In this week’s episode, co-hosts and Kula Partners principals, Jeff White and Carman Pirie, talk about niche orientation marketing. They talk about the Niche Navigator, a model and exercise they created to assess and understand where businesses fall ranging from low to high niche market orientation. Listeners can look forward to learning examples of niche market orientation, learn pitfalls that could impact their marketing strategies and tips to enhance their marketing efforts.
How Niche Orientation Impacts Your Manufacturing Marketing Strategy Transcript:
Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White.
Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White and joining me today is Carman Pirie. Carman, how are you doing, sir?
Carman Pirie: All is well. All is well.
Jeff White: Fantastic.
Carman Pirie: Excited for today’s guest.
Jeff White: That was gonna be my line. Yeah, there is no guest, folks. It’s just us.
Carman Pirie: We’re just finishing each other’s sentences now. It’s like an old married couple or something. Yeah. We could have had a music accompaniment singing ‘Just the Two of Us,’ or something.
Jeff White: Oh, Jesus. No.
Carman Pirie: Or something like that.
Jeff White: Yeah. No. The listeners should-
Carman Pirie: I’m sorry, folks, in advance. But look, why don’t you tell them what we’re doing?
Jeff White: We have been profiling a number of the Kula team over the last few weeks and have really enjoyed hearing their perspectives on everything from page optimization to archetypes, and UX, and everything in between. Today, we’re gonna be profiling some of the thinking that you’ve been working on for the last, you know, a while, for sure, and just around the idea of how many manufacturers, especially B2B manufacturers, are very niche oriented, and just kind of what that means.
Carman Pirie: Yeah. Yeah. I mean, this probably isn’t going to be a big shock to our listeners, because of course, we bring up the niche orientation of manufacturers a lot I think in the podcast, and even, you know, I don’t know how many times we’ve done the whole niche-niche joke over the years, but it’s more than twice.
Jeff White: Yeah.
Carman Pirie: But yeah, in our work here at Kula over the past number of years, as we’ve deepened our expertise in the B2B manufacturing space, it just really became obvious to me after a while that it was the niche orientation of the market opportunity that a given manufacturer has or the market that they serve that really defines so much of their marketing reality, their sales reality, the landscape, and the path forward in many ways. So, you know, it led to a piece. I wrote a piece a little while ago I guess called It’s All Niches Now, which really dives into this a bit further, and starts off with a bit of an odd story of me and my childhood friend coming to the realization of how we could feed a junk food habit. But it was all… required a niche strategy.
Jeff White: This is like the most post design rationalization thing that you’ve ever-
Carman Pirie: Yeah. Maybe. Maybe it is.
Jeff White: Childhood stories as business lessons.
Carman Pirie: Exactly.
Jeff White: Yeah.
Carman Pirie: Well, but it does… I think it does help frame it up in a way that does kind of… Even though it abstracts it from marketing, it de-abstracts it or something.
Jeff White: I agree. I agree. It’s well worth a read and it’s linked up in the show notes below.
Carman Pirie: And it does get into a fair bit of marketing-related detail, as well. It’s not all about my childhood, I assure you.
Jeff White: Absolutely. So, why don’t we just get into a bit of why we’ve really begun to see, and learn, and apply this about why niche orientation matters? Why is this important for manufacturers?
Carman Pirie: Yeah. I mean, just think about the impact. So, as an example, one of our clients addresses the premium pet food category. They basically serve premium pet food manufacturers. It’s one of their core target verticals. So, when I say niche orientation, that’s niche orientation. We’re talking about 100 and some odd, short of 200 kind-of target accounts in their universe. So, it can be totally known, so you imagine what does that mean? Well, that changes how you think about awareness, what it means to have a known brand. Are you a household name or are you known within 200 accounts, as an example?
Jeff White: Or even a subset of those 200 accounts.
Carman Pirie: Yeah. And so, and going even further, as you think about it, it really changes everything about how you qualify leads, how you think about leads, how you handle them, and so for instance, BANT qualification has no place in this. They know. They sell packaging to premium pet food manufacturers. They know that every premium pet food manufacturer needs packaging.
Jeff White: Whether or not they need it right now and from whom.
Carman Pirie: Right. They all have a budget for packaging. I mean, at some level, the money isn’t a question. Not to say there isn’t price competitiveness and things of that nature. So, budget, authority, need and timeline, not to say these aren’t important considerations in helping shape the sale, but it certainly… If somebody doesn’t have a budget in the next 12 months, should they be ignored? Well, no. You’d be ignoring 1/200th of your potential market.
