If you’re like many of my clients, you’re always looking for ways to increase your base of profitable customers in a highly competitive, maturing market. Often, the client is neither the market leader nor the market follower. Frequently, its site isn’t optimized to rank in the top five listings on the major search engines, and it’s priced out of many prime paid keyword positions. From a brand recognition perspective, this translates to the fact the client’s not on its target consumer’s radar. Given these constraints, how can a marketer increase traffic and sales with a limited budget?
I’ve worked with clients who’ve spent big bucks to go after mainstream market share in an established vertical with less than optimal results. Meanwhile, their richer, market-leader competitors have invested millions in growing online market share supported by major offline media buys. How do you cost-effectively respond to these perils?
Approach your market from a different perspective. Look to individually cultivate those niches related to your product or market.
In contrast, there are companies that understand market share can be built by dominating a number of related segments. One client grew very profitable niche segments for a mature product offering. As a result, it was able to a cross-sell bestselling, mainstream product to its involved customers with almost no incremental marketing cost. It leveraged existing buzz and popularity to sell a piggybacked product in customer communications that were already being sent.
With a limited budget, you, too, can be a big fish in a small pond while operating under your larger competitors’ radar. You may think building a targeted niche user base is expensive. There are two different, cost-effective ways to approach this problem. You can tune your product line by either selling other, related products into a specific market segment or sell the same product into different market segments. Consider the following steps to determine which niche segments or offerings will work best for your company:
- Analyze direct and indirect competitors. Your direct competitors target your market in a similar way online, while your indirect competitors sell your product to another market, sell through a different channel, or sell other products to your customers. This analysis is important in revealing untapped niches or consumer needs. Additionally, looking at how other firms approach their product selection and marketing can yield ideas for new ways to approach your market. In this assessment, don’t underestimate the power of old-fashioned competitors, such as Wal-Mart and Costco, where customers can experience the product then walk out of the store with it.
- Examine your existing customer base to determine potential niche opportunities. Consider demographics or other unique characteristics to determine whether your customers are already concentrated in identifiable niches. If you haven’t collected this information up front or through purchase history, you may need to entice customers to share this information with you. This can be accomplished with a contest or related giveaway.
As part of this analysis, more broadly compare customer characteristics across your different offerings or divisions. Though this may not work for newer companies with limited product lines, larger corporations may be able to work with colleagues to find synergies by leveraging their customer relationships by cross-promoting products.
- Assess cost efficiencies to determine effective cost:
- Look at more than the upfront CPM (define) media cost to determine the effective campaign cost. Though niche media may charge a premium for their targeted readers, you must look at the CPA (define) and lifetime value of each customer you acquire. The CPA tells you the fully loaded cost per customer; lifetime value takes the customers’ purchases and related revenue (such as advertising) into account over time as well as the time value of money.
- Include an assessment of infrastructure efficiencies to understand true corporate cost. Look for potential to leverage corporate utilities and so forth. For example, using template Web sites with similar structures can reduce the cost of approaching multiple niche markets. Alternatively, shared resources such as customer service can help keep costs down as well.
Once you’ve determined the optimal niches for your business, think about niche-targeting your marketing spend:
- Tune your offering. You can tune your offering by niche, including the type and breadth of products (do you use the same products across niches?); pricing (does your pricing remain constant or vary by niche? This can be important if segments overlap); and promotion (how do your on- and offsite marketing talk to your specific target market?).
- Create relevant content. You’ll attract new customers around topics of interest to the niche. Remember, it must be specific to your consumers’ needs. This can help drive improved organic search results. If the content attracts sufficient viewers, adding in-house or third-party advertising may be another revenue option.
- Test new offers to former customers. This may be a good way to revitalize these relationships. Due to email addresses’ short lifespan, it may be worth testing direct mail to customers whose email addresses are no longer valid.
- Tap into low-cost online techniques to reach customers. These include blogs and RSS (define) feeds. If you’re already creating tailored marketing content, why not reformat it for an RSS feed to attract new users?
When following a niche strategy, one major business decision you face is whether to approach niche marketing as part of a greater whole, like a house with multiple entrances, or as separately branded sites with similar back ends. When approaching new niche markets, consider whether there are ways to leverage your existing infrastructure while customizing the marketing. This helps you gain economies of scale while focusing marketing on making niche customers feel you really know how to meet their needs.
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