The Practice Doctor is IN
Niche Market No-No's
by Al Depman, CLU, ChFC, CMFC, BH
Practice Management Consultant
At a video-conference a few weeks ago, I was asked to address how an advisor should go about developing a niche market. A niche market is a specific population of people who have multiple characteristics in common. These could be large populations or tiny populations. After presenting the best practices, I asked for some success stories and some unsuccessful niche market attempts. The unsuccessful stories were most instructive.
I reflected on these and searched my files for some similar failures to convert a niche market to reality. Here are a few "teachable" examples from advisors encountered over the years.
Three advisors have tried to work in the veterinarian niche from three different angles. One took her own animals' vet clinic (who she'd been going to for years) and tried to refer out from that relationship. Another got in front of veterinarian students in hopes of catching them early before going out into real practices, and a third tried associating with a supplier of animal medical supplies to do some piggyback prospecting.
They all failed because of poor research on the front end. I have a document available to help with this issue. Just let me know and I'll share it with you. The more you know about the niche, the better able you are to address specific needs and understand cash-flow issues. The following characteristics could have been ferreted out in advance using this tool:
- As a population, veterinarians are not affluent. There are many small clinics that are doing reasonably well and hanging on financially, and then there are a few big players, making life difficult for the rest. Veterinarians usually have lots of debt coming out of vet programs.
- Most veterinarian operations don't have business managers, and the vet is too swamped to get a handle on—let alone discuss—financial planning.
- Email, phoning, and walking-in are the prospecting venues available, and are only minimally successful in getting the first appointment.
- Getting in front of larger groups of veterinarians varies by state and by organization. Generally, they don't feature financial planning speakers.
A couple of advisors are veterans of recent conflicts in the Middle East and are embarking on careers in financial services. They naturally wanted to work in this niche. Both have failed to make it work. Again, they did very little analysis up front, relying on their membership in the niche to carry the day. Here's what they learned:
- While they could get in front of lots of veterans (officers and field), there was little wealth to go around. Like these two advisors, most are starting over in civilian life, meaning they have limited wealth to invest.
- One advisor got involved in multiple veteran groups and did more psychological counseling than financial counseling.
Another couple of advisors decided to specialize in the construction field. They targeted contractors and subcontractors in particular. The years when these advisors started (2005 through 2008) were a boom time and they didn't diversify their prospecting and marketing. When the construction boom ended in 2009, their production nose-dived. Both advisors are now struggling to keep their production at even half the previous level. Now that the construction business is picking up, one of these two advisors is hoping his production will also pick up. The other has built some other niches (architects, masons, electricians, real estate brokers) that will cushion him against the next downturn.
If you have had a similar experience and would like to share it, let me know. If you're embarking on a new niche, contact me for a copy of my "Marketing Research Questionnaire." I can be reached at email@example.com.
The Doctor is OUT
© 2015 Al Depman
Al Depman, CLU, ChFC, CMFC, BH, a.k.a. "The Practice Doctor", is MitchAnthony.com's Business Practice Consultant, and contributor to "The Wall Street Journal." He is the creator of "The Practice Management Assessment" tool and materials and has authored numerous articles in professional publications on practice management, and author of the book, How to Build Your Financial Advisory Business and Sell It at a Profit, available from McGraw Hill. Al combined his Liberal Arts studies with 10 years of management experience with McDonald's Corporation to enter the financial services world 25 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at firstname.lastname@example.org.
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