Should You Pick a Niche For Your Agency? 🤔
This is by far and away the top question asked in our Slack Channel.
Should I pick a niche for my agency?
Short answer, yes.
But it’s worthwhile to unpacking this further.
This post breaks down the pros and cons of “niching down” in your agency.
Pro #1: faster traction in the market
Choosing a niche means your marketing strategy is laid out for you.
You know who to target, where to reach them, and their unique pain points.
Let’s say you want to target gyms. Choosing a niche like CrossFit would make it much easier to gain traction.
It gives you direction for building case studies, sales, and referrals. It’s also easier to network because you can reach out to other brands in your niche.
Pro #2: hyper-targeted marketing
Brands without a niche tend to attract lots of leads, but lower conversions.
Their marketing isn’t targeted, so most leads are all over the place.
Choosing a niche allows you to develop hyper-personalized content for different audience segments based on factors like:
- Interests and hobbies
- Where they work
- Day-to-day problems they face
- Browsing behavior
You can speak directly to their pain points in every blog post, video, social media post, and phone call.
Choosing a niche helps you attract high-quality leads, especially if you’re creating content that truly resonates with your audience.
Pro #3: selling is easier
When you only work with specific industries, your authority, reputation, and conversions take on a snowball effect:
- You take on a client in your niche
- Said client is happy with the results
- You build a case study around the client’s experience
- You use that case study and client referral to prove your value to new clients
Let’s say you run a digital marketing company for coffee shops. When you approach a lead, you can call ten other coffee shop clients to prove your experience and value.
I, on the other hand, must focus on different (and usually less specific) value propositions being a generalist.
It’s much easier to build momentum closing leads when you’re working in a specific niche. When you don’t focus on a niche, it’s harder to explain why you’re the best fit for specific clients – especially if you’re competing against other companies that do focus on their niche.
Pro #4: operations are smoother
Without a niche, you must run through a new process from scratch with every client. You have to evaluate their unique needs and problems to figure out the best actions to take.
For example, an e-commerce website has a distinct set of problems compared to a law firm website.
Having a niche means that the process is already defined for you. Every business has unique expectations, but there’s a much smaller gap.
Sure, the law firm might pay $10k for a month of services whereas an e-commerce site only pays $3k, but you’ll also have to spend more time researching and developing a service the law firm expects. Paying $10k means they expect $10k worth of results.
In most cases, your profit margins will be higher taking on the e-commerce client (if that’s your niche) because you’ll spend less time on the work process.
Con #1: the market cap is smaller
At the end of the day, choosing a niche means you’re working with a much smaller market.
If you’re only working with CrossFit gyms, for instance, there’s a limit on how many clients you can take on and relationships you can build.
A small market also puts you at risk of market over-saturation.
Developing a niche, in many cases, could also mean losing or turning away high-value clients.
Let’s say you’ve spent time developing a niche in social media marketing for cosmetic surgeons. An OB-GYN might come along with interest in your services, but you might not have the resources to meet their unique needs.However, you can turn this negative into a positive by building relationships with other companies and charging referral fees for sending clients their way.
Con #2: less incoming leads
When you develop a niche, you might scale faster but you’ll also hit conversion caps at much lower intervals.
For example, we work with lead generation, SEO, and WordPress websites. Since we don’t really have a niche, that means we can take on clients in several industries.
However, our general approach also means that many leads never convert. We might generate tons of leads, but they’re not necessarily high quality.
Con: #3: more experience is needed
I see a lot of folks choose high-profit niches simply because they have their eyes on the prize.
If you don’t have experience in cosmetic surgery or law but want to target these niches, you’ll have to hire someone who already has it.
The people you hire to write technical legal blogs, for example, will require a higher salary than someone writing e-commerce content.
Focusing on a high-profit niche ≠ high profits, necessarily.
Should you select a niche?
If you’re just getting started, yes, I recommend you find a niche for your agency.
It will make it easier to get clients and build smoother processes for service delivery.
If you’re an agency with existing clients, I would NOT recommend you pull everything down and select a niche.
Instead, use hyper targeted marketing campaigns and outbound sales to target specific niches and show them the work you’ve done for similar clients.
In a sense, you can segment your marketing / sales to target niches without having to tear down your whole brand and fire your current clients.
Do some market research. Look for what the average client will pay compared to your operational costs and experience. You’ll want to balance market demand, competition, profits, and your own ability.