9 Ways That Niching Your Agency Can Triple Your Profits in A Year (The Ultimate Guide)
I’ve seen it time and time again...
Agencies that have a clearly defined niche massively outperform those that don’t in almost every way: revenue, customer retention, employee satisfaction, and in the quality of their client relationships (because prospects see you as the expert, not just as a supplier).
A big statement to make? Sure - but I know it’s accurate because I’ve lived it. Niching my agency allowed me to triple my profits inside 6 months (you’ll read more about that in the next section).
And in my coaching practice, helping clients to niche their business is one of my most common interventions.
I recently worked with a PR firm that served three main niches. They were doing well, but were struggling to grow their agency and win new business. They felt stuck - like they were perpetually taking one step forward and one step back, never truly making progress towards their goals.
We worked together to answer three core questions (covered later in this article) about their business, the answers to which revealed a clear target niche for them. And by honing in on this area of their business and committing to it in their sales & marketing, they were able to land three new (highly profitable!) clients in just 90 days.
The world values specialists. When you have a cold or a flu, you head over to the GP and take their advice as gospel. But when you need urgent surgery on your elbow, you don’t settle for a GP - you go for the best surgeon you can find.
It’s the same with your agency. People with burning problems want to have them solved by experts. When you serve a specific group of customers, you can:
- Position yourself as an expert, not just a “jack of all trades”
- Deliver great results to your clients through constant exposure to their most pressing problems
- Charge higher rates (think how much more money a surgeon makes than a GP!)
How much less stressful would running your business be if you knew you could serve a highly targeted group of customers that saw you as an expert (and paid you the fees you deserve, without question)?
In this article, we’re focusing on how niching your agency can help you to supercharge your profitability, attract a constant stream of great prospects, and effortlessly build stronger relationships with clients (which is SO much less stressful than running a generalist agency).
Here’s what we’re going to cover in this article:
- Exactly why failing to niche down your business is holding your agency back (Hint: it’s all about perception)
- How you can find your most profitable niche (and why you shouldn’t be afraid of “missing out” on all the niches you don’t choose)
- Specific examples of businesses that have succeeded by selecting a niche (vs. taking a generalist approach to positioning)
- How you can position your business to speak directly to your target market through developing crystal-clear customer personas
- Why your website & all outbound communications have to be designed with your niche in mind
- Some of my best resources for defining your niche and ideal customers
- Some of the best tools available for carrying out keyword research (a huge asset to any niche agency)
- A simple one-page action plan, detailing everything you need to do to kickstart the niching process for your agency
The information you’ll learn here is the kind of advice my coaching clients routinely implement with tremendous results. So if you want to start getting paid like a specialist (and have more fun with your business than ever before), then read on!
We cover a ton of information here, and I know how hard it can be to actually apply everything you read when you have so much else on your plate already. That’s why I’ve summarised everything you need to know in this One-Page Action Plan. Click the image below for instant access.
No matter what industry you’re in, niching works. I saw it when I was running my own agency. I’ve seen in my clients businesses’ - and I’ve even seen it in my coaching business.
Back in 2007, when I first started my practice, I was a generalist coach. Whether the client was a large corporation or a small startup, I was happy to help them all the same. I thought that I needed to be a generalist from the get-go so I could get my coaching business off the ground, and set up my website and marketing to reflect this.
The issue with this approach was that in trying to appeal to everyone, I ended up appealing to no one.
I didn’t have a compelling story to tell larger clients because I didn’t have loads of “large corporate experience”. As a result, those types of companies were hard to win.
On the other hand, I had plenty of relevant expertise to offer startups and smaller businesses - but when they heard that I also worked with bigger firms, they would assume that I couldn’t understand the particulars of their situation. Consequently, I struggled to land clients from either category.
I was in a lose-lose position. It turned out that my beliefs about niching and winning new business were completely backwards. Rather than making me more attractive to prospects, positioning myself as a generalist was actually hurting my chances.
But if I took the opposite approach, and instead chose to niche my offering and serve a small group of potential customers above all others?
I would be in a much stronger position to succeed.
Sometimes the simplest truths are the most difficult ones to accept… but after much soul searching, I made what I felt was a very brave decision to niche my business.
How I Chose My Niche
For me, choosing my niche was not difficult. I had been a part of the marketing agency world for the previous 15 years as head of my own agency, so I was certain of two things:
- I was really passionate about the space
- I knew an awful lot about it - enough to deliver great results for clients
But despite being passionate about the niche, and being confident I could deliver results to my clients… I still hesitated.
