Differentiation is one of the most poorly understood pillars of professional services marketing. Many execs still believe differentiation isn’t a necessary component of overall growth. Reality is, it matters. In fact, it matters a lot.
But it’s hard to do. And to be sure, there are lots of undifferentiated firms floundering in the professional services space.
It happens innocently enough. Firms grow early on by adding services as new opportunities arise. As easy as that initial undifferentiated climb can be, executing a sustained referral strategy when you aren’t differentiated can be near impossible.
In our research on high-growth, high-value professional services firms, we found that high-growth firms—firms that consistently win new business—are almost three times more likely to have a strong differentiator than their average-growth counterparts.
Differentiators make it easier for decision makers to understand why they should choose you. And they make it easy for referral sources to explain to others why they should choose you, too. So, the foundation of any referral strategy must include uncovering your firm’s differentiators.
What is a differentiator?
Put simply, a differentiator is something that makes your firm meaningfully different from other firms. Yours doesn’t have to be the only firm with that characteristic. You just want to set yourself apart from key competitors.
Say, for example, you specialize in working with manufacturing companies. Others in your industry may share that specialty. But as long as most do not — particularly among major rivals — you probably have a viable differentiator.
A good differentiator makes it easy for others to understand what types of problems you solve or which industry you serve — and what types of firms would therefore be the best potential client for you. For that reason, differentiators are at the heart of any solid referral strategy.
What a differentiator is not
To meaningfully set yourself apart from the competition, your differentiators have to be true (of course), relevant to your target audience, and supportable.
With that in mind, statements like “We care about our clients,” or “We do quality work,” or even “We have the best people,” are not differentiators at all. They may be true, they may even be relevant to your audience. But almost every firm can claim the same things.
Unfortunately, “soft” characteristics like these are often the very attributes that many firms believe set them apart. In fact, these messages are so common they tend to have the opposite effect, offering prospects nothing interesting or memorable to draw their attention.
Building a referral strategy through differentiation
So how can you uncover your own set of differentiators? Here are five steps to define a true differentiator for your firm—one you can own.
1. Choose an approach to differentiation. There are two basic approaches to identifying your differentiators. You’ll need to understand and weigh your options before you proceed. At the highest level, the two approaches are:
Both approaches are can be effective. The first approach is more proactive. It requires boldness and some courage because it could mean making significant changes to the direction of your business.
The second approach is a more passive, relatively speaking. But it can yield tremendous benefits to firms that have one or more latent differentiators and aren’t interested in dramatically changing their business strategy.
Interestingly, you can explore both paths in parallel, because the way forward for both approaches is the same: research.