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In Choosing A Client Niche, Forget Averages

Jan 10, 2008
I'm all in favor of researching a niche and using what you find out to intelligently select a client niche. However, if you sell time-intensive services or complex, high-priced products, research could cause you to overlook a perfectly viable niche. A key point that might come up in your research is what the average member of the niche can afford or would pay. Ignore that average! Here are the numbers to think about instead, and why.

First, how many clients would you have per year if you were as busy as you wanted to be? In some industries, this number is extremely low. A direct-mail writer told me that her schedule is completely full with just six clients per year, since she gets repeat business from each, and each project might take a month or six weeks to complete. If we look at professions where clients tend to have weekly appointments for 45 minutes to an hour, like music instruction or psychotherapy, there might be no more than 35-40 clients a year when factoring in attrition.

According to Donald Mitchell, author of The 2,000 Percent Squared Solution, the typical business-to-business company has only 30 clients. And according to Registered Rep, a magazine for investment professionals, wealth managers tend to have a full practice with 70 or so clients. Until you actually figure this out, you probably imagine the number of clients you need as way higher than is warranted.

Second, determine whether or not there are enough people or companies in the niche you're thinking of who are willing to pay what you want to charge. And at this point you can see why averages are irrelevant. If the direct-mail writer needs just six clients a year, then whether or not the average company in the field of, for instance, organic supplements is willing to pay her rates doesn't matter. She needs only six. Likewise, the psychotherapist who wants to make $150 an hour without accepting insurance needs to attract just 35 people who are willing to accept those conditions.

Third, can you cost-effectively find that number of clients in the niche you are considering? Perhaps only giving it a try can answer this question definitively, but be sure to examine a wide variety of marketing options for attracting clients. Are there magazines that reach, let's say, aspiring rock musicians holding down well-paying corporate jobs? Then advertising and publicity in those publications can put you in front of the right people. Can other professionals refer to you individuals who have more than $2 million in assets or serious issues getting over childhood abuse? Are there lists of second-home owners within 30 miles of you or owners of pre-1990 Mustangs that you can rent for promoting yourself as a caretaker or auto restorer?

Finally, let me illustrate this three-step mode of thinking with a niche that you might be tempted to dismiss as obviously impossible to make a living from - artists. Everyone knows the stereotype of the "starving artist." Well, that's a stereotype, not a universal truth.

Recently I read an article documenting that a surprising number of Baby Boomers who have paid their dues in high-paying corporate jobs are taking early retirement to finally fulfill their artistic leanings. These people have plenty of money to spend on artistic coaches, mentors, workshops, etc. and the mindset to spend it. The biggest issue in targeting them as a niche would therefore be whether or not you could cost-effectively find or attract 20-30 clients who fall into this category.

It remains true that most artists do not have much money to spend on their career. But it is also true that a number of them do. So long as you can identify and attract the ones who do, you can turn that into a viable niche. Averages, smaverages!
About the Author
Marcia Yudkin, author of 6 Steps to Free Publicity, runs a private member site, http://www.MarketingforMore.com, which supports business owners in growing their businesses. Learn to avoid the most common pricing mistakes in her free report, "Charge More & Get It": http://www.marketingformore.com/survey.htm
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