BBO.SHOW #21 – Work out who you will provide value to, three critical market checks you can do and more
Hey Harms here, thanks for watching today’s show, if you have not yet then…
What you will learn in today’s show:
The focus area is: Business niche.
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Today’s question is WHO?
Kyle: We’re going to be talking about who we are marketing to.
Another word for who, who it is you’re serving, selling to eventually, another word for this is market.
You might have heard this term; you might not necessarily really think about what market means, a market is literally where there is a buyer and the seller.
If I have a good or something of value I want to sell and I know someone is willing to buy it from me, that’s a market, even if it’s just two people that’s still a transaction between two people.
That’s a market.
We are looking for something a bit bigger than just two people, but we use this term market without necessarily thinking about what it is.
So it is handy to know that it consists of two different things.
Buyers and sellers or supply and demand.
You need to think of both sides of this coin when you’re thinking about the market, we’re not talking about a physical market we’re talking about online markets in this particular instance, and all it means is, there are buyers and there are sellers.
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NICHE not small
Harms: When we’re answering the question of who absolutely the fact that we are very much talking about is there a marketplace?
We need the market to exist, but we also need the market to be large enough to run a sustainable business which means it doesn’t have to be in the millions and millions and millions, hundreds of millions, but it also can’t be two, five, six, seven people.
We have to find a market place which is small enough to make our product profitable, our idea profitable once we’ve run it through the BATON system.
Kyle: I will call you out on the word small though, what it needs to be is a niche, it needs to be very specific. It needs to be very focused.
That may or may mean it is small, small and large are relative terms.
A small market online could still be a million people.
When we use words like big and small, we’re automatically anchoring it we’re referencing it to what we think is big or small.
A million people might be a massive market for some people, whereas if you’re in an even larger business a million people you might think, why would I bother with that? That’s tiny.
It needs to be large enough that we can run a sustainable business i.e. there is a certain volume of sales, a certain price so that there is enough money coming in the door for us to be able to reach our financial goals as business owners.
That’s true it needs to be that large, at least.
It needs to be niche enough or focused enough that we can actually make an impact and this may or may mean it’s small, it may be a thousand people and that might be enough for you to reach your particular business goals and your financial goals.
Or it may be niche, but still a million people or 10 million people, 10 million people compared to the world or everyone online is still quite small and as long as you’re focused and that’s a focused 10 million it’s still a niche.
Big and small are tricky terms.
Harms: They’re relative to what is your niche?
By going through this process you will then be able to identify what is small and large relative to that niche, but I think it starts with the niche which is focused on ideas and focusing on a specific problem that people have and solving the problem.
Kyle: Coming back to that market metaphor.
Imagine the Internet is one giant marketplace, or even if it’s a small marketplace it’s just focused on health, for example, imagine the health marketplace online.
Previously if you set up a market stall, a physical market stall in your town or your city there would only be a certain number of vendors.
There’s only space for a certain number of people now online there are potentially 50,000 other people selling exactly the same thing as you are on your market stall and even though there may be millions of customers, why are they going to come to you in particular?
That’s what niching is about so if we are all selling apples and I mean that the fruit not the computer, why are they going to be coming to your Apple Store, your market store rather than any of the other Apple or fruit and veg stalls in the marketplace?
That is what we’re going to be talking about in this guide and it’s working out how to choose a product, choose our marketplace and get the people to us.
Harms: Because by focusing on the niche we can cut through the noise otherwise we have to leverage all sorts of mechanisms to try to cut the noise when we need to speak to everyone.
One of those mechanisms is we need to spend a hell of a lot of money now we’re competing with some very large companies.
In order to cut through the noise we niche down and that’s an incredible way to focus because by doing that, there’s people out there who already have a problem that is not being served by enough providers, that allows you to access the niche.
Kyle: For example there are shoes, barefoot shoes which are ironically actually shoes so you’re not barefoot, but it’s replicating the feeling of wearing no shoes, they are very light, very thin, but it still means you’re not standing on glass, etcetera and damaging your feet.
Barefoot shoes would be a niche of the shoes market, which is a niche of the clothing market, but the majority of people on the planet have two feet so that means even as a niche barefoot shoes could still be in the millions and millions and millions.
So that’s an example of a niche which is going to be relevant to only a very tiny percentage of people who have feet on the planet, but because so many people have feet of the planet that small tiny percentage is going to be a very big number.
Harms: How does Vivo compete with Nike and Adidas or whatever large shoe company it is?
Well actually they niche down to people like me who are interested in shoes which are barefoot.
They do not compete by niching down and providing a product and solving the problem that I have but Nike doesn’t solve, they don’t solve in terms of how they represent the brand.
