to the audience and when things are relevant, people are more likely to engage and to look and see the value, especially if you can bring expertise and knowledge in that space.

So look, honing down on a niche is an important thing to do.

There will be people.

By the way, put in your comments in the comment section below.

If you think I'm, you know, talking rubbish, feel free, but people say, oh no, you shouldn't, you shouldn't, you shouldn't go down to a small group only look when you're building from the bottom upwards, start off with I think you should, I think.

And a good example of this is Katie say, well, and Kelly Wynn and people we've mentored with Shift Success program where I'm a mentor for, you know, they, they started with, you know, they were going to be dog trainers and they were like, oh, there's loads of dog trainers in my area.

Katie then identified that, you know, she had a dash and dog.

She trained her dash and dog, no one else.

And this was probably six or seven years ago.

And if you search for Katie, say, well, the dog's code now, she's one of the world's leading dachshang dog train identified that she wasn't going after any dog, but she was going to dash hounds because that's the area that she could work with.

Kelly Wynne did the same with Beagles.

So really try and identify your niche.

And when you build up that niche and become an expert in that space, be something to someone, not everything to everyone.

You can start to build a critical mass.

And once you've built that critical mass, then you can go on and build from there.

You know, people forget that Tony Robbins, who was, you know, one of the world's greatest, you know, motivational speakers, started as someone who helped people stop smoking.

That's how he, Richard Brunson started with his shop, his magazine shop.

Yeah.

And then started to build it up and then built the Virgin brand from there.

People start in small, you know, Justin Welsh even talks around how he started at a small level trying to help certain companies that had SaaS products and then built up to become the solo entrepreneur guy.

So start with a real tight, focused niche.

Become something to someone, everything to everyone.

Go in, you do it five times, big market, into another market, into another market, to another market, and check.

There are three rules I always say check.

Is there enough of them?

Are they prepared to pay and do you like working with them?

And if you can target, if you can satisfy those three things, you'll be in good shape.

So I hope that helped you.

Felicity, by the way, listening to this, if you have got a question, as I say, reach out onto the podcast.

I'm always happy to share insights and questions for people.

I want you to get great results.

The key thing is focus on that risk.

What's the risk for the buyer?

De risk it for people.

De risk it.

Not just this is a message for you in sales in general.

De risk things for the buyer and focus on those returns.

And you're going to be in a better position.

So, as I always do, I finish the podcast with an inspirational story.

And this week I am going to talk about a lady called Lisa Johnson, actually.

And Lisa Johnson was a lady who.

Another reason I shared this story, I thought it's really interesting.

She was, he's a business consultant and author now, and she now does business consulting on a regular basis.

But the reason I like this is that she transformed her life.

She was living on a council estate and she was in severe debt and she, she has a company called the Strategy Company.

Now, I don't know them, I've never worked with them, but she focuses on helping people achieve passive income.

And it just made me think that for someone that was, you know, in significant debt and who, you know, had a tough, you know, situation, she wasn't giving up.

And when I look around, you know, the world and the companies in the country that I live in, there's a lot of people that, that sadly have a victim mentality.

And I feel if you've got that victim mentality, the world's not going to help you.

Right?

There's.

If you think someone's going to come out and save you, then I think you're wrong.

You've got to save yourself and you've got to get on your front foot and you've got to do things to help you get where you want to get to.

And so, yeah, to me, I look at that story and I was like, okay, Lisa, fair play to her.

She decided that, you know, there's a phrase I always use, eat or be eaten.

She was gonna, you know, she was gonna either be eaten up by the society in the world around her and become a victim, or she'd take things into her own hand.

And she's become a multi millionaire now and successful.

And I guess I look at stories like that and think, yeah, good on you.

You made it happen.

I don't know, I don't know her individually or personally, but that story of turning adversity into triumph to me is a great one.

So that's it for the podcast this week.

How tone down a knee shape.

It's been useful a bit longer than normal, but hope you've given you some practical insights on what you can do to, to put things in place.

As ever, thank you so much for listening.

It's a pleasure to, to share your journey wherever you're going or to, if you're watching in the, in the evening.

And as I say, great to, to have your company and I can't wait to share another podcast with you until next week.

As I say, keep an eye out for my 50th birthday giveaway.

It's gonna be £5,000 of prizes to to get involved in that, subscribe to podcast and make sure you're here and get access to all of the insights, some recordings over the next few weeks until we get to that point.

But until then, stay safe and see you soon.

Take care.

So thank you so much for listening to this episode.

I hope you've enjoyed.

If you have, please subscribe to the podcast.

It helps us ensure more people can get the insights and ideas they need to get incredible sales results.

Look forward to seeing you on the next episode.