On December 10, 2020, the rental housing marketplace Airbnb completed its initial public offering at a $47 billion valuation — one of the largest IPOs of the year. No less than 24 hours later, the company’s market cap shot north of $100 billion. Both were incredible milestones for a platform that, by design, predominantly just facilitates transactions — it owns virtually none of the services it helps its suppliers provide.
The success of Airbnb is not without precedent. Over the past 20 years, industries have been redefined by marketplace giants like eBay, Amazon, Uber, and Udemy that have upended the way we shop, travel, eat, work, and learn. But at the same time, even the most successful marketplace businesses don’t reach transformative scale. The question is: What are industry-changing marketplaces doing that others aren’t — and can those practices be replicated?
Clay Christensen’s seminal theory of disruptive innovation offers guidance. While many marketplace businesses simply organize and facilitate transactions among current market participants, disruptive marketplaces create new types of transactions that draw in buyers or sellers (or both) who weren’t already participating in the market.
For managers, entrepreneurs, and investors who are looking for the next disruptive marketplace opportunity, it’s essential to understand how these novel transactions can be identified and created. In this article, we provide a guide.
Disruption Meets Marketplaces
Many markets don’t work well. The costs of accessing the market and/or identifying and communicating with potential transaction partners can limit who participates or make it hard for participants to transact with each other. Asymmetric information about sellers’ offerings or buyers’ needs, meanwhile, can make parties less willing to transact, lest they end up being taken advantage of. Under such market failures, there are opportunities for beneficial exchange that are inevitably overlooked. Marketplaces address these problems by providing rules and infrastructure that facilitate and improve transactions, and mitigate market failures — creating value in the process.
But when is a marketplace disruptive?
A disruptive innovation underperforms on traditional measures that current market participants value, but is “good enough” for a different set of prospective consumers who value affordability, accessibility, and convenience. Disruptive innovations thus target those who were previously left out of existing markets — people Christensen referred to as nonconsumers.
In the marketplace context, we have found it useful to separate nonconsumers from what we call nonproducers, i.e., individuals or businesses that are constrained in their ability to offer supply in the market. For a marketplace to be disruptive, it must identify either new supply, new demand, or both — targeting individuals or businesses who were unable to profitably produce or consume goods and services in incumbent channels. And the most powerful disruptive marketplaces are often those that simultaneously connect nonconsumers with nonproducers.
For an example of a marketplace that is not disruptive, consider Angie’s List (as of recently, called Angi). Founded in 1995, it was built in response to the painstaking process homeowners endure to find, compare, and vet home service providers. Angie’s List cut through the time and effort this process required with a simple platform built on efficiency, trust, and simplicity. Existing providers list their services on Angie’s List in order to find new clients at a price point they are accustomed to, complementing the incumbent home services supplier network. The platform makes the market much more efficient.
Yet while incredibly valuable, Angie’s List does not change the structure of the home services market. It also does not make home services more affordable or accessible and does not find a way to turn nonconsumers into consumers.
By contrast, consider Outschool. It’s a marketplace of online courses for children that allows parents, educators, and others to create their own courses. Though certainly used by families who would otherwise be able to afford and access enrichment programs, Outschool’s business model also enables an entirely new population of families to take advantage of these opportunities. It not only enables new families to consume educational content, but enables a whole new population of educators to monetize their passions and expertise in algebra, ballet, or Pokémon arts and crafts through the platform.
Put another way, disruptive marketplaces make good on famed Silicon Valley investor Bill Gurley’s observation that internet marketplaces “literally create ‘money out of nowhere’” because “in connecting economic traders that would otherwise not be connected, they unlock economic wealth that otherwise would not exist.” When nonproducers and nonconsumers come together, tremendous opportunity awaits.
Bundles, Trust Wrappers, and New Ways of Transacting
Many marketplaces target existing supply and demand in a more efficient or trusted way — they improve existing transactions. Disruptive marketplaces, however, expand market participation by creating new types of transaction altogether. After examining what venture capital firm Andreessen Horowitz identified as the top 100 marketplace startups in 2020 (plus a number of our own favorite marketplaces), we have identified four novel transaction types that can unlock disruptive potential.
These novel transaction types are not mutually exclusive. In fact, because nonconsumption often derives from many distinct sources, marketplace disruption often entails creating new transactions along several dimensions at once.
Smaller supply units.
Before the advent of marketplaces such as Airbnb and Getaround, most people’s homes, apartments, and cars were nonproductive assets: spare couches and bedrooms earned no rents and cars were parked most of the time. The new platforms, however, allowed those assets to be monetized. They made it possible to carve homes up into smaller rental units and enabled vehicles to be rented over short time horizons, selling a bite-sized unit of supply.