Looking back now, I can see that it felt like a big decision to make because I still believed that I’d miss out on tons of business opportunities by picking one niche to serve.
I thought about it for hours, days, weeks on end. I’d ask myself “But if I focus just on the marketing agency sector, won’t I miss out on lots of other potential clients?”
As I’ve seen many times in my life, honest reflection is key to finding an answer to the difficult questions. In this case, I had to face up to the reality that I wasn’t winning many clients anyway. Most of them were put off by my generalist positioning, choosing instead to go with more focused alternatives. So really, I didn’t have much to lose. Worst-case scenario, I could pick a different niche, or go back to being generalist if niching didn’t work out.
Fortunately, that wasn’t an issue, as niching my business turned out to be the best decision I ever made.
Within six months, I had tripled my profits and was winning new business left and right. And not any old clients either - ones that I understood deeply (so I knew I could do a fantastic job for them)... ones I truly enjoyed working with.
Two Key Points About Niching Your Agency
It’s been almost 13 years since I first started serving this niche above all others. And with the benefit of this experience, I have two key learnings to share with you. Using this advice, you’ll be able to better establish your niche, serve your target audience and build a sustainable agency that profits for the months and years to come.
#1: Your Niche Defines You - It Doesn’t Entrap You
Defining a niche for your business doesn’t mean that you can never take on an opportunity outside of that niche. While you don’t market and sell yourself to other niches, it’s still possible that clients outside your chosen target audience will seek you out - or that a chance will come across your path that’s too good to ignore.
In these cases, you can make a decision based on the facts at hand. If you feel your agency is a good fit for the work based on your culture, you can deliver good results to the client and would also enjoy working with them, then go for it!
Few agencies will serve just their niche and no one else. You’re free to pitch for and serve business outside of your chosen market. As long as you don’t forget what your core focus is (and why you picked it), there’s nothing to worry about.
And remember: choosing a niche doesn’t mean you’re committed to it forevermore. In fact, I frequently tell my clients that it’s far better to start niche and then broaden out, rather than starting broad and trying to narrow down. As you establish a strong position in your target market, you’ll be able to expand the scope of services you offer to people outside that niche. Over time, you can transition completely if you like.
I’ve seen this in my coaching business. While I started out working with marketing agencies only, I’ve since gained enough experience in the marketplace to help other types of businesses too. My client base is still mostly marketing agencies, but has expanded to include clients outside this niche too. It’s a roughly 80/20 split between niche and non-niche clients.
You’ll probably experience a similar development in your business over time. If you choose your niche well at the beginning, you’ll continue to serve that market above all others - but there’s nothing wrong with dipping your toes in other waters too, if you feel the prospect is a good fit and you will be able to do a good job for them.
#2: Niche Businesses Earn More Than Their Generalist Competitors
Niche businesses nearly always charge more than generalist ones, simply because they are seen as subject matter experts. The more narrowly defined your niche, the more likely it is prospects will assume you are an expert in the field.
As a niche agency, you are seen as an expert. You’re not a mere supplier for some commodity: you’re a trusted partner, someone to be consulted. This, in turn, allows you to build better relationships with your clients - and earn higher fees.
That’s why surgeons get paid far more than GP’s. It’s why World War II historians are seen as more knowledgeable than history teachers when it comes to discussions of World War II. And it’s why some web development agencies can charge £50,000 for a website (while others struggle get paid even £500).
Selecting Your Niche - The Three Questions You Need to Answer
To be honest… it was easy for me to select the niche I’d serve with my coaching business.
As we discussed in the previous section, it just made sense to serve marketing agencies. However, through working with over 250 agencies in a coaching capacity, I’ve seen that it’s not always so easy to pick your niche. In fact, it can be downright confusing if you don’t know what segment of your business to focus on.
I find that there’s a few key questions businesses need to answer before they can choose their best niche. Consider these questions when researching what niche you’d like to target:
- What part of your agency is most profitable? You can look at this vertically or horizontally (by market sector or by service provided). E.g. a full-service marketing agency may find that their digital marketing activities are more profitable than anything else in the business. Or perhaps their financial institution clients are more profitable than any other segment.
- What type of customer can you get the best results for? Consider whether you deliver best to small businesses or larger ones, and the sectors these businesses work in.
