It is easy to fall into the trap of scooping up a domain name because we like how it sounds, feel that the niche is the next big thing, or can obtain the domain at a great price. While these factors, and others, are all relevant, if you can’t identify who would benefit from the domain name, your prospects for a future sale are limited.
While a successful domain name investor must take into account many different factors. I would argue that one consideration is more important than any other. Whenever you contemplate a domain name acquisition, always first ask yourself who might want the domain name.
Who would want this domain name?
I’m a big believer in keeping a written diary of your domain ideas, activities, analyses and plans. When a domain name acquisition opportunity presents itself, the first thing you should do is to make a list of who might want the name.
For example, I considered the name accents in a new extension a bit ago. My list of potential end users included interior decorators, room accent manufacturers or retailers, foreign language courses, foreign travel, translation services, fashion designers, retailers of clothing accent items, and possibly even a reference site on mastering accents as an actor. Now some of these are more promising than others, but make your list as extensive as possible. You can prioritize the different possibilities later.
A smart domain investment is one that you can sell for a profit after all costs are considered. A domain name will not sell unless it is deemed valuable by at least one purchaser. The odds of getting a good price are enhanced if there are multiple potential purchasers with a strong desire to obtain this domain name.
The value proposition
You need to take at least one additional step before you are ready to act on the acquisition. Estimate how much value each of your potential users might see in the domain name. You may find some sort of rating system useful, with for example a 10 meaning that an end user would regard the name as almost essential while a 1 means a very marginal interest. Both the name and the extension needs to be taken into consideration at this stage. Would an end user in this area consider this extension?
In marketing they often talk about the value proposition. A value proposition may provide a solution to a client problem or it can help them do something not currently possible. For example a new domain might offer a name that is easier for clients to remember, gives a more positive connotation, or would be useful in a social media marketing campaign. Remember that the value proposition is written from the viewpoint of the potential customer. For a few of the possible users of the domain name, write a one sentence value proposition that would be the heart of the argument you would use with possible end users.
Think early about pricing and sales probability
If you have not already done so, use the NameBio database to find prior sales in the word. This can help determine both how likely a sale of the domain name will be as well as provide guidance on the likely sales price. When I performed the NameBio search for accents, it was not as promising as I had hoped. There were just 10 sales, all in the .com extension, with an average price of $621. The NameBio search did however provide some ideas that I had not previously considered. For example the domain names FloorAccents and WallpaperAccents have sold, narrower niches than I had initially considered. Also, I saw a recent sale of CellPhoneAccents, another idea not previously considered.
How is the domain name valuable, unique and memorable?
The saleability and price of a domain name depends on the quality and uniqueness of the domain name. Your value proposition should take into account how this specific domain name is valuable, unique and memorable. If I am considering a plural name I always use Google to see how common the plural form is compared to the singular. For example when I looked at accent and accents each had a little over 800 million search results. I also look to see that none of the obvious extensions are still available to hand register, and check how the .com and .net are currently used if the name I am considering is not in those extensions.
While it is probably premature to develop a full sales plan for the domain name at this stage, you should give some thought to how easy it would be to get your name noticed by potential customers. Google searches on the term will give you ideas to get started. The longer you have been in domain investing, the more useful will be your experience in suggesting how likely end users will want a particular domain name, and how to most effectively sell the name.
All of this might seem like a lot of work for a single potential domain name acquisition, but the more informed your purchase decisions, the easier will be the actual selling of the domain name. Also, by following this process you will already be well on the way to developing a promotion plan for selling your domain name and have a sound basis for establishing a price. Personally I find coming up with potential uses and value propositions one of the more creative and interesting aspects of domain name investing.
The more informed your purchase decision, the easier will be the actual selling of the domain name.
Don’t let a vague feeling that a name is cool unduly sway you to acquire it unless you can also identify potential end users. A key to success in conventional investing is to reign in your emotions and make logical and evidence informed decisions. The same is true in domain investing. Always ask who would the domain name benefit and how likely they would pay a reasonable price for it.