The other day, I was presented with a new start-up where the entrepreneur said he was going after a niche. The problem was that the niche was defined as everything to do with health — the entire health market. Even if you might ultimately have the ambition of a building a large company, it’s advisable to start off by establishing a beachhead where you can simultaneously prove your value proposition and hope to get your head above the parapet in a noisy world. Getting a sustainable business model is vital, and it’s hard to get it right at first brush. But you won’t go far if you’re trying to get to everyone with everything. Many are the huge businesses that began as a niche and then expanded. For example, Amazon with online books, Alphabet with online search, Apple with personal computers… Especially in today’s environment, brands need to be more dialled into their purpose, really understand their value proposition, define the dire problem(s) they’re solving and find the best partners with which to collaborate. And all that with a commensurate reward for the risks taken in being so enterprising.
Finding your business model
As we move inexorably forward into a “metaverse” world, it seems to me that the choice of business model for online entrepreneurs and marketers is rather binary:
- Broad. Accessible and FREE on as many platforms as possible (with ads & sponsors or possibly toward a freemium model)
OR - Narrow. A tight niche on a selective platform (typically a subscription model)
Anything in between feels like a compromise. This binary choice comes from the stranglehold of the distribution platforms by a few big players. Not only that, but because all of the platforms have gone public (Apple, Google, Facebook, Instagram, Twitter, LinkedIn, WeChat, Sina Weibo, Snap, Twitch, vKontakte, Line…), they are chasing down their own monetization as they seek to drive quarterly performances. As a result, the concept of an organic or ‘free’ audience is now basically out of the question. Numbers vary between 2% and 5% depending on the platform and the specific page (with the different levels of engagement). We have to fully accept that it’s pay [a lot] to play, including when you’re working with any influencer of merit. The idea of banking on an organic audience is tantamount to a huge Hail Mary pass (aka the super viral video).
Free For All or Niche For Me? We have to fully accept that it's pay to play, including when you're working with any influencer of merit. The idea of banking on an organic audience is tantamount to a Hail Mary pass (aka the viral video). Click To TweetThe value exchange
As entrepreneurs conjure up their dream start-up, many will fail because they have a lopsided equation in the market. For example, too many sellers with too few buyers (on occasion, vice versa) or not enough value to warrant adequate payment. Making the value known and paid-for upfront (ie the subscription model) is a harder proposition, after all everyone likes free. At its heart, the problem is in creating the just value exchange. If your model is all about forever-growth (and raising money to scale quickly), it’s hard to resist being ever-on. When your business model is based on a free offer, it’s all about getting volume and finding ways to convert and monetize your audience. How you choose to do so inevitably involves putting your ethics on show. And whenever we’re talking scale, it’s evident that you’ll need to use automated services as you ramp up.
Check your ethical framework
Whenever you’re looking at scale, here are the questions that every entrepreneur or marketer should be asking themselves:
- How transparent are you in the value exchange?
- How intentional are you about gaining permission?
- How do you treat and secure personal data?
- What’s your engagement with regard to privacy?
- How easy is it for people to leave, unsubscribe or provide critical feedback?
- Do you understand what rules have been set out in your automated systems and any artificial intelligence you’re using?
- Is the internal culture of your company congruent with how you wish to treat your third party suppliers and customers?
- And The Golden Rule: Are you treating your customers (and your employees) in the same way you’d like to be treated?
Whereas the ‘free for all’ is just that (a free-for-all), making it in a niche requires another form of thinking and engineering. It’s a generally longer road, where the business model is validated in an iterative manner. Yet, in both cases, especially in light of the evident fight for the best talent, the best brand builders will know to espouse a proper purpose, that elevates the work to providing a value above and beyond corporate performance.
Free For All or Niche For Me? The best brand builders will know to espouse a proper purpose, that elevates the work to providing a value above and beyond corporate performance. Click To Tweet