Jeff White: Of your possible market. And knowing how long sales cycles can be in B2B manufacturing and how many people need to be a part of that buying committee, it really is the case that you can identify this market of accounts and then be working on people at different levels at the same time.
Carman Pirie: Yeah. So, I guess first things first, I want people to understand that the niche orientation of B2B manufacturing has a dramatic and pervasive impact on the marketing and sales function, and it really tweaks and changes a good part of how you market and sell and kind of the tools in some ways that you have at your disposal, or at least how you wield them.
Jeff White: Yeah.
Carman Pirie: And so, if we kind of can start there at least, I think it’s helpful.
Jeff White: Absolutely. So, why don’t we get into it? Let’s take our listeners through the model. And it’s easy to visualize, but we’ll ensure that we have a graphical representation of it in the transcript below.
Carman Pirie: Yeah. We say it’s easy to visualize. That’s because we’ve seen it. So, I don’t know if I’ll do a good job of explaining this or not, so I’ll try.
Jeff White: You want me to try to explain the visual part of it and you can explain what it means?
Carman Pirie: I’ll take a stab at both.
Jeff White: All right.
Carman Pirie: So, folks, so we’ve worked on this over the past number of years, a bit of a model that we’ve created to kind of shape up this landscape a bit. And we call it the Niche Navigator. And so, it is basically a square matrix grid, so a nine-box square that really has low, medium, high on the vertical axis, and low, medium, high on the horizontal. So, the box in the top right is high-high and the box in the bottom left is low-low.
Jeff White: I can see it.
Carman Pirie: All right, all right. And so, let’s talk about what’s on each axis. So, on the vertical axis, we have market niche orientation and on the bottom, we have account-based revenue competency. So, what the Niche Navigator really seeks to assess is where does an organization kind of sit, if you will. Where does a manufacturer sit? At the intersection of their niche orientation of their market growth opportunity and the extent to which they have fostered account-based revenue competencies within their marketing, sales, and service organizations. And depending on that combination of factors, we’ve found some really interesting patterns in terms of the strategies that work, the challenges that are encountered, and the opportunities that are in front of manufacturers depending upon where they fall in the grid.
There are a surprising number of patterns. And now assessed, we have a supporting diagnostic questionnaire that helps plot people on the model, or plot manufacturers on the model, and we’ve tested that quite extensively at this stage over the last while, and assess it against the qualitative, if you will, assessments of the marketers in those manufacturing organizations. And we’ve got it to a really interesting point.
Jeff White: Yeah. Where they’re often very, as are our assumptions about where someone might plot, they’re often very close to where they are, where they expected themselves to be on the model, and perhaps where we thought they were, as well. I think one thing that’s really worth noting before we get into what each section of the nine-box grid means, and that’s this idea that not every manufacturer is trying to get into that top right box. It’s not going to be right for everybody. And in some cases, the progression to get there could… If you really did want to try, it may require complete realignment of a manufacturing organization.
Carman Pirie: Yeah. In no way is this like a bit of the dead giveaway, like everybody’s looking to move up and to the right.
Jeff White: No.
Carman Pirie: It’s not that kind of thing at all. It’s more what are the pathways that are available to you depending on where you are in the model and what are some of the characteristics of those transitions, I guess.
Jeff White: Exactly. We’ll get into that in a little bit once we’ve explained the model itself.
Carman Pirie: Yeah, so I guess let’s get into that. So, if you’ll follow me for a bit, we’re gonna explore the vertical axis of the grid, the market niche orientation. So, when we talk about a high market niche orientation manufacturer, what we mean there is that they have really a 100% niche focus. It’s like the packaging manufacturer that I referenced earlier. Very, very… 100% of the target accounts can be known. Very well-defined ideal customer profiles. The firmographic information that points us in the direction of an ideal customer is very sound and well defined.
Most often in these high market niche orientation manufacturers, they’re selling to other manufacturers. And almost always with a direct sales organization that up until the pandemic was an outside sales organization.
Jeff White: Almost 100%.
Carman Pirie: Yeah. Almost invariably. Yeah. So, folks, I guess that’s what we mean when we say a high market niche orientation company. Medium market niche orientation is an interesting place in that this is often the space of kind of an omnichannel environment, where maybe you have a manufacturer that has… Perhaps they sell through a distribution channel, so their end customers and targets may not be perfectly known through some channels, but maybe they also have a key account group or something of that sort.
Jeff White: Or OEM sales.
Carman Pirie: Right. Exactly right. That kind of where the niche orientation is kind of higher for those segments. So, that niche focus can often be within select categories of the business, and as a bit of a rule of thumb, we’d say again it’s an approximation, not an exact science, but somewhat north of 50% of the addressable accounts can be known within the niche categories of manufacturers that find themselves in this medium market niche orientation.
