Nine Ways to Identify Your Niche from Outsmarting Goliath by Debra Koontz Traverso

Nine Ways to Identify Your Niche

The following is an excerpt from Outsmarting Goliath (Bloomberg Press, 2000). For the full text, as well as examples of each of the nine points, see the book.

Fortunately, every business can be best at something. If you're having trouble determining how you differ from your competition, then read on. Below are nine ways in which you can zero in on your niche or USP (unique selling proposition) and differentiate yourself.

As you review these nine, remember that what you're trying to do is locate a niche that matches customer needs (or wants) with your unique selling features or the area(s) in which you can excel. Your USP will require that you position that image in the minds of your prospects.

A visible, purposeful difference in benefits must be so obvious to customers that it compels them to buy from you rather than from your competition. Your USP will be the one feature you emphasize that makes you unique. Be sure it's based on truth, that it actually is a strength, and that it's something you can live with for years to come.

Keep this customer-focused question in mind: "Why should I, your potential customer, do business with you, above all other options including doing nothing?" If you can answer this question with one (or more) of the nine areas, then those techniques should work for you.

1. Product or Service

Determine whether your product is unique. What are its quality, features, and reliability compared to similar products on the market? Is it better built, more reliable, or less likely to break? If your price is higher, does your product offer more features to merit the increased cost?

Or, determine whether your service is unique. What service do you offer that's more reliable or usable by customers? Do customers have a clear understanding of the benefits they'll derive from your service?

2. Information and Expertise

Your customers and clients want more than a good product or service. With it they want solutions, information, insights, awareness. If you are the one who has the facts they need, your chances of getting their business have just improved.

Ways to capitalize on information include distributing newsletters, offering free informational seminars, and serving as a convener and a referral point. If you know something worked for one customer, get permission to pass that information along to other customers.

3. Distribution and Delivery

Do you offer home delivery of your product? Is your product distributed in more areas than your competition's? Do you provide unusual gift wrapping with delivery? Do you know if your distribution costs undercut those of your competitors? Can you provide updates on where a customer's order stands, or will customers just have to sweat until the items arrive? If you distribute or deliver your product differently than anyone else does (for example, against aggressive schedules or for less money than the competition), then this may be your niche.

4. Systems

If you have unique or redundant systems in place to offer customers peace of mind in purchasing your product or service, then this is your selling point. Car dealers offer loaner cars for when a purchase ends up in their shop. Electric companies have several sources of power to rely on in case a storm damages a coal plant or a nuclear plant unexpectedly scrams (shuts down). Telecommunication companies offer redundant hosts, routers and lines in case the primary system is overloaded. My local bank changed its business hours to better accommodate customers who work the traditional nine-to-five shifts. One bakery I consulted with near Philadelphia keeps a full day's supply of baked goods in huge freezers at a location separate from its ovens in case its primary location is ever rendered unusable. (Why? It provides a backup supply of goods so that customers' orders are never left unfilled.) These are all examples of unique, backup, or redundant systems, ways of doing business that can deliver a little bit more to customers.

5. Incentives

Sometimes special customers deserve special treatment. Through personal experience, I know that the old marketing axiom known as the 80/20 rule is true: 20 percent of your customers will generate 80 percent of your business. These "twenty-percenters" should get special recognition or allocation of assets above all others.

Although all customers are important and should be treated accordingly, your biggest or most long-standing customers should receive a higher level of service.. The airline industry recognizes this. That's why airlines reward their frequent flyers.

I have seen incentive programs run from the creative to the mundane, from the complex to the dead simple. Either way, incentive programs generally work because customers walk away from the transaction feeling that they got just a little more than expected.

For example, I like going into Waldenbooks and receiving a 10 percent discount each time I purchase a book. My son, on the other hand, likes to go to Borders, where employees punch out a circle on a customer card for each purchase of a children's book. He knows that when he receives 10 punches, he will get a $5 gift certificate. The malls are full of eateries that provide you with a customer card, encouraging you to return because by the time you've purchased your tenth sub or slice of pizza, you know a free one awaits you. Video rental stores do this, too.

