You've heard it a million times before: to build a commanding reputation you need to narrowly target your prospects. But you probably don't really believe it. After all, if a potential client goes to your website and sees that you specialize in a different type of client, won't that turn them off? (Answer: yes, it probably will.) So most firms write their target client description to be as broad as possible. It seems safer. But does it really work?
Well, we have an answer to that question and it comes from our new research study, The High Growth Professional Services Firm. These firms grow 9 times faster, are 50% more profitable, yet spend slightly less than average on marketing and sales. How do they do it? As we covered in a recent post, one of the keys is strategy. High growth firms are much more likely to use counterintuitive approaches, such as narrow specialization, and tend to have easily understood, believable differentiators. But that's only part of the answer.
Focus, Focus, Focus
High growth professional services firms also tend to have a much more clearly defined target client. When we asked the CEOs of these superfirms to describe their target client, they provided much greater specificity and level of detail than top executives at average firms. In fact, only about 17% of average growth leaders gave a target client description rated as “very specific.” In the High Growth group, 50% rattled off a very tight description of their target.
Bottom line? By narrowly targeting a very specific group, you dramatically raise your odds of closing a deal. Your understanding of prospects' needs can be honed, your differentiators tailored, and your marketing budget much more concentrated. Can you get too focused? Of course. But the overwhelming tendency is to error in the other direction.
How Well Do You Know Your Clients?
We all believe we know our clients needs and priorities. But it's easy to fool ourselves. In one of the most interesting and unexpected findings of the study we uncovered some very clear connections between understanding one's clients and bottom-line results.
We asked firms if they conducted formal research into the needs and priorities of their target customer group. (Formal research is much more involved than a customer satisfaction survey.) We divided the firms into three groups: 1) Those that did no research; 2) Those that researched their target group occasionally; and 3) those that did frequent research (at least once a quarter).
The results were dramatic. The “no research” group had a 2% cumulative growth and 11% profitability. The “some research” group yielded 17% cumulative growth and 16% profitability. But those firms that conducted frequent research had profitability rates of almost 20% and cumulative growth clocked in at over 30%.
By focusing on a clearly defined target group and carefully and systematically understanding their needs, you give yourself a clear competitive advantage. Your services cay bring more real value, your ability to anticipate needs is greatly increased, and your marketing can be much more focused and persuasive. Given those advantages, it's not too hard to see why faster growth and higher profitability might follow.
Next time, we'll peek inside the professional services marketing tool kit to see what tools High Growth firms use to get their message out.