These “smaller supply unit” transactions are often disruptive because they come at a lower price, which makes the product affordable to a new group of people. This also produces a transaction type that incumbents are unable to copy because their business model is optimized for larger-unit (and therefore higher value) transactions.
Other marketplaces have created new transactions by aggregating rather than carving up supply — and in some cases, aggregating demand. Classpass bundles excess supply of exercise class slots into a “membership” that customers could buy to access classes across multiple fitness studios. Individuals could sign up for classes flexibly and frictionlessly according to their interests, whereas previously they would have had to buy classes or memberships at individual studios.
As a corollary to the smaller supply unit transaction type, bundles are generally inconsistent with incumbent business models. Though gyms, for example, offered individual classes before the advent of Classpass, the prices were so high that prospective customers were effectively forced into monthly memberships. Thus, for someone who previously couldn’t afford a monthly membership, a bundle of class units across gyms can offer a “good enough” whole that is greater than the sum of its parts, creating demand for a new transaction entirely.
One of the simplest ways marketplaces can create new transactions is by building infrastructure that enables new suppliers to enter the market. Countless would-be online sellers, for example, have been held back by the sheer complexity of the web design, fulfillment, and inventory management skills required to run an ecommerce business. Amazon Marketplace lowers each of those barriers significantly, enabling millions to operate their own online stores. Similarly, Substack (an online platform for writers), Patreon (a membership platform for creatives), and other platforms have made it substantially easier for writers, artists, and others to market and monetize their expertise and skills, unlocking a new talent pool.
Reducing supply barriers presents disruptive opportunities in two ways: First, building a platform that turns nonproducers into producers creates competition, which ultimately lowers the price relative to existing market offerings. Second, matching new supply and new demand enables a degree of personalization that incumbents simply cannot match at a comparable price point.
Certain transactions don’t exist (or are highly constrained) because a trust barrier prevents demand from engaging with supply. Health care data, for example, is highly sensitive and thus difficult to share in a trusted way — much less exchange or sell. But blockchain solutions make it possible for health providers to share data in a trusted fashion without need for intermediaries. The “wrapper” in this case is cryptographic technology that enables a publicly verifiable transaction ledger that records where data has been sent. Such trust wrappers create opportunities for disruption by facilitating transactions among parties who would otherwise be unable to access the market.
Applying the Framework: Residential Real Estate
Our taxonomy of new transaction types offers a powerful set of lenses for any investor, entrepreneur, or manager looking to identify truly disruptive marketplace opportunities. To see how this can work, consider the residential real estate industry.
Smaller supply units.
Many prospective home buyers are unable to purchase because they face a chicken-and-egg problem: they do not have the resources (i.e., a down payment and/or sufficient credit opportunities) to buy a house outright, yet without the appreciation of home equity, they may never be able to. This suggests a potential smaller supply unit marketplace strategy: Rather than buy homes outright, could an entrepreneur make it possible for residential buyers or investors to instead buy smaller home equity units?
Real estate startups Unison, Noah, and Point already enable homeowners to sell portions of their home equity, and it’s not hard to imagine these sorts of transactions being made available to prospective home buyers as well. For example, a would-be homebuyer could invest a small amount of money into the equity of one or more homes which they are confident will appreciate. When the home is sold (or when the homeowner pays back the equity financing), the prospective buyer gains from the appreciation, which improves their ability to afford a larger down payment in the future. This type of marketplace would directly target nonconsumption, and potentially tap into nonproduction, by allowing homeowners capitalize on their home’s equity without having to sell the entire home. This offering would also be completely orthogonal to traditional lending and real estate brokerages, who profit on the sale of entire home units.
The financial barrier to developing an entire multi-family home or condominium complex is typically quite high; this results in nonproduction among individuals who can’t deploy sufficient capital to take on real estate development projects. But if we bundled the financing, several entities would be able to co-finance a building investment project in an attractive market. This bundle of supply may be well matched in a marketplace which bundles demand, becoming like a version of Kickstarter for real estate development. A group of investors could propose property types and locations, with prospective buyers or renters agreeing to move into the new units once they are completed.
This marketplace has the potential to expand access for both supply and demand that are constrained by capital and lending requirements. New developers, as well as those with ideas for properties in up-and-coming areas, could lower the cost of development by aggregating demand upfront, resulting in more affordable offerings.
