Should We Focus on a Narrow Niche, or Should We Be Generalists?

When I say narrow niche, what I mean is a company that is very specific and intentional about the service or product that they create, and the customers that they serve.

A generalist, on the other hand, is a company that offers a product or service that’s pretty similar to others in the market, and/or they have a broadly defined type of customer that they’re targeting.

Let’s compare two hypothetical examples to provide a little context for this.

Company A—our narrow niche specialists—created a customer relationship management software platform specifically for inside sales teams at small companies within the financial sector.

They’ve designed their product to offer just the features and functions that someone selling financial services will need. And their own sales and marketing efforts are focused entirely on the problems their CRM helps solve for that niche market.

They don’t spend any time or money trying to convince everyone that their product is the best choice. Instead, they make the product the best choice for their ideal audience, and then focus on engaging just that audience.

Company B—our generalists—also created a CRM platform, but they went in the opposite direction.

Rather than limit themselves to just one target audience, their vision is to become the “premier CRM in the world.” They’re constantly adding new features and functions to their platform, and they create marketing and sales messaging around their versatility. Their core message is that they’re the CRM for you, whoever you happen to be.


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Now, the reason that it’s so important to be intentional with your own level of specialization is that it helps make so many other questions so much easier to answer. When you make a well-informed decision about “niche or no niche” up front, it helps guide almost every other future marketing decision you need to make. Decisions about messaging, targeting, ideal customers, competitive strengths.

So here are some things to consider about each option. The potential upsides and downsides of choosing a narrow specialty or being more of a generalist.

Let’s look at the generalist option first. One potential upside is that it offers a lot of flexibility. You’re not hemmed in by artificial constraints, like a narrow target market or limitations baked into your products or services. On the flip side, a big potential downside of being a generalist is that it can be that much harder to stand out in a crowded marketplace.

Consider our generalist CRM example from before. There are dozens, maybe even hundreds of CRM software products available out there. Some, like Salesforce and HubSpot, own a massive chunk of the market and have huge marketing and sales budgets to reach new customers. Does coming out with another “me too” CRM make a lot of sense?

Another potential downside of being a generalist is that it’s way too easy to spread yourself too thin with your marketing and sales strategy. When everyone is a potential customer, where do you even start?

Now let’s take a look at the potential upsides and downsides of being more of a niche specialist.

First, on the upside, you have a much better chance of creating a product or service that solves a real problem that hasn’t already been solved. Our CRM for financial advisors can be designed to fit the needs of a very specific type of customer.

Sure, financial advisors could use Salesforce or HubSpot. But maybe those options are too expensive, or too complicated, or too difficult to set up and use every day. By narrowing your focus to a specific type of customer, you can design a product or service that offers the most useful and valuable sets of features and options for that specific market.

Similarly, you know exactly who you’re trying to market and sell to. You’re not trying to boil the ocean with a shotgun strategy (sorry for the mixed metaphors). No, you’re laser targeted. Connecting with exactly the right people, with sales and marketing messaging designed around their exact perspectives, their experiences, their challenges, and their desires.

But of course, there are some potential downsides to consider. Some risks that you want to be aware of and mitigate.

One is that you could be wrong about your target market. What if financial advisors don’t care about your CRM, and are just as happy to use the cheapest, most generic option already out there? Or what if Salesforce comes out with their own financial advisor version of their CRM, and torpedoes your entire strategy? What if there aren’t enough financial advisors who need your specialized CRM in the first place, and the market’s simply too small to support your growth goals?

So each option has both upsides and downsides to consider. But before we even try to make a decision, consider that there’s a third option. We’ll call it the hybrid. This hybrid approach takes the best of both the niche and generalist worlds, while reducing the potential downsides of each as well. It’s a way of approaching your business as a collection of specializations, rather than picking just one niche, or not having a specialization at all.

Let’s go back to our CRM example one more time. The company founders have a big vision for the future, and they don’t want to limit their growth to one specific market. They see themselves as one day dominating the CRM space.

But at the same time, they have limited resources. They only have so much money on hand, and only so much runway before it’s all spent. They have the engineering talent to create a great CRM platform, but not enough time and money to build the best CRM the entire world has ever seen. And they certainly can’t afford to go after every potential business customer, every potential industry all at the same time, especially with a relatively modest product compared to companies like HubSpot and Salesforce.

So rather than pick either narrow niche or generalist, they can go hybrid. They start with a narrow niche, one they picked based on a lot of research and a willingness to create a product prototype to test in that specific marketplace. Then, based on the results of that initial push, they can either choose to expand into that specific niche and look to own the CRM space for financial advisors, for example. Or they can change course, and iterate their prototype to see how well it performs with lawyers, or accountants, or freelancers.

Of course, even if they are killing it in the financial advisor market, they can still choose to branch out and create new versions for other industries. One by one, they can redesign their product to perfectly fit another niche market, growing step by step until they have a robust portfolio of highly-targeted products designed to fit the exact needs of a variety of different customers.

So what’s the right approach for your company? Should you pick a narrow niche and stick with it, or go broad and wide, or instead have more of a hybrid approach?

Here’s today’s exercise to help you figure that out. Please grab a piece of blank paper. At the top, write “narrow niche, generalist or hybrid?”

“What are we doing already, and is it working?”

Is your business currently serving a highly-targeted market? Or are you more of a generalist? Either way, what’s working well for you? What’s maybe not working so well?

“Is there a target market or customer type that your product or service is really well suited for, or you are already successful with?”

Think about your existing customer base. Is there a specific segment that represents most of your growth and revenue? What would happen if you recalibrated your product, marketing, and sales strategy to focus entirely on that specific target market?

“If you’re more of a generalist, what are the specific reasons that you’ve chosen that strategy?”

Did you intentionally choose to cast a wide net, or did it just kind of happen? Was it because you have the resources and experience to go after a large and broad market? Or because you were reluctant to find a niche? Are you trying to appeal to everyone simply because you’re worried about turning away business or choosing the wrong target market?

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