A couple of years back, a course teacher approached me with a major problem.
He had a best-selling product on the biggest course marketplace that he’d been making a solid $10k a month from, but the marketplace – Udemy – had just changed their pricing policies and screwed things up for him, big time.
The new changes meant that he was now making more like $2k/month and there was nothing he could do about fixing that problem directly.
Fortunately, this wasn’t Jonathan’s only income.
He had a premium-priced course selling on his own website, as well as a book, a podcast with enough traffic to attract some sponsors, some good credibility from a recent TEDx talk, and an email list of a few thousand that had been built from the podcast site.
This only added up to a few thousand each month, most of that was swallowed up in staff costs to get the podcast produced and to answer support questions from the Udemy course.
We needed to grow the premium course revenues, and fast, but we had no real idea who the best buyers were going to be. Living off the revenues for a course that usually sold for around $15, and selling it through a third party, meant we didn’t have access to a lot of the buyer’s data.
We simply didn’t know who was buying the course.
The course was in “rapid learning”, a mix of speed reading, memory improvement, and memory management.
From anecdotal evidence – many support conversations – we knew that we had three customer types that we could target.
Before we get to our decision, let’s talk about markets, niches and marketplaces for a moment.
A market is simply all the people with a common want or need, whatever reason it’s for.
The market for Jonathan’s course is all the people who want to improve their memory skills.
A niche is a group of people who have a particular need that you might be able to customise your marketing for, so that it appeals more to them, but possibly at the expense of other groups.
Students are one of those niches, and postgraduate students are a niche within that niche.
Drilling down to a smaller niche means you can create much tighter bonding with your customer, and talk about their specific needs. You’ll be far more effective **and** efficient with your marketing, but you need to be careful to keep your niche big enough to sustain a business.
That’s one of the reasons I look for global markets, not ones that are broken up by local laws or customs.
The global niche of postgraduate students is a multi-billion dollar market that gets an injection of new blood at least once a year, so no problems for us there!
So, how do we choose which niche to focus on?
Customers in a good market have two things that need to be in place to make a sale.
Pain, and money.
Pain is a problem that needs to be solved. It can be anything from “jeans that don’t make my bum look big” through to “I need a fire crew, my house is on fire”. What people will spend, in the short term, is usually proportional to the amount of pain they’re experiencing.
What they’ll spend in the long term is driven by other forces, but we’ll get to those later.
Money is simply access to cash or credit to solve the problem.
It’s why marketing to kids is hard. You have to make them want the product, but you also have to make their parents want it because they’re the ones with the money.
We also want to make sure that there isn’t too much competition for each of our niches.
The age-related memory market is pretty well served with supplements, and recently a lot of “brain training” apps have hit the market.
60 year-olds also find learning through video courses a much more alien concept than people half their age, so that’s another reason we’d find this a tough market to crack.
Now, a lot of people might look at lawyers and doctors and go for that market over the students, because they have so much more money.
But here’s where they’re wrong.
Pain trumps money every time, and an immediate problem is far more painful than one that is rumbling away in the background.
That’s why fat people stay fat and smokers keep smoking. They’ve got used to living with the problem.
Students however, they have pressure. They have the looming deadline of exams. And pressure is pain.
They also have money and we know they are willing to spend it.
Postgraduate course fees run to tens of thousands, and then you need to add more for books, living expenses and so on. A few hundred more to make sure you get through the exams doesn’t seem a bad investment.
Pain, and money. We had our niche.