So, learn from the masters. Or learn from your local bookstore, or video store, or dry cleaners, or pizza shop. Develop an incentive program that not only brings in customers, but will make you look like a corporate good citizen, and you've got a winning selling point.

6. Innovation

You know that box that motivational speakers and management gurus insist we think outside of? That's where you're going to find your innovative ideas: outside the box. When it comes to addressing client needs, the issues that you face are inside the box, just as they are for the big businesses. In fact, in-the-box issues tend to be very similar, whatever the size of a company.

When big businesses find they have to solve their problems in a standardized, procedural, policy-driven, that's-the-way-we've-always done-it way, small businesses can use creativity to come up with outside-the-box solutions. After all, you can think and act like a revolutionary when you are not weighted down like a corporate dinosaur with multiple staff levels and burdensome forms of checks and balances.

7. Promotional Tactics

Promotion includes just about anything you do, once established, to woo customers to your door. These tactics can be subtle or they can be blatant, making customers unmistakably aware that you are trying to woo them.

If you want to start thinking about creative tactics, listen to your local radio station: cash for the eleventh caller, a day at a salon for the best office prank of the month, a free trip to Hawaii for finding a key hidden somewhere in town. Creativity begets creativity, and analyzing even tacky ideas that worked well for another business may help you to come up with unique tactics tailored to yours.

Promoting through paradox—operating your business in a manner different from or even opposite to what is expected—can sometimes work.

Tactics don't have to be complicated. Simple tactics draw attention too. For example, let's say that you hold an annual spring promotion just like all your competitors do. To distinguish yours from everyone else's, do something original like distributing your sales flyer folded around a pack of seeds. Or give away tickets to the first 100 customers for a chance to win a free spring window cleaning.

8. Customer Service

Let's think like customers for a moment. Let's say that every card shop in your town is the same—in other words, everything from selection, to quality, to good location, to price, to incentive discounts, to advertising techniques is equal. How would you decide which shop to patronize? More than likely, your decision would be based on how you feel when you shop at each location, and you'll select the one that makes you feel more welcome and more valued. But what does that mean? If you like browsing without being bothered, you will select the shop that leaves you alone. If you want immediate assistance; you will select the shop that starts helping you the moment you walk in the door.

Think like your customers think and this just might be your niche.

9. Stability and Leadership

I have not come across many small businesses that can market this feature to advantage, principally because—for most small businesses—it is not yet a strength. Sadly, this unique selling proposition is one that your largest competitors have going for them.

What I have come across are many small businesses that thought they should be able to rely on this selling point because they had been around for 20 years or more—operations like office supply shops and hardware stores. Unfortunately, however, their long-standing status in town was generally not enough to help them compete with large chains like Staples, Office Max, Lowes and Home Depot. They quickly learned that they needed to tap into (or develop) another unique selling proposition.

However, this just might be your niche, so take a look at what I mean by stability and leadership. Customers like to buy from companies that they know will be around tomorrow. They like constancy and consistency of products and services. Ask yourself:

How healthy is your organization?
How well capitalized is it?
How long have you been in business?
Are you steadfast in presentation, product and price?
Is your leadership consistent and strong?
How much assurance will a customer have that you will be in business one month or one year from today?
Do you have a low rate of employee turnover?
Will you be able to follow through on all claims?

If the answers look positive, you may have identified a unique selling proposition that you should start promoting.

If you're still unsure where to concentrate your marketing efforts, then ask yourself these questions. The answers will help you identify your uniqueness:
What do friends and family always say about you (positive comments only, please)?
What are your customers saying to you about your business? (If nothing, then ask them: what's good, what's missing, what sets you apart from the others, what would they like to see?)
Do you have a hobby or previous career that can support some features that could be folded into your business?
What are some things you've always wanted to do in business but never had the chance?
What is your marketplace lacking that you can provide?
What types of people do you work with the best?

<< Return to Tips to Apply to Your Business—Instantly!

Copyright Notice
Outsmarting Goliath -- Copyright © 2000-2008 by Debra Koontz Traverso
All rights reserved on all material on all pages in this Web site. For information on reprinting material from this site, please contact debra@outsmartinggoliath.com.