The Hunt For Diamonds – 5 Signs You Are Onto a Profitable Idea
In this article, I am going to share with you 5 criteria we have identified that help clients determine whether a market is worth entering or expanding into and shows signs of profitability.
A common question we are asked by clients is “can you tell me how I can grow my business?” or “what other business ideas can you suggest for us to expand into?”. Firstly, we appreciate the fact we are being asked this question in first place, as it validates our vision to be long term partners with our clients, not just their dedicated AdWords manager. However, this is not a simple question which can be answered in one line off the cuff (in most instances). It requires thought and consideration as to what the companies’ ability and values are, along with data-driven research to see what potential lies out there that will complement the former.
Fortunately, we have seen success with a number of clients who have asked us this question and been willing to invest in their vision and our data-backed analysis. There are no guarantees of course. And what we have seen with noticeable consistency within the professional services industry, is that there are a number of criteria to look for when trying to build or expand the business.
So here are some of the standout features:
- Urgency: customers who have an urgent need are higher up the buying funnel and practically have their wallet out ready to buy or sign up. That’s why for example, electricians and plumbers in the online space are very competitive and command a high cost per click, because the searcher/buyer has a great sense of urgency to find a solution to some kind of urgent electrical or plumbing need. Then you factor in the life time value of the customer if you provide a good service, plus word of mouth which is very strong in this space and you could be turning a bit of coin into some solid long term revenue, but you better be awesome at what you do to have that lasting impact!
- High value: if the potential revenue to be generated from providing the service is high, then this justifies the potential higher ad budget required to attract the right quality leads. If the service provided attracts $70 on average and it costs $20 to sing the client up then depends on what your costs are of providing the service this would in most cases be unprofitable. However if the price tag is in the hundreds or even thousands of dollars, then this gives you much more room to be aggressive in the advertising landscape and nudge your way in and even dominate if you get the right strategy balance.
- Prevalence: if a need is prevalent across the general population then this will commonly show high search volumes in google search forecasts, making the potential market size ripe to enter. E.g. everyone needs a doctor, accountant, lawyer, plumber, electrician etc – i think you get the drift.
- Lack of competition: if there is very little competition online then it makes the likely entry into this niche that much more attractive as pioneers into certain territory can make very significant gains as they take the risk to test out this market. A simple way to tell is search for the service as if you were a customer and see how many advertisers there are in this space. Or if the incumbent players appear unsophisticated or display a lack of customer focus, then this also shows great market potential as you can come in providing a much better level of service and customer experience, even if it commands a higher price tag.
- Minimal fuss or customisation: if the service can be provided in a relatively simple way with little requirement for specificity or tailored solutions (e.g. taking measurements, dimensions etc) then this can help to scale the service at a very fast pace, assuming the correct process and systems have been put in place to make this a smoother process.
To conclude, the above tips are by no means a guaranteed recipe for success in the online space, many other factors need to align, such as the business’ ability to deliver the service; the resources to invest in the start-up phase and get over those initial humps that are bound to occur; the dedication by the individuals involved to have the right work ethic to see it through. And exceed the customer expectations and so much more. But if you can tick off the above criteria then you have a hot prospect to qualify and see if you can make it happen.
What other success factors do you feel should be added to this list, share your thoughts in the comments below.
To discuss your plans or ideas with a team that has walked and succeeded in this path for other business’, give us a call on 1300 74 11 45 or send us enquiry from the form below.