Today, we’re going to have a repeat appearance with Rob Michon. I met Rob a couple of years ago at a very interesting management retreat. He was one of the people who ended up spending a lot of time with and learned that he’s a really multi-faceted guy. Today we’re going to focus on niches and why they’re the key to having a marketing plan where people can actually find you.
Here are some of the things in today’s podcast:
- Why asking questions is the best way to find out what your customers want.
- The resistance you’re going to feel when someone suggests that you cut back the types of customers you’ll serve.
- What trying to be everything to everyone does to degrade the performance of your business.
- When you choose clients who are easy to work with you become much more efficient.
- How a niche is both a demographic and psychographic decision process.
Narrator: Welcome to The Sustainable Business Radio Show podcast where you’ll learn not only how to create a sustainable business but you’ll also learn the secrets of creating extraordinary value within your business and your life. In The Sustainable Business, we focus on what it’s going to take for you to take your successful business and make it economically and personally successful.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning and thinking about what it takes to make a successful business sustainable.
Josh: Hey, this is Josh Patrick. You’re at The Sustainable Business podcast.
Today, we have a return guest, Rob Michon, who’s going to be with us. We’re going to talk about niches. Rob works with Ryan Levesque at the Survey Funnel Company—maybe he’ll tell us what the real name of the company is. He’s one of the most interesting people I’ve ever met. I met him at a program called the Baby Bathwater Institute and we immediately bonded and spent hours talking about some very interesting and bizarre stuff. But today, we’re not going to talk bizarre stuff, we’re going to talk about niches. And for anyone who’s listened to this podcast before, you know I’m a niche-a-holic. I want you to be a nich-a-holic. And Rob has some really interesting ways of looking at niches. So, let’s bring him in.
Hey, Rob. How are you today?
Rob: Hey, I’m fantastic.
Yeah, the Survey Funnel Company. Yeah, you can call us Next Level Marketing Group. Ryan’s ASK methodology is something – we’re actually running the master class launch today. But basically, that’s a methodology to help people gain customers and tell their story in a way their audience wants to hear through using questionnaires, quizzes, self-involvement devices of that nature, to get a dialogue established as opposed to a one-way monologue with your customers.
Josh: The thing I really like about the ASK System is that you’re using a modified system of a customer advisory board where your customers are actually telling you what they want. And what a novel idea – ask your customers, maybe they know.
Rob: It’s so funny you say that because I’ve never built a business on anything but asking the customers what the heck they wanted because how else would you figure out a market. But apparently, this is a foreign concept to a lot of people and this is very innovative. Now, obviously the application of the model and the thinking behind it and it’s much more robust than just going out and asking some questions. That’s the thing where people fall on their faces. They think they can just go ask some questions and they’ll have all their magic answers. So, it’s not quite that simple but, yeah, it’s kind of surprising to me that this is such a novel concept but it works and it works quite well.
Josh: Yeah. I’ve been doing it. I mean, I would not start a business without it myself.
Rob: Yeah. Definitely, no.
Josh: I agree 100%. So, let’s talk a little bit about niches.
Rob: Yeah, let’s do that.
Josh: So, what are your thoughts on niches, Rob?
Rob: We’ll cover a couple in the day. You mentioned that you get some resistance sometimes when you suggest that a company or business owner chooses a niche. The funny thing is, you know, I was thinking about this last night and it kind of occurred to me like you don’t work with, say, Apple or, say, Verizon. Those companies aren’t really on your client list, are they?
Josh: The last time I checked, they aren’t but just to let you know, I actually think Apple is the largest niche company in the world. They have a really well-defined niche.
Rob: There you go. And what’s interesting about Apple is they’ve got 46% – 46% I last checked, and I looked this up last night. I don’t know how new that data is – the 46% of the mobile device market or phone market. So, Verizon is a cellular company and they’ve got somewhere between a 26% and a 30% market share.
I don’t think that most of the people that you or I deal with on a daily basis even need anywhere approaching those kind of numbers. So the thing that first occurs to me, when I see people resisting the idea of choosing a niche, I begin to wonder like, “What’s with all the scarcity issues?” Now, scarcity and desperation are really repellants. They certainly don’t attract buyers. And while you may say “Well, we don’t really come out and say that we’re worried about losing customers or we want to try to get every customer.
