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:
- Decide to differentiate your firm. If you have no true differentiators, your best course may be to create one—choose to focus on a particular area or industry.
- Discover existing characteristics that distinguish your firm. This is a process of uncovering differences, but not creating them.
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.
SEE ALSO: Expertise as a Differentiation Strategy
2. Assess possible differentiators through research. Many firms fall into the trap of seating their best and brightest around a boardroom table and tasking them with coming up with a list of differentiators. It doesn’t work. Inevitably, they bring their own biases to the table and misperceive their audiences’ key challenges, their own relevance to client needs, and even who their competitors are.
Research allows you to uncover the way your clients, prospects, or even influencers define their problems, talk about their needs, see your competition, and perceive your firm. Research empowers you to evaluate your differentiators with empirical facts rather than hunches.
If you’re exploring a conscious change in direction, research may help you select the right specialty. You might discover, for example, that you’ve had particular success with family-owned businesses. This finding could be an avenue for specialization, and that specialty could make for an effective differentiator.
Similarly, you could research several business categories and find one that affords the most opportunity. You may discover emerging issues, business models, or unmet needs that you’re particularly well-suited to address. Research helps you objectively evaluate these opportunities as potential differentiators.
On the other hand, if you are leaning toward discovering your differentiators, you’ll want to focus marketplace research on your clients, influencers, and prospects to understand how they perceive your firm. Is there anything you do that strikes these audiences as different, unique, or valuable? Is there anything you’re considering that stands out as being worthwhile?
Your clients and prospective clients may even identify an aspect of your firm that you haven’t recognized — because you’re too close and it’s business as usual for you. For example, you may discover that you’ve configured your services in a unique way, a difference that isn’t obvious to you. A firm might offer workshops, for instance, in an industry that typically doesn’t conduct workshops.
Taking advantage of external perspectives will help you see yourself as the marketplace sees you, which can be invaluable.
3. Identify the differentiators you want to pursue. Once you’ve explored potential differentiators through research, it’s time to choose the ones that you will focus on to define your firm in the marketplace. Aim for 3–5 differentiators. If your final list is longer than this, be wary. Most firms don’t have more than a small handful of unique characteristics.
To be sure, there are two sides to every differentiator: a downside as well as an upside. Firms understandably worry that, once they select a few differentiators, they will be sacrificing a lot of revenue that could come from being a jack of all trades.
For example, if you decide to focus on serving small firms, you may be forfeiting opportunities with larger firms. But that focus could be the right direction for you. Specialization drives business growth faster than generalization. The amount of new business you get by focusing should more than make up for lost opportunities in a broader, more competitive marketplace.
Perhaps the best strategy is to think about the kind of firm you want to be, then figure out how that firm can address the real problems your target audience is experiencing. Select your differentiators accordingly.
4. Validate with the marketplace. Once you’ve identified your differentiators—either the existing qualities you will emphasize or those that you’re setting out to claim—it’s time to validate them with the marketplace.
Validation may come in the form of secondary research to ensure you can back up every claim effectively. Evaluate your proposed differentiators. Investigate whether competitors are taking a similar tack, and to make certain what you’ve identified is true, relevant, and supportable.
5. Support your differentiators. After validating your differentiators, it’s time to live them out, proving and re-proving them every day. Of course, some differentiators are easier to prove than others. If you say, “our specialty is working exclusively with female entrepreneurs,” audiences will know pretty quickly whether or not you can back that up.
Other differentiating claims, like “Our customer service is demonstrably better than the competition,” might require more work to support. For these broader differentiators, you’ll need more than testimonials—you might need a thorough study. Something going much deeper than an assertion.
You will also need to back each differentiator up with policies and training to make it real and lasting.
And you have to promote your differentiators. If no one knows about them, they can’t be effective differentiators. Ensure your website and marketing materials describe, reflect and prove your differentiators. Likewise, make sure that everyone — from senior leadership to business development to human resources to marketing — speaks in a way that reinforces your differentiators.
The Bottom Line on Differentiators
An effective differentiator is a lot more than a lofty idea. It is your firm’s very DNA. When a differentiator is working as it should, it’s a guiding imperative, expressing itself in your firm’s every action.
You have to live your differentiators every day, working and acting in ways that are consistent with them. The work is continuous, and if you do it well, it can move you to new levels of success and generate significant new referral business.
- Learn how individual experts in your firm can grow from relative obscurity to eminence. Download our free book, The Visible Expert®, and start turning your best people into high-value industry stars.
- Discover how research can deliver the insights your firm needs to grow. Download the Professional Services Guide to Research
- Get the online marketing training that will turn your firm into a referral magnet. Hinge University is built exclusively for busy service professionals and marketers like you. Check it out and start learning now.
How Hinge Can Help:
Hinge specializes in helping professional services firms grow. From developing and implementing your growth strategy to facilitating your planning retreat to conducting market research on your firm, Hinge can take your business to a higher plane of growth and profitability with the Visible Firm Program.