Benefits of Niche Marketing

With the numerous demands placed on a small business owner, one cannot be an expert on everything. Thus, by selecting one, two or three relatively specific markets, or niches, you can capture greater market share and increase revenue per customer by becoming an expert in a few select areas. Fortunately, this marketing strategy applies to both new and existing businesses.

There are significant advantages for small businesses by identifying and then targeting niche markets. First, you will save time and effort by reducing the amount of information you must acquire and master, such as legal issues, technical changes and improvements and competition. Second, you will reduce costs in various ways. You can purchase fewer subscriptions, join fewer networking organizations and lower advertising costs. As you study your markets, you will spend less on traditional advertising compared to a generalist as you discover who are and how to reach your customers.

Third, from a marketing perspective, it should take less effort to refine your marketing message (promotion) and position your services and products (price, place/distribution and product) as marketing efforts become more efficient and effective. As your competence increases, the overall quality of your services and products improve, followed by positive gains in revenue and profit. Over the long term, you may be able to add new revenue streams as an expert speaker, seminar presenter and author. Furthermore, you may have greater flexibility in choosing your projects.

Realistically, one cost that will likely not change is market research expenditures as your business needs to maintain in-depth knowledge about your niche market’s needs and wants. At a minimum, research should focus on the traditional marketing mix issues – how to price, distribute and promote your products or services. But hopefully, by studying your specialty markets, it should become easier to customize and differentiate your service and products. And with in-depth knowledge, you are again the expert who should be able to outshine your competition.

If your small business targets consumers, variables that can narrow down your niche markets include some of the following. Geographically, you may focus on a certain part of the metropolitan area, state or country. One example is an engineering firm focusing on cities west of DFW Airport. Demographically, your business may choose to focus on lifecycle stages, gender or income. A prime example is an attorney specializing in divorce or adoption. A third segmentation is psychographic which involves segmenting consumers based on psychological or personality traits, lifestyles or values. An example is a fashion store targeting consumers who make frequent purchases based on the latest fashion trends. A fourth variable within the consumer market is based on purchaser behavior in terms of their knowledge or attitude toward specific products or services. Some behavior factors include how purchase decisions are made, when products are purchased or consumed, or benefits received by purchasing a certain product or service. An example is a travel agency specializing in international vacations for frequent travelers.

There are also ways to segment the business market that will help a small business identify its best niche(s). Some client criteria to consider include company size, purchasing decisions based on service or price, small versus large orders, and companies with values similar to yours. Two examples of niche business markets include accountants focusing on health care professionals and insurance agents specializing in non-profits.

Briefly, the process to develop a niche marketing strategy entails studying your business’ strengths, identifying market segments that benefit from your products or services, and developing strategies to reach them based on identified characteristics.

For more information about niche marketing strategies, contact KGB Strategic Marketing Solutions

Gift Card Statistics

Gift Card Statistics
The growth of gift cards in the U.S. has grown significantly from their introduction in the mid 1990s. Here’s what various organizations tell us about the use of gift cards.

  1. Two-thirds of all consumers have purchased at least one gift card.
  2. Fifty-five percent of gift card recipients need more than one trip to deplete the value of their card.
  3. The average recipient spends 20 percent more than their card’s initial value.
  4. In 2004, the average value of gift cards was $59.
  5. In 2005, consumers spent at least $35.3 billion on gift cards.
  6. Two-thirds of adults who like to receive them enjoy receiving them throughout the year.
  7. Eighty-one percent of consumers purchase gift cards for birthdays versus 67 percent for holidays.
  8. When retailers switch from paper gift certificates to gift cards, they sell anywhere from fifty to one hundred percent more.

(Sources: American Greetings, epaynews.com, Green Sheet Quarterly, National Retail Federation)

Increase Referral Business

Referrals are the Way to Go

Many of you will likely agree from personal experience that referrals are the most efficient means of producing new sales.

One expert found that within the financial industry, one sale is gained for every 3.3 referrals. In comparison, it takes 10 seminar attendees, 50 cold calls or 60 letters to generate one sale.

Furthermore, according to Paul and Sarah Edwards (authors of Getting Business to Come to You), up to 45 percent of most service businesses are chosen by customers based on the recommendations of others.

