Why niching your agency is so important

In today's episode of the Agency Accelerator Podcast, I want to talk about a topic that is really close to my heart and one that I'm passionate about because I've seen it make really significant improvements when agencies focus on this. And that is all about finding your niche. That's the things that make you truly different. And I'm not just talking about saying that you're passionate or honest or acting with integrity, because trust me, that doesn't make you unique. Now, before we jump into today's episode, I just want to say a huge thank you to everybody involved in the latest launch of the Agency Accelerator Mastermind program. Phew. It was an exhausting but exhilarating few weeks. It takes a ton of work to get ready for a launch and actually go through the launch process. But it was a huge success and I'm really excited to have just started with this year's group. If you missed the boat on joining this year's program, then you can still register your interest for when the doors open for the next program. So make sure that you hop over to dacostacoaching.co.uk agency accelerator. So that's decostacoaching.co.uk AgencyA accelerator and register your interest so that you're the first to hear and grab a place. Okay. On with today's show.

Accelerate your agency's profitable growth with tools, tips and value added interviews with your host agency owner and coach, Rob DaCosta.

So why is niching so important? As I said, it's a topic close to my heart because I have seen it time and time again that when an agency has a clearly defined niche, they will always massively outperform those that don't that are generalists, that don't have a clear niche, and they'll outperform them in almost every way based on the amount of revenue they earn, how long they manage to keep their ideal target customers for employee satisfaction, and in the quality of their client relationships. And that's because the client will see them as a deep subject matter expert and not just another supplier, which they may well see a generalist as now. I did many things wrong when I ran my own marketing agency back in the 90s and early 2000s. But the one thing we got right from the start was that we had a really clear niche. And that was that we were a PR agency that focused on the tech sector. And in fact, it started out even more niche than that because we were a PR agency that focused on the tech sector for software companies. Now I Kind of fell into that niche because I worked as a marketing manager in a software reseller and I felt that there were no good PR agencies out there that really understood the complex technology. So I felt there was a gap in the market and that was both a smart move and also based on naive youthfulness as well. So, anyway, it served as well and we grew our business and we, over time broadened out in a number of ways. So we broadened out by focusing on all aspects of it. So that would be software and hardware, and we broadened out the services that we offered from pure PR to become a full marketing agency. Now, when you think about this, if you were buying a service and you could buy that service from either a generalist who could offer you that service but do a number of other things as well, or you could buy the same service from a specialist who said that that's the only thing we do and we're really expert in that. Well, you're always going to go to the specialist, aren't you? It's sort of obvious. If you, if you needed knee surgery, you wouldn't go to your GP for that knee surgery, but you'd ask them to refer you to a knee surgery specialist because you immediately trust that person because they are an expert in their area. And it's exactly the same with your agency. People who've got burning problems want to have them solved by experts. And when you serve a specific group of customers, you can position yourself an expert, not just a jack of all trades. You can deliver great results to your clients through constant exposure to their most pressing problems. And as a consequence of all of that, you can charge higher fees. Think about how much more money you'd be willing to pay a knee surgeon specialist to do that operation on your knee, rather than having a general practitioner, a doctor, do it. Now, let's face it, any agency doesn't matter what you do, whether you're web design or development, whether you're SEO, ppc, whether you're a PR agency, a graphic design agency, it doesn't matter what sector. And we all operate in a very competitive space, me included, as a coach, so it's hard to look different. And what happens is that when we are trying to serve everybody, let's imagine that we are a web development company and we provide, we do WordPress web development and we want to serve anybody that wants a WordPress website. Well, you know, how do you look different to anybody else? Your website's probably going to look very generic and in the end you're going to end up differentiating yourself probably in one of two areas. You're either going to try and win on price, which means being the cheapest, or you're going to try and win on promising extreme high levels of service. And both of those, unless you're geared up for it, are a really fast way of being unprofitable. Now there's absolutely nothing wrong on differentiating yourself on price. Let's look at, you know, look at supermarkets or look at the low cost airlines that differentiate themselves on price. They are supremely profitable. However, their whole setup is geared that way. So if you're website development and you want to win on price, you're going to be the kind of Wix GoDaddy type of service. But unless your agency is geared up to act like that, you're not going to be profitable. So my advice to you is if you're a sort of small to mid size agency, you don't want to be differentiating on price or service. And if you can shop as a specialist, you can actually be higher priced. Okay, so I know some of you will be listening to what I've just said and you will be saying in your head, oh yeah, but Rob, if I niche down, then what about all those other opportunities that I'll be missing because I'll just be targeting that niche. And I get it, I get we all run that belief in our head. But you have to challenge yourself over that thinking. Now let me just tell you a quick story here about when I started out as a coach. Because for the first 18 months of coaching on my own when I started DaCosta coaching back in 2007, I was trying to be a generalist. So in theory I could go and work with a big corporate bank one day and the next day go and do some work with a WordPress web development company. But guess what guys, I didn't win either of those type of clients and I just wasn't successful. Because when I want to, when I went to talk to the big corporate, I didn't have a compelling story or background or examples to tell them. And when I went to that small web development company and I told them that I also worked in for big corporates, they're sitting there thinking, well you really aren't going to understand my business. So