They are a mass market in sports, football, fashion etcetera so it is a great example.
The big 3 – Health, Wealth, Relationships
Harms: Let me start it off with how we would approach this from a base level and you can look at the marketplace as a good starting point which aligns with what people like to provide again, not for everybody, but this is a good starting point which is the big three categories.
Number one health, number two is wealth and number three is relationships.
These are big macro categories which allow for an unlimited amount of niches which fall within that and that we can identify a marketplace within there.
Kyle, why do you think these are the big three?
Kyle: These are considered from a marketing point of view the big three because they do encompass so much of basically humanity and human needs and requirements.
I think at a base level at a psychological level there’s a guy called Maslow, Abraham Maslow and he drew up Maslow’s hierarchy of needs.
At the bottom you have physiological needs like warmth, shelter, food, drink water and then from there, there are higher and higher needs.
Once you have got those sorted out then as a human you start to worry about safety needs, security, and safety.
It doesn’t have it here, but this in modern society is money. Money is what provides security so Maslow was writing more about human survival, a universal structure.
But now if we’re talking about it coming from a western point of view or eastern or basically a modern point of view we would put money down here in safety.
Then we have psychological needs like belonging, love, relationships, self-esteem, and self-actualisation.
What we are focusing on is down at the bottom here, physiological, safety and belonging.
This is basically where physiological health sits, safety is money and belonging and love is relationships. These are the big three markets we’re talking about the basic needs and psychological needs.
Obviously from there, there are bigger needs, but from a market point of view, we focus on the bottom. Health, money, relationships, so there is definitely a psychological connection.
Harms: The challenge we have is these are far too wide.
There are certain companies that can handle that wide area within these categories, but there’s nobody who really answers the one question for everything.
There are categories after categories, niche after niche and even if you’re thinking of how many niches can health be broken into, wealth and relationships?
I think a nice place to start to identify this is to go to Amazon and have a look at the book categories and find out how specific a category people actually talk into and it’s amazing.
You’ll open your eyes to areas within a relationship.
Areas within wealth, areas within health that are mind blowing.
There who may be people out there who are not aware of what forex trading is foreign exchange trading,
That’s an example of a wealth niche.
That could then be broken into algorithmic trading. It could be broken into daily trading, weekly, it could be starting a hedge forex hedge fund training. It could be providing forex training, so it starts to get very niche and nuance within that and that’s what we’re looking for.
We’re looking to serve a niche within one of these topics.
Within these three big areas because it is too wide Kyle, how do we narrow that down and start to do some checks on the marketplace?
First things first: Reality check
Kyle: We’re going to do technical checks going through a process of basically seeing if it is a red light, amber light or green light and then going ahead on the greens.
But before we do that we’re going to do a bit of sense check, which is based on you, so it’s all well and good if you go out and you find the perfect niche, but if it’s not something that you know about, or it’s not something you’re passionate about, it’s going to be really hard for you further down the line to make an impact there.
So yes, we can start with health and wealth, relationships, these massive categories, but that would mean we’re having to go through this analysis process for thousands and thousands of niches to find the best niche.
Instead, we can start by referring to yourself and using that as a jumping off point.
Starting with your interests, your hobbies, your passions, things you’re good at and using those starting points and then we go through the analysis process of working out which of these might work.
Hopefully we can then find something that is aligned with what you’re good at, what you enjoy doing and there’s a market for, that’s the golden mean if you land between those three things, what you like, what you’re good at and what there is a market for, you’re gold.
We’re going to be talking more specifically about this, why you are the right person to serve this market.
Start with the reality of the situation in mind.
I might identify American football coaching and training shoes or whatever, as a good niche from a business point of view from a market point of view, but the fact that I’ve never played American football, I’m probably not ever going to play American football.
I don’t know anything about it means that that market is pretty much cut off from me, I can learn about it, but by doing that I’m making my life a lot harder for myself because I’ll be learning how to make a business, I’ll be struggling with starting my first online business and I’ll be having to learn about American football at the same time.
I have to become a master of this and a master in this, just make it easy on yourself.
Start with something you already know, something you’re good at and you enjoy doing and you’re going to like working with.
I think that’s the first step. This is even before we get to the technical checks.
Harms: The first step after that is to go to a brainstorming, download process, creative download where we want to now start documenting a bunch of niches that you do like, and maybe enjoy or you have an area of expertise in, as it will save you that learning curve as well and that’s important.
It doesn’t have to be the end product or service at this point in time.
This is just talking about areas you may be interested in. You may have looked in the past, you may have an internal itch which keeps talking to you about that particular idea.
