Unlocking Profitability Through Niching Down

Jeffro (00:01.132)
Welcome back to Digital Dominance. Today, I’m excited to have Vanessa McQuade with us. Vanessa is the VP of Sales and Marketing at Intrigue, and she has spent over a decade helping small and medium businesses hone their marketing strategies. In this episode, we’ll be diving into how business owners can make informed decisions about niching down and how to align their revenue model to fuel more effective marketing. Welcome to the show, Vanessa.

Absolutely. Now, before we get any further though, I have to ask since you’re in Canada, sometimes people pronounce things differently. Do you pronounce it niche or niche?

Vanessa McQuade (00:26.955)
Thanks for having me.

Vanessa McQuade (00:38.369)
this is a very hot topic. Yes. I say niche, but do you say niche? Okay.

Jeffro (00:38.998)
You

Jeffro (00:42.55)
No, I say niche as well, but I hear a lot of people say niche. It’s kind of a contested thing.

Vanessa McQuade (00:49.685)
I know it’s like the tomato tomato of marketing, feel like, yeah.

Jeffro (00:51.234)
Yeah, either one works. Everybody knows what we’re talking about.

Vanessa McQuade (00:57.851)
Yeah, exactly. Well, intertwine. Yep.

Jeffro (00:58.498)
All right, so let’s start with this concept of niching. Then why do you believe niching down is so essential for a smaller medium sized business?

Vanessa McQuade (01:09.107)
Yeah, no, that’s a great question. Really, the core piece of niching and it gets to that piece of when you get to a spot where we’re when you’re really small, you kind of take on any business that you can get. But when you get to a spot where you’re really trying to become like a master of your craft and do the work that you love and you get to that spot where you want to stop working with people that are just sucking up your time and all of those things when you’re kind of feeling that way is when niching or niching becomes like even more important.

because of, because it just carries that on so that you can essentially, you know, work on the projects that you want with the people that you want, becoming more profitable at those jobs. You attract the right audience. like we always call them a clients, your awesome clients who like to work with your AT members. And it becomes this like very, it’s almost this, culture that it creates when you start niching down into what you’re the best at. And you can become more profitable, which a lot of businesses like.

Jeffro (02:06.283)
Yes, absolutely. So what are some steps that a business owner can take to evaluate if they’re in the right niche or if they should narrow down even further?

Vanessa McQuade (02:09.43)
Yeah.

Vanessa McQuade (02:18.847)
okay, good question. I would say the one key and like this is what we did for ourselves. So we specialize in home improvement construction, but very specifically landscape is one of our niches that we’ve honed in on. For us indicators that worked and I don’t know you might have some to share on this as well is it was a space that we could win in, we became profitable at it. And the people in that space were, are a client. So I always say, know,

who are the people that you would replicate over and over again, if you could, and they would make your life so much easier. If you’re getting that feeling about somebody in a specific niche, they’re probably, that could be an area that you hone in on. We had tried ourselves other niches, you know, credit unions, which we could win in that space, but it just wasn’t the most fun for us. And it wasn’t really like invigorating our team to create this.

content on the marketing side for us. So I would say that those would be like quick indicators that, yeah, what can you win at? What can you be profitable at? And what would you, what’s the space that you would replicate over and over again, if you could for like the clients that it brings in are some indicators that we’ve used.

Jeffro (03:27.223)
So when you’re trying a niche like that, let’s say the credit unions, what’s that timeframe look like? Because I’m sure a lot of people want to know how much effort and money they need to put into going that direction before they know if they’re going to stick with it.

Vanessa McQuade (03:41.137)
I know, and I wish there was an exact science to that for us. And you know what? There probably could be, because if we had some of these questions and some more guidance earlier on, or we listened to more podcasts earlier on, then maybe we could have fast tracked it. Cause we’ve been in business for 17 years. And I’d say we’ve really started niching down over the last seven. In the beginning, we were a local business and we really would work with all different types of clients. But as we started niching.

we could get a little bit more like honed in on that. So yeah, I don’t think there is a specific timeframe, but I think if you’re being conscious of it, that’s the first step. Whereas if you’re just taking on every project that you can, your pathway is going to be long like ours was at the beginning. So if you’re at least conscious of it and you can start asking yourself some of these questions like you are, that’ll be a really good way to start honing in on it. But you do have to have the time to give it enough of a shot. Like we’ve thought about going into say, know, renovation space, but

you know, booking all the shows or doing the marketing that you need to in your specific niche to really make that big of an impact, you’re gonna have to give yourself like a solid year, I would say at least like you can’t just like started niche in a month and be like, now we’re getting all the leads and we’re closing them all like you have to have some ramp up time and give yourself some grace. Yeah.