For decades, the residential real estate market in many countries has been fully intermediated by real estate agents who extract a significant share of the transaction price from sellers. Agents’ market power has come in large part from controlling access to the information and resources needed to buy and sell a home — property listings are often proprietary and can only be created or viewed by agents. But Redfin, Zillow, and other platforms are directly addressing this pain point, making listings publicly accessible and creating technology prospective sellers can use to list their homes directly. As a result, sellers are starting to cut out the intermediaries; in Zillow’s case, homes are now being purchased outright on the platform, a transaction which immediately taps into potential nonproducers (home sellers).
As supply barriers continue to come down, nonconsumers will participate in real estate markets that were previously inaccessible due to the sheer cost of brokers fees. Although 3% on an expensive home purchase may not make a significant difference to most prospective buyers, a one-to-two month broker’s fee on a rental property is prohibitive for many. Platforms that remove these expensive intermediaries will thus create opportunities for suppliers to transact with nonconsumers.
Many prospective home buyers are constrained by a point-in-time debt-to-income analysis from their bank, which limits the available pool of homes that can be purchased. However, many individuals’ short and long-term income potential is significantly higher than what they earn today. Many universities recognize such an opportunity in their faculty members and provide home loan certifications that help banks see less risk than what a junior faculty salary may indicate. Imagine a platform that creates similar trust wrappers for homebuyers. By analyzing industry growth, firm market value, and an individual’s professional track record over the prior seven years, a platform could generate a stamp of approval that offers increased credit access to those seeking to purchase a home — particularly in markets where home prices continue to rise.
The impact of such a system on nonconsumers is straightforward: more individuals would have access to mortgages than previously possible. On the supply side, the trust wrapper might enable smaller banks and other entities to compete in a mortgage market that is currently dominated by large banks. While larger, more established financial institutions will be happy to continue serving their usual customer base, smaller, industry-focused, or regional banks can begin a disruptive march among customers traditional banks may be inclined to ignore.
These real estate examples illustrate how our framework can be used as a high-level roadmap for identifying marketplace opportunities in any given industry. And though of course none of the ideas suggested here are guaranteed successes, they serve as a starting point for entrepreneurs looking for ways to create disruptive growth.
And while marketplace businesses are complex to execute and manage, disrupting through marketplaces is paradoxically less daunting than it may seem. This is, in part, because marketplace disruption can take advantage of existing market forces.
Every market is already at work trying to achieve efficient outcomes among participants — who already have some desire to transact. Marketplace builders simply need to identify transactions the market would like to complete, but that are blocked because of some inherent friction. Once an entrepreneur figures out how to eliminate that barrier through marketplace design, the market quickly takes care of itself. And unlike in other innovation categories, a disruptive marketplace can often move up-market directly, because whatever transaction efficiencies it finds can be applied directly to improve transactions among pre-existing consumers and producers.
Moreover, disruptive marketplace transactions occur at a different level of abstraction from most incumbents, which leads to greater flexibility. For example, Marriot may think of itself as in the “hotel business” — as a result spending countless resources improving their properties and services. But for most Marriott guests, the high-level transaction is not “hotel services” but simply “travel housing.” Airbnb focused on that higher-level transaction unit and reduced barriers to participating in those transactions as much as it could — creating and capturing tremendous value along the way.
The past two decades have seen the rise of many valuable marketplace businesses, but the most iconic, category-creating ones have disrupted traditional value networks with the novel transaction types described here. Understanding such disruption helps us understand how those marketplaces succeeded — and provides a framework for innovators looking to identify the next big marketplace opportunities.
How to write product descriptions to increase sales
This post was originally published on June 24, 2019, and was updated on June 7, 2021.
When it comes to setting up and managing an eCommerce business, learning how to write product descriptions may seem like a relatively simple task. On the flip side, if you sell multiple products, it can feel monotonous and repetitive. However, product descriptions shouldn’t be glossed over or written in a hurry. They’re a small but mighty tool that can work wonders for customer interest and sales.
Research shows that 87% of shoppers say that detailed product content is important to their overall purchase decision. Moreover, eCommerce sales are at an all-time high with consumers spending $861.12 billion online with U.S. retailers in 2020, a 44% increase from the previous year. You can’t afford to miss a piece of that pie with lackluster product descriptions.
A successful product description requires the right balance of storytelling, rich content and SEO awareness. Use the following guide (with real-life examples) to learn how to write product descriptions that will boost your sales.
Learn how to write product descriptions that tell a story
As you write product descriptions, try to describe an experience, not just the product itself.
Focus on making the reader envision themselves using (and enjoying) your product.
If appropriate, go as far as describing a time or place.
