Diversify Your Revenue Streams Through Niches
Here in Houston, a lot of manufacturers — and quite a few service providers — are feeling the pinch of low oil prices. With so many years of a “go go go” mentality in the energy sector, a lot of manufacturers jumped on the energy bandwagon because that’s where the money was. Who can blame them?! Now that oil prices have dropped and new drilling has drastically slowed, we’re hearing the same need again and again from manufacturers:
“We need to diversify our revenues away from oil and gas.”
In several ways, marketing to niches is actually easier than marketing to a broader swath the market. For one, your marketing can speak directly to the needs of your intended market. By drilling down into various user groups, you will be able to saturate those micro-markets more effectively and build the strength and awareness of your brand.
Look for Niche Market Opportunities
This is a great time to start looking for niche opportunities. Your competitors are going to jump right back into whatever they were doing before the energy boom. And, maybe you should, too, but you definitely want to consider what niche market (or markets) you can serve particularly well. The benefits of niches include higher margins, better conversions, and more loyal customers.
Think about the projects you’ve taken over the last several years. Was there one you made particularly great profits on? Was there one with average profits that fit your operational strengths particularly well? Maybe there was a job you accepted where the customer said, “oh, thank God! I’ve been looking everywhere for someone who can do this!” You should also dig into new capabilities you have developed and new markets you learned about in the last several years and see where you can match the two.
Any of those could be the start of a niche opportunity. Most companies have several opportunities laying around, waiting for someone to incubate them.
How to Find a Niche: An Example Story
Let’s say you manufacture a range of pumps for various applications from oil to water to drilling mud (something you developed in about 2010). After looking through past orders, you find a few orders from a zoo that uses one of your water pumps to circulate water in the ponds and/or watering systems of various animal exhibits. After looking into this, you find that they placed the order with you because their usual supplier had a four week back order when they needed new pumps “yesterday.” And, since you had comparable pumps in stock, you got the order.
So, what is the niche opportunity here? It appears to be either:
- These specific pumps are hard to find (and you have them)
- These specific pumps are needed quickly and people might pay extra for that
- Both of the above
After looking into the market for these pumps, you find that they are commonly used in zoos and aquariums across the United States — a pretty good-sized market — and that your pump is generally better quality than the most commonly used brands. Plus, you use a sealed bearing that will probably never fail while the status quo uses a bearing with known issues and a limited life.
You’ve found a niche. Here are some of the things we might do to start marketing to it:
- Add information about this specific pump application to your website
- Create some sales materials about this specific application and market (fliers, brochures)
- Find the industry associations for zoos and aquariums — join and get the membership lists
- Buy a list of the people who design, install, and/or maintain the pump systems
- Attend an industry trade show or two — meet the specifiers and maintenance folks
- Start an ultra-targeted direct mail campaign to the specifiers and users of the pumps to build your brand within that industry
- Update your Pay Per Click campaign to include this market
- Start a cold call campaign to make sales, collect additional contact information, and send out some information
The best marketing mix for your situation depends upon the niche market you are going after. You might find that print mail is useless (but don’t knock it until you’ve tried it) and that social media brings you great awareness and even some orders.
Now, Do it Again
If you really want to build up a strongly diversified set of markets, repeat this process several more times. Finding niches should be part of your culture. Teach your salespeople to keep their ears and eyes open for opportunities where markets are under served or where your unique strengths and abilities give you an opportunity to win more often than not.
And, of course, we specialize in niche marketing and take care of these types of campaigns for our customers. Call us at 832-900-2000 or contact us online to discuss your niche marketing opportunities.
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