What it means to specialize.

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We work with a lot of firms on developing niches. Often firms equate developing a niche with specialization or developing specialists in an industry like manufacturing or health care, or functional area like business valuations or cost segregation services. They read or hear about all the benefits of specialization and they recognize the value of it, but in my experience, firms sometimes struggle with what it looks like.

It’s fairly typical that when I’m working with a partner group to define what it means to be a — specialist — each partner has a different idea. In order for specialization to become a competitive advantage everyone needs to be clear about what it means to specialize:

  • What does it look like in our firm?
  • What does it mean for individuals? Does it mean that professionals spend more than 50% of their chargeable time serving the industry?
  • Do we have a team? Or is it individually based?
  • What does it mean for the firm? Does it mean the firm generates more than XX% of revenue from clients in that market? Or spends a certain number of hours serving those clients? How many hours?

The more specific the firm’s definition, the better the result.

Once the partner group sets a clear expectation for what it means for the firm to specialize the staff can better understand what kinds of behaviors are expected. The marketing professional can create the right messages to attract the right target market. The firm can begin to align processes internally with the definition so that clients in that target market begin to recognize the firm’s specialization.

And this gives the firm a great foundation from which to grow their top line.

First the why…now the how.

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In our last post, we talked about why industry specialization is a good idea, especially for business development purposes.  So now let’s talk about how to drive growth with industry specialization.

First, it’s important to recognize that you can’t just decide you’re a specialist and start promoting it overnight; there is a process to building a niche. In our work with professional service firms, we’ve identified four phases of this process:

  1. Exploration
  2. Knowledge and content building
  3. Practice building
  4. Recognition as specialists

Below is a description of each of the four phases, including tips for how to make progress.  It’s important to err on the side of taking action; don’t feel as if you have to reach perfection in each phase before moving on.  You likely have competitors who are building industry practices and promoting their firms as specialists. Don’t lose market position by spending too much time planning and preparing.

Exploration

This is the phase when you’ll decide what industry(s) make most sense. You’ll need to determine:

  • Whether there is enough of a market available
  • How entrenched your competitors are in the industry
  • Whether you have a compelling story to tell and the right people to work the niche

Some additional things to think about to decide if building the niche is feasible:

  • Do you have a strong champion for the niche?
  • Are there several professionals in the firm who are willing to commit to working the majority of their time in the industry, get the technical/industry training, and do the business development work?
  • Does the firm have at least a few clients in the industry and one or two high-visibility clients who will serve as references?
  • Do you offer the range of services necessary to address the needs of companies in the industry?
  • Are you willing to budget the time and dollars necessary for training, certifications, and business development?

Knowledge and Content Building

The first step in this phase is to determine what industry associations and publications are available. Professionals can learn the industry language, trends, hot topics and more just by attending association meetings and reading publications. Some additional ideas for gaining industry knowledge:

  • Job shadow clients
  • Industry Web sites
  • Social media groups and company pages

As your professionals learn more about hot topics, issues and trends, they can start to develop relevant industry-targeted content to use in the practice building phase. Speaker presentations, journal articles, and white papers are all examples of content you’ll want to have on-hand for business development purposes. And once you have an inventory of content, there will be opportunities to re-purpose these items in multiple channels.

Practice Building

Equipped with a champion and a team of professionals who have identified a target industry and invested time to acquire knowledge and build content, you’re now ready to promote your niche practice. As discussed previously, this promotion is made easier by the focus you have within the industry. Here are the steps:

Define the target market

Define the geography and size of companies within the industry that make the most sense for you to target. Decide whether there are sub-industry groups you can target to further narrow your focus.

Focused activities

Once the target market is defined, the next step is to put together a schedule of marketing activities to build a position for your firm in that market. Examples of focused activities include:

  • Industry association participation
  • Industry-specific blog
  • Bio/online profile updates
  • Networking with key industry players
  • Referral source networking
  • Direct mail
  • Content marketing with relevant industry topics
  • Cross-selling to existing clients in the industryTransitioning from Marketing to Sales:

Once your niche team has invested the appropriate amount of time in building their market position, it’s time to start getting a return on that investment; that will happen when your team members transition from pure marketing activity to more proactive sales behaviors. With the ultimate sales goal of being face-to-face with interested prospects, examples of transition activities include doing telephone follow-up after direct mail to set sales appointments, identifying key prospects from industry associations and extending personal invitations for one-on-one meetings and lunches, and collecting contact information from speaking engagements to follow up with attendees.

