How to Fix a Niche that is Too Narrow or Too Broad
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When you choose a client niche, you may find that the focus is too narrow or too broad. Here’s how you can remedy the situation.
Choosing a niche is a difficult decision. When you say “yes” to one niche, you are saying “no” to everyone else. While advisors who have successfully niched know that you end up with more opportunity in the long run, it is quite scary to think you are turning off the faucet of potential new clients in the short term.
Once you’ve moved past that fear and committed to a niche, the question you have will either be, “Is my niche too narrow?” or “Is my niche too broad?”
Advisors are more likely to pick a niche that is too broad rather than too narrow. Most of the conversations I have are about narrowing the niche to become more specialized. Rarely do I find an advisor who has chosen a niche that is too narrow.
If you are worried that your niche is too narrow or too broad, let’s look at how you can remedy the situation.
When your niche is too narrow
I never worry that a niche is too narrow because the advisor can always expand it (i.e., “niche up”). You may even find that your niche naturally broadens as you dominate your market.
Let’s say your niche is employees working at a specific athletic shoe company in the Pacific Northwest. While your marketing focuses on employees of that one company, you also live in the athletic apparel capital of the U.S. Your clients often switch from one company in the industry to another. As your clients change jobs, you inevitably learn the ins and outs of the equity compensation and benefits of these other companies. And because your clients love the work you do for them, they refer colleagues at their new companies to you.
While you started a niche at the company level (one specific shoe company), you end up with a niche at the industry level (athletic apparel). The expansion is natural.
A second scenario is that your niche is no longer viable, and you need to expand to continue attracting new clients.
Let’s put a different spin on the example above. In this scenario, the shoe company is acquired by one of the other athletic apparel companies. Your knowledge about the shoe company’s equity compensation and benefits is no longer needed. However, many of your clients now work for the acquiring company, and you can learn the ins and outs of the new employer’s benefits programs. Your other clients got laid off from the shoe company and now work for other athletic apparel businesses. You can now expand into these companies as well.
When your niche is too broad
In many cases, you will decide your niche is too broad and you need to narrow your specialization (“niche down”). This may happen because competition has entered your market and you need to further differentiate. Or maybe the niche you chose has too many variations in their needs to service efficiently, and you find a subset within the niche that you serve best.
For example, your niche is newly single women, either divorced or widowed. While you’ve successfully worked with this niche for years, you realize dozens of other advisors in your area are now claiming the same specialty. You are feeling the competition because the once active flow of referrals from your divorce and estate planning attorney relationships has slowed to a trickle. You realize it’s time to niche down to differentiate yourself from the other advisors specializing in newly single women.
Because you have a broad niche, your clients are very different from one another. Some are 75-year-old widows in charge of their household finances for the first time. Others are 50-year-old divorcees who gave up their careers to raise a family and now must build a new life different from the one they had planned.
You’ve learned that your favorite clients are the divorcees who were the primary breadwinners in their marriages – usually executives or business owners. In addition to splitting half of the assets that they earned, they find themselves providing financial assistance to their former spouse. They are financially sophisticated and want to rebuild their wealth and reduce their ex’s financial dependence on them.
By niching down to this new audience, you differentiate yourself. You specialize in a more unique and complex financial planning strategy than the other advisors working with newly single women offer.
Serving a niche provides you opportunities in the long term, but the niche may require some adjusting. Although it’s rare, you may find that you have too narrow of a niche and need to expand it. Or, more commonly, you may find that your niche is too broad, and you need to niche down. Either way, review what’s working and what’s not and adjust accordingly to continue differentiating yourself and attracting your ideal client.
Kristen Luke is the president of Kaleido Creative Studio, a marketing consulting firm that positions Registered Investment Advisors and their employees as experts in a niche, making them “uncomparable” to other advisors. Over the past 16 years, Kristen has consulted with hundreds of financial advisory firms and shared her marketing expertise via industry conferences and publications nationwide. This article is an excerpt from her upcoming book, due out in 2023.