Saturday, 28 June 2014

How to grow your professional services firm - Part 1

 What do financial advisers, accountants and lawyers have in common?


They all want to grow their business, yet have trouble differentiating themselves from the competition. 

What can they do to change this picture?




In Positioned To Win, written for CA Magazine, co-authors Bob Angel and Hugh Johnston argue that old style marketing strategies don’t work for professional services firms.
“The winners and losers in this new competitive market will be those firms that truly practise branding and positioning strategy […] especially around market share, market segmentation and competitive differentiation tied to such factors as client needs and service innovation.”

Yet there’s a definite “me-too” feeling about professional services marketing, and it’s not hard to see why. Differentiating one firm from another isn’t easy for a number of reasons. “It is hard for professional firms to standardize the brand since they are mostly a collection of individual brands [the individual practices] and are not really institutionalized,” says Bruce McAlpine, president of Fulcrum Search Science Inc., an executive search and human capital firm that supports professional services firms. “Most marketing plans tend to look the same, they offer the same platitudes.”

Marketing is still considered a black hole by those who matter most: CEOs. When the Fournaise Marketing Group interviewed 1,200 chief executives, they discovered that a whopping 80 per cent of CEOs Do Not Trust Marketers. “CEOs feel marketers are too distracted and sucked into the technological flurry (and jargon) related to system integration, funnels, processes and scores, and have forgotten that technology is only a support tool that does not create demand per se – only accurate strategies and campaigns pushing the right products, product benefits, content and customer value propositions do.”

“Accurate strategies?” “Customer value propositions?” These sound familiar. Maybe it’s time for marketers – especially marketers at professional services firms – to get back to basics.

What do clients look for when hiring a professional services firm?

A recent study may hold the answer. The following table, courtesy of APQC[i], shows the relative importance of 17 criteria that clients evaluate when selecting management consulting firms:


Source: APQC (American Productivity and Quality Center) blog[ii]

Surprisingly, size doesn’t matter much to corporate clients – it’s at the very bottom of the list. Neither does the firm’s location – it’s next to last on the list. So what matters most?

Experience.

Experience – a combination of business and technical expertise – occupies the top two spots and five of the top seven. Which brings us to the marketing dilemma facing many professional services firms. If expertise/ experience is the key differentiator, why would prospects choose one firm and not another, given how similar their websites and their expertise? (This assumes most firms are not big enough to be “brand names”.)

Freek Vermeulen, an Associate Professor of Strategy and Entrepreneurship at the London Business School, may get us closer to the answer thanks to a blog post he wrote for the Harvard Business Review called You Can Win Without Differentiation. Vermeulen believes that under conditions of uncertainty (which, for buyers of professional services, is most of the time), “buyers rely on other signals to decide whether to purchase, such as the seller’s status, its social network ties, and prior relationships” and these signals should be as much part of your strategizing as analyses of differentiation, value propositions, and customer segments.

Interestingly, although he decries differentiation, I think most people would say “status” and “prior relationships” are differentiators. But for me, the most crucial word is status. Virtually every business professional wants to achieve "expert status" within their peer group and ultimately the business community at large. But expert status is not easily achieved. It is realized through merit: hard work and persistence over a prolonged period of time. But once achieved, expert status can be leveraged through referrals and word of mouth to generate high quality leads. The trouble is, these are very much one-on-one, and as such, they can only grow a practice so far and so fast.


What can be done to plant the right seeds to accelerate the growth of a practice, and do so in a professional way?

First, it’s helpful to remember that there are experts, and then there are recognized experts. The latter, through their exposure to the business community, have the ability to move the needle very quickly. There are hundreds of thousands of PhDs but there are far fewer "authorities" on a subject. Most experts toil in relative anonymity. Recognized experts are known authorities on a given subject. Being acknowledged as an authority in their chosen field can be a huge difference maker for the head of a smaller or mid-sized firm, and even the largest firms can benefit.

So how can professional services firms differentiate themselves? They need to start taking advantage of their most underutilized marketing weapon: thought leadership. A thought leader is an individual or firm that significantly profits from being recognized as such, say Russ Alan Prince and Bruce Rogers in Forbes.

Part 2 of this post will examine:

  • why thought leadership is the great differentiator for professional services firms
  • why firms fail to take advantage of it
  • how they can make their knowledge more visible
  • how they can leverage this visibility generate growth 






[ii] APQC is the American Productivity & Quality Center, a non-profit consulting organization and one of the world’s leading proponents of business benchmarking, best practices, and knowledge management research.

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