Jeffro (04:55.914)
Yeah, well, and I think it’s good for people to have that frame of reference because if they’re going into it with like, okay, I’m doing this for a year, that’s different than, all right, yeah, I’ll give it a month or two because your effort level is going to be significantly different too.

Vanessa McQuade (05:02.204)
Yeah.

Vanessa McQuade (05:12.391)
Exactly. And then also like, it’s kind of like everything with marketing. You need to like do it, test it, do it well. can’t just, unfortunately, it’s not just a switch that you can have. I’m sure you’ve experienced similar things. For sure. We’ll do another podcast when I find the switch for sure.

Jeffro (05:20.202)
Yeah, it’ll be nice if there was, if you ever find that switch, let me know. Excellent. Okay, so what about when you’re telling somebody this and they’re like, but I don’t want to lose out on potential revenue. I don’t want to niche down. What do you tell them?

Vanessa McQuade (05:37.771)
Yes. Yeah. And I would say that’s one of the scariest things about niching because it makes it feel as though you’re turning away the rest of the audience. What ends up happening when you niche and you get over that and I was in the same boat. So I’ve been at Intrigue for 12 years. We’ve ran around for seven. When we started niching, I was like, but if we start just talking to landscapers, then other people that come here are going to think that we can’t help them. Anyone outside the home improvement construction are going to think we can’t help them. And then what we’re going to do is lose all of those.

What ends up happening if you can just trust yourself and push through the uncomfortableness, like that’s how I would explain it. Like while I was in that, it just was super uncomfortable to be like, okay, we’re going to just niche on this and ignore everyone else. What ends up happening is you end up just starting to really specialize and speak to your A client. So then anybody that does come there that’s in your niche are like, these are the people I want to work with, opposed to the thing that we always say is, you know, if you’re speaking to everyone, you’re speaking to no one.

So if you come to my website and I’m just a marketing company or you come to your website and you’re just a service company and there’s no differentiation of what you specialize in. So for landscape, as an example, we have some clients that really specialize in small urban spaces. So instead of their website being like, come to us and we’re just a design and build, full service design and build. If you come to a website and it’s like urban spaces in downtown Seattle.

If I come to your website and I’m looking at two of those websites, I’m going to want to contact the one with the tight urban spaces if that’s the property that I have, and I’m going to be willing to spend more money because I’m working with somebody who like specializes in that. Opposed to if we’re speaking to everybody, then no one knows what you’re about. And then you end up not being able to compete on anything else other than price. And then you just get compared by price or people don’t even know if they should contact you.

So when I push through that like uncomfortableness of like just being like, okay, we’re gonna be landscape home improvement construction as like a sidebar. What ended up happening is we just started getting like way more clients that we wanted to. And we could still choose to take on those other clients because they still would contact us. But then we didn’t really have to worry about those ones because we ended up just really being able to focus in on what we do well. And that’s what we try to help our clients understand is because if we can really help

Vanessa McQuade (07:59.253)
differentiate and define what those niches are, then when their audience comes to their website, they’re going to be like, okay, this is exactly where I’m supposed to be. And I’m willing to pay more for that service. Yeah.

Jeffro (08:08.364)
So it’s easier to connect with your clients when you’re specific.

Vanessa McQuade (08:14.183)
Yes, yeah, and it and but it is scary. Yeah.

Jeffro (08:15.37)
Yeah. So what about for the owner who’s like, okay, I get that I’m sold. I know I should niche down, but I have trouble actually doing it. I’ve tried and I can’t just, I just can’t. Have you encountered that? Yeah.

