For professional practices, differentiating through specialisation seems the one true sustainable ‘strategy’. The argument then ensues; by service or sector? In this article I will look at reasons for specialising, evidence to support the view that clients prefer sector specialists, and steps practices are taking to work within sectors.
The alternative to competing through a differentiated position, is through a consistent drive for superior efficiency or lower cost, allowing competition through lower fees or price. The difficulty with price is that quite soon your competitors catch on with cheaper labour / more efficient technology, and your margins fall. Whereas, for example, dominating a sector through differentiation creates a barrier which competitors with a cost advantage find hard or expensive to compete against, consequently, margins are more easily retained.
The evidence from the client’s point of view
One of the Chartered Developments lead generation teams were contacting FDs of logistics firms, to make appointments, for a substantial ‘known’ accountancy practice. A mailshot explaining the sector specialism was sent before calling. The calling team was split into two approaches; one half (A) took the stance of mentioning the name of the practice, referring to the mailing and discussing the topic and the prospect’s thoughts. The second half (B) were mentioning the name of the practice, explaining the sector specialism, and then referring to the mailing.
The result was that 31% more of the FDs in group B (explain the sector specialism first) remembered receiving the mailing and overall 27% more FDs in group B agreed to meet the accountants.
So why did this happen? A recent conversation with a lecturer in Statistical Psychology at the LSE concluded that essentially the key element here is flattery.
There is plenty of other evidence to suggest that clients prefer sector specialists:
• 28% of medical practices use specialist medical accountants, the same applies but to a lesser degree to dentists, care homes, shipping and logistics and insurance brokers. There are firms clustering around lawyers who specialise in life sciences, technology and of course the traditional farming and landed estates.
• Potential clients will more readily attend seminars / webinars and events if they are sector based, and they more readily join sector blogs / forums.
Why the greater return for marketing through sectors?
• Relevant messages to give to your prospective clients make your marketing more interesting and compelling. For example, one of our accountancy clients targeted logistics companies with a message on Bonded Warehouse Schemes; far more interesting than audits, tax, accounting efficiencies or the standard ‘partner lead service’.
• The herd mentality of your prospects will naturally drive them to you. “When people are free to do as they please they often imitate each other” (Eric Hoffer).
• A lot of people realise that businesses improve by broadening the range of valuable processes that they execute without thinking, and where better to understand these processes than from a group of people in the same industry. This is one reason why sector-based events, in particular, prove popular.
• If the prospective clients think you are one of them they more readily trust you or feel at ease with you. I have worked with many lawyers who profess to be specialists in farming and landed estates. An unsuccessful one turned up to a ‘new business meeting’ at a farm with totally inappropriate footwear and we spent the first few minutes listening to the poor farmer apologise for the state of his yard. Empathy lost, no deal; rapport is easier to build if common ground is established early.
• It is safer for referrers to recommend a sector specialist. The IBM principle.
• The prospective clients are easier to target because of; what they read, their forums, databases on them, their conferences, trade shows and more.
Some practical steps to becoming a sector specialist
The enviable position attained by some sector leading practices has been gained through a mixture of historical serendipity, and good business management.
For example a founding partner proficient in dealing with shipping, schools, medical practices, insurance, motor and retail, builds a practice with expertise in both delivery and marketing within that sector. However more and more practices are now taking active steps to target sectors. The following are ideas to consider.
The more regulated a market is, the greater your ability to differentiate your service specialism. Your knowledge is in short supply and people fear falling foul of regulation, consequently the risk of moving to you is reduced. This logical view should help you to understand that even if your market is not heavily regulated, you should still use the regulations there are, or any changes in regulations to differentiate your practice and create fear. Practical steps you can take are to be spokesman on your subject; be the first to market with news or even pre-empt news with discussions or White papers. Recently many legal practices in the UK have actively commentated on the Bribery Act subject. However some of our clients have been taking this message to market in their sector for nearly a year. Teach or Blog on the subject. Create discussion documents on the effects of impending changes, and finally, ensure that your community of potential clients know what you are up to. It is of course no use if you go to all this effort and then keep it a secret.
Trade associations and governing bodies are of immense service. You can be a panel specialist for referred work. Advertise in journals, websites and newswires. Write editorials, and use the editorials in your own marketing material. Sponsor, speak and exhibit at their events. Know other specialists and agree reciprocity arrangements. Buy their subscriber database. Attain a rank on their committee. Run joint events. Run user groups and training events. Or even set up your own association. Blog on their network. All at a local or national basis.
Some accountants’ longstanding clients have in recent times become a touch capricious; good IT managers or consultants are in great demand, it’s a value thing.
Those practices which are delivering IT solutions bespoke to a sector have a competitive edge, which helps attract clients and which, once again, builds a fortress around both prospective and existing clients, barring competitors.
Don’t ignore the graduates
The serious bright young things entering professions and sectors are tomorrow’s owners. Where they can be identified and corralled into collectives, they should get your full attention. For example, there is a clever practice which offers first year Barristers a full year’s free support and tax return.
A champion is required
Once the decision has been made to create sector specific messages, the questions that still remain are; which sectors and where do we start? Someone in your practice will need to champion the cause, consequently it will help if they have some background with the subject matter. Audit managers with a penchant, for example in the motor trade, care homes, insurance or building, should be given the green light, resources and a plan to get on with it. Practices could, and some do, make a point of recruiting those with dual qualifications, i.e. surveyors turned accountant, those from specific industry’s who have moved into practice and IT consultants who know an industry well.
Start the process with a plan; understand the importance of designed differentiation, and decide how to make room in the practice for others with the same mindset.
Click the link to view the article – Designing Difference, Specialising by Sector.