“Wouldn’t it be great to spend every day working with clients who are ideal for you, clients whom you can hardly believe you get paid to work with? It is completely possible once you identify who you want to work with and determine with absolute clarity that you will settle for nothing less. Once you do that, it’s just a matter of knowing which of your existing clients qualify and how to acquire more just like them.” ~ Michael Port
It’s not a new topic for many business owners but a crucial one often ignored out of ignorance and/or fear. For most business owners, there’s something paradoxical about the fear of defining an ideal market. On one side, they believe seeking and serving mostly ideal clients means limiting revenue potential whereas, in reality, it’s quite the opposite. The research on this topic is extensive and irrefutable. Target marketing is the most effective and profitable way to grow your business. To do otherwise is to follow a painful path to mediocracy and monotony, if not failure. Neither the advisor nor their clients ever really end up truly happy.
| “Ideal Clients” receive high value from a firm’s products and services. In return, they provide high value in the form of high margins, loyalty, and retention. Companies should identify and build on this type of customer. |
Susan Cartier Liebel, an instructor at Solo Practice University, writes…
“Customers are the lifeblood of any organization and the heart of the demand-driven economy. Scores of books have been written about the importance of customers, ways to provide value to them and the need for a company to be customer-oriented. Senior executives in all industries readily agree that customers are critical to the survival of a firm, that customers are their most valuable asset and that their entire organization must be customer-centric.”
Holding On To Old Mindsets
Most financial advisors starting out are taught to go after as many clients as possible. It’s a numbers game. They’re told to list every person they know, make dials and schedule appointments. The few successful ones end up with a relatively large diverse book of clients, a nice income and very little time to work “ON” their business. They understand how valuable their clients are and end up so consumed with them and the daily grind, they can’t find time to really evaluate their profitability and implement strategies to grow. Consequently, they end up plateauing with a significant percentage of their clients who contribute little to the firm’s top and bottom lines. Can you relate?
Susan goes on to say, “Businesses often make one of two big mistakes when it comes to customers: They either pay too little attention at the risk of losing them or they work too hard at trying to keep the wrong ones.”
Sunil Gupta, the Edward W. Carter Professor of Business Administration and Chair of the General Management Program at Harvard Business School, and Bernard Schmitt, a famous French economist, put it this way…
“Rather than spread itself too thin by treating all customers the same, a company should identify its different types of customers and treat each group appropriately.”
They further point out that while it may seem counterintuitive to be customer-focused and yet suggest firing customer’s too costly to maintain, “a study of U.S. banks in the early ’90s found that only 30% of customers were profitable over the long run — 70% of customers destroyed value!”
Therefore target marketing and niche strategies must be employed. To sustain growth, build a valuable business and have the freedom to really enjoy their lives, they must move towards working with fewer affluent and more ideal clients.
It’s More than Demographics
Most advisors who get this concept, tend to oversimplify it by focusing on a few demographic attributes like net worth and investible assets. Taking a simplistic approach robs this strategy of all its potential to create the attraction, conversion and retention they want long term. This is where a deeper dive to more fully identify your ideal market and niche is essential.
Not only does ideal market and niche marketing empower you to bring in more of the right clients, but it will also put you in the best possible position to retain and duplicate them through referrals. In other words, it will create synergy throughout your business making it more sustainable, profitable, and enjoyable. Ideal market and niche marketing shape everything you do to get your message out to the right people with the greatest likelihood of them responding to it. And knowing exactly what your ideal market wants and needs, you can design and implement a business model that will create that elusive “WOW” factor to retain and replicate them.
Ideal Client, Market and Niche
For the sake of this body of work, let’s align on some terminology. The phrase “target market” (preferably referred to as “ideal market”) is often used interchangeably with “market niche.” It’s also used interchangeably with “Ideal Clients.” This can be confusing so let’s clear it up.
- Ideal Client (often framed as an Avatar or Profile) is a way of humanizing your ideal market by describing the attributes of a person who would be a perfect match for your business offering.
- Ideal Market (Target Market or Target Audience) simply refers to common attributes within a group of people who are most likely to buy your products and services. Those who are most likely to buy from you have similar problems, needs and desires you can satisfy. The more closely you match their problems, needs and desires with your offering, the more attractive you’ll be to them and the more likely they’ll be to respond (buy).
- Market Niche (Niche or Niche Strategy) refers to the specific and unique way in which you position yourself to satisfy your ideal market’s problems, needs and desires. The idea of niche marketing is to become known as the go-to expert or specialist.
Simply put, the important distinction between ideal market and niche is:
- Your ideal market is the group of people you serve.
- Your niche is the unique value proposition or offering (specialty) to your ideal market.
There could be several different service providers targeting the same ideal market but delivering different specialized offerings to satisfy different needs and desires within that market. For instance, a financial advisor, CPA, attorney, and lender could target the same ideal market. These could become great professional service and/or promotional partners.
Here’s an example of a target market and niche. Let’s say a little research in your area identifies a large population of small businesses with owners between the ages of 45-65 and with over $2M in investable assets. So these attributes offer a partial description of your “Target Market” or “Ideal Client Profile.” While many advisors might stop at that, they’re missing the real power behind these strategies.
With a little more research, you then identify a number of common problems or challenges your ideal market faces. Of them, preparing for and moving through retirement transition seems to be a really big one. Because you happen to really enjoy working through these situations, have a unique ability to relate to their mindset, have experience with this type of work and offer solutions (products and services) specifically designed to help solve problems associated with these issues, this would be a great niche. Now all of your messaging targets this group of people and aims to position you as “the go-to expert for small business owner retirement transition planning.”
This allows you to really nail your messaging and deliver it to the right people in the right places. It also allows you to hone every aspect of your service model to solve the most common issues with maximum effectiveness and efficiency. Do you see the power of these two strategies working in tandem? It’s huge!
Often, an advisor’s ideal market comes from their “why story.” It’s the story of your life and how it informed your decision to get into your current business. We have a complimentary assessment that will help you in this discovery process and moreover, a complimentary 30-minute coaching conversation to help you make the connection. This is often a game changer for business owners, especially those challenged with capacity and frustrated not being where they want to be.
To take the “Confident Leader Insight Assessment” click HERE. To schedule a 30-minute complimentary coaching session to identify your ideal client, audience and niche, click the button below.
