Niche Marketing—Why it’s Better for You

Many accounting firms position themselves to meet everyone's needs—thinking this strategy will capture more business. The rationale is that the broader the services, the faster the growth. In reality, this is a bad business strategy.

When firms offer services to meet the needs of everyone, they position themselves to be in direct competition with every firm that offers one or more the same services. When this happens, it is more difficult for a firm to position their offerings as unique, and that means that price becomes the main factor.

Over the past decade, niche marketing has become a key strategy across many industries because it works. When you become known for a particular niche, the following happens:

• Marketing efforts are more focused;
• Networking efforts are more targeted;
• The firm emerges as a premium provider of the specified niche services;
• Conversion ratio increases;
• Referrals increase; and
• The firm can command higher prices.

It's understood that most firms will always maintain a certain number of generalist clients, which provide a solid revenue stream. However, as firms move forward, it's critical to build and become superior in providing niche services. Take physicians for example. Specialists have a much narrower target audience than general practitioners. General practitioners have long-term relationships with patients and refer business to specialists. However, specialists make much more money. The same concept applies to accounting firms.

If your accounting practice is spread too thin and is forced to compete mainly on price, then you will want to consider developing niche services. To begin, research your market to determine what industries might be underserved and then develop a plan to capture those markets. If you're not comfortable doing this yourself, get assistance from a coach or peer that has made the niche transition.

The key point is that if firms continue to be all things to all people and take whatever new business comes in, it is challenging to create uniform workflow processes, maintain overhead costs, and provide competitive pricing. Niche services work and are fast becoming a standard business model.

Hugh Duffy is co-founder and chief marketing officer for Build Your Firm (http://www.buildyourfirm.com/), a practice development firm dedicated to the accounting industry.