And then a low market niche orientation is where there’s really almost just no niche focus. These are often B2B markets that function very much like B2C categories. The example that a lot of our listeners may know of here, and we’ve actually had them on the show, Klein Tools. You know, they make hand tools, pliers predominantly, for electricians. And I like to use that example because electricians, yes, there are big electrician companies and things of that sort, but an awful lot of electricians are one person shows-
Jeff White: Independent contractors.
Carman Pirie: Yeah. So, in some ways, they function very much like a B2C category. You know, you’re selling those products at Home Depot, or Lowe’s, or what have you-
Jeff White: As well as specialized distributors, of course.
Carman Pirie: Sure. You’re making availability, if you will, almost ubiquitous at that point. And in those low market niche orientation areas, you’re often more likely selling to personas, buyer personas and ideal customer profiles.
Jeff White: Yeah. Instead of target accounts.
Carman Pirie: Right. You’re not even thinking about it really that way. There’s no firmographic data that points you to an ideal fit, really.
Jeff White: Yeah. You know, if we’re talking about this from a B2B perspective, it may sound like, “Oh, this low market niche orientation is someplace you don’t want to be.” It’s also really… Depending on the type of B2B manufacturer you are, it can be a very enviable position, as well, because it means you get to market like a brand marketer, which so often is very difficult.
Carman Pirie: Yeah. I mean, look, there’s no… It’s not pejorative in any way. We don’t assume that… Yeah, it’s just a representation of the market served. You can have great businesses in every swath of it.
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Carman Pirie: So, as we shift over to look at our account-based revenue competencies as an organization, what do we mean by that? On the high part of the model, so the far right part of the box, that’s where we see a very highly synchronized marketing, sales, and service organization. I often use the analogy of swimming here and I say in high account-based revenue competency, it’s a bit like a synchronized swim. The marketing, sales, service organizations are acting against target account opportunities in a unified way, in a synchronized way, and they’re doing so often under a unified kind of sense of KPIs, like as an organization the silos have been pretty well broken down at this stage.
Jeff White: Well, I think that’s also why this is so often a… It’s a hard part of the model to be in because it requires… You may have very good sales and marketing alignment. You may even have shared KPIs with them. But there are very few organizations where service is part of that too. And where so many B2B manufacturers are really seeing service as a growth opportunity to truly grow revenue with existing accounts, having service, and marketing, and sales all aligned and working on the same things at the same time is a very… It’s a very advanced place to be.
Carman Pirie: Yeah. It can seem like a hard destination to get to for a lot of folks. There’s no question. And of course, the tech stack that is kind of is required to power that gets to be fairly extensive. So, you’re moving well beyond the notion of just kind of CRMs and marketing automation. At this stage, you’re probably leveraging account-based advertising technology, intent data platforms, tight integrations between those, et cetera.
Jeff White: Yeah. Yeah, exactly.
Carman Pirie: And this, for organizations with that high account-based revenue competency, that account-based revenue focus extends into their digital presence and their demand gen. It’s like you’ll even notice on the websites for firms that are there, they wouldn’t have a general category at the top of the page like industries or what have you. It gets much more focused than that, often. So, that helps give people I think a bit of a sense of it.
In the medium account-based revenue competency, sticking with our swimming analogy, I’d say this is where we have more like a medley relay, if you will. We have well aligned marketing, sales, and service organizations. There’s clear accountabilities. Everybody knows what each other’s supposed to do and when they’re supposed to do and there’s clear handoffs. But it is that handoff. A bit more of a handing off of a baton.
And you know, interesting, to be in that medium swath of the grid, certainly need to have an established martech foundation. Solid CRM, marketing automation game at that stage, for sure. And the digital presence in demand gen ought to be reasonably well aligned with target niches at this stage. And we often find that that kind of… The account focus even kind of almost starts at the sales level, of course, most often. Not uncommon to see kind of the further left part of this medium swath organizations that have a fairly strong account focus on the sales side, but maybe marketing isn’t there yet.
Jeff White: Yeah. And I mean that’s an interesting opportunity, as well. If your organization is like that and you’re a marketer who wants to explore more account-focused methods of demand gen and bringing in new opportunities, sometimes leveraging the knowledge and the way that your sales team who are account focused can be a way to get additional buy-in to show the positive parts of this and show how it’s already working within your organization.
Carman Pirie: Yeah. No question.
Jeff White: You know, one of the things you talk about there, and sometimes we hear, is at this level of competency, you might have a service level agreement. You know, you hear about that.
Carman Pirie: Yeah. SLA between marketing and sales or what have you.
