Introduction
With a digital agency, it can be tempting to want to take on any and all projects that come your way. However, focusing the agency’s services towards an industry, audience or customer demographic often leads to far more success than taking a broad approach. In this article I discuss the pros and cons, but ultimately why you need to niche.
When you select a niche for your agency, you focus your expertise and marketing tactics to that subsection of the market and can then hone in on their specific needs; this will allow you to make more money from fewer clients and set yourself apart from other digital agency companies that have left their focus too general.
A lack of clarity on who good clients actually are is a common mistake I see, and something I was guilty of when I set up my first agency. Back then I was a web designer. I could design websites and code them up, but the simple fact is I would work with anyone who would pay me. Sometimes this would mean doing graphic design work, creating database scripts, or even data-entry, anything to get some money in.
It seemed to make sense to me at the time, after all I was trying to build up a reputation and case studies so I could get more work. But by marketing myself as a generalist, I realise now I was devaluing my offer. I was telling the world I was a jack of all trades and a master of none.
Picking a niche and defining your position is key to business success. In this article I’ll explore why you need a niche as well as how to actually pick one.
Positioning
A client should just not be someone, just anyone with money that wants something done. No, a client should match what you provide and be someone that you want to work with. Above all, they should value what you have to offer and they should seek you out. Being a specialist is absolutely key to not only charging more and making more money, it will also help you land clients in the first place.
This act of understanding who you want to work with, and presenting yourself in a light that gives you expertise and power in the client-agency relationship is called positioning. It is a wonderful, wonderful thing for an agency owner, something I wish I knew more about when I first walked out of my 9-5 job and set up my agency.
Let’s look at the following roles, and in each case ask yourself which one is paid more, and more sought after by those that need them:
We associate specialists with high value. For example, a General Practitioner in the USA is well paid by most standards, averaging around $200k per year. Not bad at all! However, a Neurosurgeon has an average reported salary of just under 1 million USD, around 5 times more.
There is a natural tendency to try and rationalise the desire to stay generalist by saying things like “I just need to get some work in so that I can build social proof in order to generate more clients”. I’ve heard this countless times from my own mentees.
I would counter that by saying, look at the list above again. Did the Child Psychologist start out doing babysitting as a first step in their career? What about the Historic building consultant, did that person start out doing odd jobs like fixing squeaky doors and leaky pipes in order to build up a client list? I mean, it’s possible, but it is far more likely that these people made a decision early on about their careers and they trained and marketed (aka positioned) themselves accordingly. In all of the examples above, each pair of occupations shares a common theme, but what is different is one is a generalist and the other is a specialist.
Fear of losing generalist clients
There are a couple of other objections people often make when it comes to specialising but this is the main one. There is the fear that by excluding “generalist” clients we are cutting ourselves out of work. The reality is you don’t have to exclude this work, you simply don’t publicly advertise it. Instead you focus on your niche or speciality. Doing so will attract more higher-ticket clients to you and your specialist skill set. You can of course still take on other (lower paying) work that comes your way, but by presenting yourself as an expert you will benefit from this better paying work as well.
Another objection is the idea that if you specialise you will get bored doing the same kind of work over and over again. I felt the same when I created my first specialist agency which is focused on helping museums, heritage and culture organisations. The reality is the work is more varied than before when we were churning out lots of low value commodity websites. Now we get to work on all kinds of interesting stuff we didn’t even know about before.
I’ll give you a recent example which happened to one of the digital agencies I have been mentoring.
This agency owner I was working with was really struggling. He got to a point where he was considering giving up the dream of running his agency and instead started to look at job sites in order to get some work in. Previously I had advised him to niche down and work on his positioning. He picked a really good niche that he had some experience in already, but nothing seemed to be working in terms of actual work coming through the door.
Just as he was about to pack it all in, he landed a huge contract – a monthly retainer far more than a well paid job as a developer. But here’s the kicker, this contract wasn’t even in his niche! My mentee believes he won this contract largely due to the help I gave him with his proposal and pricing strategy but I whilst I’m sure that helped, I don’t think that was the full reason. I believe that the very act of being a specialist helped him land this job. This was not just from an outward marketing point of view, but also from the way he behaved and carried himself as a leader in his field, a determined man with a purpose and on a mission to help people as a professional. This is something very hard to do when you are a generalist, exchanging time for money with anyone that has it.
A specialist knows their worth, but you may be wondering how you become a specialist if you are just starting out or have been a generalist for years? Read on to find out.
Benefits of niching
The benefits in niching are huge and I wish I could go back in time to when I started my agency and picked a niche.
How to choose your niche
Picking a niche can seem a daunting task and there are many ways you can do it. You certainly want to pick something you are interested in and ideally have some experience working in. If you don’t yet have that experience, it is something you can start to focus on before you fully niche down.
If you aren’t fully committed to your niche, you can just pick a few focus areas that you specialise in. Over time you might find that one of these areas starts to become the prominent theme in your business.