Vanessa McQuade (08:30.025)
And they just can’t? Yeah, yeah, because then people are like, but I do everything and I don’t want people to not know that I do it. I’d say like a baby step in that direction. And that’s what we did would be like, I wouldn’t try to do more than three niches, but you can have specific landing pages on your website. So if there is, you know, like as a very high level, sometimes people have like a residential audience, and then they have a commercial audience, making sure that the individual pages on your website speak to your niche for them so that at least

you can try to speak the vocabulary that’s going to be relevant to that audience without having to pick one. But I would say, yeah, you don’t want to have more than like two to three niches or else you’re to be like spreading yourself too thin. But that can be like a stepping stone in the right direction because some people get too scared of the idea of just having like one specific niche. And then that way you can have individual landing pages, individual marketing campaigns that are tied to each of them while you maybe test them, dabble in it. And then you’ll probably find that there’s one that you’re

accelerating at and then you could push money more towards that side or change the whole vocabulary of your overall website once you figure out your niche. Yeah.

Jeffro (09:36.298)
Right, so just even knowing that you’re allowed to have more than one niche is probably helpful, right? And then maybe you can decide to focus on building out one at a time. And once this one’s kind of working well, we’ve got our messaging dialed in, then we can focus on the next one and see if we want to continue that one. But it’s not as much of a all or nothing approach.

Vanessa McQuade (09:47.285)
Yes.

Vanessa McQuade (09:57.729)
Yes, which can seem like a little bit of a scarier thought and then at least, but yeah, you just want to make sure it doesn’t get away from you. you’re like, well, now I have like six or 10. then again, you’re going back to that. You’re speaking to everyone kind of thing, but yeah, that’s sometimes a little bit of a better, stepping stone.

Jeffro (10:10.025)
So how can niching influence or improve your revenue goals? Can it do that? Is there a correlation between getting more focused and achieving that higher profitability?

Vanessa McQuade (10:23.465)
Yeah, and I think that ties into what I was mentioning because you can you can charge more because then you become the specialist in that area. You know the product, you know the service that you’re selling in that specific niche, whether it’s like some of our clients are like retaining walls, other ones are high end kitchens. And that’s what they do. Like they don’t want their website to have anything to do with like bathroom renovations or anything else because they want to be the kitchen people. What ends up happening is when someone comes to those websites, they’re like, this is

person that understands my problem, you can charge more money for it. You also start repeating the same projects over and over again, so you can become more profitable. So you can charge more, you can become more profitable. So it just impacts your whole revenue model in terms of being able to make more money on those projects, opposed to spreading yourself, then doing everything and trying it. I’m sure you and everybody else has like tried a new project and you’re just like, not nearly as profitable, you might lose money on those opposed to if you can niche you just

become better and better at it, your clients get better and better service and products out of it, and then you can charge more and make more money. So yes. Yeah.

Jeffro (11:28.178)
That makes sense. All right, I want to circle back to the concept of A clients. So you mentioned those, you talked about them. These are your ideal customers that fit a specific profile. So how can someone identify who their A clients are within their chosen niche?

Vanessa McQuade (11:47.233)
Okay, so this is a good one. This is the question I always ask is if you were to think of your A client, who’s like the first person that comes to mind and people are like, but what does A client mean? that, you know, who has the biggest project, but it really is tied to who, you know, who pays on time, who listens to your advice, who’s willing to like value the product or service that you’re offering without micromanaging you. Like you probably have this gut feeling of who it is.

What we like to do as an exercise is get you to write down, you know, two to three of those clients that pop into your head that you’d like to replicate. And then you can go through a bit of a exercise. We have a whole sheet that we go through, but some of the questions, you know, being the demographics of like, where are those people located? you know, in terms of geography, age, gender, marital status, any of those things you can write out. But ultimately what we really like to dig into is when you have those three names, so Jane, Bob and

bill written down, think about what’s the problem that they experienced before they came to you. So what is something that they experienced that made them pick up the phone and contact you? Because those pain points are typically what you can start incorporating into your marketing and allow you to niche to figure out like that’s what they were experiencing before or different catalysts. you know, in in the service industry, it could be like, did they move to a new home? Did they?

experience a leak, was there something that happened before they contacted you that was like the catalyst of reaching out? yeah, catalysts, any of the problems they experienced before they contacted you and then general like demographics and psychographics. And if you’ve written those down for say one to three of your best clients, you’ll probably start seeing some similarities. And then that can really help you hone in on your niche and your A clients.

