What is a Power Niche?

One of the most important things for any real estate business and, indeed, any business is a successful marketing program.  Of course in our hearts we want to believe that if we just do something great then everyone will figure it out and be impressed.  But alas, that is just not true.  Indeed, Einstein flunked physics and couldn’t land a job.  And everyone has an example of a super-talented person that ends up just toiling in the trenches for someone else.  Like it or not, the world belongs to the marketers.  And I believe that this will increase more and more over time.  Someone – but I cannot find the exact quote – said something like this:

“The world will increasingly belong to those who create the ideas rather than those who execute them.”

In the real estate world it is no different.  If you have a great “brand” (which of course is built by a successful marketing program) you typically succeed — and the converse.  This is the basic reason why Warren Buffet – arguably the world’s most successful investor – focuses on brands; namely, for their long-term premium pricing power.

So how do you create a strong brand in the real estate world?  The simple answer is that you do this by creative and intelligent marketing.

I have become a student of marketing over the past ten years, including both reading everything I can lay my hands on and at the same time analyzing what works and what doesn’t work and delineating the reasons for success and failure.  After thousands of hours of study, I have come to the conclusion that the secret of a successful marketing campaign and, concomitantly, the essence of building a successful brand (almost) always centers around what I call:

  • a “Power Niche”

This is a concept and phrase I have invented and coined; however, for any intellectuals reading my writings, you will quickly realize I am building on the works of Peter Drucker and Michael Porter and other great intellectual giants in the business world.

As an aside, I note that there are certainly other ways to be successful, such a being the low-cost-producer; however, generally the other angles (including being the low cost producer) are typically much more difficult to effectuate and maintain; however, just about anyone can build a Power Niche.

So what do I mean by a Power Niche?  Here is my definition:

In brief, a Power Niche is a small-sized niche within a bigger industry that no one else yet dominates or owns.  The niche isn’t obvious so you have to figure it out and “create” it.  You step in and learn everything about it and everyone in it.  You tell everyone about what you are doing – incessantly — and become the real “owner” of the niche merely by staking out your homestead in virgin territory.  This then becomes a virtuous cycle as the more you know, the more you do, and the more you do, the more you know.  Before long you are the world’s unquestioned expert in this (smaller) niche.  All of this enhances your bargaining power within that niche.  Instead of begging for business in the bigger industry, you now have eager clients paying you top dollar within this smaller Power Niche.  

A Power Niche is often difficult to identify and at the same time counterintuitive, and indeed kind of scary, but once figured out is very easy to accomplish and can be crazy-lucrative.  Indeed, just about anyone can create a Power Niche successfully.

Indeed, for my law firm, I am a lot better off as The Pure Play in Real Estate Law than I am trying to be all things to all people.  It was surely an unsettling decision, to become the Pure Play in Real Estate Law as when we enacted this we were theoretically scaring off the 99% of clients in the world who are not in real estate.

But consider that in the (smaller) real estate world my firm is a major player.  We are able to know everyone and everything.  This makes my partners and me very useful to our clients in ways that are in addition to “just doing great legal work”.  This of course includes effectuating our mission of “helping our clients build their business” due to our connectively, contacts and industry knowledge.  If I tried to make my firm full service, I would be competing with multi-thousand-lawyer global behemoths and I have no idea how I could convince a client we were the optimal, or even a useful, choice.

In the business side of the real estate world, it is the same thing.  Let me give you an easy example, which is deliberately quite simplistic.  Let’s say you are in the multi-family business.  You do what is called “build-to-core.”  This means that you find locations for multifamily buildings, you get a construction loan and you build a high-quality building.  Then you rent it out.  Simple, right?

However, if your building looks like other buildings, how are you going to make a profit that on a long-term basis will be greater than just average?  You could convince yourself that your building is “better”, but what does that really mean?  Does it mean you paid more for a better location?  If so, your costs are higher and hopefully your rent is higher to make up for it.  Or did you do a better job of building it with higher quality contractors?  Same thing – you paid more and hope to get more rent.  I wonder whether that is really much different from making it cheaper and charging less?  It is two sides of the same coin.  In the short term you are making bets that may or may not pay off.  In the long term, what you are doing is making a product better and hoping to charge more for it because of that.  Indeed, Michael Porter says that the biggest mistake people make in the business world is making things “better” when they really should be concentrating on making things “different.”  And of course that is what I mean by the Power Niche.

So instead of the usual plan (outlined above), what if, for example, you modified the marketing and business plan for your residential real estate company to more narrowly concentrate on the LGBTQ community?  I picked this concept at random but please follow my point through.  What would now happen?  A bunch of things:

  • You would learn everything about the LGBTQ community

  • You would learn what they like and dislike

  • You would target your building towards LGBTQ people (and figure out if in fact they wanted to live with other LGBTQ residents)

  • You would develop intellectual capital at your company around this

And you would build your building to make it one where LGBTQ people would want to go.

