Do you want to grow nine times faster and be 50% more profitable than your competitors, and still spend less on marketing?
I thought so.
In that case, Lee Frederiksen and Aaron Taylor have one word for you: Specialize.
In their book Spiraling Up: How to Create a High Growth Professional Services Firm, Lee and Aaron argue that the fastest growing and most profitable firms position themselves as specialists. These firms have a well defined target market and a well defined set of services. This clearly differentiates them.
The book is based on interviews with hundreds of sellers and buyers of professional services. These include accounting, consulting, IT, architectural, and government contracting firms. You can download the book at www.spiralingupbook.com. Lee and Aaron are partners at Hinge, a marketing and branding firm based in Reston, Virginia.
Why are specialists more successful than generalists? It’s simple. They attract and keep more clients.
And how does that happen?
- Specialists effectively market to a narrow target audience
- Specialists know their markets really well
- Specialists have a clear message that prospects and referral sources understand
- Specialists get more business from existing clients because clients understand their capabilities
Start by differentiating yourself. If you can’t do that, you’ll have a fuzzy message and an unfocused marketing effort.
“Strong differentiators are out there. ……..But if your competitors have great people and you have great people, too—you’ve got some work to do.
“We’ve got great people and superior technology, and we’re devoted to our clients.” Problem is, that’s not newsworthy, and nobody wants to hear it. It’s difficult to prove and sounds like marketing puffery,” Lee and Aaron write.
They found that high growth firms were three times more likely to have a “clear differentiator” than average growth firms.
Lee and Aaron offer, along with examples, four ways to differentiate your firm:
- Target Market – The accounting firm that focuses on ex-patriots
- Problems Solved – The online marketing firm that specializes in companies reaching baby boomers
- Service Offering – The IT firm focusing on Fortune 500 companies with high risk/high reward projects
- Fee Structure – A law firm that offers fixed price project fees in an industry that bills by the hour.
“Begin by looking at what you already do exceptionally well, then chip away at everything else. Assuming what’s left is big enough to sustain your firm’s growth, focus your message like a laser on that competitive advantage,” they write.
More Marketing Bang for the Buck
High growth firms spend about 5% of their revenue on sales and marketing. That’s about the same level as their slower growing peers.
How do high growth firms manage that? They are more efficient and effective marketers.
It all starts with the target market. “High growth firms tended to pursue a well-defined group of target clients. Their focus is sharper. Their target is better articulated,” the authors write.
A narrow target audience is easier – and less expensive — to reach. Specialists get their business from referrals, their websites, and via partnerships with other industry professionals. They avoid expensive tactics such as cold calling, direct mail, advertising, and trade shows.
On the other hand, generalist firms often target a very wide audience. They use a shotgun approach, employing the expensive – and less effective – tactics that the specialists avoid.
Specialists have another advantage. They really understand buyers’ problems.
The book quotes a buyer “Offer me a personalized understanding of my situation with no high pressure sales calls.” “When you talk with me, present a detailed solution to my problem and relevant case studies to back it up.”
Specialists are uniquely qualified to do this. They know the market intimately. Generalists don’t.
How to Get More Referrals without Really Trying
“Interestingly, high growth companies place a higher priority on reaching non-referral clients. That means they aggressively go after prospects within a well-defined target group, whether or not they were referred.
They don’t just take what comes their way. They pursue the prospects they want, ” according to Lee and Aaron.
Specialists focus on lead generation more than generalists do. Yet, specialists get more referrals. Lee and Aaron theorize that their lead generation efforts stimulate referrals by creating awareness in the marketplace.
Another factor is a clear message. The authors write “We asked each CEO to give us their brief elevator pitch. We then rated their response on a 5-point scale based on three criteria:
- Clarity of the firm’s capabilities and purpose
- Clarity of the target market
- Articulation of the firm’s competitive advantage”
Some 73% of High Growth CEO’s had a strong message vs 45% of the Average Growth CEO’s.
Are You Ready to Grow?
To see where you fit on the growth scale, check out the list of questions starting on Page #54. Ask yourself:
- What’s Your Strategy?
- What’s Your Market?
- What’s Your Message?
- What Are Your Differentiators?
- What do You Deliver?