For example, look at the description for the below Bumble and bumble hair product. There’s a tagline under the product name “Sweat fearlessly. Clean Instantly.” Immediately, you already understand what this product does. Then the description further explains how you feel post-workout with sweaty hair, and how it can combat that issue. The benefit icons are just the cherry on top! (More on benefits later…)
Product descriptions that tell a story are persuasive to potential customers, nudging them towards the “add to cart” button. The story doesn’t have to be all flowery language — it can also include informative details. In fact, consumers are 131% more likely to buy from a brand after they consume educational content .
Apple is the masterclass example of marrying storytelling with information within their product descriptions. Cameron Craig, who worked in PR for Apple, told the Harvard Business Review:
“Our mission was to tell the story of how our innovative products give customers the power to unleash their creativity and change the world.”
You can see just that in the product description of the latest MacBook Air. The copy immediately educates the reader on how this product will optimize their personal and professional lives. They also break down complex technological specs (like CPUs) and explain what that means for users in practice, i.e., you can complete more tasks and waste less battery.
Write product descriptions that highlight your unique value proposition
What makes your product different from the rest? Your unique value proposition (UVP) is your product’s differentiator, it’s what makes it noteworthy, and also worth buying. You should include your UVP near the beginning of your product description to quickly convince customers.
If you aren’t sure what that might be, do a little competitor research to see what other brands say about similar products and figure out why yours is different.
For example, refer to GoPro’s description of their latest Hero9 camera. They highlight that the device takes 5K video and has 7x more resolution than typical HD content.
Not only do they speak about their best selling points but they also explain why this version is better than the previous iterations. The copy describes the benefits of Hypersmooth 3.0, the latest update to their stabilization technology.
Master product descriptions that consider your target customer
As you explore how to write product descriptions, think not only about your target customer, but also how they will use the product.
While features are important and have their place (more on that later), benefits create compelling copy that convinces the customer why they need the product.
When thinking about the product and customer, ask yourself:
- How will it make their life easier?
- What problem will it solve?
- What advantages will it provide?
Those are the types of benefits you should highlight first and foremost in your product description.
Read the first two paragraphs in Goop’s description for a skincare product. It immediately dives into what the product will do for the customer’s skin, describing, in detail, all the results users can expect.
Use product descriptions that match your tone to your buyer persona
When you write a product description, you also want to consider your target customer so that you can speak directly to their buyer persona.
One way to accomplish this is by matching the tone of the product description to your ideal customer.
For instance, if your audience is millennial consumers and you’re selling a lifestyle product, you can inject humor and frivolity to catch their attention.
On the other hand, if you sell professional-level tech products targeted toward business buyers, you’ll want to keep the tone more serious and detailed.
The perfect example of tone is Dollar Shave Club, a brand that made a name for itself with irreverent humor. Notice how their product description reflects its overall brand voice (and matches the tone of their audience) with tongue-in-cheek jokes.
Make your product descriptions concise and scannable
The above-the-fold section of your product page should contain the best copy. Remember that every word matters. Potential customers can scroll or click for more information if they’d like. That means your initial product description should be concise and to the point.
Whether you offer an expandable description or tabs below the fold with more features and details, the idea is to make the first product description scannable to hook the customer.
Scannability is also crucial for mobile customers so that they can see product descriptions easily on their phones.
Make sure to keep mobile-friendliness in mind as 79% of smartphone users made a purchase on their mobile device in the past six months.
Many brands use bullet points to help with scannability in their product descriptions. Notice how Home Depot includes bullet points in both its initial product description, as well as the expanded product overview.
Include multiple high-quality images with product descriptions
Holding a product is vital to certain consumers. Even with the eCommerce boom from the pandemic, a recent survey found that 46% of people still prefer to shop in stores. And 33% say it’s because they want to see, touch, feel and try out items.
You don’t necessarily need to hire a professional photographer to take product pictures (although if you have the budget, it can be worth it). High-res camera phones with portrait mode make it increasingly easier for eCommerce business owners to DIY product images.
When possible include images of the product in use, like someone wearing a piece of clothing, a customer using a tool — or even a screenshot of a digital product. These types of images help contextualize the product in action, which makes it seem more real and tangible.
Note how Thrive Market overcomes the issue of selling spices (becasue it’s essentially just a ground-up powder, it’s tough to really spotlight in an exciting way). But they still use pictures to their advantage, showing the packaging, so customers know what to expect. They also incorporate an image of a meal that uses the spice, helping to put the product into context.
Incorporate customer testimonials with product descriptions
User-generated content (UGC) is a powerful tool in driving sales for your eCommerce business.
