How to choose a niche for you Marketing Agency

How to choose a niche for you Marketing Agency

This is the first step in building an agency.

I want to point out that, the more detailed your niche and ideal target audience is, the easier it’s going to be for you moving forward with the process of building your agency.

Niche = Target Audience.

A specific target audience, within a larger market.

Which means - Construction, Dental, Law, Fitness aren’t niches, they’re larger markets which you need to dive deeper into and narrow down to a specific audience within that.

Here’s a few examples to illustrate this:

Electricians installing EV chargers.

Painters doing domestic jobs.

Cleaning companies looking for commercial cleaning work.

Therapists, Coaches, Accountants, Plumbers…

and so on… you get the idea.

Everyone raves about formulas or structures to picking a niche, but honestly there’s only a few steps to take and a handful of questions to answer to establish a niche for your agency:

1. Familiarity with the niche and their products or services - how well do you actually know what your customer does or what they sell? What problems their products or services solve for their customers? Do you understand their potential customer? I always say lean into industries you have experience in, makes life easy.

2. Their average order value - How much does your client make per order placed? Is this an Ecom beauty store selling a £19.99 product or is this a builder selling a conservatory for £10,000 each. You need to know their average order value and the quantity at which this sells / can be fulfilled - this helps massively when understanding affordability for your services depending on your offer structure (we’ll get to that another time).

3. Their customer life time value - Again understanding this is huge. Will you generate repeat purchases through your marketing or will you address the audience repeatedly to generate sales/clients? Recurring revenue from one customer is great, let’s say a SAAS business AOV is £100, and the LTV of that customer is 6 months. That means each customer you deliver to your client is worth £600.

4. Quantity of potential clients - how many businesses like your client is there? are they super common or super rare? ideally you want to work with a business that can attract new customers without having to promote crazy offers or discounts as if it’s a common business chances are their competitors are advertising so you need to beat those with creatives/offers/promotions and so on.

5. Quantity of potential customers for your client - their total addressable market. How many of your clients customers is there out there? Are they a local florist that can only market to the town of 30,000 people? Are they a national conservatory seller that can market to millions of home owners in the UK? Need to get the balance right.

6. Can you deliver your service to this niche? - pretty self explanatory but essentially is it easy to generate them customers or sales? If targeting a florist in a local town with 30k audience size, chances are only 1% maybe 2% will be interested at purchasing flowers so ease of delivery isn't the greatest. Compared to a cleaning company that travels 20miles to their customers homes, their audience size will be much bigger making the delivery much easier.

I’d also answer these questions before jumping into it:

• Does the niche need what you are selling?

• Does their customer(s) need their product or services?

• Is this a growing niche?

• Can they afford your services?

Then moving forward establish a platform you’ll use to help these niches…

Let me give you a couple examples:

Boiler installation company will receive better results doing google ads than facebook ads (google ads leads have higher intent as they’re searching for the key terms aka new boiler).

But something visual like landscaping services can bring better results through Facebook ADs and capture a customer when they’re looking at inspiration for their garden (so super early in the purchasing process - which isn’t all that bad actually if you have good nurturing sequences).

In most cases companies only really care about what problem you solve not the platform you use, so it’s completely to help you get them the best results.

Here’s a few more thoughts about choosing a niche:

Don’t go for niches that a YouTuber tells you to go for - instead revert to point 1 in this email and really think.

You need to understand their margins - if you’re doing lead gen for a medspa and each treatment is £100 but you’re delivering customers at £50 (CAC) is £50 enough to cover their labour, overheads, marketing costs? most likely not… so repeat business would be ideal or selling packages instead of single treatments. You get the idea right?

There are good niches and there are bad niches, you have to use your brain and see what works and what doesn’t.

If you haven’t got a clue about margins or LTV or AOV for a niche then i’d simply say do your research. Either online or reach out to business owners and speak to them to find out more on how their businesses work and whether there is space in the industry for what you’re offering.

Hope this helps,

Konrad