Kyle: We are going to have three checks and at each stage we lose a few.
Let’s say we start with a hundred for example but you don’t need this many.
The first check might remove 50 of them immediately, the second check might remove another 25.
Then the third check will allow you to order what’s left and then maybe a few them fall at the waste side and you’re left with five at this point which are go, go, go.
Harms: Step one is done, we just download niche ideas if you want an example or want to get something to help you get niche hackers is a fantastic website for that, so that is the first step, which is a download of all your ideas and that’s it.
Don’t overthink it, don’t think is this a product or service? It’s going to take too long.
First check google trends
Harms: Let’s go to the first check which is a Google trend check. We’re taking the high-level items we’ve put into the hopper and we’re going to apply this check to those items.
Kyle: This is going to be the first check, superfast super simple because we might have tested this on a hundred different items and we’re using this to say yes or no fast.
Then with the next stage we spend a bit more time than on the third stage we spend even more time, but each stage we have less items to check.
Google trends allows us to see the traffic and the interest in particular topics and particular subjects over time on Google and that means because Google has been around since around 2004 we can see the interest in a particular topic over the last 16 years.
We can see things going up and down.
Now this doesn’t actually give us an absolute number, it doesn’t say okay, there were 60 million people interested in this topic.
What it gives us is this index from zero to 100 it gives us a relative gauge of interest, but right now we have nothing to compare it to.
What I’m going to do is I’m going to give you three or four benchmark niches we’re going to use that as a range in which we want our niche to land.
If it goes far too high that means the niche is too big and if it goes below this range it means the niche is too small.
I’m going to plug and copy a niche that I know works based on personal experiences and based on other people who are succeeding in these niches, and general quantitative research.
First one is to learn Chinese, speed reading, self-publishing and learn Java. Java is a programming language. I’m taking it to the past 12 months, so this gives me a much narrower range and I’m not looking at things that are going up or down over time.
Chinese had a massive jump in interest apparently in March this year, learning Chinese, which is interesting that must be coronavirus related. I’m going to get rid of Chinese for now, because that is no longer useful for me.
All three of these are roughly within the same range and the main thing is that I can now add an additional comparison, what that additional comparison will do is show me if a niche is way too big or way too small.
Let’s start with Pilates, the safe range has now disappeared it’s now flat along the bottom of the chart. We want the niche that we are aiming at to fall within this range.
Pilates has not, pilates is massive, it’s way too big. That tells me that the pilates is not worth targeting.
It would need to be a sub niche of pilates, it needs to be something small. It’s telling me Pilates for kids is too small.
That’s a tiny, tiny niche.
It is falling way outside of my safe range, whereas pilates was way too big, so that’s given me a lot of information if I’m interested in getting into something related to pilates.
I need to find something in the middle.
What we’re going to do for each of the ideas on your list we’re going to go through until we find niches that fall within this safe range.
I’d go through each and every single niche very quickly and it can take a few seconds to do each one.
You go through each niche, you plug in the term, if it falls within the safe range that has been created by speed reading, self-publishing and Learn Java they’re the benchmarks I’m using, if it falls in that benchmark range you just put a tick next to it on your list.
If it’s way too big maybe you have a down arrow which means it’s become smaller and if it’s way too small like pilates for kids you put an up arrow which means if I was going to do this, it needs to be something bigger than this.
We will be mainly focusing on the ones that have ticks because that has passed the first stage of our test.
Harms: Now what do we do once we have those items?
We now save those items for the next stage now. Have an excel sheet or table and one column which says past Google trends, and a yes or no.
That allows you to filter immediately.
If you use a tabulated format you’ve also got the original list and you can see the progress made by using a typical filter search on the columns.
Second check – are the markets accessible?
Harms: Once we have this we then want to put it into the second check which is just identifying if the market is accessible and this is a very basic sense check.
What we’re checking for is this market easy to find?
Is this item easy to find because there’s no reason to make this hard on yourself than starting a business already is.
The thing we want to know is does a market already exist and is that market accessible?
Accessible to us as business owners because marketing and creating accessibility from scratch is extremely difficult.
When we say is it accessible to us it’s also can we speak to the marketplace?
Is it easy to talk to the marketplace, or do I have to create another mechanism in order to access this marketplace?
We’re looking for tools in order to reach the marketplace and that’s best described as tools that already exist.
If the tools or the way to access the marketplace doesn’t exist, then that’s extremely difficult for us and that’s not the purpose of this whatsoever, we want to make things as easy as possible so we can start to make these tests and experiments as quickly as possible.
