How To Pick Your Niche - How My Software Agency Solved This Problem

One of the first pieces of advice any seasoned agency owner will tell you is that your business will not thrive unless you pick a niche. It’s good advice, but it doesn’t mean much when you first start out as a freelancer or agency. Getting the first handful of clients through the door can be the hardest period of time and the urge to say “yes, we can do that” is strong.

I was the main culprit. As the guy responsible for bringing in business, ignoring the fact that we hadn’t niched down. The problem was that we were a young business with an unreliable pipeline. It made complete sense to take any kind of business we could find.

We’re a web development company, but during the early stages of business, we stretched our services from copywriting to graphic design, SEO and mobile app development.

We struggled with this problem for three years. I trawled Reddit forums, blog articles, took Udemy courses, watched a ton of YouTube videos, and read a handful of books looking for concrete answers.

Here’s a summary of the topics we cover in this rebranding series:

• Step 1: 🏀 Defining Rebranding Goals & Brand Strategy - A Complete Guide
• Step 2: 🚚 How To Pick Your Niche - How My Software Agency Solved This Problem
• Step 3: 🎡 Finding A Branding Freelancer - How To Hire An Expert On A Budget
• Step 4: 💳 Building Our New Branding - The Process To Follow
• Step 5: 🗺️ Website Roadmapping - Planning To Maximize Conversions
• Step 6: 🖊️ How To Write Great Website Copy - Sharing Our Process
• Step 7: 🎨 High Fidelity Design - Prepare And Execute Like An Agency
• Step 8: 😶‍ Choosing The Best Website Framework & Headless CMS

Problems of running a niche-less online business

The two biggest issues our team have noticed running a business that doesn't focus on a single niche market is:

1. Sloppy efficiency and slow delivery
2. Not knowing our target audience

These issues strongly affected our ability to grow as a company because they hampered our service quality and chances of landing new clients.

Sloppy efficiency and slow delivery

Catering to every kind of project meant that the lessons we learned along the way weren't retained for the next job. Every time we'd land a new client, it was like we were starting our learning from the beginning.

Without getting better at one kind of job, we would end with sloppy efficiency. Tasks would take longer than they needed to, resulting in a project that ran over time.

In the early days of running Clean Commit, most of our projects were fixed price. So not only were our clients annoyed that the project had run over time, we were lowering our effective hourly rate.

Not knowing our target audience

Not knowing exactly who we were selling to ended in us writing super generic sales copy. Trying to explain how we help our clients with unclear arguments ended up leaving new visitors unsure if they should bring their problems to us.

It also coloured the topics of our blog. At the start of our journey, we were writing articles on any old keyword that seemed to have high search volume. As a result, our blog answered some small one-off questions but didn't dive deep enough into the target market we were actually interested in.

Without understanding our target audience, our digital marketing strategy was essentially a shotgun approach, spraying everything trying to see what we could hit.

We wanted to become a more focused business. Rather than trying to compete with every other company in the mass market, our goal was to understand our chosen niche well enough that we could make them look for us.

It's easy enough to understand that having a niche is good and not having one is bad. But we were no closer to picking what our agency would specialise in.

How we found our niche - approaches that failed

We were actively trying to figure out our niche for over two years. Most of what we tried failed. Here's what we tried and why it didn't work

Brainstorming niche ideas

Using brainstorming to find a profitable niche to focus on sounds like a good idea. The problem we found with this approach is that there's no way to measure or test the niches.

We did a decent amount of keyword research and came up with some interesting niches like headless eCommerce, JAMstack website development, and Progressive Web Application development. In the end, our brainstormed ideas list was huge and we felt like most of the options could be viable.

In hindsight, our problem was focusing on what we could do, rather than what problem we could solve for our target audience.

Niche market examples we used for inspiration

Our next approach was researching other companies in our space to see what was working for them. This is a great approach to feel terrible about your own progress. Finding other businesses that have dominated a niche that would have been a great fit for your own company is deflating!