Customer testimonials and reviews are the best types of UGC to include in product descriptions.
Reviews help to provide social proof that other satisfied customers purchased and used your product, which goes a long way to encourage potential buyers.
Recent research confirms that UGC influences the consumer purchase decision process.
Depending on the layout and format of your eCommerce site, you can include a link to the product review page, or have native reviews underneath the product description.
Some brands opt to cherry-pick positive reviews or testimonials and include it as a quote in their product description.
Make product descriptions searchable with SEO
If you want more customers to find your product with organic search (via search engines such as Google or Bing), write product descriptions with SEO in mind.
Each individual product page on an eCommerce site is another opportunity to include high-quality content that’s indexed by search engines.
When product descriptions are optimized for search engines, those indexed pages will ideally rank for your target keywords. In other words, a potential customer types in a query related to your product/brand, and your site appears as a top result in the Search Engine Results Page (SERP).
If you haven’t already, do some basic keyword research, so you know what terms and phrases to include in your product description. Keywords are terms that directly relate to your product that a potential customer might type into a search engine when looking to find it.
Make a list of keywords and naturally include them in product descriptions, details and anywhere on your product page.
Don’t forget about long-tail keywords— these represent longer phrase/question searches rather than specific two- to five-word keywords. To give you an idea, instead of the keyword “cleaning supplies,” a long-tail keyword would be “affordable organic cleaning spray solution.”
Google tells us more and more consumers use conversational search queries. Searches with “do I need” grew in popularity by 65% — these are searches like: “what size generator do I need?”
Their advice on using this to your advantage? “Lock down keywords and phrases typically associated with [your] businesses and then consider natural language search phrases that customers might be using to find them.”
Make product descriptions that include useful and technical details
After you craft and hone your initial product description, include technical and specific product details. As you’ve seen in the examples above, the product details section typically comes below the fold and under the initial product description.
However, that doesn’t mean it’s not as important.
Consumers have specific needs and concerns when it comes to purchasing a product, and details can be a make or break when it comes to conversion. Just think: what if someone has a skin allergy and can’t find the materials for a clothing item?
Your goal with product details should be to answer any question before a customer asks it, and provide useful information to help them on their buying journey.
A good example is Macy’s — they include the height and clothing size of the models in their product pictures. These details give the buyer additional insight into how items fit on an actual person, for example where a dress hem might fall.
A/B test your product descriptions
Once you nail down how to write product descriptions, don’t stop there. A/B test descriptions against one another to try out different tactics and find the best options. You can formally A/B test with marketing tools such as Google Optimize, Optimizely or Visual Website Optimizer.
Alternatively, you can do informal A/B testing by using different versions or formats for descriptions on similar products to see which sells better over a certain period of time.
Every eCommerce business is different, and there’s no-one-size-fits-all formula when it comes to product descriptions.
Testing your product pages will allow you to improve your descriptions to increase traffic and sales.
Make sure to check in with all product pages, if one seems to be selling better than the rest, try to repurpose that description on the low-selling products. Remember that data and metrics will help you refine your process.
Editor’s note: With dedicated product pages, GoDaddy Online Store makes it easy to update your product descriptions.
Learn how to write product descriptions to drive more sales
Product descriptions have the power to increase sales for your eCommerce business dramatically, yet large and small companies alike can struggle with them. Whether you have 10 or 10,000 products, it can be challenging to write unique, customer-attracting descriptions. But trust us, when you put in the effort, using the above tips, you’ll see the ROI!
The main takeaway? Don’t get disheartened when setting up your eCommerce store. Follow this guide, and with a little creativity, strategy, and persistence, your product descriptions will increase conversions for your online store.
This article includes content originally published on the GoDaddy blog by Erik Deckers.
The post How to write product descriptions to increase sales appeared first on GoDaddy Blog.
What Is a Niche Market and How to Find Yours
Jeff Bezos had a vision to build an “everything store”—an internet company that sold nearly every product type all over the world. In 2020, it’s safe to say he was successful, as Amazon sells everything from web services for startups to Nicolas Cage pillowcases. But when Bezos launched Amazon 25 years ago, it was simply an online bookstore.
Amazon’s origins are a fitting case study in niche marketing. One of the best ways to launch a business is by identifying an underserved segment of the market and tailoring your products or services to them. We understand finding a niche market can be difficult, which is why we’re here to help. In this guide, we’re going to explain the benefits of niche marketing and show you how to find a niche market for your business. But first, let’s establish exactly what niche marketing is, and provide you with some examples of how it’s done.