You would be building a Power Niche.

Your market would be smaller – much smaller – but if you did it right you would do what Dale Carnegie says in his famous book, How to Win Friends and Influence People, namely, to “arouse an eager want” in the customer.

Would LGBTQ people pay more rent to live in a building that was really about the LGBTQ community in New York City?  Honestly, of course I don’t know that and there is always risk in any new idea.

But this is just the beginning of the Power Niche.  Once it became clear to the market that this was your business’s focus, LGBTQ people would want to work for you.  LGBTQ businesses would want to do business with you.  Advertisers would want to advertise with and through you.  You would find all sorts of opportunities you wouldn’t otherwise see because you would be the “only one” focusing on this.  You would learn more and more and become a font of intellectual capital on the LGBTQ community’s interaction with the residential real estate world.  People would want you to speak at conferences.  You would be the expert’s expert in residential real estate for the LGBTQ community.

If the idea worked for a first building, your next building would be a no-brainer to get investors and lenders and other parties.  And after a while, everyone would be chasing you to invest with you and do business with you.

Instead of trying to be “better” and playing the odds on paying more for a better location, you would be a “brand” that had a small but targeted customer base.

You would have established a Power Niche in the real estate world and as Warren Buffet would presumably like, you would be able to sell your product (i.e., brand) at an above market price for a long-term period of time.

Guaranteed success?  Of course not.  Obviously there are social issues at play here as well (for this particular Power Niche), but I still like it a lot better than the other game plan in “build-to-core”, in which you are a lot more at the mercy of the market.  Indeed, when the market falls apart for multifamily, which place do you think will hold its rental value better?  All the buildings that look pretty much like each other, or the “one” building where LGBTQ people really want to be.

Power Niche Marketing: Always Start With Peter Drucker

In this column I have staked my marketing reputation on the theme and theory that marketing is (almost) all about creating, owning and building Power Niches. Last week, I outlined what a Power Niche is – and that definition is found at the end of this article so everyone remembers it, without having to go back to my first article.

In order to move forward and establish the intellectual basis for Power Niches, I start with Peter Drucker. Indeed, he is always a great place to start in the business world. He is one of my intellectual heroes. He was not only incredibly smart; he was also someone who took the time to figure things out and put workable and usable theories together. Drucker, if you don’t know, actually invented the science of “management.” He died a few years ago. If you want to be a real thinker in the business world – or the marketing world – I urge you to read his work.

Anyway, Drucker says that there are two things which every business must do to be successful. If the business doesn’t do those things, the odds of success are not good, and the converse. Can you figure out what they are? Don’t worry, I couldn’t either, but as soon as Drucker told me it was so obvious I was kicking myself. The two things are as follows:

  • To innovate
  • To market

Of course! If you don’t “innovate,” you have nothing to sell, and if you don’t “market,” then no one will realize why they should want your product in the first place. But if you put them together, then you have something powerful.

Consider Apple. What would Jobs have done without Wozniak? What would he have had to sell? And what would what Wozniak have done without Jobs? He would have tinkered around until someone stole his ideas or maybe he would just have gotten a job somewhere. If you put the two together; however, you have Apple, which is arguably the most successful company in world history.

So, although I would like to “just” talk about marketing in this column, it is hard to extricate marketing from innovating. If your law firm just does widget-like legal work that is indistinguishable from the legal work of other law firms, you have a serious problem. I will talk about how to solve problems like this in later columns; however, the first step in a successful marketing plan, and in building a Power Niche, has to be some level of innovation.

Let’s look at another very powerful, and indeed in my view the most powerful, thing Drucker ever said, which is when he identified a key and basic question; namely, what is the purpose of a business?

Don’t worry if you can’t get this one either. I couldn’t get it, and I suspect it took Drucker many years himself to figure it out. I was thinking it was probably to serve your customers, to serve your employees, to make the world a better place, to just make money; however, none of that is right. The purpose of a business, according to Drucker, is:

“To create a customer”

Wow! Makes you tingle a bit, doesn’t it? It is the use of the word “create.” He doesn’t say your purpose is to “get” customers or to “sell” to them or to “market” to them. It is to “create” them.

This goes back to the basic idea that you have to do some innovating if you want to market and sell effectively. Synthesizing Drucker, the ultimate plan as I see it is as follows:

Innovate and market to create customers

Steve Jobs said this beautifully when he said “don’t ask the customer what it wants; instead, show the customer what it should want.”

Or in another way, “it is not the customer’s job to know what they should want.”

The point here – as both Drucker and Jobs are saying to us – is to

Innovate and market to create customers”

Please consider this for a few minutes and take a moment to think how it applies to your law practice. Are you just “practicing law,” or are you innovating and marketing to “create” customers?

I used to just be a plain old lawyer, and my career went absolutely nowhere. Now I spend every single day thinking about how to “create” customers – just like Steve Jobs said above – and my career is quite successful. And to be clear, I “really” do this. The purpose of these columns is to teach you exactly how I do it.