I then made that decision to focus on my niche. And I'll tell you a little bit about how I did that later on how I made that decision and that's when I started really growing my company. So if you're sitting there Thinking, yeah, but Rob, I don't want a niche because I might miss loads of opportunities. You have to be really honest with yourself and say, how many of those opportunities are you actually winning? And would you be able to win more ideal work if you had a clear niche? As I said, when I ran my agency, I wasn't successful at all for the first year and a half because I was trying to be all things to all men. So if you agree that niching is a good idea and maybe you've grappled with that issue before and you struggle to find your niche, let me give you some insights on how to go about doing it. Firstly, let me tell you about the decision making process I went through when I niched my coaching business from being a generalist business coach to a coach that only worked in the agency sector. So first of all, I thought about where do I have expertise? And that was obviously working with agencies because I'd run my own agency before and I knew I could deliver great results. So that's one area that I focused on. But I also thought about where I was passionate because I believed I could make a big impact. So those are two things, and there's some good clues there on how you need to go about niching. So rather than getting stuck and ending up making no decisions, what I suggest you do now is grab a pen and paper, pause this, grab a pen and paper, and then just answer the following three questions. Now, let me just outline what those questions are first and then I'll dig into a bit of depth about them. So the first question you want to answer is, what part of my agency is most profitable? The second question you want to answer is, what type of customer can I get the best results for? And the last question you want to ask yourself is, what kind of work do I most enjoy doing? So let's dig a little bit deeper into each of those questions. So the first question I said was, answer, what part of my agency is most profitable? Now you can look at this vertically, horizontally. So that's by market sector or by the service that you provide. So currently you might be a full service marketing agency, but when you look at some analysis, you find that actually it's the digital marketing activities that you do for your clients that are more profitable than anything else in the business. Or you might find that actually it's all the finance clients that we work for that are more profitable than any other segment. So you can cut this a number of ways. But the first question to answer and do some analysis on is what part of my agency is most profitable? Profitable. Then question two was, what type of clients do I get the best results for? So consider whether you deliver your best work to small businesses or larger ones and what sectors they work in, but which type of client do I get the best results for? And the third question I said was, what kind of work do you most enjoy doing? And let's face it, when we're doing work that we really enjoy, we're going to get the best results anyway. So this is really, really important. You know, working with clients you're not excited about helping is also going to put you on the fast track to burnout. So, basically what I'm saying is that your niche will be the intersection of money, passion and results. And it's that Venn diagram with that bit in the middle that's going to tell you where your best client work and the best type of client is. And if you can find that and you can commit to focusing on that, you're going to be able to build a sustainable business where you deliver great results for clients, you earn the right kind of fees that you're happy about and you enjoy doing the work. Now, if you run through this process and you're still struggling to work out that niche, like where you do your best work, just bear in mind that you can cut your niche in four ways. We tend to just think about it in terms of what sector we work in, but you could cut it by geography. So, you know, I only work with clients in the south of the uk, or you could cut it by industry, vertical sector, so that's obviously finance or creative or whatever. So for me, it's the creative marketing sector. You can cut it by the service that you deliver. So we just do digital marketing, or we just do WordPress design and development, or you can cut it by the problem that we solve. So it could be that we help companies generate more leads for their business, and so that's the problem that you're solving. So think of those four things, geography, sector, deliverable and problem. So it's been 13 years since I started focusing my coaching practice on the agency sector niche above anything else. And the benefit of this, and with the benefit of this experience, I have two key learnings to share with you. And using this advice, I hope it will help you create your niche, serve your audience really well and build a sustainable, profitable and most importantly, enjoyable agency for the future. So the first thing I want to say is that your niche defines you, it doesn't trap you. And so the first Thing I want to say is that your niche defines you, it doesn't trap you. I think a lot of people are really fearful about saying, well, if we're going to this niche, I'm going to lose loads of other opportunities. But that's not true. You can still take on work outside of your niche. You just have to make a conscious decision of whether you're going to do it or not. So for example, my niche is the marketing agency sector, but I have a couple of clients that sit outside of that. So I work with a telecoms company, but when, I mean, I worked with them for many years, but when we first started having discussions about working together, I was really mindful about thinking, is this work I could do really well? Would I enjoy working with them? Could I make an impact and a difference? And because I answered yes, because I really like the people and the culture of that organization, I decided to take them on. So when you commit to your niche, it doesn't stop you working outside of that niche. It just means that you are going to tell the world that you work in this specific niche. Now another point about this and a piece of advice is that I would say go as niche as you can because you can always broaden out that niche over time. So I've changed my niche over the last 13 years. First of all, I said I work with just creative marketing agencies. Then I broadened that out a bit to be service based businesses because for a while I started winning some recruitment clients and now I've taken it back to just the marketing agency sector. So I think the thing is, if your niche is really specific, but you know that there's a big enough market for you to win enough business, then you need to commit to that niche. And as I say, you can always broaden out over time. Now the second learning and point I want to make with you to help you build confidence to