As business owners and consultants, it is common to see clients struggle with the fear of alienating customers by saying “no” to certain customer groups. However, as the saying goes, “you can’t be everything to everyone.”
We’re prone to it ourselves, in one of our team strategy meetings (for our own business) I fell into saying, “OK but we don’t want to alienate customers who don’t have…..” The fear we see in clients, not wanting to say ‘no’ to some clients, became our (my) fear. It takes a great deal of confidence to realise that not being “FOR” someone does not hinder one’s success with those they are “FOR”, or prevent them from attracting those in adjacent segments.
Summary:
In this article we’ll explore the benefits of building your strategy and marketing efforts with a focus on your target customer and why being “for” someone is key to success. A lack of focus can lead to challenges such as loss of brand identity, confusion for consumers, difficulties in marketing and product development, and missed opportunities. Focusing on a specific market can lead to greater success and profitability. Companies that have found success by focusing on their target customer include Melissa & Doug, Whole Foods, Etsy, and UK DIY stores. I’ll also talk about the fear of alienating customers and the confidence it takes to say “no” to certain segments.
The Fear of Alienating Customers
It’s natural for business owners to want to appeal to as many customers as possible. However, the fear of saying “no” to certain segments can often lead to a lack of focus and dilution of the brand’s message. This fear can also become contagious, affecting even external consultants advising the business.
- Fear of Missing Out: Companies may fear that by focusing on a specific niche, they may be missing out on market opportunities in other areas. They may believe that diversifying their offerings will bring in more revenue and help them reach a wider audience.
- Fear of Losing Relevance: Companies may worry that by focusing on a narrow niche, they will become irrelevant to other segments of the market. They may be concerned that a lack of diversity will prevent them from staying current and up-to-date.
- Fear of Limiting Growth: Companies may believe that focusing on a narrow niche will limit their potential for growth. They may feel that a lack of diversity in their offerings will prevent them from scaling their business and reaching their full potential.
- Market competition: Companies may fear that if they focus on a specific niche, they will be more susceptible to competition from other companies in that niche, making it more difficult to differentiate themselves and maintain a competitive advantage.
- Fear of saying no: One reason a company may not want to focus on a niche is to avoid saying no to customers. If a company caters to a wide range of customers and offers a variety of products and services, they may feel obligated to say yes to every request or demand
The Focus Imperative
Having a clear focus and niche is crucial for a company’s success. A lack of focus can result in various challenges for a company, including loss of brand identity, confusion for consumers, difficulties in marketing, difficulties in product development, and missed opportunities. In this list, we will explore the dangers of not having a clear focus in detail and why it is important for companies to identify and target a specific market.
- Loss of brand identity: If a company tries to be everything to everyone, it risks losing its unique identity and becoming just another generic brand. This makes it harder for consumers to understand what the company stands for and what makes it different from its competitors.
- Confusion for consumers: A lack of focus can lead to a confusing brand message, which can make it difficult for consumers to understand what the company offers. This can lead to lower sales and customer loyalty.
- Difficulties in marketing: When a company tries to appeal to too many different segments, it becomes harder to create effective marketing campaigns with any depth and resonance for customers. This can lead to lower engagement and a waste of resources.
- Difficulty in product development: A company that lacks focus may struggle to identify which products are resonating with its target audience, making it harder to develop new products that will be successful.
- Missed opportunities: By not focusing on a specific niche, a company may miss out on the opportunity to establish itself as a leader in that market. This can result in missed revenue and growth opportunities, as well as a missed chance to build a strong reputation and customer base.
For example, The Body Shop was known for its commitment to ethical and natural beauty products. However, as the brand expanded into areas such as home fragrance and fashion accessories, it diluted the clarity and focus of its original brand messaging. This led to confusion among customers and a loss of trust in the brand’s core values.
A prime example of a company that diluted its brand messaging is Sears. Once a household name synonymous with retail and shopping, Sears has lost its focus over the years by expanding into areas such as real estate and financial services. This lack of clarity has resulted in a decrease in customer loyalty and a decline in sales.
In the UK, Tesco, the country’s largest grocery and retail company, has struggled to maintain market share with an increasingly confusing product portfolio in recent years. With a focus on expanding into new markets such as electronics, clothing, buying coffee shops and even recently Paperchase the struggling greetings card business, Tesco has faced challenges in establishing a clear brand image and coherent offering for customers.
Ultimately there is a clear challenge of spreading resources too thinly to have real impact in the future.
The Confidence to Say “No”
It takes a lot of confidence to realize that not being “for” someone does not hinder one’s success with those they are “for” or prevent them from attracting those in adjacent segments. In fact, focusing on your target customer and being “for” them can lead to greater success and a more profitable business.
There are, of course, examples where companies have reached the limit of their ability to increase market penetration within the products and services they currently deliver. Where additional returns, on any extra £ spent, diminishes. At this point there is a case for ‘branching out’ but extreme care must be taken and thought must be put into coherent products and services (within the brand) versus opportunities to build new brands in the markets they want to explore. Portfolio companies like P&G and VAG have succeeded in doing the latter while Apple, historically, succeeded at the former (though one might suggest they have lost that focus in recent years).
Examples of Being “For” Someone
Some well-known examples of companies that have focused on their target customer and reaped the benefits include:
- Melissa & Doug: This company makes sustainable wooden toys and generates $340 million in revenue ($1 billion at retail) by focusing on parents.
- Whole Foods: This grocery store has found success by focusing on sustainable and organic foods, instead of trying to sell general merchandise. Sold for $13.7Bn to Amazon.
- Etsy: This online marketplace separated itself from Amazon and eBay by focusing on crafted quality and providing direct access to the creators. $2.33Bn revenue in 2021.
- UK DIY Stores: The “big shed” DIY stores in the UK each have their own niches. For example, Wickes is for the DIYer building something big, B&Q is for the DIYer fixing something difficult, and Homebase is for the DIYer looking to create a beautiful home. Homebase’s Australian acquirer, Bunnings, forgot this and took it down a route that competed with B&Q only to have to write off A$1Bn.
The Importance of Knowing Your Niche
Knowing and focusing on your target customer is crucial for the success of any business, big or small. Focusing on a specific audience and area of expertise can bring numerous benefits to a company, allowing it to stand out from the competition and build a strong brand identity.
One of the key benefits of focusing on a niche is the ability to create a clear and concise brand message. When a company knows who its target audience is and what it wants to offer, it can create marketing campaigns that effectively resonate with its customers. This not only leads to increased engagement but also improves customer loyalty, as consumers are more likely to choose a brand that they understand and trust.
Another benefit of focusing on a niche is that it makes product development easier. A company that knows its target audience can identify which products are resonating with them, allowing it to develop new products that will be successful. This leads to increased revenue and growth opportunities, as the company can focus its resources on areas where it is most likely to succeed.
Moreover, by focusing on a specific niche, a company can establish itself as a leader in that market. This helps to build a strong reputation and customer base, allowing it to differentiate itself from its competitors and command a premium price for its products or services.
Finally, by focusing on a niche, a company can ensure that it remains relevant and in touch with its customers. This is particularly important in today’s fast-paced and ever-changing business landscape, where companies that fail to keep up risk being left behind.
Don’t be afraid
In conclusion, don’t be afraid to say “no” to certain segments in order to focus on your target customer. Being “for” someone is a powerful way to attract and retain customers, build a stronger brand identity, and achieve greater success. Remember, you can’t be everything to everyone, but by focusing on your niche, you can be the best for those you are “for.”
Whether you are a large corporate or a small start-up, taking the time to understand your target audience and what makes you unique will help you build a strong brand and a loyal customer base.