I’m telling you, just the mere fact that you refuse to choose a niche and focus on a segment of your market speaks to me of scarcity issues and I’m sure it’s popping up in other ways. So that’s just how you’re starting the conversation and it’s not a great way to do it. Now, a couple of the reasons why I say it’s not a good reason or it’s not a good method to use is – first of all, everybody’s doing it. You know, most markets I look at, I could swap out the company names and nobody would know the difference. It’s all the same stuff. And quite frankly, the worst response you could elicit from a buyer or a potential customer is “I’ve already heard that.” Once they’re saying that, it’s game over.
And then people wonder why they have pricing pressure so they can’t seem to close transactions and deals that they should be getting. It’s because you haven’t given the buyers any other good criteria to choose from. Because you haven’t taken control of the conversation and giving them a new way to see what it is that you do, they’re just going to default to the stuff that everybody’s always worried about – pricing, or their cousin Vinnie works at a competitor or something like that. So, a terrible reason is to choose to do business with somebody but if you haven’t given them a better reason, then what else are they going to do, right?
Josh: So, how do you give them that better reason or—if I might ask, how do you differentiate yourself and really let the niche that you’re trying to get into know that you’re the right person for them?
Rob: Yeah. Well, there’s a number of ways you can do it. And I’ve seen people, they’ll do keyword research or they’ll go do market intelligence tactics to try out a market that they want to go after. You can do that.
I think it’s also important that you actually have some degree of passion about that sub-section of the market. If you don’t start there, then someone with a lot more passion or interest or concern for those customers is going to clean your clock the minute they decide to move forward.
So, I think that the best thing for you to do is start looking at what clients – what customers do you prefer to work with? I like to look at things like, “Who’s just easy to work with?” I mean, if you’ve got to work with people all day, let’s find the easiest people that we can to make you and your team get the most satisfaction out of solving in terms of problems.
If you dig down just a layer or two below the surface, you start saying that, “Hey, there are favorite customers that you have. There are favorite problems and challenges that you like to focus on.” That’s where I start to look for areas that you could start to define as a niche. And you know what? It doesn’t have to meet the conventional definition of a niche. You don’t have to focus on 18- to 24 year olds. You don’t have to necessarily focus on two-income, no kids. You can define that niche however you want to and I prefer to go where the work is that your company is uniquely good at providing the services or where you guys get the most enjoyment and fulfillment out of doing the work.
Josh: So, what you’re saying is you should build your niche around the problems you solve and not the demographics you serve?
Rob: No. I’ve tossed the demographics out the window. Now, you’ll want to revisit those and look for patterns and trends and see if you could see “All right, now that we’ve defined these criteria that are uniquely our won, now we can go back and couple that with demographic. Let’s go and see, is there a way that we can target these folks through cold generation techniques? Can we go after Facebook advertising by using these criteria? Then yeah, you’re going to want to rely on that later. But that’s not where I would go first.
Josh: So, when you talk about favor problems or challenges that your customers face that you like to work with, is there a methodology that you can recommend that people use and do that?
Rob: Well, first of all, I’d go to your staff and let your staff tell you, you know, “What are we really good at? Where do we get the best feedback from our customers? Who’s excited about the work that we do and can’t get enough of us and keeps coming back for more?”
The other thing you also want to look at is, who’s spending the most money for you? Now, I know most business owners don’t have great methodology for generating metrics like lifetime customer value. But if you can implement some things and look at some trends, you’re going to find that most of money is coming from a very small percentage of your clients – like, rather who those people are and start building something around those folks.
One of my mentors, Glenn Livingston, who actually developed the roots of the ASK methodology, talks about the bull’s eye keyword and he says that 80% of your profits are coming from 20% of your customers. That’s nothing new. Anybody who’s heard of the Pareto principle has heard that. But he also found that you could actually ramp that up once or twice and what you end up finding is that sometimes as much as 5% of your customers drive half of your profits. It’s hard to believe until you start looking at your own numbers. But you’ll start finding some definite irregularities and some anomalies there if you just look in your own customer data.
Josh: So, once I’ve identified this group of customers that create most of my revenue, what’s the next step I should be taking?
Rob: Well, really, if we’re going to speak to the ASK methodology, first of all, we’ll survey your entire customer list. And then we would compare what our most valuable customers are saying versus what the people – who maybe never bought anything from us. Then the other thing, we would also be looking at is what do the most responsive people say when they submit their responses to us on what their biggest challenges are. So, at that point, I would go and combine the findings that we found internally from our own people and the conversations that they have, and the work that they do. And then I would meld that with the responses we got from the surveys that we do of our customer list.