What is a niche market?
A niche market is a subset of a market on which a particular product or service is focused. The market subset is usually based on five different market segments: geographic, demographic, firmographic, behavioral, and psychographic.
Geographic segmentation splits a market based on its geographical boundaries, and is based on the assumption that our location informs what we buy to some degree. Demographic segmentation identifies markets based on demographic information such as gender, age, and income level.
Firmographic segmentation separates a market based on company or organization attributes, such as industry location, headcount, and revenue. Psychographic segmentation is about finding a market based on attitudes, aspirations, and values. Finally, behavioral segmentation is based on observed actions, such as usage rate or purchase preferences.
Niche marketing examples
A niche market is typically composed of a combination of different market segments and will inform the features, price range, and quality of the product or service. Examples of niche markets include:
Owners who like to dress up their dogs (demographic, behavioral)
Parents of children with an upcoming bar/bat mitzvah (demographic, psychographic)
Actors/actresses in need of SEO services in New York (firmographic, psychographic, geographic)
Each of these examples is based around an established industry (pet care, party planning, and SEO) and narrowed down to cater to a specific need identified within the market.
A niche market can be broad (i.e. soccer fans, people in need of legal help). However, it behooves small business owners just starting out to have a niche market that is as focused as possible (i.e. fans of the soccer club Manchester United, car accident victims in Philadelphia). As the business grows, it can broaden its niche to cater to new opportunities.
It’s important to note that a business can also serve a broader audience than just its niche market. A law firm, for example, can do more than just work with car accident victims in Philadelphia. A niche marketing strategy is simply a way to leverage your expertise in one area to stand out from your competition.
A few examples of actual niche marketing companies include:
Square: This point of sale company offers simple software to many small businesses that were unable to process credit card payments or needed an easier way to handle these transactions.
Lululemon: This popular athletic and athleisure brand caters to women and men looking for trendy fitness apparel or comfortable loungewear.
Zen Courses: This online course-building company targets entrepreneurs and business owners who want to create their own workshops and courses, but aren’t sure how to get started.
Why you should find your niche market
As a small business owner, tailoring your business to meet a specific demand in the market has several key benefits, including:
While it may take time and money to drill down and find your specific market, working within and marketing to a niche market is usually cheaper and less time consuming than trying to appeal to a broader audience. This is because it takes less time and money to develop and market a product or service and provide customer service that caters to a smaller group of people.
“You can achieve brand saturation within a niche market in a way that you never could within a broad market without spending billions of dollars,” says Gerard Boucher, founder and CEO of social media marketing agency Boucher + Co.
A niche market is a niche market because it is underserved. Therefore, if you identify a niche market, there shouldn’t be a lot of competition. Reduced competition can be good because it allows you to run your business the way you want without having to worry that you are being undercut or outmaneuvered by a rival.
However, if you find a niche market with little competition, one of two things are likely to happen: You’ll foster competition by finding success in the market, or you’ll realize that there is no competition because the market is not lucrative enough (we’ll talk more about finding a lucrative market in the next section).
Because niche markets are small, businesses can more easily build brand loyalty by focusing on the quality of individual customer relationships. This can be done through more direct customer interactions, such as sending personalized emails and thank you cards, accommodating special requests, and offering custom services.
These types of actions foster repeat business, which is key to survival for any niche business.
If your business has a digital presence (and it should), niche marketing allows you to be hyper-focused on a few very specific keywords. This will help you rank highly in search engine results, which can be an enormous driver of traffic and sales. To help you get the most of your niche market from an SEO perspective, consider publishing content related to your niche.
Remember: Getting in front of the right people is better than getting in front of a lot of people who may not be interested in your business.
Highly targeted marketing
We mentioned that it is cheaper to market to a smaller number of people, but it is also more effective. That’s because the members of a niche market are more similar to each other, meaning it is possible to craft marketing content that will resonate with a larger segment of the desired population. A smaller market also makes it easier to judge the impact of your marketing efforts.
Another benefit of catering to a niche market is that people with similar interests tend to be in contact with each other. For example, fans of the television show “Game of Thrones” discuss their interest in online web communities. If you’re doing a good job, people in your niche will spread the word to others, which is the most powerful form of marketing there is.
Focus your efforts
Focusing on a niche market affords you the opportunity to become really good at one specific thing. The better you are at what you do, the more you are considered an expert or leader in your market. This becomes a self-fulfilling cycle, as more customers will want to buy or work with the most experienced or well-regarded business in the market.