Jeff White: Exactly, like we will bring you the right leads and you will action them appropriately.
Carman Pirie: Yes. Yeah. And we expect you to respond to them within 24 hours provided they meet this criteria or what have you.
Jeff White: Yeah. But marketing is not responsible for the closure of the sale.
Carman Pirie: Yeah. And in those cases, you kind of sometimes can get a bit of a feeling like there’s a bit of cover your butt happening there, right?
Jeff White: Yeah. Yeah.
Carman Pirie: But it doesn’t necessarily mean that it’s a terrible place to be. And for certain categories, it’s about as far down the account-based revenue competency road as you really desire to go.
Jeff White: Exactly.
Carman Pirie: For companies that find themselves with low account-based revenue competency, you’re either there because you’re in a bad space or you’re there because you ought to be, typically. So, you know, if you are in a high market niche orientation and you have a low account-based revenue competency, that’s a really strong indication… You know, nine times out of 10, that’s an organization that has dramatically underinvested in marketing. Most of the investment has been on the sales side of the game. And you know, like a midsized B2B manufacturer that just has minimal investment for their… and is kind of having to kind of leapfrog, if you will, their current state. Alternatively, you could find yourself with low account-based revenue competency maybe because you’re like Klein Tools, and it is not your game. It’s not where you ought to be. And in that sense, maybe you’re more of a brand first marketer, if you will, a distributor, retail focused, just it’s a different situation than somebody further up the market niche orientation.
Jeff White: Yeah. And I mean if it’s not… If you’re not like Klein Tools and you are the former example that you used, there’s potential danger there because a lot of times you’re talking about sales teams with a lot of built-in knowledge about the accounts. Sometimes, they’re the only people who know what’s going on in those accounts. And the knowledge is all in their head, or it’s stored in esoteric emails and spreadsheets on their computer, but it doesn’t necessarily… There’s no knowledge transfer and in a lot of cases with the B2B organizations we speak with, if they have that kind of a model and that’s where they’re aligned, that sales team may be looking to retire in the coming years and there needs to be a shift in order to get out of a bit of a danger zone.
Carman Pirie: Yeah. Kind of… I think that’s a good point. That kind of higher niche orientation, if you’re looking to make a transition, if you will, if that’s where you are and you’re looking to move from low account-based revenue competency towards a high account-based revenue competency, that friction with the sales organization or culture change required in sales is not uncommon at all.
Jeff White: No. And that’s why, these are general multiyear progressions, where you’re kind of beginning to build that team as a secondary way of going to market.
Carman Pirie: Yeah. And in addition to the kind of culture, if you will, lift that might be there, there’s also a systems one often. When you see an organization… I mean, it’s amazing to me every time you encounter a midsized B2B manufacturer who operates exclusively through an outside sales team, and at best it’s being managed in a spreadsheet.
You know, there’s just no CRM. And if the spreadsheet doesn’t exist, it’s in their-
Jeff White: It’s not a centralized spreadsheet, either.
Carman Pirie: No. And most of it’s in the head, stored knowledge of 35-year veteran salespeople.
Jeff White: Don’t judge, because they’ve made a lot of money for those organizations.
Carman Pirie: Yeah, of course.
Jeff White: But-
Carman Pirie: Of course, they have. But it does mean that to move to where we’re talking to ramp up our account-based revenue competency, it means it’s not just an investment in people, and process, and culture, but it’s also an investment in systems often.
Jeff White: Yeah.
Carman Pirie: And the good news, I think though, for those organizations and for the people leading that change, is that the impact is potentially incredibly high. People that are at that high market niche orientation typically means they have a high lifetime value of customers. Often a very high first purchase order even.
Jeff White: And they’re probably well serviced, those customers. Yeah.
Carman Pirie: And there’s big cross-sell opportunities within those accounts. So, you can, if you’re starting down that path, the good news is even with the longer sales cycles that typically are associated with a higher market niche orientation, the payoff can be pretty… When it does happen, it gets to be pretty big, pretty fast, which is a nice reward.
Jeff White: Well, let’s talk a bit about that. We’ve got about five or so minutes left. Let’s talk about what some of the progressions might look like. You know, from where people are starting out to where we might see them going and what would be required of them to get there.
Carman Pirie: Yeah. Like we just said about that kind of transition on the high side, so if we look at more like the medium, people that are more in the medium swath of the grid in niche orientation, what do we see there? It often starts with a bit more of bringing more of a conversion focus to their digital presence and also bringing in more lead handling sophistication, if you will. And integrating, beginning to integrate that account focus into their existing demand gen programs.
Jeff White: Making sure the content is aligned with those strategies, creating it in tandem with the sales team.
