power your advice

Differentiation: Why Visible Expertise is So Impactful for Advisory Firms

Have you been competing for work that you are more than qualified to perform, only to be underbid by your competition? Or maybe you have been the one underbidding, which leaves you no room for growth or prosperity.

If you want to stop competing on price alone, it may be time to develop a stronger differentiation strategy.

Differentiation Strategy Defined

There are really only two ways to gain a competitive advantage over your competition. One way is to compete on price, highlighting the similarities you share with your chief competition.

“We’re just as good as our competition, but we cost less.”

Unfortunately, unless you have a sustainable cost advantage, you can’t keep up this strategy for long. All it takes is someone willing to undercut your lowest price. The lowest-cost strategy also exposes you to commoditization and a much wider range of competitors, including do-it-yourself approaches, off shoring and automation.

Another way—a better way—is to stand apart. Be different. Separate yourself from the rabble in a way that is important and relevant to potential clients.

This is what is known as a differentiation strategy.

Three Tests for a Successful Differentiator

How do you know you have a good differentiator? Well, we recommend you put each differentiator to the test. If it can pass these three critical checks, it is worth developing into a broader differentiation strategy:

1) Is it true?

You can’t just make up claims of differentiation. Apart from the moral hazard of making something up, it is simply too easy for people to see through your exaggerated claims. Your firm has to live it each day. And remember, you’ll need to deliver on all claims.

For example, many firms say they have superior client service but do nothing special to make it a reality. No special policies. No special training. Nothing to ensure it actually happens. The bottom line is they are no different than their competitors making the same claims.

2) Is it relevant?

Any half-decent differentiator will resonate with prospective clients. If your point of distinction doesn’t matter to them, it won’t work in getting you more business. More importantly, what is ultimately most important is what plays into their selection criteria and decision-making process. Any non-relevant differentiators are a wasted effort.

We once had a client that believed their strongest differentiator was the lack of conflict of interest. Their competitors certainly could not make the same claim. But, when we dug a bit deeper, we realized their clients (both current and target) didn’t value the impartiality as highly as the firm did. So much for a strong brand differentiator.

Going back to our example of client-side service. It is all too common to claim “Customer service is our main priority.” A lack of customer service may be a reason why you lose a client, but did you know it rarely plays into the initial selection process?

3) Is it provable?

This is the often the hardest test of a differentiator. You may have identified a true and relevant point of distinction, but it is useless without proof. Even if everyone says a differentiating statement is true, without a way to prove it, it will be ignored.

“We have great people” jumps to mind as an example we frequently must dissuade clients for using within their differentiation strategy. It is a trap! Why? Well, have you ever heard a firm claim they have average people?

Didn’t think so.

The Challenges of Maintaining a Competitive Advantage

You are well on your way to a solid differentiation strategy once you know what sets you apart from your competitors. Especially if you can explain—and prove—it in a way that is relevant to who you want to attract as clients. But, you are still not done.

The marketplace won’t stand still. And your competitors will look to your success and attempt to copy it. Over time, what was once a distinctive characteristic is neutralized. As is your competitive advantage.

Therefore, a sustainable differentiation strategy requires that you build those distinctive characteristics into your reputation. As such, it becomes the foundation of your professional services brand.

Why Visible Expertise is So Impactful for Professional Services Firms

This brings us to the topic of expertise and why it is so critical to professional services.

When you talk about professional services, expertise is what you sell.

Put another way, clients aren’t buying your services because they like them. They are buying your services to solve a problem. Maybe they need help complying with a regulatory requirement or they need a solution to a specific strategic challenge.

Our research highlights the reasons why a company would select one professional services firm over another. Expertise is the top selection criteria for most prospects, and it is most frequently the factor that tips the scale for the contract-winning firm.

But what about the argument that professional services are “a relationship business”? Well, that assumption is true. But when you look at the research, the only factor that trumps a great relationship is expertise.

As we outline in Inside the Buyer’s Brain, both buyers and sellers of professional services understand the importance of an existing relationship, but sellers consistently underestimate the role their reputation plays in the final selection.

Also, a strong reputation for expertise is the one factor that can overcome an existing relationship. If a company does not believe their current provider can solve a problem, they will look for someone who can.

Not long ago, a prospective client came to us for our marketing expertise. He had hired a life-long friend to help with his marketing. Despite their close relationship, he had fired his friend (and hired Hinge) because his friend could not solve his marketing challenge. Our strong reputation for solving the specific marketing challenges of professional services firms was more important then their strong relationship.

And to add to the argument of expertise as a differentiation strategy, we can look to the latest research on professional services referrals. According to our most recent study of referral marketing, visible expertise plays the single most significant role in driving referrals (37.3% of all referral-driving factors). Relationships, both social and professional are still important, but only when there is an awareness of your expertise.

Overcoming the Problem of Invisibility

Developing expertise as a differentiation strategy sounds like a great idea, but there is a catch. Clients are notoriously uninformed when it comes to judging actual expertise. Consequently, your firm’s expertise is often unseen by the marketplace.

And if your firm’s expertise is not visible it doesn’t exist.

Fortunately, it is possible to make intangible expertise visible and real.

We conducted extensive research on highly visible experts and the professional services buyers who hire them. As we outline in The Visible Expert, there are certain strategies and techniques that work well in elevating the visibility of your expertise in the marketplace.

Public speaking, writing blog posts and articles, and books are all great ways to demonstrate your expertise. And other strategies and approaches are helpful in boosting the visibility of that expertise, either as a firm (or practice within a larger firm) or as an individual. The value of these different techniques, when put together as part of a differentiation strategy, has been proven time and again by our clients.

Building Your Differentiation Strategy

The only proven way of making your expertise visible so that it can work as a differentiator is to have a clear strategy.

Start with an understanding of exactly what you want to be known for. What are you expert in? Your area of expertise should be broad enough to be enduring and important. But that breadth must be balanced. The narrower and more specialized your expertise, the easier it is to make it visible and defend against potential competitors.

The next step is research. Research will help you align your firm’s offerings with the desires and preferences of potential clients. It will also inform your selection of issues to write about to make your expertise more visible to your target audience. We have found that research of your target client group is associated with growth. In fact, the fastest growing firms (those that grow as much as 20% year over year) are twice as likely to conduct research as their no-growth peers.

Upon Implementing Your Differentiation Strategy

The research on using expertise as a differentiation strategy is still evolving. We know that highly visible experts accelerate the growth of a firm both by attracting new leads and making it easier to close them as clients. We also know the fastest growing, most profitable firms use strategies and marketing techniques that raise the visibility of their expertise.

With a well thought-out strategy and diligent implementation, you’ll see your firm’s visibility and perceived expertise accelerate.