Jeffro (13:35.304)
And so what about those intangible things you kind of alluded to, like nobody wants a customer who’s a jerk or rude to your team or micromanaging. How do you filter out those qualities? Or can you?

Vanessa McQuade (13:49.743)
my gosh, that’s such a question. If we could, if we could put like a question on a forum of being like, are you a nice human? Wouldn’t that be a nice thing? Yeah. I think if you start speaking to the problems that they experienced ahead of time, and then you can incorporate it into the copy and the imagery of like that’s on your website, that can be a good way of getting in front of the right people.

Jeffro (13:55.314)
Ha ha ha.

Vanessa McQuade (14:10.917)
We can’t unfortunately just exclude jerks. It would be a very nice thing if you could. I wish there was some magical question. If I find that, we’ll do another podcast. But yeah, I would say that if you start speaking to your audience in terms of the copy on your website and the imagery and trying to hone in on that, it could get a step in the right direction. And then when they call you, you’re gonna be able to know if you need to filter them out more or not. Yeah.

Jeffro (14:31.227)
Yeah. Well, and I think there’s actually, I think some of it happens on its own. if you are getting good at getting the messaging dialed in and you are positioning yourself as a specialist in this area, if you do that right, by the time they’ve gone through that stuff, they’ve already in their mind, you are now like above them in this space, right? So you should know more than them. They’re not going to feel like, like they have to tell you exactly what to do because you’re coming into it as the expert.

Vanessa McQuade (14:38.4)
Mm-hmm.

Vanessa McQuade (14:45.931)
Yes.

Vanessa McQuade (14:53.822)
yet.

Jeffro (14:59.973)
And so I think that probably helps prevent some of those negative interactions because of how you set this up. Nishing itself kind of facilitated this for you.

Vanessa McQuade (15:10.923)
For sure, yeah. And then when they come to your website and they see the copy and imagery that relate to them, then they’re like, this is where I’m supposed to be. So you inadvertently attract the A clients and you discourage the CD clients that you didn’t want to contact you anyway. And then there’ll be that middle ground that you’ll probably have to disqualify depending. But that’s a really good point for sure.

Jeffro (15:28.678)
All right, so let’s move into the next phase of this conversation where we talked about A clients, talking about niching down. What is the connection between niching down and your business’s revenue model? Does that matter? How does that connect and how can you make sure that’s all working well?

Vanessa McQuade (15:46.919)
Yeah. Nicheing is kind of that top part in terms of like marketing and who you’re speaking to. And then like we mentioned, because then you can charge more and that type of thing, can filter down to it. One of the questions that we always like to ask our clients when we go through it is this revenue model that basically all businesses are based off of. Because marketing might be one of the pillars, but there could be other things that you could do to help improve your bottom line.

The calculation is leads times your conversion rate. So how many of those leads are gonna actually turn into clients? Then you multiply that by your average sale times your average gross margin would get your average gross margin in dollars and then how many times are they purchasing from you on an annual basis and how long do they stay clients for will get you your average lifetime value in gross margin dollars and that’s the number that we always like to calculate with our clients the

pillars that you can pull is like on the lead side. So I’ll go through it slowly on the lead side. It could be, you know, improving your marketing asking for more referrals. So in the, in your niche, like you were talking about, you know, for us, if we have landscapers, we’re like, do you know any other landscapers in other geographies we could help? asking for referrals within your current niche will allow you cause

what it’s the saying like birds of a feather flock together kind of thing. So if you love a client, there’s probably a chance they have friends or family you would also love working with. And that sometimes is like such an easy ask that we forget about. And then on the sales side, so if you’ve worked really hard to fill your funnel on the marketing side, one of the things that fall through the cracks sometimes is like, are you picking up your phone? Are you converting those sales that come through? Is there like something that you can do to help?

pull that pillar a little bit because sometimes people don’t need more leads, they just need to convert more of the ones that are coming through from that niche. Average sales pretty easy. Everybody every year should be increasing their average sales so that you don’t have to do a major bump. So we always try to remind our clients of that. Gross margin, how can you be more productive? Can you partner with other competitors to get better supply pricing, things like that? And then in terms of how many times they’re purchasing.