- What kind of work do you most enjoy working doing? This one is massively important. We do our best work when we enjoy working with the client and are passionate about the results we deliver. Working with clients you’re not excited to assist will put you on the fast-track to burnout.
You can visualise these questions with the following graphic:
You want your chosen niche to be at the intersection of the Money, Passion, and Results circles. This will allow you to build a sustainable business where you can deliver great results for clients, earn fees you deserve and enjoy the work you do.
Operating a business that fits in just one of these circles (or even in an overlap between two) will be unsustainable in the long run.
- If you don’t earn enough from the work, you won’t be able to keep doing it
- If you can’t deliver great results for clients, you’ll struggle to retain customers and win new ones
- If you don’t enjoy the work you’re doing, burnout is inevitable (trust me - it’ll happen sooner or later)
Take the time to figure out what niche lies in the overlap between these three circles. This market will become your core focus, allowing you to build a stable agency dedicated to serving those customers.
A Simple Way to Think About Niching
If you’ve run through the three questions above and are still having some trouble wrapping your head around niching… consider the following framework.
There are four easy ways you can think about niching your agency.
- By geography
- By industry/vertical sector
- By deliverable/service
- By problem
Let’s examine these in more detail below.
This one is self-explanatory: you can choose to serve a market based on geographic location.
This can be a good strategy when knowing the area is a competitive advantage. Understanding the lay of the land and being able to “speak the language” of your target audience is often an invaluable asset in winning their business.
By Industry/Vertical Sector
Examples of industries/verticals include pharmaceutical, telecoms, tech, and education.
These sector definitions are quite broad, so it can be a good idea to niche down even further by identifying a sub-sector in the niche e.g. rather than serving tech companies, you could drill down and focus on helping consumer tech start-ups or B2B SaaS companies.
Examples of deliverables/services you may provide could include PR, web development, SEO etc. Once again, it’s important to ask yourself if the specific service you’ve identified is niche enough… or if it’s too broad.
If it is too broad, you need to establish a niche position that makes you look like a specialist, not a generalist. For example, you don’t just offer PR services - you’re an expert in Crisis Communications. You’re not just a web developer - you’re a web developer that specialises in integrating CRM systems.
Sometimes, you’ll find that a lot of your clients are facing broadly similar problems. E.g. you help startups win funding from competitive grant programs, or you help financial practitioners generate more leads for their services.
If you habitually help your clients with the same problems, you could consider basing your business around solving this problem. And if you can explain how and why you are uniquely qualified to serve this sector, you’ll do just fine!
Once You’ve Picked Your Niche - What Then?
Once you’ve picked your niche, you need to commit.
All of your outward communications should be crafted with this niche in mind. If you’re advertising, you should endeavour to speak to your target audience directly. Forget about being all things to all people - serve the few so that you may build a profitable, stable business that will eventually serve the many (if you want it to).
Your goal is to be seen as an expert in your chosen sector. In practical terms, your website should be geared towards achieving this outcome. First impressions matter. You don’t have very long to convince people you can help them. As soon as prospects land on your site, they should be able to tell:
- What your niche is
- That you understand the burning problems they’re facing
- That you’re capable of solving these problems for them
- How you’ll add value to their business
Let’s look at some quick examples to really drive this point home.
Look at this web design agency. Here’s the first thing you see when you click in…
This is the site of a web design agency located in East London - but you wouldn’t know that from looking at their home page.
Their offer of “bespoke design and web development” is stuck in the top left corner in small white font. The most prominent thing on the page is the fact that they’re looking to hire developers.
Suffice to say that prospective clients who come across their website are unlikely to stick around for very long.
To apply the criteria listed above to this site:
- We don’t have a clear idea of what niche they’re targeting
- Because of this, we don’t know what problem they’re solving (beyond creating websites and doing bespoke design)
- If you click around, you can see samples of their work - but the first image you’re greeted with is of business cards and stationery, which is confusing
- Their value proposition is unclear. You could argue that “bespoke design” is their USP, but given that they’re a design agency (and have confined this fact to a tiny corner of the screen), one wouldn’t be very convinced by this statement
Now, let’s look at a better example. This is another web design agency. Here’s the first thing you see when you click onto their site:
Instantly eye-catching visual imagery, a clear contact button, an uncluttered screen and an obvious next action to take. In addition to this, they instantly speak to their audience (ambitious businesses who want their brand to “thrive online”).
Their niche is even clearer when we scroll down to the next section…
Great use of white space, and a beautiful design in general. Important for a design agency, sure - but let’s apply our criteria from above to see how well they fare.
