In today’s increasingly competitive marketplace, the demand for specialized products and services has also increased. If your business sells everything to everyone, chances are that your audience will not see any reason (eg. greater value) to buy from you rather than anyone else. In an homogenous market, price becomes the only metric by which visitors can compare you to others.
When Price is all That Matters…
When you compare apples to apples, the only point of comparison is price, as this is the only real, visible distinction between the apples from two different suppliers. Thus, if your product’s value is perceived as equal to that of others, naturally the cheapest alternative will win.
Price in itself is not important — it’s merely an arbitrary figure that represents the value of an offering. It only becomes an issue when there’s no other factor that the customer can use to gauge your product’s value. Of course, price is not the only metric. But most people understand units of dollars more than they do value, which is a more subjective concept. Therefore, if your offering’s too similar to those of your competitors, price will always be an issue.
Economics shows us that these rules are true:
- The more unique you are, the less competition you will have.
- The less competition you have, the less substitutable you (or your product) is.
- The less substitutable you are, the less elastic the demand for your product will be and therefore, the less important price becomes.
So, if you’re copying your competition, or trying to promote your offering as one that’s better than those of competitors, you’re only reminding people of that which you are better than: your competition. So, don’t duplicate, differentiate! Or as Earl Nightingale once said, "Don’t copy, create!"
Homogenous Products Take More Work To Sell
Being all things to all people will probably help you to stumble upon a few potential customers who will visit your site and respond to your offer. It’s the law of averages. But the underlying problem is that, with such an approach, you must generate a substantial quantity of hits in order to produce an acceptable sales result.
Given that you want to appeal to as many people as possible, the greater the need will be to paint your Website, content and marketing messages with broad brushstrokes. And in the end, the traffic generated will be just as general or broad — and they probably won’t have particular characteristics (such as a strong need for your product).
Even if your product is a perfect fit for some, it will only be perfect for a small percentage of potential customers. Also, the degree of "generalness" your marketing efforts will have to project in order to attract so many ‘prospects’ will probably convey that the value of your offering is equal to that of others — suggesting that there’s no added value in buying from you. In this case, price is the metric that your prospects will use to measure the value of your product.
Additionally, out of the small handful of qualified prospects that hopefully hit your site, a large number — if not all — of them will leave due to your apparent lack of understanding of their specific needs, goals and concerns.
Find Your Niche and Put Your Feet Up
The sales you generate will increase dramatically if your site is narrowly centered on a specific theme, product, audience or outcome. And niche marketing has an added benefit: you won’t need to attract nearly so many potential customers to your site in order to generate the same number of sales as in the previous example.
Offline, being everything to everyone is understandable to a certain degree as, geographically-speaking, a niche might be very small — a limited marketplace. But online, however, niche marketing can work as a market can always expand, even if it operates within a comparably "small" niche of the market overall.
But beware! It’s a double-edged sword: as the Internet expands your market, it also increases the competition. Niche marketing is therefore more important online — by narrowing your focus, you will increase your market, and decrease your competition!
Marketing Your Product Online — A General Approach
Here’s an illustration. Let’s say that your best client is the corporate executive earning $50,000 annually or more, and that your Website receives approximately 200,000 hits in total per month.
If your site aims for the public at large, only a small part of those 200,000 hits will come from your ideal market — the executives. An even smaller number will actually be qualified for your offer.
For the sake of example, let’s say that this percentage is around 0.1%. It means that, of your 200,000 monthly visitors, only 200 (at best) will be people that you actually want to attract — people from your target audience.
And, because your site is too general, an even smaller percentage of those 200 execs (say, about 0.5%) will be truly interested in your offer and eventually make a purchase. In this case, 0.5% (of 200 target visitors) will generate sales – equal to a single client for an entire month.
Looking at the situation in reverse, if you want to achieve at least a single sale per month from this ideal market, your site will require at least 200,000 visitors on a monthly basis, given the law of averages. Therefore, your marketing efforts will need to multiply exponentially in order to create a high enough level of traffic to yield acceptable results.
Niche Marketing Online — Reap the Rewards
Now, let’s take the example of another Website dedicated exclusively to corporate executives earning over $50,000. This site receives a meager 5,000 visitors per month — admittedly, it’s not a lot, especially when compared to the other site. But in this case, the percentage of those 5,000 that fall into that site’s target market will be 100% — a 10,000% improvement!
Additionally, chances are great that this niche site will magnetize this ideal market almost effortlessly (such as via the search engines), as your site caters to the needs of this audience specifically.
Furthermore, the percentage of interested leads that are in a position to buy will be higher, by virtue of the fact that the site focuses on their specific needs. In other words, perceived value will be greater in the minds of those attracted to the site in the first place.
To be conservative, let’s say that this percentage is only 5%. It means that out of 5,000 visitors per month, one can achieve 250 sales — that’s 249 more sales than the other site (and with only a quarter of the traffic). But let’s be a little more conservative for a moment. Let’s say that only 1% of visitors actually buys. It’s still a remarkable 500% improvement over the other site, as 1% of 5,000 visitors equals five sales per month.
Of course, the above example is when all things considered are equal — I agree that there are many variables at play, here. But the spirit of this illustration is clear: it took an equal if not lesser investment of time, effort and money to achieve five sales per month with a niche site than it did to achieve a single one with a general site.
Case Study — Online Retailer Finds His Niche
Jim Banks started selling carpets online in 1998. He admits that, at the time, he knew nothing about it. Says Banks: "I thought that it would be a non-competitive market (‘who would want to sell carpet on the Internet?’ I asked myself) and it would allow me to learn about this whole new Internet thing."
But at first, Jim floundered. "I showed carpet on the Website, sent out samples, and used a wholesaler in Georgia to deliver the goods. I made some money, but it was a lot of hard work. In fact, a lot of hand-holding of customers was required, and my time was a limiting factor in how much money I could make."
But then, Jim had an idea. He adds: "I had read one or two articles that stressed the importance of niche marketing. And after thinking about that, and applying it to my industry, I came up with the idea of selling carpets and area rugs with children’s designs (e.g., animals, letters, game boards, etc). Today, things are going very well!" See for yourself – check out Jim’s site at KidCarpet.
Find a Niche and Fill It
In conclusion, here’s my advice: if you’re looking at starting a business online: first, find a niche and fill it. But if you’re already doing business online, then narrow your focus to a specific outcome, audience or product. And finally, if you do sell everything to everyone already, I suggest that breaking your business down by developing several sites, which sell the same products you offer now, but target them towards different segments of your market, will generate you greater success.