Lessons from Leaders

The Power of Positioning
by Maureen Broderick

“Most firms are not very specific, and they’re bland in general. So, we have to say here’s what we do and here’s what we don’t do. Here’s how we do it, and here’s what the value proposition is for you. And here’s why we think it’s not just hot air.”

All of us in the industry understand and value the power and impact of brand in the professional service business. Unlike product companies, which have something tangible to sell – something you can see or touch or taste – professional service firms (PSFs)are challenged with the difficult task of selling an intangible. The product we sell is talent, skills, insights, and ideas. Brand for professional services, therefore, is essentially a promise to deliver a value. Selling intangibles is not easy in a highly competitive field of players who look much the same to the buyers of these services.

The key to building a successful brand is positioning. Positioning defines what the firm does, how it does it, and why it is different from other organizations. Why would prospective clients pay money for the firm’s services? What benefits are they hoping to receive? And why would they select one firm over another that offers similar services? To succeed, a PSF must identify a credible position to occupy in the market. Determining positioning involves decisions on a number of fronts:

Where do we play?

Firms must decide where to play on what industry consultant David Maister calls the Professional Service Spectrum of Practice. Maister has identified three points on a continuum that represent different positioning and service options – efficiency-based, experience-based, and expertise-based practice models.

  • Efficiency-based practices provide efficient solutions to common problems. Typically, they are low-margin, highly leveraged assignments that utilize a team of relatively low cost junior professionals performing well-developed routinized methodologies. Profitability is achieved through a high volume of low fee engagements.
  • Experience-based practices offer customized processes and solutions to certain types of problems that, according to Maister, don’t require an expensive “start with a blank piece of paper” approach. These models usually are lower leverage – one partner to five to ten professionals versus one partner to 30 or 40 in an efficiency practice. Fees and margins are higher, and the work requires an experienced “been there, done that” team of professionals.
  • Expertise-based practices provide unique solutions to unique problems. These assignments require a top-notch team and are very low leverage – often one partner to one professional. Because clients are willing to pay for the “best minds in the business,” fees and margins are high.

The decision of where to practice on the spectrum has critical implications on all aspects of firm management. The choice to position and price as an expertise-based premium provider, for example, must be reinforced with what the market perceives as high value services delivered by top notch professionals, who provide a high degree of one-on-one service. The target profile, revenue, and status of the buyers of these services will look different from the buyers of lower cost PSF services. To attract experienced and top-schooled professionals, compensation is at the high end of the market. Brand building and marketing in this model focus on establishing credibility and value through thought leadership development and knowledge sharing. Business development will most likely be conducted exclusively by the partners or equity owners.

However, the bottom line of a premium brand model does not differ from a lower cost, high leverage, efficiency-based service model if both businesses are managed well. Profits per shareholder can be lucrative for both, but each calls for a very different strategy and team.

What will we sell?

“New services for us usually begin with an idea or an insight that we chose at a high conceptual level without much regard as to whether there is a market for it.”

The firm must determine the focus, depth, and breadth of the practice areas or service sectors in which it hopes to compete. Deciding what to sell may seem basic to those outside the industry. Lawyers practice law, architects design, executive search professionals recruit and place. But it is not that simple. PSFs do, of course, begin with a professional skill acquired after years of study and training, so the basic service focus is a given – lawyers do practice law, not engineering. But the mix of services offered can be broad. For example, we counted 60 areas of expertise listed on the website for a 1,000-plus attorney global law firm.

Many PSFs are guilty of adding service offerings without much forethought as to the impact on their positioning and brand. Deciding on the mix of services usually begins with the founders’ specific skills and areas of interest. As the firm grows, new services are added, sometimes solely based on who comes onboard and what they want to do. The best firms have evolved services based on a strategic analysis and perspective on market trends, client needs for services, and the competitive environment. Will you offer industry focused expertise, for example, and if so, which industries and why? Do you have a track record in this sector to leverage and a strong bench strength of sector experienced professionals? What is the competitive situation? Is this a growth market? Will anyone buy it if you sell it?

Who will we sell to?

We are not disciplined in profiling our clients. Are we going after the multibillion-dollar clients or the midmarket? Which industries make the most sense? Are we targeting the CIO or the CFO or both?”

Accurately profiling potential buyers of the firm’s services is a critical task that many firms do not do well. Some believe that anyone who can afford the fee is a viable client. We once asked a law firm team who specialized in labor law who the market was for their services. We knew we had a lot of work to do when the reply was, “Anyone with five or more employees.” It is impossible to launch an effective marketing and sales initiative if you cannot pinpoint the highest-opportunity buyers for the firm’s services. Particularly when the budget and resources are limited, every dollar and partner business development moment must be appropriately focused on the top clients, prospects, and markets. Profiling the buyers most likely to buy your services – by segments, geographies, revenues, companies, and specific buyers within those companies that make the purchasing decisions – is a critical component of the positioning process.

What will they get when they buy us?

“When you look at the decision criteria that clients use for selecting service providers, a lot of it has to with your reputation, your track record, the experience they’ve had with you, and what their peers are saying about you.”

When your product is a service, clients view your brand as both what they receive and how they receive it. It’s both “What do I get?” and “How do you deliver?” Within the professional service arena, the experience – the how – matters as much to clients as the results delivered. For example, how the firm interacts with a client, the partnership it creates – the “roll up our sleeves” attitude, or a “walk through walls” mentality, creates a distinctive experience for clients and prospects. Deciding on the service experience the firm will create for the client – whether it’s efficiency, speed, availability, practicality, or something else – is a critical component of positioning.

Unfortunately, you can’t just aspirationally develop your service philosophy in a conference room. Saying it is so doesn’t necessarily translate into reality. The attributes selected must realistically demonstrate the firm’s ability to deliver. Failure to do so can backfire if you set false expectations with clients and prospects. The task of establishing the service promise begins with an honest internal assessment of the firm’s culture and environment to identify the values and characteristics that will resonate with the market. Some firms conduct regular “anonymous and candid” surveys of employees to gather the internal perspective on what the firm does best and worst. This feedback is used to both improve life at the firm and define the client experience.

The service attributes you choose must be formally articulated and embedded into the values and culture of the firm. It is a constant, repetitive process that begins with recruitment and is reaffirmed formally and informally through ongoing training, teaming, prolific communications, performance evaluations, and ultimately compensation and promotion. In the best PSFs, adherence to values is cultivated and rewarded; failure to comply can result in expulsion.

Maureen Broderick is founder and CEO of Broderick & Company (www.broderickco.com), a consulting firm specializing in market strategy, research, and training for professional services. Her book, The Art of Managing Professional Services (www.theartofmanagingprofessionalservices.com), features insights and best practices from some of the world’s top firms.