Find your niche and jump in with both feet

In a tough economy, there's a tendancy to abandon your business plan and try to attract customers any way you can. So rather than doing one thing extremely well, you try to tackle a number of additional things as well, learning as you go.

In the meantime, that one thing that made you stand out in your customers' mind is suffering because you're spending all your time and effort marketing your new services or products without paying much attention to what made your business a success in the first place.

Sometimes this strategy works – but more often than not it dilutes your brand, bleeds off more customers than it gained, and increases costs without increasing profits.

While it's tempting to go the "cast a wide net" route to keep profitable, finding your niche and doing it better than your competitors will get you the big payoff, perhaps not in the short term but certainly over the long haul.

Let's take a look at a good case study showing how this works:

A company called MarketSoft had a nice niche - they made marketing automation software and were the pioneer in their market niche with clients such as MetLife, Cisco and GE. Then Siebel, SAP and Oracle, looking for new markets, muscled their way in to the same market. In fact, one Siebel executive called the CEO of MarketSoft and told him to either "sell the company [to Siebel] or be squashed."

Did MarketSoft abandon their primary niche and start developing other types of software for their clients?

No. Instead they found an even smaller niche in their core business. They began developing products that solved the worst nightmares of their target audience: CEOs and corporate boards. In essence, the reinvented the company and turned on a dime. The new products were rolled out in 2001 – Cross Sell for Financial Services, Sales-Driven Marketing for Insurance, and Partner Loyalty for High-tech.

While their potential competitors ate each other alive with cut-rate deals and cutthroat competition, MarketSoft closed deals with FleetBank Boston and AIG. In the high tech sector, they got Apple and Cisco.

How? Because they were the only company that spoke the language and had solutions that couldn't be ignored. And in the process they achieved record revenue and smashed the Siebels, PeopleSoft and Oracles of the world.

MarketSoft isn't a huge company. They're small by design so that they can focus on what they do best and turn on a dime when the market changes. Sure, they could expand their offerings infinitely. But they choose to emphasize specificity or generality and it's paid off big.

What lesson is there for your business?

Ask yourself what your niche is. No, it's not that you supply 'X' widgets or sell 'X' products. Do some soul searching and research and find out why your customers keep turning to you instead of the competition.

Is it because you provide better service than the others? Is your product mix unique? Is it the expertise of your employees? The peace of mind you create through your service or product?

If you delve deeply enough, you'll start to find your niche in the marketplace. It may not be as grandiose as you think. It may be something as simple as listening carefully to what your customer wants and giving it to them at a fair price.

Whatever it is, identify it, market it and support it. If you make the best coffee in the city, why add sandwiches or pop? Having the best coffee in town, the county or the state is the specificity of your business. You don't necessarily need to aspire to be a Starbucks.

Just do what you do and do it better than anyone else. Find a niche, fill it with a unique value proposition (i.e., a service or product that fills the need at an agreeable price point) and deliver on the promise with your customer.

You'll find that your profits will grow beyond your expectations. And you won't have to try to be all things to all people - which is the guaranteed path to failure.