Business Rx: Should firm stay focused on a niche or go broad?

The entrepreneur

David Aidekman was recruited from his Harvard graduate program to work in national security policy at the White House. After Sept. 11, 2001, he was working long hours, helping shape the policy around the creation of the Department of Homeland Security. He was rarely able to escape the office — but when he did, he wanted it to be a true getaway.

Aidekman spent his nights and weekends planning elaborate group vacations for him and his friends. Word spread and soon there were more than a thousand people on Aidekman’s vacation planning list, curious about his itineraries and destinations. Aidekman and his now-wife, Meg, realized they had the makings of a travel business. Now after a few years of running group trips, Aidekman’s company, the Trip Tribe, has a new twist.

The pitch

Aidekman

“What makes for an amazing vacation? The Trip Tribe believes there are two crucial components: the destination and the other people on the trip. We learned these lessons by operating a small group travel business for several years.

“The Trip Tribe offers an online solution to common problems facing the group travel industry. First, we are answering a key question that virtually every customer asks before booking a group trip: “Who else is going?” When members sign up, they fill out a social profile (which can be tied to Facebook) that includes age, relationship status and appetite for adventure, nightlife, etc. When users book a trip, we aggregate the data of the trip participants. The Trip Tribe marries the pervasive social web to group travel, delivering travelers experiences with the right people for them based on their social profile.

“Second, we are transforming an outdated $150 billion industry that still uses paper catalogs sent by mail. Our platform aggregates curated bucket-list vacation experiences. This is both a single solution for customers and a channel for travel providers to sell their trips.

“Part of our distribution approach has been to focus on niche audiences. In our early days, we have focused on niche audiences to gain traction and be sure that our Web site and experiences are successful. For example, we have partnered with a yoga brand for a yoga retreat vacation. However, those niche audiences don’t represent the full ambition of the business. How deep and for how long should we focus only on those communities before expanding to broader interests and demographics? We don’t want to dilute focus nor do we want to get in a rut with only niche travel experiences.”

The advice

Elana Fine, managing director, the Dingman Center for Entrepreneurship

“You need to realize that the Trip Tribe might be pretty niche for a long time. Don’t focus on finding new audiences, but instead on generating new leads for the niche audiences you serve. This is a customer acquisition problem, if anything. If there are enough people in your niche that you can create a scalable model, then that’s a great business. The beauty of being a consumer Web site is that you can get customers from all different places.

“You probably should go pretty deep in some of these niche areas, whether its yoga retreats or cooking trips. Make sure you first resonate in those niche markets. That will be your bread-and-butter for some time. You need to make sure you’re attracting a strong niche audience before you dilute yourself into other audiences. There is a certain type of person who is going to want to go on one of these group trips. Be sure you’ve identified the demographics of this type of person.

“How are you going to find those people in your niche audiences? Marketing directly to consumers is going to be too expensive. To get any sort of scale, you’re going to have to pursue partnerships with member associations, retail chains, gyms, social clubs, etc., to build specific audiences.

“The beauty of your platform is your niche travel offerings; if you’re worried that will get you into a rut, you need to rethink your model. The Trip Tribe is the long tail – you’re trying to figure out how you create something that is of interest to a small group of people, but create enough scale that it works.”

Reaction

Aidekman

“Customer acquisition is exactly what drives our growth, so the suggestion to scale our distribution with niche audiences reinforces our preferred growth path. While we offer both niche experiences and trips for general interests, the passionate niche communities make for distinct marketing targets. Their members also cultivate the social sharing that bolsters our expansion. Therefore, we’re doubling-down on the partnerships and similar channels, just as Elana suggested. Her strategies are already driving very strong return on investment, along with highly positive weekly user growth and revenue growth.”

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