Establish a foothold
Finally, if you’re just starting out, you’re focused on establishing your position in the market. By finding a niche, you are guaranteed at least some demand for your product. This can help you establish an identity and build the foundation to eventually expand into a larger market.
How to find a niche market
Now that we know the benefits of finding a niche market, let’s explore niche market opportunities for your business. If you’ve already launched your business, you may have considered some of these factors. If you’re looking for business ideas, identifying a niche market can be a great starting point.
1. Choose from your interests
No matter what type of business you want to launch, it helps to start by asking yourself what you are interested in. Take a piece of paper and write down all of your hobbies, passions, and skills.
Once you have a list, consider your most important personal achievements and life lessons, and your approach to solving problems. Also ask yourself who you want to do business with, and where you want to do business.
How do these things apply to each item in your list of hobbies, passions, and skills? Ideally, your idea will arise naturally when you look at the combination of these factors. For example, you may love clothing and care deeply about the environment, so you decide to launch a line of eco-friendly leisurewear.
Considering all these things will ensure you choose a direction that you will be truly invested in. This is important because you will be spending a lot of time and energy in this niche, and your passion for the business will be your main motivating factor. In addition, if you don’t care that much about your niche, your customers will sense it, and you will be seen as a phony.
2. Explore the potential market
Once you have discovered a niche that you are interested in, you need to determine if enough other people are interested in it that it can support a business. A great way to do this is by evaluating the internet and social media traffic around keywords related to your niche market.
There are several tools you can use to evaluate search volume for specific keywords:
Google AdWords Keyword Tool
While doing keyword research, keep in mind related terms that pop up, as these provide insight into other interests within your niche market. AdWords and UberSuggest also show you how competitive each keyword is. If there is a lot of competition, your market might not be as niche as you thought. Also keep in mind the popularity of keywords over time, as this can show you if interest is rising, falling, or seasonal.
Boucher says that if a keyword has under 500 searches per month, you are facing an uphill battle in terms of demand. “Ideally you want between 1,000 to2,000 searches per month. With a number like that, you can test your product without burning through cash,” he explains.
Checking social media websites like Facebook, Pinterest, and Reddit can also provide a window into the interest in a particular niche topic. Check to see if there are a significant number of people posting about your niche, and if there are online groups where people discuss topics related to your niche. These people make ideal targets if your business decides to launch a social media marketing campaign.
Another approach you can take is asking people who you think would be prospective customers what their impressions are of your business. This can help you refine your idea and make it more market-friendly.
Finally, if there is any competition in your niche market, research them. How do they rank in search results? Is their marketing effective? What can you do better than what they are doing? Answering these questions can help solidify your business idea.
3. Determine profitability
Once you’ve found a niche market you’re interested in and confirmed there is an audience, you need to determine if you can actually make money focusing on that market. Online this can be done by checking Amazon bestseller lists, affiliate marketplace product lists like ClickBank and ShareASale, and dropshipping marketplace bestseller lists.
Each of these platforms informs you of the popularity of specific products, as well as what they sell for, which can be valuable in determining your own price points.
Another approach you can take to determine your price point is through digital marketing. Boucher recommends launching a targeted social media marketing campaign featuring posts with different price points and comparing the engagement on each post.
“These online focus groups can inform you of which price is most palatable, as well as general consumer interest,” says Boucher. “And it can all be done for a few hundred dollars.”
4. Promote your product or service
Finally, you need to market your product, collect feedback based on your marketing, and re-tool accordingly. Fortunately, because your market is so small and specific, you shouldn’t have to go through many variations of your marketing because the audience already has a lot of similar interests.
Boucher recommends marketing initially on social media as it allows for greater targeting and the ability to test multiple iterations of the same ad. As with any marketing campaign, it takes multiple impressions for a consumer to have brand recall. However, with niche marketing, it is common for a larger segment of the market to convert once they have brand recall.
“A niche market could have 5% to 10% of consumers with brand recall convert, compared to 1% to 3% in a broader marketing campaign,” says Boucher.
The bottom line
In 2008, Wired Magazine co-founder Kevin Kelly popularized the idea of 1,000 True Fans. In short, the idea states that to be successful in any line of work, all you need is 1,000 loyal customers who will buy anything you produce. If you generate $100 profit from each fan, you will earn $100,000 annually.
When put into the context of niche marketing, this means identifying a profitable market and working to reach peak brand saturation within that market. If you can do this, 1,000 true fans is within reach, and possibly many, many more.
This article originally appeared on JustBusiness, a subsidiary of NerdWallet.
