Do you specialize in a particular market?
This is one question I asked at the Learning Labs I facilitated at PPAI Expo this past January. Only a few hands went up.
This is also a question I ask our distributor clients when we first start working together. Most feel it’s best to serve as many industries as possible and not limit themselves. They keep their websites and marketing materials very general so it’s clear they can serve any buyer.
With this approach, you are perceived as a general product seller as opposed to a specialist. You are sort of competing with thousands of other product sellers, including the giants that sell online. Keep in mind these big sellers’ average order is $500, so you’ll be attracting smaller clients with low budgets. It’s going to be very hard to grow your business with this approach.
If you’re looking for larger clients who have bigger yearly budgets, you need to change your approach and be seen as a specialist in their markets.
If you are a distributor in business for 5 years or more, chances are your best clients can be grouped into 2 or 3 categories, whether it be by industry, by the type of events they do, or even by product lines. If so, you are one step away from becoming a specialist. All you need to do is to develop a solid brand message that clearly communicates your expertise to your ideal buyers, so when they check you out they feel they found what they were looking for.
It can be easier said than done, this is something we help our clients with, staring with helping identify their most profitable areas, defining buyer personas, and developing their value proposition and marketing message.
Pros: Faster Growth.
Fact: People prefer to work with specialists
Anytime you’re looking for a service provider of any kind, you will favor the one who has done the exact thing you need. I know I do, and it’s not just me, Google search terms reports prove it.
Picture this. You find out that a university is looking for a new vendor. You’ve done some work for universities here and there and you’d love to have more of that type of business. You jump at the opportunity and land a meeting. You go well prepared, show a bunch of cool stuff, leave self promo gifts for your prospects, and feel everything went very smoothly.
As part of evaluating vendors, your potential client went to your website and found nothing about you working with universities. You have a standard industry site, nice looking but generic, and you probably have just one short bland paragraph on your about page. So they go to your website and only find general information about all the promotional products you sell. Not much about who you are and what you stand for.
Then there is another distributor who also landed a meeting. Their website shows a defined brand that claims they work with universities, they have a couple of blog posts about product ideas for universities, they have a project section showing work for other universities, and even a testimonial. This makes them look like they specialize in universities.
Who do you think your potential client will go with? Most likely not you. Your competitor’s website will speak to them and make them feel that this distributor really understands them and will be a better partner because of that. And you might even be much better at what you do, but the other distributor is better positioned.
All theory aside, in working with distributors since 2015, we’ve seen that those who grow the fastest are the ones who niche down in some way. The narrower the focus, the fastest the growth.
When you focus on a market not only do you attract more of the same clients, but you also become more efficient in your operation. You work with fewer vendors who get to know you well, it’s easier to identify new products and opportunities for your clients, and you spend less time creating presentations and quotes because you already have at hand the information you need.
Plus, you eliminate the all too common situation of spending endless hours doing research for products in whole new markets you are not familiar with, where you might not even get the sale, and end up never using the knowledge you spent so much time acquiring.
In the end, you have more time to focus on getting new business.
Cons: The Risk of A Downturn in Your Niche of Choice
What if the niche you choose suffers a downturn?
Some distributors tell me that focusing on a market is limiting and it’s best to diversify so they protect themselves from eventual downturns in the particular industry they are focusing on. This is a valid point. Before choosing a niche you need to do some research and look at its growth trends, making sure it’s been growing steadily at least at a 10% yearly rate, and there are no technology changes, legislation, or anything else on the table that might have a negative impact on the niche.
Case in point, the pharma industry, about 10 years ago or so, when the entire market literally went away. Distributors who specialized in this area knew this was coming, some looked at other markets as soon as they heard, others buried their heads in the sand and got slammed.
In the end, as an entrepreneur, you need to be aware of trends in your market. At any given point some industries are going away while others are coming in so you need to be aware and anticipate these changes to make the right moves in your business. This is relatively easy to do in the information age we live in, you just need to pay attention.
You can also choose more than just one area of specialization, and as a rule of thumb, you want to start with one in terms of building expertise and a clientele before moving to the next.
If you’re a generalist and not growing, you need to start thinking about what areas you could specialize in to capture a bigger piece of the marketplace. In this thriving economy, you might be busy with work from existing clients, but if you’re not getting new ones, this is a good time to take that extra cash and invest in the future of your business, to be better positioned when the inevitable downturn in the cycle comes in.
If you need help with identifying your most profitable markets and branding your company as the go-to expert, that’s what we do. Feel free to reach out, I’m here to help.