The Long & Short of It: What Small Businesses Can Learn From the Long Tail

In a 2004 article for Wired magazine, Chris Anderson took a statistical term and made it cool. Mentioning the long tail strategy in relation to the success of popular companies like Amazon and Apple moved this concept into the mainstream and gave retailers an innovative way of moving hard to find items through the sales process. By making these items available to larger audiences, the companies were able to sell fewer mainstream products without sacrificing profits.  And while this concept is typically thought of as an online retail strategy, its fundamental principle of identifying and working niche markets can be beneficial to the small business owner.

Just think of your local coffee shop.  While Starbucks and Dunkin’ Donuts are well-known and frequented stores, there are pockets of buyers who’ll bypass them in favor of the little coffeehouse on the corner decked out with retro furniture and loads of charm. Not because they’re cheaper. In fact, the opposite is probably true. But because they offer unique finds like locally roasted coffee, homemade chicken salad, and freshly baked bread all made with ingredients from area community gardens, small businesses like this coffeehouse can rely on their appeal and offerings of hard to find items to be profitable, even though they’re not selling to the masses.

While this coffeehouse seems to have found its groove, surprisingly, many niche markets go underserved. So as a small business owner, what lessons does the long tail hold?

1.  Target a niche that makes sense for your business.  While it’s tempting to try to be everything to everybody, it seldom works. The long tail is a world full of micromarkets pleading for individuality and if you’re looking to make an impact here, you’ll have to identify a niche that’s starving. The owners of the little coffeehouse probably looked around and saw an area devoid of Starbucks but rich in an eclectic mix of historic homes, cool  shops, and university students committed to saving the world.  In comes a cool coffeehouse offering vegan tacos and fair trade coffee. Brilliant!

2.  Create a unique experience.  Take the time to survey your targeted niche. Why are they dissatisfied with the mainstream brands?  If they were asked to pick two words to describe their ideal experience, what would they be?  For the owners of that coffeehouse, words like fresh and cool come to mind. So they made the decision to move away from microwaved artesian sandwiches and opted for fresh local eats served on vintage plates found at garage sales.

3.  Provide the basics.  While your focus is on a particular niche, be sure to cover the basic needs expected within this niche.  At the coffeehouse, sure, the focus is on the niche market of buyers who care about supporting local suppliers.  But at the end of the day, they offer the basics – coffee and food. So, even if a die-hard Starbucks fan got lost and needed coffee, he could still walk into this coffeehouse and get what he needed.

For small businesses, there is tremendous value in narrowing your focus. You can be small and occupy a niche and still be very relevant. So look to the long tail for inspiration and explore just how staying small may be the right thing to do.