New to Networking? 10 Steps to Ensure You’re Making Long-Term Connections
What’s one step you can take to ensure you’re making long-term connections at networking events? Why is this a good tip for new entrepreneurs?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year, and have created tens of thousands of jobs. Learn more at yec.co.
1. Invite People to Dinner
I think so often people go to networking events and see these new relationships as business. But some of the best business relationships blur the line into personal relationships. Consider inviting people to parties, events, dinners, etc., that are ostensibly casual and friendly and use some of that time to just build a stronger relationship.
2. Find Common Ground
The best way to build meaningful connections when attending networking events is to find common ground with the people around you. Business owners within the same industry often have conflicting views on how things ought to be. Instead of focusing on your differences, finding common ground can lead to productive conversations that eventually lead to long-term partnerships and friendships.
3. Treat It Like a Normal Conversation
Treat the networking event like a normal conversation. People can sense if you view them as a means to an end, which makes you appear inauthentic and insincere. Don’t focus on what you want to get out of the interaction. Rather, focus on the humanness of the event. After all, successful businesses don’t treat people like transactions; they treat people as valued human beings.
4. Transition to Social Media
Transition these relationships to social media and LinkedIn right away. Ask to take out your phones and say something like, “Let’s follow each other so we can stay in touch after the event. Which social network do you use for networking?” It’s that simple. If you take the initiative first and follow or friend them and then engage with them, you have a much better chance of sustaining the momentum.
5. Add Personalization
Adding personalization to your conversations will take you much further than putting on an act while speaking to others. Calling someone by their name shows that you’re paying attention to them and want to hear what they have to say. Genuine actions make others want to do the same for you and keep the connection alive.
6. Attend Events Often
It’s important to attend networking events as often as you can and to increase the frequency with which you engage with your connections. When people see you and talk to you more often, they develop familiarity with you. This makes it easier for you to develop long-term connections.
7. Find Out How You Can Help
Invest some time with each of these connections and be helpful. Invite them to a brunch and connect with them. Find out how you can be helpful to them as well as how they can be helpful to your business. Whether it’s giving referrals or doing business with them, helpfulness is the key here. Also, make sure you exchange contact information with the connections you would like to stay in touch with.
8. Learn to Listen
If you want to make long-term connections at networking events, you have to learn to listen to other people. When you don’t give other people time to speak, you’re going to lose interest. In other words, engage in two-way conversations and ask questions. You’ll find that this will help you build long-term meaningful connections.
9. Research and Prepare Questions
Research who will be there and have a few questions ready to ask people about their business. They’ll remember you for already knowing them and their work and will be keen to keep in touch. Introduce yourself, be friendly, get their contact info and follow up afterward, emphasizing that you enjoyed your chat and would love to go for coffee to talk further about XYZ that you touched on at the event.
10. Follow Up With Intention
Collect the business cards of the people you want to connect with. Then, about a week after the event, reach out to each person separately and explain briefly how you met at the event and that you were very impressed with their work (use an example). Then ask them if there is anything you could do for them, even if it’s just an introduction to someone else. Just offer value. Dig the well before you’re thirsty.
Joris Bryon, Founder and CEO of Dexter Agency Interviewed on Influential Entrepreneurs Podcast About Conversion Optimization.
How to Lead Your Team Through the Transition Back to the Office
Chaos N’ Cookies Founder Heather Steinker Reveals How Busy Mompreneurs Can Stress Less and Save Time With Simple Systems on Influencers Radio
The Moment These 7 Entrepreneurs Turned Their Hobby Into a Business
5 Personal Finance and Budgeting Books Recommended by Experts
How to Calculate Startup Costs for Small Businesses
News7 days ago
Children’s Book Author and Mom To Eight, Heather Davis Hits Multiple Amazon Best Seller Lists with Inclusion Book “The Blomes & The Smooms and the Impossible Bridge” Illustrated By Corryn Webb
Managing people5 days ago
How to Lead Your Team Through the Transition Back to the Office
Managing people6 days ago
How to Prevent a Rising Star from Flaming Out
News6 days ago
Chaos N’ Cookies Founder Heather Steinker Reveals How Busy Mompreneurs Can Stress Less and Save Time With Simple Systems on Influencers Radio
News7 days ago
Congressman Doug Lamborn and staff show support for Health Care Sharing Ministries with a visit to Medi-Share
Managing people6 days ago
Figure Out the Right Hybrid Work Strategy for Your Company
News5 days ago
Joris Bryon, Founder and CEO of Dexter Agency Interviewed on Influential Entrepreneurs Podcast About Conversion Optimization.
News6 days ago
Chozen Martial Arts Academy Offers Free BJJ Training to Law Enforcement