- Their niche is clear - they serve businesses who want to sell online and where appearance is key (e.g. fashion, skincare, etc.)
- They understand that these businesses need visually compelling websites to convert prospects into customers
- They have demonstrated their expertise by putting relevant samples right in front of you when you click onto their site (past projects & great images in general)
- This + their positive testimonials & social proof prove that they’re capable of delivering value to your business
Of course, there’s more to marketing than just your website. You also need to think about how people will find you.
If you’re running ads, they need to be congruent with the niche you’re targeting. Speak their language, and tell a consistent story across all mediums you use to reach them.
Beyond ads and digital outreach, you also have to be mindful of the networking events you attend.
Packaging design business owners shouldn’t be attending events where they meet accountants, bankers, personal trainers & hairdressers. Sure, they might have some great conversations - but they won’t be talking to their target customers.
If you’re not sure who your target customers are, you need to spend some time developing crystal-clear customer personas (or customer avatars). For more info on how to do that, check out my Customer Personas Workbook (discussed in the Resources section below).
Having a clearly defined niche and understand who you’re targeting is a massive part of running a successful business in any industry, not just in the agency space. To prove this point, let’s look at another example… coffee.
Small Batch Coffee - A Niching Success Story
I don’t know about you, but I can’t start my day without a good cup of coffee. And to be honest, I’m pretty spoilt for choice. Living in the seaside town of Brighton in the UK, I can’t go more than 100 yards without coming across a coffee shop.
In my eight years of living here, I’ve seen many coffee shops come and go. In fact, I’ve actually worked with one or two over the years (a good example of how you can take on clients slightly outside of your niche when you can add value to their business).
Trust me: it’s extremely difficult for a coffee shop to stand out from the crowd here. They all sell the same basic product (coffee), have roughly the same atmosphere and decor, and operate their businesses the same.
Most struggle to define a clear niche to target. And so they try to cover all bases (e.g. offering breakfasts, takeaway lunches, teas etc.) - this is a mistake. As we’ve already discussed, trying to appeal to more and more people usually has the opposite effect you’d like it to have.
Singing the same tune as everyone else is not a good way to get heard over the noise. This is why the majority of coffee shops are just getting by. The owners don’t get rich - at best, most just build a high-stress job for themselves.
Of course, some coffee shops are doing very well. Take Small Batch Coffee Company, for instance.
When they first started in 2007, Small Batch was a small-scale business. Their only goal was to roast small batches of high-quality coffee. After a couple of years of this, they opened their first few coffee shops. Gradually, they expanded the company’s wholesale and retail business to include multiple coffee shops.
Today, Small Batch Coffee is a hugely successful coffee wholesaler, supplying high-quality, ethically sourced coffee to cafes and restaurants all over the south of England. They also sell coffee online direct to retail customers and serve their own customers in seven different locations.
I believe that Small Batch have succeeded because, right from the start, they were clear about their niche. They didn’t open up another generic coffee shop and starting competing with the 15 other stores within walking distance of theirs. They focused on providing home-roasted, high-quality coffee to the exclusion of all else. At least at first. They were singing a different tune… and pretty soon, people started to pay attention to them.
You’ll also notice that they didn’t confine themselves to this niche. Once they had established a position in this space, they expanded outwards into complementary markets (known as ‘shoulder niches’). This contrasts with the standard generalist approach taken by most coffee shops.
In addition to this, Small Batch established a reputation for quality in the micro-roasting business, then carried it over into their retail operations. People know that if you’re looking for a good cup of coffee, you go to Small Batch. They prove that niching works.
The Most Powerful Resources for Niching Your Business
In this section, I’m going to share with you some of the powerful tools you can use to help niche your agency.
Previously, we discussed some of the big issues that stop you from building a highly profitable niche agency. False beliefs, not taking the time to truly examine your business, and the fear of “missing out” on all the niches you don’t choose… all of these factors can hold back your business from growing like it should. Growing your agency is challenging enough - you don’t need all this extra baggage complicating matters too!
Luckily, I’ve developed some useful tools in my time as a coach to 250+ agencies. And in this section, I’d like to share these resources with you.
Firstly, you can get a free copy of my “Defining Your Niche” eBook. Inside, I break down the difference between niche and generalist agencies, the realities of running each type of business, and a super-simple (but powerful) framework for figuring out where your business is right now - and more importantly, how to get to where you want to be.
