One of the first questions you might ask yourself when starting your own digital marketing agency is “should I niche down”? You may also have heard other people suggesting to “niche down” when you first start providing services. In this article, I will focus on the pros and cons of niching down.
When an entrepreneur niches down, it means that they want to have a clear focus on who their target is. They align this focus to their marketing to make sure they will achieve their goals.
Since targeting a larger market requires bigger investments, entrepreneurs try to niche down. Moreover, you can compete wisely by targeting customers while offering specific needs for them.
In other words, to niche down means to focus on a small but well-defined target market. Therefore, instead of offering all services, you will focus on becoming an expert in helping just one segment.
For me, I never wanted to niche down. I knew I wanted to become a big, full-service digital marketing agency that caters to every industry. I have always had big dreams and big goals. When you already started, you will learn to make decisions based on what you know will be the best direction for your agency.
I did start to niche down because social media marketing was the only thing I knew and the only service I could provide, except that I did not want to niche down into a specific industry.
When I started getting clients, almost all of my clients ended up being in food and beverage. These clients include a number of small restaurants and cafes. Yes, I did not select my niche, my niche chose me!
There are reasons why some entrepreneurs will suggest that you should niche down. Here are some strong benefits you could get if you niche down your agency:
Your agency’s growth is one of the most important things you should monitor. There are lots of ways on how you can grow your agency, one of them is to niche down.
By niching, companies and people are more likely to work with you since these potential clients are looking for a specific service. Compared to a full-service agency, you will be giving more specific services and people love that.
By specializing in a specific category or niche, you will start to become an authority in your industry. You will start to get attention from others in your industry and specialization and lead generation will become easier and easier for your agency.
In addition, you will have more time to do in-depth research on your target market. You will also be able to communicate with them more effectively as you will have a great understanding of their needs and your industry as well.
As you continue to gain experience in your particular niche, you will slowly become an absolute expert in your field. You will be able to hone your skills and grow when you are niched down in a particular field or service versus trying to become a full-service industry from the start. All things digital move and change very quickly and you will be able to stay on top of things faster than a “jack of all trades”.
As you continue to focus on your segmented industry and target market, you will continue to gain more leads because your visibility will be increased. It is because when you niched down, the competition is a little smaller than if you are a full-service agency. This is great because the more online visibility your agency has, the more likely people around you will choose you.
With these great advantages, don’t forget that you might experience some disadvantages too when you decide to niche down.
If you are niched down into a particular category or service, you may miss out on a lot of opportunities. You might not take on potential clients because they are outside of your specialization, or companies may not sign with you because you are niched down into a corner. In other words, when you niched down, you may lose clients.
When you niche down, your target market will obviously become smaller. This is because you are targeting your offers to your target audience from the segmented market. In order to solve this, you should always try to broaden your niche and focus on becoming an expert to make you attract more qualified leads.
This is not always the base, but if you are niched down into a very particular niche, you may not be able to have a lot of clients. You should make sure that there is a need for your services in whatever niche you select.
This is not always true but it can be a possibility. If you are niched down in a specific industry or service, you may not be able to provide a wide range of services or upsell your clients.
This means contract sizes may be smaller and your clients might look elsewhere for additional services. Obviously, it can affect your ROI, but what’s great is when you started to be an industry leader, you will be able to reach a wider audience. A wider audience means more possibility of increased conversions.
These advantages are possible to happen but you should always look at the bigger picture. While having smaller clients, you can also lower your ad spend and other marketing expenses. Moreover, when you learn how to maximize your resources and skills, niching down can send your business to greater heights.
It is worth noting that just because you decide to start your agency and niche down, it does not mean you are stuck in that niche for the rest of your agency life. Part of growing an agency or any business is to continue to improve and evolve. I have repositioned and pivoted my own agency multiple times in the last several years.
If I were to start over, I would most definitely niche down and specialize in one specific niche and provide 1, maybe 2, specific services. I would provide multiple upsells within that service to try and increase my contract sizes. I would also look for partnerships where I can outsource some relevant services in order to be able to capture bigger clients that have more needs.
The reason you should niche down your agency is so that you can start to build and establish your brand with more impact. By starting off as a general agency or full-service agency, you will be up against a lot of competition. In fact, you may have to deal with small to big competition from big agencies. As a result, it will be much more difficult to create an impact with your portfolio and case studies.
Niching down is what you can do to start scaling your agency. You can always expand your niches and services if you grow fast – and I hope you do!