This is the first lesson. You have two weeks until my next column. Your homework is to read what I wrote (above). Reread it a couple of times. And think!!! How can you “innovate and market to ‘create’ customers”? You might just be flailing around now and maybe even have no clue what I am talking about. But if you read what the Power Niche is (below) and just turn on your brain, I assure you that your time will not be wasted.

Here is the definition of Power Niche again:

In brief, a Power Niche is a small-sized niche within a bigger industry that no one else yet dominates or owns. The niche isn’t obvious so you have to figure it out and “create” it. You step in and learn everything about it and everyone in it. You tell everyone about what you are doing – incessantly – and become the real “owner” of the niche merely by staking out your homestead in virgin territory. This then becomes a virtuous cycle as the more you know, the more you do, and the more you do, the more you know. Before long you are the world’s unquestioned expert in this (smaller) niche. All of this enhances your bargaining power within that niche. Instead of begging for business in the bigger industry, you now have eager clients paying you top dollar within this smaller Power Niche.

Power Niche Marketing: What Is A Power Niche?

Welcome to my new column, “Power Niche Marketing.”

This column has a very simple purpose: to teach marketing to lawyers and other professional service providers.

Astonishingly, all of us lawyers need clients in order to survive, yet when we go to law school and start our careers and our careers move forward, there is simply no one teaching us how to get these clients!

And we are desperate to learn. We see the big rainmakers, with their (figurative) cigars having all the fun and making all the money, while we toil away in the trenches wondering “why?”  It doesn’t make sense. It doesn’t seem fair. But we have no idea what to do about it.

In our desperation, we may ask a successful rainmaker, “How do you do it?  What is the secret?”

The rainmaker is always 1000% confident in her answer, and you hear things like this:

  • You get your clients from across the table.
  • You get them on the golf course.
  • You go to seminars.
  • You work the room.
  • You network relentlessly.
  • You get them from your high school, if it is connected.
  • You get them through just doing great work, and people hear about it.
  • You get them at the synagogue/church, etc…

The list goes on and on and on, with the only theme being that there is no rhyme or reason to it. And yet the rainmaker who gives you this advice is super-confident in it for an empirically misleading reason: whatever she is telling you worked for her!

Some of us in our desperation go to marketing courses, or seminars, but, alas, just about all of them (and maybe all of them) are taught by people who didn’t actually go out and bring in clients. Perhaps they are non-lawyers or, worse yet, people who failed at being lawyers and then turned to teaching marketing, thereby validating the old saying that those who can, do; those who can’t, teach.

There really is nowhere to turn. But meanwhile, our profession is becoming utterly relentless in the simple truth that:

No rain = bad career.

Your troubles are now over!  Just read my column for the next year, and you will be a great rainmaker. Simple!

Okay, it is not that simple; however, I will stick my neck out and say the following:

  1. I am not some guy who couldn’t succeed and so is now teaching. I am out there every single day marketing and trying to provide strong value propositions to prospective clients. I am in the trenches, and I know what clients respond to.
  1. I have gained my expertise by ruthlessly examining internally my own strengths and weaknesses and, with brutal honesty (to myself), I have analyzed what works in practice and what fails. At the same time, I have tried hard to understand what is really and truly important to my clients. After many fits and starts – and more outright failures than I like to think about – a lot has become clear to me. I will be sharing what I have learned in this column.
  1. Finally, of everything that I have learned in the marketing world, by far the most important lesson I have learned is the importance, and indeed the power, in the “Power Niche,” which is a term I have coined. Although there are numerous sub-parts to my marketing plan, at the heart of it is the Power Niche; accordingly, you will hear a lot about it throughout the articles.

Ultimately, virtually anyone can become a successful rainmaker by following a few simple teachings. This is really true. There are some tricks of the trade, but it is not a secret handshake – it is actually quite easy. Just keep an open mind, and I will be of great use to you.

I will get into the heart of the Power Niche in my next article, but so I don’t become one of those “annoying” serial writers who always puts the excitement in the “next” article to bring you back, I will let the cat out of the bag right now and tell you what I mean by a Power Niche:

In brief, a Power Niche is a small-sized niche within a bigger industry that no one else yet dominates or owns. The niche isn’t obvious, so you have to figure it out and “create” it. You step in and learn everything about it and everyone in it. You tell everyone about what you are doing – incessantly – and become the real “owner” of the niche merely by staking out your homestead in virgin territory. This then becomes a virtuous cycle as the more you know, the more you do, and the more you do, the more you know. Before long you are the world’s unquestioned expert in this (smaller) niche. All of this enhances your bargaining power within that niche. Instead of begging for business in the bigger industry, you now have eager clients paying you top dollar within this smaller Power Niche.

The goal of this new column is to teach you exactly how to build a Power Niche and become a rainmaker (or grow your book of business if you already are a rainmaker).