If you missed part 1 of this series, the link is here.
Going from selling commodity products to whoever will buy them to dominating a niche is a spectrum. Last week I mentioned some examples of the spectrum:
- Offer better service.
- Offer convenience.
- Leverage your information advantage.
- Specialize.
This spectrum is a good way of thinking about levels of differentiation.
Competing on price is only a differentiator if your prices are consistently lower than everyone else’s and you have massive volume. Like Amazon.com. If you’re primarily competing on price, you probably have zero differentiation.
One step up in differentiation is to offer better service. But a lot of agencies at least claim to do that.
Layer on convenience, and you’ve mostly eliminated disloyal, high-churn customers from your book.
Then, if you want to differentiate yourself even further, you can start to leverage your most valuable, intangible asset: your accumulation of knowledge, expertise, and experience. That’s an information advantage.
And finally, when you find a problem that you can specialize in solving, you’ve landed in a real niche.
Now, how do you dominate that niche?
1. Get more specific.
The more you drill down, the better your shot at becoming the go-to provider.
It’s how you can best differentiate yourself. And as the saying goes, “different is better than better.”
For example, I know an agent who speaks Korean with native fluency. That’s a good niche. But she’s not the only one. So what if her niche was Korean-speaking business owners? Or more specifically, Korean-speaking real estate brokers? Or how about Korean-speaking real estate brokers who serve clientele in high-end zip codes?
You can see how the market gets smaller, but the possibility of being uncontested in that market skyrockets. And you can see how being different can be better than being better.
The clearer you get about whom you’re serving and what problem you’re solving, the clearer clients will get about why they should be working with you. Take that to the bank.
Can you have more than one specialty? Yes. But get one right first. Then use it to branch out. Your initial niche will only be as good as your focus.
2. Build trust.
As you strengthen your position in a niche, trust becomes critical.
When you’re a price taker, you might rely entirely on the brand-trust of the carrier you represent. That’s a plus for sure, but it means there is no customer loyalty for you.
With a niche, your own brand-trust becomes a huge asset to your business.
And I’m not just talking about integrity. That goes without saying.
I’m talking about two things: care and credibility.
Care
You’re going to have more interaction with your niche customers. They have to know that those interactions are about them, not about you.
They have to know that you care about them and are committed to doing what’s right for them.
You’re playing the long game, not the transactional game.
Credibility
They also have to know that you know what you’re doing.
Figuring out where your strongest game is, or developing a very strong game, is a prerequisite for entering a niche in the first place.
Without that, you don’t have a specialization, and you won’t drive surplus customer value.
But if you do have strong credibility, you’ll be able to give excess value that customers will convert into retention, referrals, and more of their product purchases.
So, to summarize, once you’ve decided to move into a niche, your goal should be to own it. You do that by:
- narrowing your specialization so everyone with the problem you solve comes to you.
- caring deeply about clients and their needs (the long view).
- being highly credible in your problem/solution set.
Next week I’ll talk about how your financials will change in a strong niche and how to optimize them.