Secondly, If you’re completely new to the subject of niching, then I highly recommend you check out the book “Blue Ocean Strategy”. First published in 2005, it revolutionised the way I (and thousands of others) think about business. I’ve often applied its learnings with my coaching clients, many of whom have benefited tremendously from the ideas contained within.
The book likens competitive marketplaces to “red oceans”: waters where fish fight for scraps and tear strips from each other in an effort to survive. Companies operating in red oceans typically have smaller profit margins, experience more competitive pressure and have a harder, more stressful time in general.
The book then goes on to explain that you don’t have to dive into these overcrowded markets. You can instead head for open water and seek out your own “blue ocean” (an untapped or underserved niche). These spaces are less competitive, allowing you to more easily establish a position in the niche (and even become the dominant force in it).
Thirdly, you can also get a free copy of my Customer Personas Workbook. Rock-solid customer personas are the foundation your niching efforts are built on. In this PDF, you’ll get my step-by-step system for getting in the heads of your target market, deeply understanding their needs, and effortlessly tailoring your business to their desires. This is the exact stuff I do with clients every week as part of my coaching practice, and some of the highest-ROI work you can do as an agency owner.
Finally, we have to face up to reality - not all niches are created equal. Some seem great on paper, but don’t pan out like they should when it comes to overall market demand. And one of the best ways to gauge how viable a niche is? Keyword research.
One of my favourite keyword research tools is Keywords Everywhere. This free browser extension gives you access to tons of keyword-related info that you’d otherwise have to pay for via expensive Adwords campaigns and the like.
You can also consider Neil Patel’s namesake app: another great resource at your disposal.
And if you don’t mind spending a little money, you should check out Ahrefs, which has tons of useful content for researching a niche, and positioning yourself within one.
Using tools like these, you’ll be able to research your chosen niche & associated keywords in detail, assessing its viability without committing lots of money and time to the cause.
Your Action Plan
We’ve covered a lot of ground in this article. To help keep this actionable, I’ve outlined the very next steps you should take to start the process of niching your agency.
If you’re interested in getting your hands on this free One-Page Action Plan, click the picture below for instant access.
The value of having a clearly defined niche cannot be understated. In my experience, niche agencies outperform generalist ones in almost every way. They:
- Earn higher revenues
- Have better client retention rates
- Have higher employee satisfaction levels
- Build stronger relationships with their clients (because they’re seen as trusted experts, not just suppliers)
Running a niched agency doesn’t entrap you - it frees you to build a business that delivers great results to clients, earns you the fees you deserve, and allows you to work on projects you’re excited about.
Your ideal niche is at the intersection of profitability, your ability to deliver results to clients, and what you’re excited about (Money, Passion and Results). Making anything else your focus is unsustainable in the long run.
You can also think of niching in terms of geography, industry, service and the problem you’re solving. Remember, these are just four different ways of considering how you might differentiate your business from your generalist competitors.
Once you’ve picked a niche, you have to commit to it. All of your outbound communication (including your website) should demonstrate your understanding of that niche and your ability to solve their problems. Websites or ads that miss the mark with this will hold your agency back and cause you to lose out on lots of business, so it’s worth paying attention to.
Having a clearly defined niche to serve is important in any industry. Web design, marketing, 3D architectural rendering, and even for coffee shops - businesses need to pick a niche to serve above all others if they hope to succeed in these spaces.
My aim with this article was to teach you everything you need to know to start niching your business today. With the tools, processes, templates and frameworks we’ve discussed here, I’m confident that you can:
- Get your mindset right about choosing a niche for your business (you won’t be missing out - in fact, it will help your agency do better than ever before)
- Determine what the right niche is for you (by looking at your existing business & customers, seeing what kind of work you enjoy doing, what you’re good at, where you’re located…)
- Develop crystal-clear customer personas → extremely important when it comes to succeeding as a niche agency
- Use the resources I’ve provided to simplify the process, helping you to establish a niche position for your business faster and easier than ever before
I’d love to hear about your experiences with niching, so please reply in the comments below with your thoughts to these 2 questions:
- Do you run a niche agency - do you agree with the advantages we’ve discussed here? Or do you feel there’s additional problems we haven’t covered?
- If you run a generalist agency - have you ever considered niching down? If so, what’s holding you back? If not, then why?
I look forward to reading your answers below!
P.S. Don’t forget to download your One-Page Action Plan by clicking the image below.