Carman Pirie: So, there’s not gonna be one-to-one account focused content, of course, but it may well be the place where you start to build out some of your vertical focused content, or maybe you build out some content just for your distributors to market exclusively to them. So, you can kind of bring in account focus in a couple of different ways without having to get super specific, I guess.
Jeff White: Yeah.
Carman Pirie: And there’s often in a medium market niche orientation a real strong opportunity as you move left to right to really bring more focus to a media spend, be that getting some of the junk out of say a paid search strategy, or account-based display versus say Google display.
Jeff White: Yeah. The savings on media alone can often pay for these programs if you’re spending a lot on display and AdWords and everything else.
Carman Pirie: Yeah. You can really do it almost as a cost neutral proposition and then obviously it’s not impact neutral. So-
Jeff White: Well, no. The impact is gonna be outsized.
Carman Pirie: Yeah. Exactly. So, I guess in that lower tier, there may be times when you’re not trying to move. As an example, sticking with Klein Tools, I remember in talking to the VP there, he really looked up to a lot of what Harley Davidson did as a leading consumer brand marketing organization.
Jeff White: And probably one of the only pliers companies who people have actually gotten married under their logo, gotten tattoos.
Carman Pirie: There’s lots of parallels and I think you can drive between the two factories. It’s about an hour or so, or the two headquarters, too. So, there’s I think some connection or admiration there, but it was… So, somebody like that isn’t looking to necessarily move left to right at all. But for those that are, it would be… It’s often really just the emphasis here is about being found for those brands that are not of the scale of Klein. I think of a recent guest we had on the show, C-Therm. They make thermal instrumentation to test thermal conductivity. You might think that that’s pretty niche. It does sound like a niche product, but there’s a wide, wide range of applications, many of which they can’t kind of foresee in advance. So, so much of their-
Jeff White: You need to be able to let people raise their hands and say, “Yeah, that applies to me too. Can I… How much do you use it?” Yeah.
Carman Pirie: So much of the strategy is about being found. And then, of course, they can move a little bit left to right here if they can help themselves be found for some specific applications or specific verticals or what have you. So, there is some opportunity for movement.
The last thing I would mention is just while most of the movement in the grid is left to right, there is an opportunity for some vertical shift, as well, which is basically what’s happening there…as organizations begin to go to market in a more account focused way, this is kind of… I call this kind of like the Tootsie Roll moment, right? You know, as you begin to go to market in a more account focused way, you begin to see the markets you serve through a more account focused lens. It’s like whatever it is I think I see, it looks like Tootsie Rolls to me.
Jeff White: You have to be of a certain vintage to get this.
Carman Pirie: Yeah. Exactly. Exactly. So, and you know, different people have different opportunities for that vertical movement, because again, the markets that they serve lend themselves to that discovery at different rates.
Jeff White: Yeah. It’s kind of like once you’ve seen something, you start to see opportunity all over the place.
Carman Pirie: I hope it serves to introduce folks a bit to that thinking and yeah, shape it up a bit.
Jeff White: Yeah. I think it’s good to understand kind of what the model means. You know, if you check out the transcript on this, you’ll see kind of how that sort of works out, and in all honesty, if it’s something that really interests you and you’re kind of wondering where you fit, we do have this diagnostic. We don’t like to just put it out there because it needs a bit of context, so if you’d like to learn more or-
Carman Pirie: Yeah. It requires some processing of the results on the backend.
Jeff White: Yeah. For sure. So, just reach out-
Carman Pirie: We don’t want to sound lazy or anything.
Jeff White: No, no. We’re more than happy to… We’ll do the work. But yeah, just email firstname.lastname@example.org. That’s C-A-R-M-A-N at K-U-L-Apartners.com.
Carman Pirie: Yeah.
Jeff White: Thanks.
Carman Pirie: I look forward to hearing from you.
Jeff White: Yeah. It’s been a great conversation. Thanks, Carman.
Carman Pirie: I’ve enjoyed it. Cheers.
Announcer: Thanks for listening to The Kula Ring, with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing. That’s K-U-L-Apartners.com/thekularing.
Carman Pirie is the co-founder of Kula Partners—an agency that helps leading B2B manufacturers craft digital experiences that transform how they engage buyers, serve customers, and outpace their competition online—and co-host of The Kula Ring manufacturing marketer podcast.
Jeff is the co-founder of Kula Partners, an agency designed to help leading manufacturers digitally transform their marketing and sales. He is also the co-host of The Kula Ring, a weekly podcast that focuses on talking technology, marketing and sales with some of the most interesting minds in manufacturing marketing.