Recognition as Specialists

The Holy Grail — in this final phase, when the target market recognizes your firm as specialists in their industry, business development and growth become infinitely easier (and potentially less expensive). Through personal experience and word of mouth, companies in the industry know to come to you when they need help and/or are ready to switch providers. The need for your firm to invest in extensive branding and positioning activity lessens (although it never totally goes away!) and your professionals can spend more time in front of interested industry prospects and clients, selling and delivering services to increase revenue.

New Year…New Approach to Business Development?

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We’re a month into the new year — if you aren’t already, it’s probably time to start thinking about how to continue growing your business in an increasingly competitive environment. It’s not enough to work the same contacts you always have and continue to tell the same story. So how can you identify new contacts and update your story? One avenue is to compete as specialists in a niche market.  While some firms develop niche practices around service categories, we find industry-focused niches are most effective for business development purposes. Here’s why:

1. More targeted marketing opportunities

Prospects don’t gather in groups based on what service they need; there isn’t an association for companies who need audits! However, there are plenty of industry associations: associations who have meetings (networking opportunities), sponsor conferences (exhibiting and speaking opportunities), publish trade journals, e-newsletters and blogs (publishing and advertising opportunities) and hold special events (sponsorship opportunities).

2. Increased cross-selling opportunities

When firms organize business development efforts along functional practice areas, more often than not their professionals discuss one service area — their particular expertise — with a prospective client. But when they organize business development around industry, firms typically start to see a transition to cross-functional team selling. Those in the firm who provide a variety of services to a particular industry can talk to the prospect together about all the ways the firm can help because they know the industry issues and best practices.

3. Elimination of silos

Often traditional service can become problematic; cross-functional industry-focused teams typically help to break down those silos. Proposal teams look at the whole picture for a prospective client and develop a more effective proposal; sales teams present the wide range of expertise the firm can bring and make a better impression; cross-functional client service teams look at the client’s entire organization and ensure the firm is addressing all client needs.

4. Ability to differentiate

What gives a firm the competitive edge to win a proposal? Is it the process they use to deliver a service? Is it really that much better — or, for that matter, different — than a competitor’s? Prospects expect firms to be service experts — that’s a given.  What can really differentiate a firm, though, is when they can talk about a broad base of experience in a prospect’s specific industry. Recognizing red flags, knowing best practices, being aware of requirements, offering expertise outside of your core service area — these are all advantages that come from specializing a practice in an industry. These advantages translate to big benefits for clients and these benefits will provide differentiating marketing messages in proposals, on web sites and in other marketing materials.

5. Attention-getting marketing messages

Obviously, most of us are more comfortable speaking our native tongues. In the business world, that means speaking the language of the industry in which we operate. Talk to construction owners about bonding and relationships with surety agents; talk to manufacturers about the inventory issues and materials costs; talk to non-profits about increasing board-of-director confidence. Speaking the right language is what will get prospect’s attention and keep them engaged in content and marketing materials.

Come visit us here soon, as we’ll be following up by talking about the four phases of selecting and building a niche and offering tips for how to work the phases successfully.

Getting to the Second Date

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Everyone can probably agree — first dates are tough! We’ve all felt the butterflies, and let’s face it — dread — anticipating a first date. The good news, though, is if the date goes well you usually have a pretty good feeling that a second date is likely. Not so in the business world! You can meet a prospective client and have a great conversation, even share some valuable ideas — and never hear from them again. And it doesn’t mean that he/she’s just not that into you! In business relationships, you have to proactively work to get to the second date.

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Process not Project: Creating a Growth Culture

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Many firms we talk struggle to determine the best business development approach. Does it make sense to hire full-time sales people? Can’t we expect our marketing director to make sales for us? How will we compensate a full-time sales person?
Here are some ideas to keep in mind when embarking on the process of building a growth culture in your firm:
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Seven Tips for Finding the Right Calling Partner

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Telephone lead generation — calling those prospects with which you would most like to do business to schedule an introductory meeting — can be just the tactic to rev up your firm’s ROI on marketing activities. But getting partners to make the follow up calls, whether following up to a mailing or following up with e-marketing activities or recruiting to an event for your firm, can be difficult at best. Even if your firm has a full time business development professional, savvy marketers understand that those professionals’ time is often better spent face-to-face meeting with interested prospects than dialing from inside their offices.
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Make 2013 Your Year to Grow

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New Year. New Goals. How will you find growth this year? There are lots of new tools out there to help you market your firm and grow your top line, but sometimes the best new tools are the old tools implemented in a different or better way.

