Professional services firms are under exceeding pressure to stand out and compete. For example what differentiates one accounting firm from the next? They all offer tax, advisory and audit. So what separates them?
Until very recently professional services firms were able to differentiate based on their size, location and relationships.
- Location: You could be a “downtown firm” or a “midtown firm.” A common value proposition for firms outside of the downtown core is to claim “downtown services without downtown prices.”
- Size: You could also position the firm as a boutique, a full service independent or a national provider. Size can be leveraged to demonstrate credibility, capabilities, service levels and specialization.
- Relationships: Above all else professional services firms’ brands are anchored on relationships. The availability and talents of the Partners to network, build relationships and close business is the biggest predictor of a firm’s reputation and business development capabilities.
But these three advantages are being pushed to the wayside. The Internet is eroding these points of differentiation, and leveling the playing field for clients. The world is flat. It doesn’t matter who you know, where you’re based or how large your firm is. From a client’s perspective it’s easy to find expertise anywhere, compare and contrast features and benefits, and even find the lowest cost option. So that begs the question, how do you stack up against everyone?
Competing in an ever more competitive world leads to two marketing strategies: embrace commoditization or create a new paradigm.
The first option is not to fight the competitive pressures hitting your industry, and embrace them. Accept that your value proposition is not unique, and your clients can get comparable services at other firms. Not only that, your clients are very price sensitive. There’s less margin per billable hour than ever before. These are the truths. To make a profit requires delivering highly efficient, cost effective services.
There are three rules when embracing commoditization:
- It’s not about relationships, it’s about systems. The firm has to run on systems to deliver its core services efficiently, effectively and with repeatable process.
- No frills and low customization. Customizations are expensive. You’re job is to give the client what they need, and that’s it.
- Transparent sales process. Clients are well educated buyers. They know how the services work, how to leverage them and how to get the best price. Build off their knowledge by delivering a transparent selling system that talks about your processes, prices and deliverables.
Transparency and systems anchor a commoditized marketing strategy. The more efficient you are the better.
Create a new paradigm
The other option is to fight the commoditization of your industry with a niche marketing strategy. This approach makes sense when you value deep client relationships, varied services and solving complex problems.
Building a niche practice requires creating new services or offerings that act as a new paradigm in your industry. It requires focusing your practice around a core skill or specialization that is valued by a specific market.
One of the key advantages of the Internet and social media is it enables you to market a niche beyond your geographic reach. You can market broadly and widely to firms that are looking for and want your expertise. And this makes it achievable to develop new practice areas that were impossible to maintain a decade ago.
Both strategies work, but it’s a choice. You can’t be all things to all people. Are you delivering a low cost, transactional service, or are you providing a specialized, high value service?