Bejamas are a great example of this approach. They had taken a strong stance on JAMstack development. They formed around the same time as us, and we watched them grow rapidly, bringing on recognisable clients.

We never wanted to be Bejamas even though we respect the way they committed to their niche.

What we learned from this approach is that other businesses have been where we are and figured the out the solution. And that we need to keep working on the problem.

Half-commiting to a niche

At one point in 2021 we decided that headless eCommerce was going to be our new niche. We wrote a handful of detailed articles about this emerging topic.

• 50 Headless eCommerce examples
• 7 Best Jamstack eCommerce Solutions
• Headless eCommerce Frontend Frameworks
• Pros and cons of headless eCommerce
• 10 Benefits of headless eCommerce

However, the rest of our website content was speaking to clients who needed a new website because this was where most of our revenue was coming from. We weren't ready to fully commit to this niche because we had only built a few headless sites and weren't sure the demand was great enough to focus on.

The big lesson from this experiment was that there's no such thing as half-committing to a niche.

Enjoying the content? We're working on some really cool new content around headless services and the best digital products to watch in 2023. Sign up to our newsletter to receive a monthly summary directly to your inbox.

What helped us pick a niche - success at last

At the start of 2022, Clean Commit's co-founder stumbled across a guy who had grown a software agency from nothing to seven figures. He shared a lot of our experiences and offered an online course that promised to help us settle on a niche.

Without relaying the entire course, he recommended interviewing past and potential future clients and deeply understanding their needs. Ask them questions about their struggles and why they're willing to pay for help. This will provide insights into the services they need.

This was easy enough for us. I'd met with dozens (maybe hundreds) of clients by this point and had countless emails and tons of notes on the things they were trying to do with their business.

The lightbulb moment

I followed the approach Brennan Dunn (creator of Double Your Freelancing) recommends; highlight the phrases used by the client to describe their issue. As I was reading through the notes of a recent meeting with a potential client, I spotted this sentence:

We've outgrown our technology and it's preventing our business from getting jumping to the next level of business development

This was the lightbulb moment. I realised what our new niche was going to be. We were going to focus on helping companies that had outgrown their existing technology and off-the-shelf platforms who were looking to build a custom platform.

You might argue that this is just "software development", but it's not. There are a few differences that make this a legitimate niche;

1. We're focusing on established businesses that have money to invest in internal tooling
2. The niche is solving a unique problem
3. We can clearly define our target audience

Why was this niche the right choice?

Around the time I landed on this niche, our team started pushing a new, unique service; Product Roadmapping. A Product Roadmap is a clear plan that takes an idea and turns it into a minimum viable product (MVP). It’s a blueprint for a project that bridges the gap between the client's team and ours.

Very few agencies offer this service, but clients love it because it shows them how their project will come to life before any coding happens.

Product Roadmapping helped us clearly understand our client's business problems. They all boiled down to one thing; outgrowing their technology.

After I'd finished our third Product Roadmap, it was clear that this niche was the right choice.

It ticked all the boxes:

• Businesses with this problem have cash and have typically worked with developers before (i.e. the ideal customer).
• Projects run for longer periods, so it's easier to bring on more expensive, experienced resources with less risk of having them underutilized
• The problem is well-defined and forms a great foundation for our niche marketing materials

It really was the perfect niche for our team. We already had a product offering that was well-suited to our ideal customer. All we needed to do was rebrand, rewrite our website copy and build our marketing strategy around this new niche.

How can I replicate your process to find my niche?

Here's the process I wish someone had explained to me when I first started to work out our niche. This process assumes you already have skills in some sort of digital activity; copywriting, search engine optimisation, web design, development, link building, etc.

Here are the steps we suggest following:

1 - Figure out who you want to work with and who needs help

This might not seem like the obvious place to start, but hear me out.