When I created my first niche I created a matrix grid on a spreadsheet and looked at the following areas in order to pick my niche:
- Past work social proof
- How much I enjoyed the various niches and sectors
- Niche pay
- Competitive landscape (competition)
- Current knowledge of niche
One of the main things I looked at way the niche pay – that is how much that particular sector would likely pay. At the top of the list of clients we had worked with before was security and defence. I know this is a huge market where budgets are expected to be large.
In contrast, at the bottom of the list was heritage and history, something I enjoyed but I knew the budgets were not that great. I ended up picking this one.
My reasoning was that running a business is a marathon, not a sprint, and in order to keep working on it for years at a time, I would need to be interested in it. I was concerned that niching down would affect the rest of the work we were doing so I created an entirely new business for this niche. It was a great decision and business went from strength to strength.
In order for any client to take you seriously in your new niche, you need to back up your offering with credible social proof. You may feel this is easy for me to say after over 20 years of business, but how can someone starting out do the same? There are multiple strategies you can employ.
Look at your career history
I recently started advising a new mentee who was facing this very problem after setting up his web development agency. He told me he had no case studies or clients. We discussed his previous job roles, and it turns out he previously did web development contract work for some huge brands including JP Morgan and a number of tech giants. He said he couldn’t use them because this was contract work for someone else, not his own agency. He said if he used these big names, they might find out, or worse his former employer would. I asked him if it was true that he worked for those clients, on their projects, and he confirmed what I already knew. I asked him if there was any clause in his contract saying he couldn’t talk about past work. No such clause existed.
So, the first thing to do is look at your own work and education history and see if you have any clients you can use as social proof. You may not have that calibre of clients in your work history, but it is likely that you have worked with someone in the past in an employed role that you could use as evidence of your capabilities.
Case studies for non-clients
Another mentee of mine literally had no past work he could use. He did however have a well defined niche. So his approach was to build case studies for potential clients he wanted to work for. He developed free audits for these people and used them to start conversations with these companies. He also used them as case studies on his website. Whilst they aren’t paid work for real clients, they still act as social proof to potential clients. If asked, it’s best to be honest and say these kinds of case studies are not paid projects, but in reality it’s very unlikely that would happen. We have a tendency to worry and overthink these things. Somehow it is socially acceptable and perhaps even the norm for someone to exaggerate on a CV, but not when trying to start a business for themselves.
Regardless, most people would be impressed enough just seeing the names and the good work that went into the case studies.
Do a pro-bono project
When I created my second agency we had some small projects but not the calibre my team and I were ready to work with. We wanted to help big name national clients but our social proof in this sector wasn’t there. These clients weren’t interested in seeing work from my other agency which was from a totally different sector.
So I reached out to one of the national leaders in our niche and asked if I could do a free consultancy audit for them. They accepted and I treated the project like a real, paid project and at the end they gave me a great testimonial. Having such a famous brand within my niche as a client helped us secure future work with clients of that calibre.
Now, it’s important to state that I didn’t go in cold on this. You can’t just contact a big brand like Microsoft or Amazon and ask to do some free work as it is very unlikely they will say yes. Instead you will need to learn to get out there, to connect with people and start forming meaningful relationships with people you want to work with. This is true for both paid and unpaid work, and is a key principle of this book.
With this brand I had previously invited them to one of our events. A big dinner event in London with leaders from the sector I was targeting. During the event I made sure I spoke to everyone including this client. Having bought them a posh meal, drinks all night, and connected them with other leaders, when I asked for a small favour later on, it was an easy decision. We will discuss events in the next chapter, as done right they can be a powerful secret weapon in your business arsenal.
This approach works best if you have some past work experience you can demonstrate to a potential client too, so you could use this combined with case studies you have created.
If you literally have no past work experience at all, you would probably be best to target a smaller, lesser known brand that will give you a shot, rather than a market leader. You may even have a relative or friend who runs a business that you can do some work for.
Personal projects
Finally, you can create a set of personal projects. These will have less credibility than actual clients but they are better than nothing. The best personal projects are those that resonate with your target client, so look at and understand your client and base your projects around the challenges that they tackle. Personal projects can be very time consuming (he says as he writes this book!) which is why I recommend the other approaches first.
Once you have some social proof it is important to showcase this on your website. You may also want to create a credentials document which is usually a PDF which shows some of your past work successes and case studies. A creds doc is really hand to send over to potential clients once the conversation has moved along a bit to reassure them of your capabilities.
Changing your niche
As humans we tend to think of big business decisions like picking a niche as binary, permanent things. They aren’t and with one of my businesses I have change the niching, positioning and branding multiple times, adapting with the market. There is nothing wrong with this! Your clients aren’t going to leave you straight away because they see your focus has changed. They probably never even look at your website in the first place!
Conclusion
Hopefully I have adequately persuaded you of the merits of picking a niche. The biggest hurdle to doing so is usually fear. These decisions require you to be brave, and as mentioned there are strategies you can use to reduce the perceived risks in niching:
- You can focus on specialist areas instead of picking a single niche
- You can create a new company or branding name to test out the niche
- You can always change your niche later on