The rules of niche marketing

(October 2005) A lot of financial professionals say they serve a "niche." That’s fine, but when I ask them to define that niche, it becomes pretty clear they haven’t thought a lot about what niche marketing is, and how it works. It’s one thing to say you serve a market niche. It’s quite another to do it right.

First things first: What is a niche, anyway? For the purposes of marketing, a niche is a specific, well-defined group or segment of the population with easily identifiable "membership criteria" — that is, a list of features and characteristics that make the group different from others. The easier it is to define who belongs to a niche and who doesn’t — the more distinct the difference between members of the niche and members of the general population-the more attractive that niche is from a marketing perspective.

Why do top advisors like to target a niche? It’s simple: to maximize their marketing power. Instead of trying to be all things to all people, niche marketing allows you to focus on certain areas of expertise, and tailor a customized marketing message that you know will attract a certain segment of the population. It allows you to trim down your product and service offering, focusing on those that are in demand for your niche. And because people see you as a specialist, it becomes a lot easier to convert niche prospects into niche clients. All in all, pretty compelling reasons to be a niche marketer.

If you’re interested in marketing to a niche, keep these simple rules in mind:

1. Define your target niche clearly To market effectively to a niche, you need to define that niche as specifically as possible. For example, "high-net-worth individuals" may be an attractive segment of the population to target with your marketing. But for the purposes of marketing, they do not constitute a viable market niche. You’ll have to be more specific, more detailed if you want to be a niche marketer. High-net-worth business owners with established construction companies operating within 20km of your office — now that’s a viable niche. Ideally, your targeting effort should produce a list of between 200-400 prospects living in or near your community. If it doesn’t, then it’s probably a good idea to re-consider the business case for focusing on them.

2. Research your target market: their dreams, fears, and actions Once you’ve defined your niche, you’ll need to do your homework, and understand what issues hit home with these people. Quite frankly, this is an area where I see a lot of advisors fall down. They take shortcuts — they’re so excited about the prospect of marketing to a niche that they fail to research that niche thoroughly. That’s a big mistake. To market effectively to a niche, you need to understand their issues as if you were a member of the niche yourself. You need to understand their issues — economic, political, and personal. You need to read their publications. You need to understand the emotions that drive their behaviour: What do they dream about? What do they fear? After answering these questions, you should be able to answer the most important question: How can you help them? If you can’t, you need to do more homework.

3. Create a service process that meets the needs of the niche Bringing your niche into your existing service process is a lot like trying to force a round peg into a square hole — it just doesn’t work. If you want to market yourself effectively to a niche, be prepared to spend some time re-working your client service process. Very likely you’ll need to emphasize certain elements of your service mix, while possibly downplaying others. An interview with an influential member of the niche might give you some ideas here. Before long, you should be able to construct a simple graphic overview of your new service process that quickly and effectively communicates key elements of your service process to the niche. This will make it easier to demonstrate how every element of your practice is tuned to meet the needs of the niche.

4. Market yourself as an expert to your niche Finally, you need to get the word out to the niche that you are an expert in meeting their needs. You should tackle this along three channels: (a) your own marketing publications (newsletters, brochures, marketing emails), (b) speaking engagements and seminars designed specifically for the niche (lunch and learn sessions, etc.), and (c) appearances and/or interviews in media of interest to the niche (i.e., trade magazines). Executing this three-pronged strategy will find you rapidly earning the attention of the niche.

Established professionals may want to write a self-published handbook for members of the niche — an excellent way to impart specialized knowledge and build credibility. Whatever you do, your goal should be to make it clear to the niche that you’ve chosen to be a specialist — you’re not all things to all people — and they should recognize that nobody will better protect their interests than you.

Make no mistake about it: niche marketing can be an extremely effective strategy for financial advisors. But it takes work and discipline to do it right. Invest some time in getting your niche marketing right, and you’ll be handsomely rewarded.

Jeff Thorsteinson is the creator of the YouFoundation, an organization that has helped advisors build world-class practices through innovative concepts, tools, and systems since 1993. Contact strategicadvisor@youfoundation.com or 1 800-223-9332, ext. 21, for more information to help you build your referral business. Or visit the website at www.youfoundation.com.

(10/06/05)