Getting Into the ISP Business - part 2:
Which Niche to Conquer?

"If you can't be number one in the niche that you've chosen (because of competition or other external influences), you should move into—or create—a niche where you can dominate or be number one."
—Al Ries and Jack Trout, The 22 Immutable Laws of Marketing

by Christopher Knight [October 4, 2000]

If Jack of all trades is a master of none, then why does Jack keep trying to be everything to everybody? Answer: He just doesn't know any better.

In today's competitive ISP space, the choice of attempting to be a master of all ISP-related services is no longer a realistic option. Nowadays, you must choose a narrow but profitable path—a product and service mix that the market will support—lest you lose the game altogether.

I have found that there are two primary business modes that ISPs operate in:

• Profit Maximization Mode
  Market share takes a back seat to profits—across the board. Rather than investing aggressively in acquiring new sales (except inasmuch as that leads to increased profit), you strive to maximize the profit you are making on your installed base. This is common in most mature ISPs.
• Growth Maximization Mode
  Short-term profit does not matter; you strive to achieve a market dominance position at all costs. (A down-side of this mode is that it's easy to run out of cash, resulting in bankruptcy or scrambling to find additional unplanned financing to sustain operations in the process.) This is most common in startup ISPs.

Since the title of this article is "Which Niche to Conquer," I'm going to assume that your ISP is operating in Growth Maximization mode, because that is the approach you'll need if you're going to conquer your chosen niche. Generally speaking, you cannot conquer a niche without being willing to shave off a few margin points to acquire the clients that come with that niche.

Choosing a primary niche
Even though you can segment the markets you plan to serve, if you hope to be successful in the long term, you must still choose one primary niche that you will call your own.

Here is a list of factors you should consider when choosing your ISP niche:

• Market size and the kind of service or product you want to offer
• Market demand for the service or products you want to offer
• Your geographic coverage area
• Your current or expected future business size
• Your available capital and credit
• Your talent and staff expertise
• Your network capacity and strength or lack thereof
• Your vendor relationships and alliances with strategic partners

[Credit given to the ISP Marketing Survival Guide for the above list.]

To stimulate your thinking, here is a list of possible ISP niches that you could enter. There are many more; this is just to get your wheels spinning:

• DSL only, or primary focus
• Wireless/microwave specialists
• Corporate WAN management (security/firewall/support)
• ISDN/dedicated leased line
• Wholesaler to other ISPs
• Website hosting, promotion, design services
• E-mail hosting or outsourcing services
• Application or Business Process Services/Support
• Outsourced expert technical support services
• In-home or On-site setup and installation services

Identifying who you do not wish to serve
If you're having a hard time choosing which niche you wish to serve, start by deciding whom specifically you are not going to serve. For many ISPs, it may seem like 90 percent of the problem clients are from 10 percent of your client base, and therefore you should fire your problem clients - those who do not conform to your ideal customer profile.

Right now, stop reading, and make a list of undesirable customer traits that you and your team dislike serving. Once you have this list, it can help guide you closer to which niche specifically you wish to serve as your primary target.

Cool niche-marketing book resources
Divide and Conquer: Target Your Customers Through Market Segmentation, by Harry Webber
John Wiley & Sons; ISBN: 0471176338; $24.95, list

Segmentation and Positioning for Strategic Marketing Decisions, by James H. Myers
Amer. Marketing Assn; ISBN: 0877572593; ca. $49.95

Eight Giant Steps to Global Domination: A Personal Guide to Finding Your Niche, Conquering Your Market, and Taking Your Company to the Top, by Kenn Viselman
McGraw-Hill Professional Publishing; ISBN: 007136241X, ca. $21.95

To Your ISP Success!
Christopher ("Sparky") Knight
Founder & Managing Editor of the ISP-Lists Discussion Community

—End

Read Getting Into the ISP Business - Part 1