So how does a business get more referrals? Undertake an intentional effort to get the right people talking about your company and your products and services.

Chicago-based Gaebler Ventures recommends these five steps when developing a referral program:

  1. Select the best clients
  2. Ask them
  3. Provide promotional tools
  4. Develop rewards
  5. Track results

Invest in a Website

Every year, a greater number of small businesses utilize websites. Here are some important considerations when investing in a website.

  1. What are the number of and types of special individual needs of your customers?
  2. What level of contact do you maintain with your customers? Does your site need to be interactive (selling, customer service and/or accounting) or will it just be an informational site?
  3. Consider what changes you may need to make if you start selling on the web. Examples include vendors for shipping, packaging materials and payment options (credit cards).
  4. Costs will include establishing your domain name, the web hosting service and maintenance. One expert also recommends registering variations and misspellings of your domain name.
  5. Is the message of your website consistent with all your other marketing items?

(Compiled from various sources including Chris Espinosa, ceGraphics)

Adjust your Pricing

For small businesses, establishing prices for your products and services is an important activity. Here are a few factors to consider when thinking about adjusting your prices.

  1. Should you reward certain or all customers when they habitually pay their invoices early or promote your products or services? As an example, offering one time discount for new successful customer referrals.
  2. Should you establish a tiered pricing program based on type or size of customer, product line or location? Are there benefits to keeping certain clients to establish a greater niche presence, or growing a new location?
  3. Should you adjust prices when customers use a combination of services? As an accountant or attorney, how valuable is a client who uses your firm for both business and personal services?
  4. Should you reduce prices for a short period of time to increase sales? Will higher sales volume allow you to reduce purchasing costs or help to recoup the costs of new software or training?

Postcard Marketing

Postcards are a great way to communicate with customers and offer four advantages over the traditional letter/envelope: 1. lower in cost; 2. don’t require receivers to open an envelope; 3. force sender to provide concise message; and 4. faster to print.

So what are some great uses for postcards? Here are some ideas, especially for targeting your best clients.

  1. Pre-print with your logo, address, slogan and/or picture, add meaningful comments and mail while on a trip, business or personal, to stay in “front” of your clients.
  2. Utilize for important announcements including new services or products, new employees or location, revised hours, upcoming meetings or seminars, or new strategic alliances.
  3. Pre-print with important industry facts or new regulations impacting your business, industry or services.
  4. Provide notification of upcoming special sale or discount, or use as a coupon.
  5. Use as thank you, reminder of their next appointment or need to schedule an appointment.
  6. Employ to solicit comments about an idea, or even a resume, for personal use.

Business Networking Success

An important part of creating career or business success is networking. Experts recommend planning for activities that help increase your visibility and build your credibility.

Here are a few useful hints to start employing today, if you aren’t already!

  1. Make special effort to remember names – we all like to hear our name said out aloud. Occasionally repeat someone else’s name when talking to them, and strive to introduce them to at least one other person.
  2. Focus on your talents more than your title or company. It should be easy for you to talk about what you do well and what you need.
  3. Come prepared with a list of topics you really want to mention and to whom you want to speak. The purpose of these topics could demonstrate you’re an expert, teach others to trust you, and/or lead you to resources and opportunities.
  4. Listen so you’ll learn what your contacts need. Apply the old rule: you have two ears and one mouth, so use proportionately.
  5. Display an upbeat attitude when entering a networking event.

Listen to Your Customer

Findings from customer service research conducted by Richard Gerson, U.S. Chamber of Commerce Small Business Institute, indicate the number one thing people wanted from someone they did business with was to be listened to.

Here are some ways to gather information from your customers that demonstrates you’re listening to them!

  1. Establish advisory groups, customer councils or board of directors, especially involving your best customers
  2. Conduct focus groups
  3. Use after-purchase surveys
  4. Ask employees for feedback based on interactions with customers
  5. Use customer suggestion box
  6. Undertake formal written surveys sent via mail, email, fax, telephone, or within a newsletter or promotional piece
  7. Conduct personal interviews over the phone or in-person
  8. If you distribute a newsletter, ask for customer comments
  9. Seek follow-up to customer complaints after problems are solved
  10. Hire mystery shoppers, especially retailers.