You cannot grow your business without a niche or, in marketing-speak, an avatar, ideal client, persona, or any one of a thousand different terms that mean the same thing. Every single marketer will tell you that. Every marketing book starts with defining your customer. It’s the one thing you must always do.
Every MSP fights it.
Well, not every MSP. Only those who insist on working hard to stay small.
I can’t remember any MSP we’ve started with having a well-defined niche. They might say something like Apple products or small businesses under 50 million. But when we push for more specificity around industry, function, or other defining characteristics, we get the MSP’s favorite answer:
We are agnostic.
Now, if you are agnostic, I know what you are thinking. “But my solution will work for any industry, for any niche.”
I have two answers to that:
- Nobody cares. Your prospect doesn’t care that your solution works for others; they only want reassurance that you understand them and their needs. They want to hear their language, problems and needs coming from your mouth.
- If you are that generic, then stop. Do you want to be so generic that anybody else can replace you? MRR is vital to your business and getting better at delivering your solution, what we call your signature program, is how you stand out; get more MRR and make your business work. So stop being generic.
Even realizing this, many people will resist defining an avatar. So let’s get into why.
Why creating a niche is a challenge
I talk about the dangers of agnosticism here, but in this post, I want to talk about why it is so hard to choose a niche. In our practice, we see that most MSPs don’t have a niche and fight us every step toward creating a niche.
And it isn’t just MSPs. Nobody wants to niche down. Everybody wants to sell to as broad a market as they possibly can. When I first came across the idea of a niche, it scared me to death.
The fear of niching holds MSPs (and entrepreneurs in general) back.
So where does that fear come from? And how can we deal with it?
In our work, we’ve identified three fundamental fears keeping business leaders from choosing niches:
- Fear of turning customers away.
- Defining a niche means you actually have to deliver.
- Fear of focus or a bias toward busyness.
I go through those below.
First fear turning customers away
The first fear tends to be that you will alienate potential customers if you create a niche. From the business owner’s perspective, there is a vast market for your services. You know that the services you provide: helpdesk, email, backups, etc., will work for any business anywhere. It doesn’t matter what industry they are in, what they do, or how they work.
So, since we can deliver services to anybody, and anybody is a vast market (there are more than 30 million businesses in the US alone), we only need a small fraction of anybody. If you need 100 clients and there are 30 million prospects out there, then you only need to convince 0.0003% of them to be your customer.
The fear is that you alienate everyone who isn’t your niche by speaking directly to your niche. People who may, possibly, could have, one day, hopefully, been interested now absolutely would not be interested because they don’t belong in your niche.
It’s true. You will turn people away. That’s precisely what you want.
When one MSP decided to focus on Accounting clients who use Thomson Reuters CS Professional Suite, they were convinced their business would collapse. They imagined crowds of people running away from their offering to choose someone else who was much less focused.
However, in reality, there were no crowds of people beating down their doors to buy their services. And the more they tried to create a generic offering that would appeal to everyone, the fewer clients they had.
The fact is that people don’t buy from generic producers. They buy from people who understand their problems.
Think back on the last service you purchased. Did you buy one that was generic and tailored to everyone? Did the salesperson impress you by saying, “I work with every industry… it doesn’t matter; it’s all the same.”
I’ll bet the answer is no. I’ll bet you wanted to work with someone with industry experience. You know your industry. You know the vagaries of your situation. You want your vendors to understand them as well.
Just today, as I write this, I got a LinkedIn message from an “agnostic” MSP owner asking me what makes me qualified to work with MSPs.
Your prospects feel the same way.
The more you niche, the more companies or people will not be those you serve. One interpretation of this is that you are turning them away. But they were never going to be your customer anyway.
The good news is the more you turn companies/people away, the more you will attract prospects who genuinely want to buy from you.
And then a funny thing happens. Your happy customers start to refer you to people outside of your niche who come to you and ask if you could break the rules and work with them as well.
At that point, it’s your choice.
Returning to the MSP who focused on accounting – once they did, they tripled their revenue. They also simplified their business by cutting out a lot of non-accounting support that they no longer needed: so more revenue, easier sales, and less cost.