Vanessa McQuade (17:53.343)
this is another miss on the marketing side and even in the niche. Like sometimes your niche might contact you about a certain product or service and then only like at Tunnel Vision and think that you don’t offer any other options. But what’s the like, what’s your, you want fries with that? So is there something you could do to market to your current niche and your current clients to help it grow that? And then in terms of the average lifetime, like how do you get clients to stay clients longer? And that’s can be like customer service surveys.

you know, calling your clients frequently so you know if there’s any problems that are happening. And then this can really impact it. So we do a calculation and you can’t really see this on a podcast, but we go through that with like 10 leads, 40 % conversion rate gets you four clients, $50,000 average sale at a 30 % conversion rate gets you 60,000. They purchase once a year, stay clients for two years for easy math gets you 120,000 in gross margin dollars. If you move all those pillars just by 10%,

it increases that bottom line by 83%. So it can compound like very aggressively so that 120,000 goes to $219,000 by just moving all those pillars that I just talked about by just 10%. So we always encourage our clients like when you’re thinking about that niche from the very top part, how can you look at it all the way through your business to make it so that you can just become more and more profitable throughout it all to impact your bottom line and that’s where we dig into like, you know.

Jeffro (18:54.085)
That’s impressive.

Vanessa McQuade (19:20.117)
really optimizing your revenue model with that niche. Yeah.

Jeffro (19:21.06)
Okay, that was a very densely packed value segment there. A lot of numbers and analysis that I think we lost a couple listeners, unfortunately. listen to what I’m saying here. If you’re one of those business owners who started to zone out when we talk about numbers, try not to, obviously. But if you have a partner in your business who is more numbers oriented, this is the part where you bring them in and say, hey.

Vanessa McQuade (19:33.999)
No!

Jeffro (19:47.288)
Let’s rewind and listen to this together. Make sure we both understand it because there’s so much good stuff in there and it’s really practical. So don’t be scared of the numbers. Get your bookkeeper if you need help. Go through that because like Vanessa said, this stuff stacks and it makes sense. If you start looking at it through that lens of where you’re focusing and what little tweaks you can make, it’s huge and it makes a huge difference to your business. It’s less stress on you. So it’s worth doing that.

Vanessa McQuade (19:54.504)
Yeah.

Mm-hmm.

Jeffro (20:16.014)
Little bit of effort, even if it feels hard.

Vanessa McQuade (20:18.633)
And I can send you a screenshot. I could send you a screenshot of the numbers. Yeah, yeah.

Jeffro (20:21.707)
Okay, so let me ask you a question. You talked about calculating the lifetime value of a customer. Let’s say we’ve done that. We know they’re going to stay with us for a year or two. They’re going to spend about this much money. Do you have a rule of thumb for what percentage or let’s say, you how much should we spend to acquire that customer based on that lifetime value to make sure it’s a good match? We should probably consider our profit margins and things, but I didn’t know if you had a rule of thumb for that.

Vanessa McQuade (20:32.737)
Mm-hmm. Yeah.

Vanessa McQuade (20:50.288)
Okay, so that’s a good question. We have a rule of thumb in terms of like an percentage that we recommend for like a marketing spend. like usually two to 5 % of your revenue overall is like a rough range depending on you know, do you want to stay steady, you could probably do a 2 % do you want to do like more extreme growth, you might have to ramp up close to that 5 % of revenue. But then what’s important when you’re niching is to work with a marketing company that

specializes in your space so that they have the benchmarks to tell you what your cost per click would be. Not cost per click, more on cost per lead is what we would calculate for our clients. So in the landscape space for design and build as an example, $350 cost per lead is something that we’re seeing pretty regularly. Where a smaller value project of like average sale, you probably are looking at like lawn care stuff being, you know, $125.

