Updated: Mar 10, 2021
Why is niche so important?
As coaches and business owners, we often hear that we need to find our niche. Once we start down the path of forcing ourselves to find our niche, it often starts to feel very uncomfortable and not coach-like.
Rather than feeling anxious due to the “You must niche!” advice, let me help explain why it is important by going a little into business terminology to give some background.
Niche, or target market, is part of the overall strategy of any business.
The types of strategies are (according to strategy guru Michael Porter):
• Low-cost leader
• Low cost-best value
• Focus low-cost
• Focus best value
Think of Wal-Mart here. They serve a huge market—though they do not serve everyone. They serve people for whom the lowest price is what is most important. To do this, Wal-Mart is obsessed with lowering costs. To scale up, it is key to lower costs, and that often means lower quality. As a coach who coaches one-on-one, you cannot be a low-cost leader because you cannot scale yourself (meaning there is only one you available each hour).
Low-cost, best value
There are many examples of low-cost, best value such as Target, Wayfair, and Overstock. The offer is at the lowest cost at the best value for the customer. Value is the perception of what the customer gets from paying for the goods or services. This is where most coaches try to compete in the beginning of their coaching careers. Coaches charge very little, and the clients get amazing coaching—and coaches coach anyone and everyone who comes along.
Pretty soon, we realize that we cannot scale ourselves, and there are clients with whom we do not resonate. If you have ever worked for companies that hire coaches for corporate coaching gigs, you were probably not paid your normal rate. This is because those companies are lowering costs through scaling up while getting the best value coaching from you.
A differentiation strategy relies on uniqueness that is valued by a particular target market for whom price is not important. Tiffany’s follows a differentiation strategy as did Tesla in the beginning (strategies often change as a company grows). Coaches can use a differentiation strategy by choosing a target market that is price insensitive—and offering coaching that is highly valued by that market.
An example of focus is whomever cuts your hair. A hair stylist can only serve one person at a time, and there are stylists who specialize in different types of hair and different types of cuts. You can visit a salon that offers nothing but haircuts and you can visit a salon that offers free champaign. Focus is divided into low-cost (spritz with a water bottle) and best value (free champaign).
Focus is where, as coaches, the majority of us will, well, focus our efforts. In focus the target market is smaller than the low-cost leader and low-cost, best value. As coaches, we get to choose what part of the market we wish to serve—and how we wish to serve those clients. Once we find the part of the market we want to serve, we can achieve economies of scope that will expand our reach, find more clients, and increase our income.
Focus low-cost is where, once we’ve decided not to serve everyone, coaches tend to gravitate. There is a resistance in most of us to charging what the coaching is worth to the client. There are some coaches who can make a go of serving the low-cost market, though they tend to have some consulting or public speaking to boost revenues.
Focus best value is where most of us would like to be as coaches. And it is important to understand that we offer the best value any person could get simply because we coach. We all know what a sacred gift coaching is and the value that it brings to the lives of our clients. Regardless of what we charge, we always bring best value to our clients.
Focus is why niche is so important. The group of people we joyfully serve need to know we are here, and targeting our outreach efforts to those people will help us build our businesses.
The next step is to get clear on who you want to joyfully serve, and as we all know, the best way to get clarity is to get coached on it.
 Scale refers to producing the same thing in larger and larger quantities.  Scope refers to doing more things that are different, yet similar. For example, let’s say you charge $300/hour for one-on-one coaching and $4,000 for 1/2 day coaching workshop. A 1/2 day coaching workshop works out to being paid $1,000 an hour. You have, in effect, made $700 on top of the hourly cost of your coaching.
And here is the academic reference: Porter, M.E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Free Press .