But they did have to put their company and reputation on the line to deliver meaningful results to accountants, which brings up fear number 2.
Second fear: if you define a niche, you actually have to deliver.
It’s one thing to do generic work that anybody can deliver or to promise effort (the work you do). It’s another thing entirely to promise specific results to someone in a particular situation with specific problems.
One of our clients did most of their work in manufacturing. But they hadn’t defined a manufacturing niche and struggled to sell their services.
What did they say they did?
“We make IT easy to understand and use; we have smart, dedicated people who will work hard to solve all your IT needs.”
That wasn’t it exactly, but just google “MSP” and pick one – it was something like that.
When we focused on manufacturing, we honed in on manufacturing problems and realized that one of their biggest concerns was that production would stop if their computers were to go down. This isn’t just inconvenient; it costs money.
So the MSP shifted their story to something like IT that keeps your factory running with 99.9% uptime and dedicated production facility support.
This was MUCH more interesting to the manufacturers and easier to sell.
But our client started to panic. What if they couldn’t do it? What did they actually know about manufacturing?
Suddenly, delivery became real; they couldn’t hide behind generic anymore; they had to implement real manufacturing solutions. In truth, they did have manufacturing experience and solutions. But, they hadn’t ever made any promise other than “doing their best.”
The second you make an industry-specific promise, you realize that your solution isn’t as flexible as you thought, and you will have to figure some things out.
That can be scary, but it allows you to sell, charge, and create a more substantial business. The specificity will attract prospects and allow you to sell easily.
Fear number three: fear of focus (or a bias toward busyness)
The third fear that keeps leaders from focusing is fear of focus itself.
Returning to the scenario where there are 30 million businesses, all of whom look like prospects (when you don’t have a niche), reflect briefly on what happens when you try to sell to all of them.
It’s a lot of work. It’s hustle, and doing this work makes you very busy.
One way to prove to yourself that you are doing as much as possible to make your business succeed (while remaining safely in the bubble of your comfort zone) is busyness. You get hustle credit by keeping busy and filling in every little calendar gap. You feel like you are moving forward. You are doing stuff.
It may not yield any results… but at least you’re doing stuff.
Focusing on a niche means stopping all the work that isn’t about your niche. Maybe you stop entertaining an endless parade of 15-minute get-to-know-you calls. Or, you move away from spamming the world with cold emails that interest no one. Or, you stop cold calling anybody with a phone number.
That gives you time that you can use for deeper work. You use it to understand your niche, to develop a packaged “product” or signature program that is tailored to them; you create a marketing campaign around them and where they are.
This feels, at first, insanely risky because of all the work you give up. It’s a step into the unknown. And, sure, cold calling isn’t very effective, but you do get a customer every once in a while. So by forgoing cold calling, you definitely won’t get that once-in-a-while sale.
There is also a sort of high that comes from being busy and being in constant motion. You’ll lose that when you move to deep work. (At first: deep work turns out to be much more rewarding, but that’s another topic.)
The pay-off is that marketing to your niche is a million times (approximately) more effective, so you won’t need that occasional cold call sale; you’ll have more than enough from your more focused activities.
Focus means making choices, establishing priorities, deciding what matters, and doing that, but only that. And that feels scary, like a leap of faith.
How do you overcome the fear of focusing? There’s no real shortcut here. You have to make decisions and have someone hold you accountable to your focus. The only way to focus is… to focus.
Entrepreneurship is a step into the unknown
In one of his books, Carl Jung compares moving into the future to standing on a cliff looking out into a primordial fog. Everything you know is behind you, and the future is nothing but faint shadows. You must step forward and trust that the ground extends to keep you from falling.
Starting an MSP is an even greater leap into the unknown because you don’t just step forward; you must spring off the cliff, throw yourself completely into the fog, and trust that the ground will catch up. It’s scary, and one of the ways we protect ourselves and avoid this leap into the unknown is by keeping our options open.
But, the only way to ensure you don’t fall and do succeed is to focus. Confront the fears, choose a niche, and create a scalable business.