5 Reasons Why you Shouldn’t be Afraid to Niche Down

5 Reasons Why you Shouldn’t be Afraid to Niche Down

Countless agencies are struggling to find their purpose in a sea of competitors. Those who decide to niche down have most likely discovered their business strengths, and are focusing their energy on those services.

Glancing at a few agencies’ websites, it’s clear that many haven’t decided to niche down yet. They are trying to please everyone with their full-service-offering:

“From web design, to development, to SEO and content marketing, we have all your business needs covered.”

“We’ve worked with small and mid-size businesses as well as corporations and Fortune 500 companies.”

“We’re a full-service agency with experience working in a variety of industries from healthcare and real estate to B2B and technology.”

The problem should be evident: if you offer services that cover every aspect of SEO, for instance, you might not be an expert. Why should a potential client hire you for link building if there are agencies specializing in that niche?

There’s a lot of misunderstanding and friction when it comes to niching down in the agency world. We’ll demonstrate with five simple reasons why every agency should at least think about niching down.

The hypocrisy of agencies

Many agencies preach the story of niching down without applying it themselves. They ask prospects or clients about their target audience. If the client says something like, “Oh, we target everybody,” they start explaining how much money they’re leaving on the table.

“How can you expect us to reach your audience if you’re not clear on whom you’re targeting?!” they exclaim. Ask them that very same question and the answer might surprise you, because most won’t be able to respond.

We admit it’s a smart thing to do, yet we fail to apply it ourselves. That’s not the case for everybody, but if you haven’t done it until now, your know you should consider it. Here are the not-so-obvious reasons why.

Niche down, and practice what you preach

Successful agency’s niche down early. Some of them do it from day one because their founders are industry experts, others do it at a later stage.

The sooner you decide to focus on a specific service offering, the easier it is to

  • explain your business to prospects,
  • position yourself as an industry expert, and
  • find leads that are looking for your services.

Let’s look at a few reasons why you’d want to niche down.

Reason #1: You will grow faster

If you niche down your business today, you could end up making less money during the first years. However, keep the long-term effects in mind.

Here’s what might happen if you niche down now:

  • You start marketing to a particular niche.
  • Projects that don’t fit your criteria are turned down, or you need to end your relationships with previous clients. A drop in revenue is expected.
  • Little by little, your agency starts to get known as the “X agency for Y” which increases your credibility.
  • At the same time, this gives you the ability to charge above average rates.
  • The increased prices and reputability make your agency more referable in the long run.

What you’ll start profiting from is word of mouth from happy clients. Once you find your ideal clients, they’ll refer you to leads in the same industry with similar characteristics.

As the saying goes, “Birds of a feather flock together.”

While revenue could decelerate for a bit, your year-over-year growth is likely to be higher. This will shape your agency’s growth from a linear to an exponential construct.

And before you know it, you have left the generalist agencies way behind.

Reason #2: It will start to click

Let’s say you are a designer who creates book covers. It’s clear how to find your target group. If you’ve productized your offering, you are most likely working for self-published authors. You can even go one step further and focus on a specific genre, such as science fiction, or young adult fantasy.

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Next, research authors and do outreach. The successful ones have their own website–it’s easy to reach out to them. Those who are getting started linger in Facebook groups, forums, Reddit, and Quora.

Another way to approach them is with an inbound strategy. There are countless popular blogs and podcasts for you to participate in. You can start your own blog and target your ideal customer with search engine optimized blog posts. Or you re-target them with Facebook ads.

Filling your funnel with ideal leads is much easier once you know who you need to target. Niching down also helps you scale your agency by knowing who you need to hire. It all starts to click: marketing, HR, sales. You get clear about your entire strategy and in business–clarity is power.

Reason #3: Efficiency is profitability

Once you start focusing on the same tasks, you’ll become an expert in doing them. Not only will you do them faster, you’ll find new ways to make your process more efficient.

Instead of struggling to keep track of multiple tools, you can use our all-in-one client management & billing software.

You can

In a business that depends heavily on people’s time, efficiency is correlated to profitability. Less variety combined with just one tool everyone needs to use means employees and contractors can learn faster.

On the other hand, having a wide variety of services and target markets distracts your team. They’ll have to study your documentation and learn things from scratch before they can work efficiently.

Narrow down your focus. That’s how you’ll break through the embarrassing profit margins some agencies make. Build a business that delivers higher profits instead of more problems.

Reason 4: You’ll attract the right clients

Many agencies can’t scale their business because they are attracting the wrong clients. Do wrong clients exist? They sure do for productized agencies!

Those clients are not the right fit for you because they ask you to do things you are unprepared for. You might not want to turn them away, but it would help you in the long run.

Another often overlooked opportunity in attracting the right client lies in your abilities to read their mind. Ideally, you’ll have researched buyer personas and know exactly who your ideal customer is. If you know who they are, you’ll also know how to market your services to them.

If you niche down, you’ll reduce the possibility of unfit clients ever finding you. If you are still not convinced, maybe the last reason will nudge you in the right direction.

Reason #5: Clients become case studies

Social proof is a handy way to convince even the most skeptical lead of your qualities. When you narrow down your efforts to a particular industry, you start building a collection of case studies and testimonials. You can display those on your website, or communicate them during your sales efforts.

Case studies have another advantage: they are a great way of building relationships with your clients that go beyond a simple client-service-provider relationship. You are not the only one benefiting from a case study as a marketing and social proof tool. The client will do everything they can to promote it in their channels (blog, newsletters, social media).

Besides case studies, you can use testimonials from happy clients. A short one-liner placed in your SPP order form template during checkout can do wonders for your conversion rate:

SPP order form template testimonial

There are many other places you can integrate your testimonials thanks to our client template editing option.

You don’t need to marry your niche

One often misunderstood point when agencies are told to niche down: picking a specialty is not a decision set in stone.

You can pick it, test it, change it, flip it. Ten times in the next month if you want to. Niching down your agency doesn’t mean you’ll turn down all the projects that fall outside of it. You also won’t let go all of your clients tomorrow.

Don’t even change your website unless you have the possibility to do a proper A/B test. Instead, set up a landing page with an offer to a particular niche, and run paid traffic/ads to it.

Think of niching down in terms of funnels. That is, niche your funnels, not your agency. Thinking about it from this perspective makes the decision to do it less painful. If things go well, years down the road, you can easily start to expand to other markets, just like startups do.

Business behemoths like Facebook and Amazon started within a niche—Harvard students and book readers, respectively.

What would happen if a startup tried to model what Amazon or Facebook is today from the get-go? It’s the same when young agencies want to be like the big boys, and target everybody from day one.

Deian
Posted by Deian
Head of Agency Success at SPP