One tool we can use Facebook it’s very much an interest-based platform, which you can use and if we want to go deep into this and we want to know is it an interest.
Does it exist as an interest within Facebook insights or we could just do a search. Just search your term, are there Facebook pages that pop up on this topic?
Are there Facebook groups that pop up in this topic?
Are there personal brands or companies that represent this topic?
What is the size of those groups and fans in their Facebook pages?
If competition exists in the market space that’s what we want. We don’t want a marketplace that has nothing. That’s a big alarm bell and also a good indicator that it doesn’t exist.
Facebook is a great way to start searching as they have a lot of information about people’s interests and they allow us to access that by the Facebook audience tools.
What’s another way we can do this?
Kyle: Again, we’re just looking at ways that we will eventually be communicating and talking to our audience, so really any online platform where they hang out.
We need to know where they are, as a sense check though it’s going to be podcasts, are there any podcasts already talking to this group of people?
If it’s a large enough market there should already be podcasts if there aren’t, you could start your own one but it’s a bit of a warning bell that maybe this isn’t large enough if nobody is doing this already.
YouTube is the same look for decent size YouTube channels on YouTube obviously see how many followers they have. Seeing how many people watch the videos that’s another good indication.
A slightly more technical one but search on Google.
So this is Google search, search for your niche, and what we’re looking for is not pages about this.
What we are interested in is, are there paid adverts at the top of Google?
If people are paying Google to advertise in this niche that means there’s a market because Google ads are pretty expensive if there is no market, there is a very high return that you can make money with them but if there is no market and you’re not making sales then Google ads get very expensive extremely quickly.
If anyone’s advertising in this niche that is probably a good sign.
Harms: Remember with this we’re not doing competition research at the moment.
Instead we’re identifying if the market exists.
If there are podcasts on this niche topic, a Facebook group.
If there are Google ads being run on a specific niche then it’s telling us actually there’s people interested in this topic and that’s a big win for us.
If there is nothing it tells us that people are not interested in this topic and will make our decision easier to say that idea out there nobody is interested in it then it comes out of the funnel.
Kyle: We are using this to remove niches from the funnel basically so we don’t want you to go and do this research you are doing a check.
We are just doing a sense check; it should take a couple of minutes tops for each niche just to check if there is anything on Facebook yes or no.
Anything on podcasts on YouTube, is anyone running ads and then from that is going to be yes or no.
Then we’re moving on to the third stage of our checks.
The point here is I didn’t realise this in the early days of marketing which is if you think that your product idea is original but it’s backwards.
Harms: It’s totally the wrong way to do it.
I think this sense check acts as a big wake-up call.
We have to be ruthless with it because we don’t want to waste time, money, going to someone paying them thousands of pounds for a website on an idea that hasn’t been verified yet.
So certainly work through this process.
Onto the third method which is now a deeper process.
Kyle: Again you should have maybe 10% of the original group left over.
Remember you can always refill the hopper if you’ve run out that’s great, it doesn’t mean you’ve failed the process it means the ideas you put in, have failed through the checks and they weren’t worth wasting your time on.
You can just feed more ideas in; you should still have around 10% at this point depending what you put in at the top.
For each of these we are going to go into a deeper dive and we are basically going to check five different areas and we’re going to give it a yes or no on each.
What this will allow us to do is compare the different niches at the end of this so we might have one that passes all five that means it’s very attractive, whereas we have another one which we thought was pretty good, but only passed four in that case, you would go for the one that has five passes.
We are going to have a yes or no for five different questions.
At the end you’ll be able to rank them.
The first check of five is we are going to see whether it is an ever-green market.
They live all year-long and not fads we’re looking for something that people are interested in and they will continue to be interested in.
We’re going to be looking at one niche at a time now, so we don’t do any comparisons we’re just looking at one and we’re going to be looking at it over time to see what has happened to interest in that particular topic.
If the line is pretty flat that’s what we are looking for.
Flat means passed, if you see a pattern where it’s jumped up and then disappears it’s fad and it does not pass.
I’m going to do the second check which is also in google trends.
The second thing we’re looking for we want to see that it is stable or growing so this is a bit different to whether it is a blip.
We want to see stability or growth, we do not want to see declining.
There are certain topics that have been losing interest over time.
Paleo diet this is not a fad it has continued for years. You see every January there is the peak so these are people trying to lose weight because they’re fat here basically, new year’s resolutions there is a massive peak.
You can also see there is a general downward drift over each of these so each one is getting a bit lower each time and this is not a very stable pattern.
You want something evergreen that is the first check.
The second check that we looked at is it stable or is it rising slightly?
If so, great yes it passes if it’s going down, down, probably not.