commit to a niche is that a niched agency will always earn more money than their generalist competitors. And that's because niche agencies can charge more than generalist ones simply because they are seen as subject matter experts. And the more narrowly defined the niche, the more likely it is that your prospects will assume you're an expert in that field and therefore expect to pay more. Just bear in mind, we all want to have that partner partner relationship with our clients rather than the sort of unequal supplier customer relationship. And when you show up as an expert, your prospect will see you not just as a supplier and therefore a commodity, but much more as a trusted partner. And someone who will be giving them really expert consultative advice. And that enables you to build better relationships with your clients and fundamentally earn higher fees. So remember earlier I talked about the knee surgeon? Well, obviously you're going to pay a lot more money for your knee surgery than you would pay a GP to do the surgery. And if we go back to the web development example, that's why some web development agencies will charge £50,000 for a website, while others struggle to get paid £1,000 for a website. So which of those categories do you fall in? And if you're sitting there thinking, yeah, but Rob, I'm an exception, trust me, you're not. And if I was sitting down looking at your market and your product or service, I'm sure we could find a way to niche your business. And the whole reason you should think about doing this is because it makes it much easier to find clients, it makes it much easier to define your ideal target customer, and it makes it much easier to be consultative from day one and of course charge more fees and have longer term relationships. So one word rises above everything else when I'm talking about your niche. So once you've found your niche, that word is commit. You have to be willing to to commit to your niche. So once you've done your niche, what do you do next? Well, you need to make sure that all your outbound communications are crafted with your niche in mind. So if you're thinking about rewording or redeveloping your website, is it really clear that you are an expert in whatever sector you say you are? And is it really clear to your target customer about the pains that you're solving? Because that's when you show up as an expert and a trusted partner. So whatever your outbound communications are, you really need to think about your niche. So you need to be talking to your ideal target audience directly. Forget about trying to be all things to all people. What you need to do is serve the few so that you can really resonate with them and you can build a profitable, growing, stable business that you can broaden out that niche over time. Remember, your goal is to show up as an expert. And in practical terms, this means that your website needs to speak about that. Any of your email marketing, your social media posting needs to really quickly tell people about your specialism and your niche. Remember that we don't have very long to convince people you can help them, so get that point across as quickly as possible. So when we look at the website, as soon as a prospect lands on your site, they should be able to tell what your niche is. They should see that you understand the burning problems that they're facing and they should see that you're more than capable of solving those problems for them and how you can take that pain away and add value to their business. Now, something that I'm alluding to here, but is definitely the subject for a future podcast, is ensuring that your website is all about your target client and not about you. No one cares about you until you've proven to your target audience that you understand the core challenges that they have and you show them that you can solve those challenges. Only at that point will they say, okay, tell me more. And that's your opportunity to tell them more about your agency. So I'm a big fan of making sure that website homepages really resonate with the target audience by showing them that you understand the challenges that they have. As I say, that is a subject for a future podcast, but is a point worth making when it comes to niching. And of course if we've got and of course if we've done our work on niching as I've talked about in this podcast, then we really understand our ideas, target client and the challenges that they have and how our product or service can solve those challenges. Now I've got a great freebie attached to this episode of the podcast and it outlines niching in much more detail and gives you a step by step process to follow. So go and grab a copy of that and you can grab it at the costacoaching.comco.uk ebook niche or generalistagency or simply go to decostacoaching.co.uk ebook and you'll see it in there as well as all the other ebooks that are free for you to grab a copy of. So that's my advice about niching your agency. If it's something that you thought about before but have avoided, or if you're struggling to win ideal clients or profitable work, then this is definitely something that you should think about. Trust me, every single time a business in a competitor competitive space niches, they win. A good example of that is where I live on the south coast of the uk There is a coffee shop every few hundred yards and it is really difficult for them to differentiate one from another. But one that has been very successful is the small batch coffee shop and they have really focused on roasting their own beans. That's why they're called small batch and they started out just as coffee roasters and then started opening their own coffee shops, and the reason that you go there is because you want a great cup of coffee. Coffee. And guess what? They're more expensive than a lot of other coffee shops. But the reason you're going to go there is because you want a great cup of coffee and you might want to grab some beans as well to take home with you. So any competitive space is always going to really struggle to differentiate themselves, and you need to make sure you're doing that by establishing your clear niche. So I hope that episode has been really useful for you. Go and grab the freebie download that I mentioned earlier because that goes into this topic in a lot more depth and it is really one that I'm passionate about. Now, in next week's episode of the Agency Accelerator Podcast, I am interviewing Steve Buston and we're talking about everything to do with public speaking and presentation skills and why we are all so scared about it and what you can do to overcome it. So make sure you come back and join me for next week's episode of the Agency Accelerator Podcast. And of course, please make sure you have hit the subscribe button so that you are always alerted to the newest episode. And if you've enjoyed this episode and other episodes, please please, please consider leaving me a review since it really helps other people find the podcast. Meanwhile, have a great Thursday, Friday and weekend and I will see you next week.