Afraid to Niche Down? How to Do It Without Changing Your Entire Agency

I will be the first one to tell you: you don’t have to niche your agency to succeed, but after reading this, I bet you’ll want to.

Why? Because it has more benefits than you think.

Trying to please everybody is madness. Yet, glancing at a few agencies’ websites, that seems to be the norm.

“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.”

See the problem?

Understandably so, there’s a lot of misunderstanding and friction when it comes to ‘niching down’ in the agency world. 

Today I’ll show you a less-painful approach that doesn’t require you to transform your business overnight.

The hypocrisy of agencies

Tell me if you’ve heard a similar story.

An agency owner or salesman gets on the phone with a prospect or client and asks them, “Who is your 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 who you’re targeting?!” they exclaim.

Yet, ask them that very same question and the answer might surprise you, because most won’t be able to respond.

Isn’t that fascinating? We admit it’s a smart thing to do, yet we sometimes fail to apply it ourselves.

That’s not the case for everybody, but if you haven’t done it yet, your know you should consider it and here are the not-so-obvious reasons why.

Reason #1: You will actually grow faster

This one is counter-intuitive. That’s because, if you niche down your business today, you could technically end up making less money during the first year or two before growth starts to catch up.

Here’s how it happens:

A snowball effect starts to occur. 

When you finally find—and only work with—your very best clients, you’ll see how they know more potential clients in the same industry with similar characteristics.

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

So while revenue could slow down for a bit, your year-over-year growth is likely to be higher, shaping 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 all starts to click

Say you were to serve SaaS companies like ours.

It’s immediately clear how to find us—and other companies like ours.

Outreach? AngelList, ProductHunt and CrunchBase are a good start.

Inbound? Popular startup blogs and podcasts are all over the place for you to participate in and if you start your own, it’s easier to know what questions this particular audience has.

Strategic partnerships are ten times easier to find when you know the industry you’re targeting and even hiring quality talent, that can actually deliver, ends up being an easier task when you specialize.

It all starts to click. Marketing, HR, sales. You get clear about your entire strategy and in business, clarity is power.

Reason #3: Efficiency = Profitability

When you do the same thing again and again, you get good and efficient at it.

You start building a repeatable process and finding gaps and opportunities to more quickly and rapidly serve your clients.

In a business that depends heavily on people’s time, efficiency is directly correlated to profitability. Less variety means employees and contractors can implement and learn faster. 

Having a wide variety of services and target markets is a fast way to distract your team. They’ll have to start from square one in things that take a lot of time to grasp, like understanding a new audience or learning a new software.

Narrow down your focus. That’s how you’ll break through the embarrassing profit margins some agencies make and build yourself a business that delivers more profits, not more problems.

Reason #4: The most powerful sales weapon turns to your advantage

We all know the power of social proof.

Cases studies are flat out one of the most powerful ways to convince businesses to buy from you and not “the other” agency.

When you narrow down your efforts to a particular industry, you start building a collection of case studies and testimonials you can show on your website or communicate in your sales calls.

This makes your target market much more likely to respond, so you can seal the deal once and for all.

And not only your clients will want to buy from you…

There’s more to it than just making the sale of your services easier.

Your business as a whole will be easier to sell AND will actually be worth more if you niche down.

In the marketing world, the phrase “jack of all trades, master of none” could not be truer, especially during the valuation phase.  A niche business will come in handy when considering strategic buyers.

Strategic buyers are often business owners in your current industry that are looking to acquire a smaller agency with offerings that they do not already provide.

This would increase the appeal of your agency and ensure security when your customers are rolled up in the acquisition.

Preparing to Exit: How to Sell a Digital Agency

If that’s not enough to make you niche down right now, then I’m not sure what will be.

Just let me finish with the most misunderstood concept of all when it comes to doing it the right way.

You don’t need to marry your niche

Please understand: 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 your agency doesn’t mean you’ll turn down all the projects that fall outside of it, or that you’ll fire all of your clients tomorrow.

I strongly suggest to not even change your website. Get a landing page up and running with an offer to a particular niche and run some paid traffic 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 do you think 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.