version: "1.0.0" name: niche-selection description: Hormozi's criteria for picking a niche. 5 quality vectors (pain, buying power, saturation, viable TAM, reach), a reversible drilling process (test 3-4 before committing), and common traps. The invisible prerequisite behind every offer — pick the wrong niche and no Grand Slam Offer can save it.

Niche Selection

Source: Alex Hormozi, $100M Offers (Ch. 1-2, "Pricing & Niching") + $100M Leads (Ch. 2-3, "Who's Your Customer").

Why this skill exists

Every other skill in the plugin assumes the niche is already chosen. But most weak offers aren't a copy, pricing, or bonus problem — they're a niche problem. Founders pick "cute" (they like the topic, they know some people, it's a small niche they figure they'll dominate easily) instead of picking on economics.

The wrong niche kills everything. You can have a perfect Grand Slam Offer, a killer conditional guarantee, a brilliant hook — if the niche has no real pain or no buying power, none of it works.

The 5 niche-quality vectors

Score each vector 1-10. A viable niche needs ≥ 7 on 4 of the 5 (you don't need a 10 across the board, but failing 2+ vectors is a red flag).

1. Pain intensity

How urgent, frequent, and visible is the problem you solve?

• 10/10: the customer wakes up thinking about it. It costs money or time every single day. They've tried several fixes; all failed.
• 5/10: the customer recognizes the problem but can put it off. "Would be nice to solve."
• 1/10: the customer doesn't even know they have the problem. "Maybe someday."

Diagnostic question: if you charged 10x your current price, would the customer still buy? If "yes" → high pain. If "not even at a discount" → low pain.

2. Buying power

How much can the customer pay without someone else's sign-off or a complex budget process?

• 10/10: B2B SaaS founder with ARR > $1M, a C-level executive, a self-employed professional with a packed calendar. Their own call, high deal size is fine.
• 5/10: a mid-level manager with a tight budget, a bootstrapped solo founder, a salaried senior professional.
• 1/10: a student, a recent grad, a micro-business with no cash flow.

Diagnostic question: what's the average deal size this niche pays today to solve adjacent problems? If they already pay $10k+ to a competitor or substitute, buying power is fine.

3. Market saturation

How many competitors already attack this niche with similar positioning?

• 10/10: 0-3 established competitors. Emerging or ignored market.
• 5/10: 5-15 competitors, but there's room with clear differentiation.
• 1/10: 50+ competitors, commoditized, everyone positioned identically.

Diagnostic question: if the customer searches "[problem] + [your niche]" on Google, how many paid ads show up? More than 10 means saturated. 0-2 may mean the market is too small (careful).

4. Viable TAM

How many possible paying customers exist in the niche at your pricing?

• 10/10: 50,000+ companies/people would pay your deal size. Room to grow for 10 years.
• 5/10: 5,000-50,000. Fits 5-7 years of operation if conversion holds.
• 1/10: < 1,000. The whole niche becomes a customer in 2 years, then it's over.

Math: if the deal size is $10k/year, growing to $1M ARR takes 100 active customers. A viable TAM means having at least 10x that number (1,000+) in qualified prospects.

Diagnostic question: run your exact ICP query in LinkedIn Sales Navigator (or similar). If you find < 5,000 profiles in your target market, TAM is tight.

5. Reach

Can you reach this niche with a clear message on a viable channel?

• 10/10: the niche is concentrated in 2-3 predictable channels (LinkedIn, specific events, closed communities), with a common, identifiable language.
• 5/10: scattered across channels, but reachable with 3-4 different plays.
• 1/10: fragmented niche, no common channel, no identifiable language.

Diagnostic question: do you know 5 people in the niche today? If yes, reach is reasonable. If you know none and have never talked to one → red flag, the niche is an abstraction.

Scoring table

Sum ≥ 35 and no vector < 5 = viable niche.

The reversible drilling process

Founders tend to "marry the niche" on day 1 and then can't admit the mistake. The right move is to test 3-4 niches in parallel, cheaply, before committing.

Step 1 — Brainstorm 5-7 candidates. List niches based on: (a) where you have founder-market fit, (b) where you already know 5+ people, (c) where the 5 vectors look high on paper.

Step 2 — Pre-validation (1 week per niche).

• 10 conversations with real people from the niche (LinkedIn DM, referral).
• 1 question: "What problem X do you pay the most to solve right now?"
• Count the spontaneous mentions of the problem you'd attack.

Gate: ≥ 6/10 mention the problem without prompting → proceed. Otherwise, kill it.

Step 3 — Offer validation (3 weeks). For the 2-3 niches that survived Step 2:

• Draft an LP with a Grand Slam Offer adapted to the niche.
• Run $500-1,000 of cold ads or 50 segmented cold emails.
• Measure reply rate / opt-in / click-to-call.

Gate: the niche converting 2x better than second place → finalist.

Step 4 — Commit (but not for life). Focus 100% on the finalist for 90 days. Measure real LTV:CAC. If the ratio is > 3:1 in 90 days, commit fully. If < 2:1, go back to Step 3 with what you learned.

Common traps

1. "I love this niche" with no economic test. Personal passion for the topic is noise. Founders pick a "cute niche" (yoga, coffee, sustainability, pets) because they like it — without checking pain, buying power, or TAM. It almost always fails on buying power.

2. A niche too small "so I can dominate it easily." "I'll be the leader in [micro-niche]" is a recipe for a low ceiling. If the total TAM is 500 companies, you won't build a $5M ARR business there.

3. A niche with buying power but no reach. "Top cardiologists in [major city]" have money, but you can't get to them. A viable niche needs a viable channel.

4. A saturated niche, but "I'll be different." The digital marketing course market has 200+ established players. Cosmetic differentiation won't save you. You only go in if you have a structural edge (rare founder-fit, a proprietary methodology with proof, etc.).

5. Validating with friends / your close network. Friends always say "great idea." Real validation is a stranger on the internet paying or putting down a deposit. If nobody pays, the idea is just another LinkedIn post.

6. Confusing a niche with a persona. "Niche: marketing professionals" isn't a niche — it's a giant category. A real niche: "Head of Growth at a B2B SaaS with $5-50M ARR, sales cycle > 60 days, internal team of 3-8 people."

Use by case

When this skill does NOT apply

• Founder already has PMF, > 50 paying customers, LTV:CAC > 3:1 → niche is already validated, focus on copy/pricing/scaling.
• Refining the offer of an already mature product → use grand-slam-offer directly.

Detailed reference

reference/100m-leads-extracts.md (ch. 2-3) and reference/100m-offers-extracts.md (ch. 1-2).