Josh: So, once you’ve done that –I’m sorry to take you down this road of step by step by step, you’ve got these responses, and you’ve compared the people who are your best customers to not your best customers, and you find that you should probably be doing something that you’re not doing. How do you make those changes?
Rob: Well, the question you have to ask yourself is, “Are these changes that we want to make?” You may find that there are opportunities that you don’t want to meet. So then the question becomes, “Do you provide that service or refer them to somebody else? Do you sell somebody else’s goods or services to these folks instead? And is this some place where you’re masterful?”
And then from that point forward, then with the information that you have, both internally and through your customers – everybody I’ve worked with in this particular methodology, with this process – the answers are fairly obvious. So, you may find that the existing product or service mix that you already have just needs to be fine tuned or re-positioned. You may not have to make any adjustments at all. Or you may find a big gaping hole in the market that will allow you to not waste money on initiatives and new products and services that aren’t going to be met with enthusiasm by your market.
Josh: So that makes sense to me, is that, first, you have to decide what you have passion around, then you have to find out where your clients and customers want you to be, then does it make sense that you want to be melding the two?
Rob: That’s what I found works in my direct client work. I work with private clients myself as well as through the Elite Mastermind at Ryan’s company. And I found that if you don’t meld the two, you get a substandard result. You know, the folks that are just chasing their tails trying to find their passion end up never really getting off the ground, usually.
And conversely, the folks that are just in it for the dollars, they’re just going to get whooped by somebody who’s passionate about that market because the money’s going to be there whether you’re passionate about it or not. It’s a question of how much care are you going to exert, how much effort are you going to put forth to satisfy those customers. Are you going to stake out your unique point of view and have an opinion on this market or are you just trying to suck maximum dollars out for minimum time? I found that if you follow that latter model, it just never works out quite as well and you’re always subject to somebody else coming into the market and cleaning your clock.
Josh: Because we’re in a small marketplace. I mean, most people that are listening to this, they’re not the 200-pound gorilla in their market. They’re just a little guy trying to carve off a piece of their business. So, talk to me a little bit about the profitability of a niche-focused company versus one who’s not.
Rob: Any business I’ve ever built, we’ve always gone after a niche of some kind. And it’s always been a premium to market. And there are a number of reasons why. But first of all, you know, people love to be told that they’re special, that they’re unique, that their challenges are different than everybody else’s.
And what better way to tell people that than to say, “Hey, you know, we don’t deal with—” you know, and you’ll say it nicer than this, “But we don’t do deal with every schlepper out there in the marketplace. We work with people who, you know, XYZ. And people like this, they don’t have the same issues, the problems, the challenges, the aspirations of the average buyer. No, these folks are above average and they have above average needs and wants. And that’s the type of person that we cater to.”
Well, if you’re having a discussion like that, you know, first of all, just as a casual visit or I kind of want to be part of that group, whatever group that is that you’re catering to there. People want to be seen as special and they want to be valued as customers, so just that alone lays the foundation for premium pricing power.
Josh: So, along with premium pricing power, my experience is you also become more efficient.
Rob: Yeah, absolutely, because you’re not wasting time trying to wrap your arms around the entire market, particularly on the fulfillment side. I mean, those outliers, when it comes to just customer problems, questions or issues or little customization requests that they might have, I mean, when you’re trying to cater to everybody, it’s absolutely exhausting. You can never have something that’s going to satisfy everybody.
So, the minute you start clipping off the edges – attached as we are as business owners to those valuable customers, as you let those people go, I mean your vacuum is more than filled by better matches for what you offer. It just makes business easier and it makes it more profitable.
I’ll give you a strange example. In our community, we’ve got somewhere around 1600 members in our membership community and these are business owners – online business owners – predominantly a lot of infomarketers as well as service professionals and kind of across a wide spectrum. And there’s this chap in our group. His name’s – oh, let’s just say his name’s Norielle. And about a year and a half ago, he did a project for somebody to help solve a huge problem with their e-mail service provider. They could not fix something or get it to work properly.
I don’t remember the details but he solved the major challenge for a fairly influential person in that particular market. And this guy just started singing his praises. And so, what was interesting about it is he quickly developed a niche of being able to solve these e-mail service provider-type problems. And what was interesting is he just kind of rode that and followed that and people started coming like, “Oh, well I’ve got a problem with Infusionsoft. Oh, I’ve got a problem with Entrepot. Hey, can you work with MailChimp? How about Aweber?” And then suddenly just everybody that had an e-mail problem was coming to this guy.
