Create a competitive advantage for your firm through differentiation
To be successful, a professional services firm needs to go where the money is.
In other words, a business that provides services such as accounting must find a market that needs and is willing to pay for those particular services. And chances are, if you’ve found a lucrative niche, others have found it, too. That’s why it’s critical to develop and promote a key benefit your firm can offer that will enable you to stand out from your competitors.
Competitive differentiation is the process of helping buyers distinguish your firm from similar firms and giving them a clear, compelling reason to select you.
This strategy is not new. It has been around under many names for decades. It first came to prominence back in the 1940s as a “unique selling proposition” or “unique selling point.” As it got refined over the years, it has become known as “competitive differentiation.” While the names may have changed, the strategy has basically remained the same: Find something that genuinely makes your firm different from your competitors—something about your business that you can own—and promote it.
But, you might be saying, we all offer pretty much the same thing. How can I develop a true competitive differentiation? The answer lies in the two elements needed to create a successful competitive advantage:
1. One or more characteristics of your firm that competitors either lack or aren’t talking about
2. A strategy to promote these characteristics that will entice prospective clients to buy
It’s important to note, however, that just having a differentiator is not enough. A competitive differentiator requires that it be something your prospects care about. For example, if you specialize in publicly traded enterprise accounting, prospects may not care that you’re the largest firm in the region, but they’ll sit up and take notice if you’re the only firm with deep experience in SEC compliance.
True differentiation takes place in the mind, creating a connection between the prospect and your firm. And that requires something that’s both highly relevant to your prospect and isn’t associated with your competitors.
Four key steps to creating a competitive advantage
So how do you actually go about differentiating your firm? It starts with doing a little research—reaching out beyond your own team to find out what the market really thinks is both different and important enough to choose your firm. In most cases, that means hiring an experienced third-party market researcher to conduct phone interviews with your audience and get an outside perspective on both your firm and your target prospects.
Step 1: Identify and research your key audiences
Just who are you trying to influence and convince? Who are they and what’s their role? What industry or industries are they in? Do you want them as clients, partners, employees? Answers to these questions will help inform the messages you create to effectively reach them. Then do the research. You will want to focus on the type of clients that you want more of and try to understand what makes your firm a better choice.
Step 2: Compile an initial list of potential differentiators
With a little knowledge and insight from your research under your belt, it’s now time to compile a list of the characteristics that set your firm apart from the competition. Go over your research results and keep an eye out for anything that casts you as different from other firms. Don’t worry about nailing all the things that your firm does—focus instead on features that make you different from everyone else. Don’t deal in generalities. Be concise.
Step 3: Vet your list
Once you have your differentiator list together, it’s time to cast a critical eye on it and narrow it down. You’re looking for quality, not quantity. You can get a lot of mileage out of even one great differentiator.
There are two reality-check questions you need to ask to ensure that your differentiators stand up under scrutiny:
• Could one of your competitors claim the same thing?
• Is it really, truly, different?
Step 4: Prioritize your differentiators
Now put your differentiators in order of importance. If you’re lucky enough (and diligent enough) to have a remaining list of several differentiators, prioritize them in order of how important they are to your primary prospects and how strong the supporting evidence is of their uniqueness.
Competitive differentiation is your key to success
Let’s face it. No buyer of professional services gets excited about having to research and evaluate providers. They’d love nothing more than to have a clear winner stand out from the crowd, making it a no-brainer decision that won’t cause them to lose sleep. Competitive differentiation encourages that kind of easy decision-making.
Of course, not every firm has a feature or specialization that is unique—sometimes services really are a commodity—so it’s important that you at least identify an aspect of your business around which you can build a compelling story. Often that may be something someone else offers as well; but if they’re not talking about it and you are, then as far as the market is concerned, it’s unique to you. And that’s a compelling story that will give you a competitive advantage.