Advantages & Disadvantages of Niche Design Firms
I spent two years as the tech lead for a company focused on live auctions and it was a great experience to deal exclusively with one market and build so many interlinked connections. I’ve frequently considered opening up a design company focused only on a particular industry (but haven’t done so yet). Rather than give you my opinions, I’d thought I’d survey some of the experts in the field. Enjoy!
Advantages:
Being a niche focused firm gives us the ability to:
- become an industry leader
- learn the industry well and save the customer half the work
- become recognized in the industry as a preferred provider
- create testimonials and case studies based on similar businesses
- create and sell products, services, or applications specific to the industry
- get noticed by industry publications, associations, awards, etc.
Rye Armstrong - Avtec Media Group, Credit Union Website Design
As a industry specialist, your clients become more interested in ongoing business dealings with your firm rather than just hire a generalist on a project by project basis.
Phil Marzo - RestaurantIdentity.com, Restaurant Web Design & Marketing
Being a niche focused firm allows us to have a retainer based business model. Instead of billing on a per-project basis with smaller retainer fees - usually maintenance and hosting - we now use a solely retainer-based business model. This regularity means that our turnover and workflow can be correctly estimated month-on-month and we do not suffer - as much - from peaks and troughs, which is very important in today’s economic climate.
It has also reduced the number of companies we compete against. We carefully studied the web design market and picked a niche with few “specialist” providers. It was easier to become the leader of that niche and the de facto company our target audience turns to get a website.
Lastly, we have little to no price competition. During our setup phase we implemented processes that allow us to realize economies of scale by reducing development time. Price competition and lower project bids became a non-issue and we have more flexibility over our margins.
Leo Ludwig - Accountant Websmiths, Websites for Accountants
Beyond being just a web design firm, our clients use us as a research tool (we act as consultants for their business) which builds an incredible degree of loyalty. We have clients that have been with us for over ten years.
John Hernandez - RESI, Real Estate Website Design
After nearly a hundred legal-industry websites and marketing campaigns, we know a lot about what works and what doesn’t. We know to advise a marketing director or partner where the potential speed bumps exist in development and how to present to the firm internally, how to get buy-in from lawyers not directly involved and other important factors specific to our industry.
Further, with a focus on law firms we are constantly asked by current clients how earlier clients did something, especially when the earlier clients may be high-profile in the industry. Being able to talk about previous experiences puts the client at ease knowing that we’ve been down this road before.
Jason P. Lisi - LISI, Law Firm Website Design
Simplified and more powerful marketing as you only need to develop differentiation that appeals to one market.
Stephen E. Anson - perfectpatients, Chiropractic Web Design
Search Engine optimization is much easier because you only have to optimize for one industry and set of key phrases.
Christina Archer - Dental PC, Dental Website Design
Disadvantages:
The disadvantage is the obvious of having all of your “eggs in one basket” or industry. If that industry declines, new competitors emerge or clients choose to bring their design and development in-house, this can potentially limit the size of your marketplace.
Kent H. Tewell - L.E.T. Group, Hotel Website Design
We intially invested a relatively large amount of time and money in developing our “products”. This was done to ensure that the blueprint we developed was flawless because it is going to be used a number of time to realize the economies of scales mentioned earlier.
Web designers are creative people and after years of working on the same market segment, they might become frustrated to have to create yet another website for your niche. Allowing them to work on ‘outside’ project assures that their creative juice keeps running.
Leo Ludwig - Accountant Websmiths, Websites for Accountants
Some disadvantages of being a niche focused firm that we keep a sharp eye on are:
- Becoming too focused on a specific industry and miss other opportunities
- Skills becoming too specialized
- Getting too comfortable and lagging behind technology trends
Rye Armstrong - Avtec Media Group, Credit Union Website Design
Did you find this post interesting? Please subscribe as all my posts are focused on helping design companies and freelancers improve their business!
Any advantages or disadvantages that were missed here? What has your experience been with niche markets?
Yamia Benhaim:
Starting out as a custom design firm, we designed websites for any type of client. The cost to our clients was high, and our cost to produce the website was sometimes even more! Needless to say we had to transition our business model! The decision to focus on chiropractic web design was an accident. One chiropractor referred us to another and so on… Focusing on a specific market allows much more efficiency in production. It costs us less to produce a site, therefore we charge less to our clients, but are still able to maintain positive margins.
James Paden:
Thanks for the comments, Yamia. I love that you’ve created your own Chiropractor directory at http://www.chiropractor-pages.com. Great for marketing as well as a value add for your clients!
Steve Anson:
Hi James
Great post. Very interesting to read what companies in various verticals say about the pros and cons of specialization.
Steve
Tracey Grady:
Well done James, this is a great idea for an article and the information provided by all of the participating experts is very useful. If this is an indication of the new direction you have previously said you are taking, I look forward to what is to come.
James Paden:
Steve, thanks for your assistance with the article!
Thanks Tracy, I appreciate our comments!
kmullett:
While working on niche markets and vertical products can offer many advantages mentioned by others here, it must be carefully managed. During a downturn in the housing industry, one of our niche markets, we mistakenly started investing time and sales efforts outside of our region. The mistake was driving past and ignoring business opportunities right in our region. By concentrating locally and opening up to other businesses outside of this one vertical we were able to present more, close more, and at a reduced cost.
James Paden:
Thanks for sharing about your experiences, kmullet. Definitely a risk going down this avenue. Indeed, focusing heavily on local markets and working with local groups (Chamber of Commerce, etc) is it’s own niche.
Sydney Web Design:
Hi Great article, i’m a niche firm specialising in CMS. This is a good article as it makes some good points on the benefits. nice work. Have a look at my web design blog where I’ll be posting more similar articles http://www.scottydonald.com
anistock:
All markets are a combined set of niches, most people succeed in niches due to 1st mover advantages or leveraging off deep insight into the selected market. Niche specilization is not the same as product specilization, so key to winning over niche markets in multiple products relevant to that particular niche. Example of the largest niche brand in the world is Apple. They have since crossed over into a series of product niches but thier history is founded in the creative niche market.
Jeremy Dearringer:
There are many challenges and benefits of taking this direction for a web design firm. If your clients’ websites are going to integrate search engine optimization and/or PPC campaigns you may run into some problems. Local services firms are great because you can go from city to city and they will not be competing directly. It’s important to pick the right type of niche industry to focus on.
The major benefit is becoming an expert in the field. Understanding effective marketing copy, collecting related stock photography, and standardizing development with common CMS systems and possible design templates. You will also be able to demonstrate success stories that directly relate to your new customers.
What Do You Think?