I'm told better to build something at least a few people love, rather than something many people simply like, as it's easier to scale a loved product to the masses than it is to get even a few people to adopt one that they merely like.
My concern regarding this approach is that I worry my product may not have even the potential to become mainstream (i.e. ability grow out of it's user base of early adopters to the early majority).
What are some good ways to gauge whether a product that's loved (albeit by few) has the potential to grow outside of it's initial (somewhat niche) market?
The easiest answer to this is something a mentor told me a few years ago when I was working on a niche app....she said "do you honestly feel like you could be passionate about this for the next 10 years"? That may not sound like it's relevant but it is...honestly that's the only thing that matters when starting a compay (besides the obvious of is this valuable)...That's the first thing to figure out. Then when I answered and said maybe, she said "do you think that this is the biggest thing you could be doing with your time? Why stop at helping a few thousand people, why not pour 10 years of your life into something that can help millions".....so reframe your question, is my product only helping a few people? Is there something else I could be doing that will help more people? If the answers are obvious then you know what you need to do...back to the drawing board.
First, look at your market size your product/service is addressed to. How many people/companies could potentially buy your product. Now imagine you capture 1% of this market. If this 1% is worth it, maybe you're 'mainstream' enough.
Second, your product doesn't need to be 'loved' to succeed, as long as it solves a business need or a consumer need and there is demand for it. Also, here's a good tip from Seth Godin to gauge whether a product is loved enough: http://sethgodin.typepad.com/seths_blog/2009/04/first-ten-.html
Happy to have a separate chat if needed.
Niche is a good thing! It'll help you stand out. I would do a lot of cold emailing and targeting to that specific niche to dominate the market.
You can use something like http://www.growthok.com to help you find targeted contact information. Hope that helps!
In my experience every product or feature finds traction with 1%-5% of users - indefinite retention, express strong satisfaction in surveys etc. For paid products the number is usually much lower. The questions you must answer are:
1. What's special about these people? Don't assume they are "techies" or "early adopters" - these answers are too generic and often wrong. You need to reach out to your best users and interview them. If you do enough of these a profile will start emerging - single parents living in suburbs, <50 person companies in the transportation sector ...
2. Why do they love it? What job is it doing for them?
Once you have the answers to both you'd be in a good place to answer the question you're asking - is this a seed of a much larger market that's will grow significantly over the next few years.