I work with Realtors to help them define and establish a niche for their business. Most Realtors don’t have a niche or at least not a well-defined one. I’ve written previously about the steps to find your niche and how to stand out in a crowded market, but one of the biggest questions that I get is: “Will it limit my business?”
The short answer is no. Defining a niche for your business doesn’t mean, “I only work with this type of client in this market in these situations.” Niching isn’t about limiting yourself or turning away business – I still have many clients who aren’t Realtors. Niching is fundamentally about how you market yourself.
Niching is a marketing strategy. By identifying a niche, you make it easier (and cheaper) to market yourself because you are focusing on a single target – your ideal client. You can develop a consistent message and a consistent approach when you know who you’re talking to.
So unless you have millions of dollars to spend marketing to multiple audiences (with multiple personalities), you’re better off concentrating your efforts and your budget on a single market, the one that’s going to respond and resonate with you the best.
But let’s not get ahead of ourselves. It’s one thing to simply say I want to work with this type of client or in this market. But how do you know if a particular niche is right for you?
To ensure we have the best chance of success, there are 10 criteria we use to evaluate a niche.
1. You must be able to reach your target market easily.
Not only physically, but with your marketing. It must be a clearly defined audience that can be targeted with advertising and other methods of outreach. The more you know about your target audience, the better you will be able to reach them where they hang out and with messages that resonate with them.
2. Your market must have compelling problems, opportunities or needs that you can solve.
The number one thing you need to know and understand about your target audience is what drives their behaviour when it comes to real estate. Every buyer and seller has a different motivation, issue, concern or need. Understanding what the key drivers are in your market – and how you answer them – is how you become the go-to expert.
3. Your target market must have money to spend.
This may seem obvious but you should have some idea of the average transaction value – as well as the lifetime value – of clients in your niche. Map this against the income you want to make from your business and you will have an idea of how many clients you will need to make that happen. Can your niche support your business goals?
4. Your audience is willing to spend money to solve their problems.
This one is important. Your market needs to value your services and what you bring to the transaction. You don’t want to be in a position where you have to constantly discount your commission to get the deal.
5. Your target market must be large enough to support your business.
If we go back to #3 and you have a market with an average transaction on the lower end of the scale, you will need more transactions from that market to reach your income goals. If that’s the case, you’ll need to ensure the market is large enough to support your business.
6. You can compete.
This is where understanding your strengths and your superpower are important. If you can solve the problems of your target market better than anyone else – because of your background, experience and skills – you will stand out from the crowd.
7. There is not too much competition.
This is the whole point of narrowing your focus…so there is less competition. But that doesn’t mean there shouldn’t be any competition. If there isn’t, that may mean it’s not a good niche! A little competition is good. It gives you a measuring stick to position yourself with, learn what works and what doesn’t and carve out your own unique persona.
8. You have the ability to dominate the target market.
Not just compete, but dominate. The more narrowly you define your niche, the more chance you have to dominate it.
9. You want to dominate the market.
One of the steps I go through with my clients is identifying where their passions are and the people they love to work with. If you don’t love working in your niche, you will never dominate it. It’s that simple.
10. And finally, you can develop repeat business.
If you can develop a niche where you get a client for life, you’ve made it. Happy clients will generate referral business. And people tend to know or hang out with people that share their same interests. Plus, once you become the expert in a niche, the business will start coming to you.
If you have an idea for more than one niche, use the above criteria to help you determine the best one for you. Use a simple scale of 1 to 5 for each criteria, with 1 being poor and 5 being excellent, and then total them up. When you are done you should have a good idea of which market has the most potential for you.