Most advisors make the biggest mistake in marketing before they ever begin.
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Maybe you've heard that successful marketing starts with defining your niche; know who you will market to before you start. But the people they target are not a niche at all.
Here is the challenge: a niche is not actually a demographic or a profession or an affiliation. A niche is a need. A successful niche identifies a tribe of people who share a common need that is not shared by the general population. It is what separates one group from the rest of us in terms a financial advisor can address.
It is not a description. You can describe a lot of groups that share a lot in common but do not have a unique need. If they don't have a need, what you can do to appeal to them is limited. My favorite is advisors who tell me that their niche market is women. Women is not a niche (I spoke with Mark Tibergien of Pershing Advisor Solutions last weekend, and will write more about that soon.) Women make up 52% of the population – that's not a niche, it's the Grand Canyon. There is nothing I can think of that could meaningfully tie together the needs of my 18-year-old daughter, a 45-year-old corporate executive, and an 87-year-old widow. And unless there is a common need, it is difficult to design an advisory solution for them. It is pointless to define your target market based on the restroom they go into.
A niche is certainly not a bank balance. I hear some advisors say they specialize in high net worth individuals with over $1 million to invest. That is not a need but a resource. People don't define themselves by what they have in the bank. There is nothing in particular that I need simply because I have $1 million. I think of myself a lot of ways – husband, father, someone with kids of a prior marriage, a small-business owner, a cook, a dancer. I don't think of myself as someone who has $1 million.
Another common "niche" is retirees. But, like women, that is just too big a segment with too many varied needs. There is a big difference between a 42-year-old who no longer has to work because he just sold his Internet company and a 67-year-old former plumber. They are likely looking for very different things from an advisor. "Retirees" is not a niche. People who retire from a specific company, or from a certain profession, or who still have teenage kids after they retire could all potentially be niches. I work with one practice who has made significant strategic decisions to highlight their expertise in the benefits plan of a major local employer. When that employer declared bankruptcy, this practice sent out a single e-mail saying they would have a seminar on the implications of that filing on the company’s 401(k) and retiree health benefits and put 600 people in a room. Retirees that share a common challenge is a niche. But just being retired is not.
All marketing begins with the niche. When you choose yours, make sure that what you have selected describes a group that will respond to the special solution you have to offer them. What do you describe as your niche? I would love to hear some of your ideas in the comments.