Harms: Have all your niches highlighted and then have these items we’re speaking about in terms of checks and these are more deeper checks so you’ve got a comparison.
The next factor to bear in mind is there is a possibility of this niche having a high-priced end product?
What this means is that there is escalation value, it means something is worthwhile.
In terms of a customer will pay a premium price for that product. We speak about the value ladder and it means that at some point on the customer’s journey they’re paying the premium price for that product.
To identify that there is no quick answer but it does require thought.
Think of something like can you offer some high-end coaching, high-end mentoring? Does your product have a premium add-on?
Kyle: Again, what is high-end will depend a bit on your business goals here but just use general concepts.
Harms: Again not trying to invent a product at this stage.
The next way in order to do a check is and is very popular on an online business and it actually allows an online business to stay sustainable in most parts, which is, is there an opportunity for a recurring revenue off the back of this niche idea?
This is the opposite of selling one item and getting paid for it.
This is selling a product, service, and getting it on a subscription basis.
Somebody pays you every month or week, or per product automatically.
An example of this in the physical world is netflix, gym memberships.
Kyle: With fidget spinners there are no subscriptions so that would get a big cross here and ideally we want recurring offers something that has some form of recurring revenue.
For backyard chickens it might be that we send you chicken feed once a month on a subscription.
If they are recurring products, subscriptions, if there are membership sites or paid group opportunities then yes, give it a tick.
The final one is a bit more technical.
We are looking for something called an affiliate product.
We are looking to be able to enter a market where we’re not alone. There is already an existing ecosystem of other people selling products, online products and physical products.
When you become somebody’s affiliate, you share the link or you share their product to your customers, the people you’re talking to.
If your customers then go and buy this other product you get a small percentage.
That’s nice additional revenue that is fantastic, but the main thing we’re looking for is the existence of this ecosystem, because that means there’s a market, there is a healthy amount of cooperation between the different people.
The different sellers in the market. It means you can leverage the affiliate programs of the other people and instead of them becoming your competitors you cooperate with them you make money, they make money both happy and it also means later, you’ll be able to offer your products, your services for other people to sell for you, so you will become the affiliate owner.
There’s a lot of different reasons but online if there’s an existence of affiliate products and affiliate services, that generally means it’s a nice, healthy, vibrant market in the online business world.
To check that put in your niche and the word affiliate in google and that will turn up the different affiliate programs or your niche plus affiliate program.
There are specific sites where you can find affiliate programs like commission junction, if there’s stuff there great, that’s a tick on your list. If no, then you put a cross.
Once we have gone through all of those five sense checks and the ways to compare each niche to each other we now score them out of five.
Harms: This allows you to quickly rank from one to five how great each niche is compared to another based on this criteria. Ideally we want one to three niches now.
Kyle: We already know that these niches are the right size because we checked on google trends.
We already know that these are accessible markets because we did a sense check on Facebook, google, all we’re doing now is saying okay these could all work let’s do these additional checks, so are they evergreen?
Are they growing or stable?
Is there a possibility of high-end products?
Is there a possibility for recurring products and are there affiliate products?
All we’re doing is asking these five questions of the niches that are already proven to be pretty stable.
Harms: Although you may be emotionally attached to a particular idea if that scored two and another idea scored four or five, we’ll tell you to go for the four or five, that’s a better ranking niche.
Although we know the other works it’s got more going for it to increase the probability of your business success once we start rolling out with that niche.
Kyle: If you’re really not interested in it, partner up with someone or give it to but don’t let this go to waste if you’ve found something valuable.
Harms: Don’t get scared now you’ve got the item now it’s time to take it to the next stage.
Remember at this stage we’re just looking at who we are going to serve and by that we mean what market place we’re going to serve.
We went through a process of stages, one being we started with a big creative download, a brainstorm list.
Secondly heading to google trends and test these ideas against the trends benchmarks which now allows us to filter down even more. Remove those outside the safe zone.
Now we want to check if they’re accessible.
This is a quick check for example, does this Facebook group or Facebook page exist on Facebook?
Does this search come up on YouTube?
Is there a YouTube channel associated with this? Are people advertising in this space?
If I type this into google is there a google as that pops up?
These kinds of quick sense checks are all we want to do here and we’re identifying the accessibility of the market.
Do we have a mechanism to speak into the market and does stuff exist?
Now the final step is we start to compare these niches against each other.
We have a five-step process for you to do that.
Finally we rank it.
The time invested here will save you a lot of time and money going forward as you’ve nailed down the niche in advance rather than just thinking this is a great idea, I’m going to spend money and time developing it, going to the marketplace to then feel disappointed.
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