Those are just examples, but working with somebody that understands that benchmarking for you so that they can let you know exactly what you should expect to pay for the leads that are coming through is a really important part. And whoever you’re working with should be able to do calculations of, you know, what is your return on investment that you’re anticipating based on how many leads you’re going to get, how many you’re going to close. So we try to do a five times return on investment on gross margin dollars is the.

piece that we’re trying to calculate for our clients to be like, okay, if you invest in this plan, you can get five times return on investment for your reverend U dollars is what we try to aim for. Yeah. Yeah.

Jeffro (22:20.023)
That makes sense. We’re getting close to the end of our time, but I did want to ask if there’s any common mistakes that you’ve seen as you’ve helped companies kind of niche down and figure out this model.

Vanessa McQuade (22:34.921)
Yeah, I would say, you know, being able to set up the tracking and measure things is super important to be able to figure out if you are really successful in that niche without the tracking and the benchmarking of being able to see what’s working and what’s not. It’s hard to tell if you’re actually being successful in that space. A lot of people will try marketing or try a niche and then they just throw money at it. And that’s the biggest thing in marketing. It’s like I’m trying marketing, but is it working? Like some of it seems to be some of it isn’t.

So I’d say like regardless of what you’re attempting, making sure that whoever you’re working with has those pieces set up so that they can see exactly what the lead is, where it’s coming from. Did it turn into a quote? What’s the quote value? What’s the sales value? Like there are tools that exist. What converts is one of them that people can use to be able to really track all of their metrics through to be able to see like what is working, what’s not.

And to the point earlier, if you do try two or three niches, you could run three different campaigns. And if you have the tracking set up, you can see what one got you the most revenue and then just put more money into that niche. So without that, it’s hard to really tell what’s working and what’s not. Yeah. Yeah. It’s so basic, but it’s so missed. And setting the goal of knowing exactly what you’re aiming for too is a miss as well. Cause a lot of people are like, I’m trying marketing. I want stuff.

Jeffro (23:43.202)
gotta track the numbers. You can’t just guess.

Vanessa McQuade (23:57.121)
But it’s like, at the end of the year, do you know if it worked or not? Or can you catch it throughout the year and be like, did we actually accomplish what we wanted or did we need to change course part way through and we didn’t get to the very end of the year and then be like, we missed our marks, which has happened to so many of us, right?

Jeffro (24:09.292)
Yeah. And if you’re not a numbers person, get a numbers person in your business to help you with this, right?

Vanessa McQuade (24:16.958)
Yes, exactly. Yeah, if you want to really dig into that revenue model that I lost some of you at.

Jeffro (24:21.004)
No, no, just teasing on that. But I do appreciate you joining me today, Vanessa. This has been a really helpful discussion and I’m glad we got to talk about niching down or niching down, depending on who is being a stickler for that. But I find myself having some of these conversations in my head too. And so this is helpful kind of putting a lot of examples to it and kind of breaking down some of the pros and cons, what to look out for, what to expect, knowing how long to focus on this. And I’m sure it’s been helpful for the listeners as well.

Vanessa McQuade (24:35.068)
Yeah, exactly.

Jeffro (24:51.688)
And speaking of our listeners, guys, check out the links in the show notes to connect with Vanessa. If you’re a landscaper, you should definitely go listen to her company’s Landscape Growth podcast. And I have one last question for you, Vanessa. You can tell us about the podcast, but I also wanted to know what’s one thing you wanted to leave our listeners with today.

Vanessa McQuade (25:03.232)
Yeah.

Vanessa McQuade (25:11.865)
Ooh, that is a good question. Yeah, so I would say, yeah, come check out our podcast. We have a bunch of good information on there from a lot of industry leaders that could apply to landscape or anybody in the service industry. There’s stuff that can be applicable there. Yeah, and set your goals, set up the tracking and make sure that you’re niching and you’ll be able to get more out of your mercantile dollars.

Jeffro (25:33.258)
Awesome. Well, thanks again for being here, Vanessa. Thanks for sharing your knowledge with us. Once again, thanks to all of you guys for listening. Please make sure to leave a review for the show, and I’ll see you back here for the next episode of Digital Dominance.

Vanessa McQuade (25:46.217)
Thank you. Bye.