Work out what your ideal customer will look like. For us, we were sick of working with "solopreneurs". Most of them suck as clients. They're super price sensitive, don't understand the value of what we're helping them with and have unrealistic expectations. Instead, we wanted to work with owners of established businesses who have worked with developers before. They understand roughly what's possible, aren't afraid to spend money, and have a lot more to gain from our services.

Additionally, we want part of their operations to be based online. Any business that operates online, even if it's just their internal tooling, will need help from developers at some point. They'll probably be able to explain their struggles and the things they need help with.

2 - Talk to these people

I'm not going to lie. This step is uncomfortable if you don't already have clients that you can chat with.

You need to speak with your ideal customer and find out what their day-to-day frustrations are or what's holding them back. One way to do this casually is to start a podcast and contact your potential customer under the proviso that you're interviewing them for the podcast.

I tried this a couple of times, and it went okay. The nice part about this method is that you're offering value to your potential customers. Being on a podcast is cool! They get some street cred, and you get to ask them questions that will potentially unlock valuable insights.

The other way you can tackle this problem is by reading through emails clients have sent to you where they're asking for help. I tried this initially and didn't get much from it because most of our older clients were asking for a website redesign. The problem was their own website wasn't great, and they wanted a new one. There were few insights to be found in those emails.

What you're looking for in any verbal or written conversations with clients is the underlying problem that's impacting their ability to do business.

For our clients, that's a technical ceiling placed on them using off-the-shelf software. They can't do what they want with the software, and it's so engrained in their businesses that it ends up hampering their ability to grow.

This was never how they described the problem. It usually comes out as "Xero is too slow, and it takes us too much time to use", or "Asana's permissions don't fit the way we've integrated it with our other systems".

Your job is to read between the lines.

3 - Propose your solution

Once you've got a clear grasp on the problem your ideal customers are struggling with, figure out what you can do to solve it.

This is your niche. You fix a unique problem.

I came across a great example of a niche relevant to our business a while back. A lady approached me on Linkedin selling her service as "discount lead generation for small businesses". Lead generation is not really catering to a niche, but by specifying that she helped small businesses generate leads at a budget they could afford, she'd created a niche market.

Once you've figured out your solution, reach out to your customers are see if it resonates with them. You don't need to ask them to commit to anything; just get feedback on the solution.

4 - Turn your solution into a service

Finally, if you've had positive feedback from your ideal customers, then it's time to work out the details of how you can turn your solution into a service.

Why does advice for finding a niche suck?

Most advice online for finding a niche is focused on eCommerce businesses creating new online stores and finding products from AliExpress to dropship. The blogs writing this content make decent affiliate commissions from the products they're referring, so the keywords are completely saturated. Unfortunately, that means the legitimately useful content focused on small businesses finding their way is buried deep in the weeds.

The articles targeted at service businesses usually revolve around finding that "cool new thing" on Google Trends, or they assume that every business knows exactly who their target customers are.

Finding a niche is hard and it takes a lot of time. There's no easy way to validate your idea, and few businesses have done it successfully. Even fewer have taken the time to explain what they did. As a result, most of the articles about this topic suck.

If you're still looking for advice on finding your niche, I would highly recommend checking out Brennan Dunn's Double Your Freelancing Blueprint course. We're not affiliated with Brennan, but we found a ton of value in the course. It offers a great step-by-step playbook that will prepare you and take you through the steps to find your niche.

Wrapping up

Figuring out what niche market Clean Commit was going to focus on was a challenge for almost two years. It started to impact our team's ability to survive, let alone grow. We went through a number of failed experiments whilst trying to find the answer to what we should focus on.

Eventually, I spent time speaking with our customers and reading between the lines of how they described their struggles. After seeing the patterns three or four times, our niche slapped me in the face!

Hopefully, our recount of this experience helps you figure out where to focus.

What's next?

The next step in our branding exercise is finding a branding freelancer to bring our ideas to life. There are a hundred million self-proclaimed branding experts on the web. Finding the right one was challenging, but we built a repeatable process that I break down in the next article. Check it out now.