How to generate leads from small B2B audiences in a niche market
Dominating a niche B2B market generally reduces competition, reduces price pressure and the ‘me too mentality’ brings a supplier closer to their customers and increases their loyalty. So why do so few companies make a success of niche marketing? What are the challenges associated with lead generation? What is the best combination of marketing tactics to achieve success?
Niche market definition
First let’s define a niche B2B market – the Chartered Institute of Marketing (CIM) defines it as ‘A clearly defined segment of the market. It is about satisfying a specific customer need that is, in general, not covered by any major competitors’. Philip Kotler defines a niche as ‘a portion of the market in which individuals possess homogeneous needs and characteristics and the latter are not covered by the general offer to the market.
To break those definitions down, addressing a niche is about servicing very specific (common) needs across a clearly identified market segment that are not addressed by competition.
To be viable a niche, it must be quantifiable and measurable, accessible and, probably most importantly, both of sufficient size and growing at a fast enough rate to sustain sales growth. There is little point allocating resources to pursuing a niche if it is unlikely to deliver an appropriate return on investment.
Lead generation challenges in a niche market
Low competition and our own set of loyal customers - sounds wonderful in principle but the reality is not quite that simple. Niche marketing throws up a unique set of challenges that are not (in general) addressed by common marketing literature, they include:
- Small number of customers / prospects.
- Relatively small number of opportunities.
- Ensuring the message is heard.
Perhaps the greatest challenge is the relatively small number of potential customers or prospects. In B2C and larger B2B markets, there are potentially many thousands (perhaps millions) of potential customers. Mass marketing, even if it only results in 1-2% response (enquiry) rates, works well. However, that same process is unlikely to work in a niche market with perhaps only 400 potential customers.
With a small number of target customers it follows that there will be a limited number of opportunities emanating from those prospects. Each opportunity is potentially more important in niche markets than in mass markets. Once a customer is secured, long term retention of that customer is vital to success and they must be serviced appropriately, and sales must be on top of every potential purchase that may arise.
In the battle to raise potential customer awareness, ensuring your message is heard is a problem for niche (and other markets) that is often overlooked. You may be in the fortunate position of supplying a full system or solution but for many their product or service is part of an overall whole.
Even with a specific solution and limited competition, it can be a struggle to be heard among the suppliers competing for share of mind on any single customer project. Is your specific message likely to be heard and acted upon amongst all the noise?
Don’t forget the marketing basics
Before attacking any niche market it is essential to have the marketing basics in place. Detailed research should lead to an understanding of specifically what your company offers, who needs that product or service and why do they need it? Why is your product or service unique and why is it that the competition is not addressing that need within your niche?
With the above in place it is possible to identify the potential customers for your product or service. Unlike traditional marketing, where many businesses happily survive by addressing only a subset of the available customers, it is important in a niche to identify them all (or at least as many as practical). With the customer list in place, it is important to check and double check that this set of target customers has the potential to deliver enough business to make the niche viable.
It’s all about the numbers or lack of them
With the basics in place, a plan may be constructed to reach the target customers while overcoming the niche market challenges outlined above. You have a target customer base of perhaps 400 customers and an objective to increase awareness within those customers.
The first step has to be to dive deep into each target company you identify
If you take just a quick look at your CRM, in many companies you have only two, maybe three contacts. Perhaps a single engineer and a buyer, but what about all the other potential contacts that may have an influence on purchasing decisions. What about project people, or quality? Are their several project teams and do they have their own engineers? Who are the real influencers in a target organization? The more relevant people in a target customer you can find the more chance of raising awareness within that company and the higher the chances you have of generating a lead for sales to follow through.
What is the best mix of marketing tactics to raise awareness of the product or service and generate leads from the niche market?
Is outbound marketing the best route, or is inbound a better option? To maximise the potential for success in a niche market it is important to both increase the number of contacts (see above) and the touch points and, in general, it is on numbers and touches that outbound marketing fails to deliver.
Let’s assume you have 400 companies on your target list but only two contacts in each company. You decide to try outbound tactics initially. You call 400 companies and with persistent calling you reach 70% (best case) of that the available contacts. Let’s assume your script is to ask the prospect for some sort of immediate decision then I suggest you will be lucky if 10% respond positively.
You may try some traditional advertising in carefully selected media. What’s the response rate likely to be 2%? Perhaps you could try some direct mail, again at what response rate? Maybe 3%. You may try a promotional email and achieve a 20% open rate and 5% of those click through.
Even if you employ all of these tactics and assume the results are cumulative then you have 104 positive responses. What about the other 696, what do you do with them? Are you going to call, email and direct mail again? How is your message going to change? Will pushing out the same message again and again deliver improved results or is it a law of diminishing returns?
When pushing your message out there, you are competing for share of mind on a project with those supplying other products or services to a project that can potentially shout much louder than you. A way needs to be found to bring prospects to you at the point they are ready to consider your product or service.
The answer then is inbound marketing, touching your target contact base on a regular basis with useful and engaging content.
In principle this strategy fits perfectly with the objectives of reaching out to the contact base on a regular basis (without causing resistance) and also with maximising retention of those customers that have been secured. For the record I am a fan of inbound marketing but it does have its problems.
Problems with inbound marketing
- The first issue is the substantial time lag from starting the process to any meaningful results.
- The resources required to implement the process are significant and it requires an in depth knowledge of where prospects look for information on products and services and an understanding of their information needs. A strong website as an information hub, an E Newsletter campaign, blog posts and other online media designed to deliver on whatever prospects may be searching for will all have a positive impact but on their own are not enough.
What offline media do target contacts utilize, what do they trust, how do you get your message in these publications are all issues that require detailed evaluation but in the end analysis the key issue with inbound is the time involved.
What is actually required for best results is an appropriate mix of outbound and inbound marketing techniques that best matches with the niche market. With inbound as the main marketing process what outbound techniques can be employed without damaging the trust element associated with inbound. An element of outbound marketing buys time for the inbound process to deliver results.