Grow Your Client Relationships
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What’s Next?

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Perhaps one of the most telling characteristics of a successful business owner is the “what’s next” attitude. The understanding that you can’t just sit back and enjoy the spurt of growth you happen to be experiencing right now; the knowledge that unless you’re always moving forward, you’ll soon be moving backward.

So how to move forward? Well certainly one important step is understanding how your clients’ needs are changing and figuring out what you can do to help them. Developing the right services and knowing how to take them to the market is a challenge many firms struggle with; consider the following concrete action steps to make this challenge a little less daunting.
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Setting Realistic, Achievable Growth Goals

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With summer here, many firms are planning retreats beginning to set growth goals for next year. It’s the perfect time re-think your goal-setting process. Don’t just think in terms of acquiring new clients when setting target numbers; it’s important to evaluate all factors that will contribute to your final growth goal.

  1. Average Useful Life of Clients: From mergers and acquisitions to changes in management — there are a number of factors that will lead to lost clients. Every client has an average useful life cycle. If your firm’s average is ten years, that means on average your firm will lose 10% of your clients every year. If your firm’s average useful life is 15 years, you can expect to lose 6.7% of your clients per year.
  2. One-Time Projects: You should also consider the amount of one-time project work your firm does in one year. Typically this averages 10-20% of a firm’s total volume.
  3. Net Growth: The net growth you want to achieve this year.

After evaluating these three factors, you can determine your growth goal. For example, if you have an average client life of 10 years, 10% of your revenue is one-time projects, and you want to grow by 10% next year, you really need to generate 30% of gross new business to achieve your 10% new growth goal.

As you can imagine, it takes a lot more activity to generate 30% gross new business than it does 10%. So it might be helpful to break down your goal and determine exactly what you’ll need to do to realize it.

  • How many new clients will your firm need to secure?
  • How much additional work to current clients will you need to sell?
  • How much of a price increase will you need to consider?

When you actively define you growth goals with these three components in mind you can easily assess how realistic or aggressive your goal is. Tracking each of these on a quarterly basis will give you the ability to measure how you are doing against your overall goal. If one of them is lagging, you can increase activity within that component or adjust to make up the difference another way.

Be realistic when setting goals. Make sure your firm can generate enough activity — and that you have enough money budgeted in your growth plan — to achieve your goal.

Busy Season Year Round

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Sometimes it’s difficult to look past our own busiest times of year and think about business development. For professionals who also sell it can be one of the biggest challenges to maintaining consistent growth. But, the most successful firms are those that take their own busy times out of the equation and adopt a more year-round approach to growth. (Which, incidentally, is also usually more market focused.)

There are four main methods for prospecting. Some you can work into your schedule even when you are busy serving clients. Some you should think about for once your busiest time is through. But a mix of all should be implemented consistently to help even out the peaks and valleys of your growth results. Planning ahead helps make sure you’re getting the right mix and helps you be more effective at implementation.

  1. Who’s Your Friend? You’ve just finished. or are doing a lot of work for a lot of happy clients, right? Now is good time to call and ask for referrals. Thank them for any referrals you receive and touch base again to let them know the outcome. Be sure to follow-up right away with the referred company. You can do this while you’re meeting with and delivering value to your clients.
  2. COI Development: Develop relationships with centers of influence or evaluate current relationships you have with COIs and see if they are willing to provide any sales leads. Get back to this activity shortly after your busy time is over.
  3. Get Involved! If you’re not already, become active in local community or industry groups. Membership in area associations is a great networking tool. This personal marketing effort should eventually transition to sales, don’t just wait for referrals. After you’ve established relationships ask about your prospect’s business—and how you can help. Once you’ve checked in and picked up with your COI relationships look to broaden your efforts with this type of activity. Most community and industry groups publish an annual calendar of activities so you can look ahead and decide the activities that best fit into your schedule.
  4. Dear Prospect: Acquire a list of companies that meet your target criteria and send a direct mail piece. Follow-up with a phone call and set appointments with interested prospects. As long as you are willing to do the follow-up and work the sales cycle, direct marketing can often be a fairly quick and effective method for generating leads.

Use this big-picture approach to planning your prospecting activities and spend less time thinking about what you should do to grow your practice, and more time growing it!