Then, without him doing anything at all, he started developing a reputation for solving all things technical. And like, to this day, if somebody has a difficult challenge in all manner of technical issues, they’re tagging this guy and say, “Hey, I don’t know, but this guy, he solves everything.” And he’s got this huge halo effect. And what that allows him to do is select whom he will and whom he will not work with. And this is kind of a microcosm of the topic that we’re talking about here. But I’s fascinating to watch it happen in real time before your very eyes, like somebody who’s a very small fish in a big pond, just like you mentioned earlier and then suddenly go from this teeny, tiny microscopic niche to all things technical, getting to choose who he does and does not work with and evolve in a very fast time from just surviving in his market to very much thriving.
Josh: So here’s my question about that. I mean, I see solving e-mail problems as being a well defined niche, I’m not sure I see solving all things technical as a niche.
Rob: Exactly. So the reason I bring that up is because what I find so common, the resistance to choosing a niche is that, “Well, I’m going to have to give up all these customers.” And what you end up finding is that, not only do you get more of the best kind of customers but you’re not losing other customers that you might want to service. They’re going to show up anyway.
But, if I flip it the other way around, we’ve got lots of people in there that have technical expertise who probably could’ve solved the same stuff that he does, maybe not as well – I won’t argue any of those points. But what I will say is, because those people came in ill-defined, they’re still not getting referrals that this guy is. And had they just focused on one thing, to start, they wouldn’t have lost customers that they wanted to keep. And you don’t have to just work with those people, you will get other spinoff business. But then you’re coming from a position now where you’re qualifying and deciding the people that you’re going to take on as customers as opposed to chasing after the ones by chasing every rabbit in the herd.
Josh: So what you’re saying is that once you decide you’re going to be a niche company, you’re going to communicate to the world what your small little market solution is. But if somebody comes to your company who’s outside your small little niche, you can decide whether you want to serve them or not. It doesn’t mean you can’t serve anybody else, it just means you’re communicating to the world who you do serve.
Rob: Exactly. And like I said, people have a tendency to think that they’re chopping off their legs to save one arm when it comes to choosing a niche and I’ve found that not to be the case at all. You actually get more customers just showing up that just happen to be in the orbit of that niche. And then, like I said, a lot of companies are not necessarily that selective in who they take on. They’ll take on people because they just need to meet numbers. And now, the dynamic is you’re deciding whether these folks qualify to work with you or not.
Josh: It makes perfectly good sense to me.
So, Rob, we’re about out of time. Do you have any other comments that you’d like to make about niches that we haven’t covered?
Rob: I’ll just say this, people don’t want to work to try to figure out who you are. And if you’re not distinguishing yourself either as a service provider or as a company, folks just don’t have the time or the interest in doing that. When they come into a market, they’re looking for a solution. They’re looking for reasons to eliminate you from consideration – not for reasons why they should do business with you because that’s how we make choices – we cut and slash and eliminate things that all look alike or don’t say anything unique or different. And when we find somebody that stands for something, has a point of view, specializes in dealing with the types of concerns that either are exactly what you’re dealing with or are related to it, now that catches people’s attention and not much else does.
Josh: Well, that’s a great way to end this episode.
So, Rob, if somebody wants to get in touch with you and talk about niches, how would they go about doing that?
Rob: The best way, I’ve got a special e-mail set up for your audience. You can just e‑mail me at firstname.lastname@example.org and I can spell that if you like, it’s email@example.com (R-O-B-E-R-T-M-I-C-H-O-N.COM).
Rob, thanks so much for your time again. And as always, your comments are interesting and very thought provoking.
I’ve got an offer for those of you who are still on the line with us or are still listening. We have this thing I call the Periodic Table of Business Elements. It’s 56 different business strategies that you can pursue. Built on what looks like a periodic table. You may remember that from Chemistry class. So, if you want to get this, all you have to do is text periodic (P-E-R-I-O-D-I-C) to 44222. That’s PERIODIC to 44222.
You’ve been at the Sustainable Business. This is Josh Patrick. Thanks so much and I hope to see you back here real soon.
Narrator: You’ve been listening to The Sustainable Business podcast where we ask the question, “What would it take for your business to still be around 100 years from now?” If you like what you’ve heard and want more information, please contact Josh Patrick at 802‑846‑1264 ext 2, or visit us on our website at www.askjoshpatrick.com, or you can send Josh an e-mail at firstname.lastname@example.org.
Thanks for listening. We hope to see you at The Sustainable Business in the near future.