The thing that makes the difference between a $150.00 suit from Target and a $1200.00 suit from a custom designer often comes down to one main thing: the fit. The same thing is often true for businesses that make millions compared to those that make tens of thousands. If you want to grow your revenue, you have to be a good fit for your customers.
At the Bottom Line, we are continually tweaking the customer “avatar” that we target and after several months of adjustments, we feel we have a pretty good understanding of which customers “fit” our business model and which ones don’t.
We started as a traditional accounting firm over 18 years ago. Our ideal customer was anyone who needed accounting services. We figured that covered a lot of people and we wouldn’t need a very large piece of that pie to be successful. However, as business heroine, Marie Forleo, says, “When you’re talking to everybody, you’re talking to nobody.”
We’ve learned over the years that being all things to all people is a pretty daunting task for any business. We strived to be the best accounting service out there. We were staffed with all the prerequisite degrees and certifications, so we could do it all, or so we thought.
We quickly learned that accounting, like every other business out there, is constantly changing. Keeping up with all the new legislation, new techniques, and technological changes left very little time for business development. Every client we had, it seemed, used a different iteration of Quickbooks® and none of them would sync with each other. And that was just one of the platforms we were working with.
Finding the Right People
We also saw some of our competitors doing quite well serving only a small portion of the market. Some accountants only worked with attorneys. They were experts at trust accounting. Others worked only with construction firms that needed someone skilled in job costing.
Our epiphany, our “light bulb moment,” came when we attended Jeff Walker’s products launch conference. We had a blast! We loved all these online entrepreneurs that we met. We even joined Jeff’s Platinum Mastermind group. We enjoyed grabbing a cup of coffee with these new friends. These guys were our kind of people!
Finding the Right Tools
We decided to make a shift in our business. Instead of trying to appeal to everyone, we decided we should focus on the small niche market of online entrepreneurs. We focused on technology and cloud accounting. We already had online clients, but we decided that they could no longer be a group that we added to everyone else. They would become the core of our customer base.
In order to serve our new top clients, we had to find a tool that worked well for them. We decided to look for software that was cloud based, easy to set up and use, and was a full accounting system, not just bookkeeping software. The software we chose was Xero. Like a custom tailored suit, Xero fit our business well.
Our new customer base was savvy enough to understand the new online system. Adopting Xero as the only accounting system we recommend meant our customer base took a serious hit. The brick and mortar businesses with no internet presence we had served would keep us on the phone for hours arguing about the security of cloud-based accounting. We did our best to explain SSL encryption and layered security but most just didn’t get it.
However, we weathered that initial storm and now are seeing unprecedented growth. Our revenues just through March 5 were already 90% of our total revenues from the previous year. “Niche-ing down” is paying off for us big time.
How to Increase Your Revenues by Shrinking Your Pond
I hear it often. “We don’t want to target these people, because we aren’t sure there are enough of them to buy our product or service. The niche is too small.”
We know the feeling. We were there too. We thought we could turn anyone into a customer if they would just try us.
It’s scary to market to a small niche market. We think that a small piece from a big pie is better than whatever we can possibly get from a tiny pie. However, in business, as in pies, it matters more that the piece you get is sweet than how big it is. By marketing to your niche, you can tailor your product or service to be the sweetest tasting ever to your customers.
Continuing with our pie analogy, let's say that 40% of your customers prefer apple, 35% prefer cherry, 25% prefer lemon meringue, and 5% prefer strawberry rhubarb. You will sell a lot more pies if you make the best strawberry rhubarb out there, than if you try to sell a cherry, apple, strawberry, rhubarb, lemon meringue pie. Or put another way, If 35 pie sellers make all four flavors of pie and they each sell about 3% of the pies sold. You can blow them away by selling 90% of the strawberry rhubarb pies or about 4.5% of the total pies sold.
The secret to selling more pies, or accounting services, or memberships to the tea-of-the-month club is to specialize in a specific niche and be the best in that niche.
The Bottom Line
If you were to ask me if a dog-training company could bring in nine figure revenues, I would have said, “No way!” That’s what I would have said until I saw it. Shrinking your prospect pond by finding a specific niche and serving them well, is the way to increase your revenues too. You may not make it to nine figure revenues, but perhaps you will. Developing a niche market is what we would advise you do for your business. That’s what we are doing at the Bottom Line.