I encounter it time and time again. Professional services firms that struggle to grow or generate consistent profits see one way out: to serve up more services and more value to an even wider audience. It’s a natural and rational conclusion. After all, if you can’t get enough of something (revenue, profits), why not expand your universe until you have enough?
Only there is a gaping hole in this way of thinking. One so big you could drop a conference table through it.
It ignores how buyers—real people—behave.
While it’s true that many buyers may ultimately want a provider that can deliver a wide range of related services, that’s not what most are looking for when they first select a firm. Usually, they need to solve a very specific problem. And they want the fix done fast, expertly and right.
Buyers also want one more thing. They want to avoid getting burned. Every firm has at one time or another hired the wrong provider or partner, spending vast sums of money on a firm that lacked the skills, attention to detail or follow-through to get the job done.
So how do these two desires play out in the buying process? And what are the implications for a professional services firm that wants to reach more buyers and build deeper relationships?
Buyers Prefer Specialists
One way that buyers avoid this problem is to seek out providers with a reputation for solving the very problem they have. In short, they seek out specialists.
Specialists make sense for several reasons:
They focus on a particular thing, whether it’s a type of problem, service, industry, or buyer role. Focus gives them a deeper understanding of the thing they are specializing in. As a result, they are more likely to have more experience and insights into solving a problem that falls within their area of specialty. Where a generalist might say, “we can learn about your problem (or business),” a specialist can say with confidence, “we already understand your problem (or business).” That’s a powerful message.
They are faster, too. With a longer track record of relevant experience comes mastery. Identifying the cause of a problem and solving it is simpler when you’ve seen it before. Meaning they can deliver high quality work at speed.
They are seen as true experts. The problem with generalists is that they often lack the foundational background to support the advice they give. They are more likely to be ignored by the client. The specialist, equipped with deep knowledge and experience, has earned the gravitas to command the room. Clients listen to their advice. And that means their recommendations tend to be taken seriously—and are more lasting.
What’s in it for You?
There are tangible benefits for the specialized firm, as well.
Buyers are willing to pay more. In the professional services marketplace, specialists are usually more expensive. Because specialists are seemingly sacrificing something—access to a wider market—and because they are assumed to be more skillful, buyers are willing to pay a premium for their services. Another way to think about it is that buyers consider generalists commodities, while specialists are rare and more valuable.
It’s easier to grow. This may sound counterintuitive, but by narrowing your target audience, your growth potential increases. In fact, in our research we see a consistent correlation between specialization and growth. For one thing, marketing is easier. You can deliver more focused messages to a smaller, better-defined audience. Also, as your reputation in your area of expertise grows, you tend to get more “invisible referrals.” And differentiating your firm from the beige wheat field of competitors is a cinch. While not always the case, even very narrow specialties are usually large enough to support a firms’ growth ambitions.
You’ll become better at what you do. The world perceives specialists as more capable, but there is more to it than mere optics. When you specialize, your team—through repetition and exposure to variations on a limited number of themes—build deeper expertise. So when you walk into a new client, you can quickly diagnose the problem and have a good idea how to tackle it. You know what can go wrong and how to minimize those risks.
We operate our businesses in a time of continual, accelerating change. Specialists thrive under these conditions. Undifferentiated firms struggle to keep up with challenges and innovations that affect their broad customer base. But specialists can focus on just those that apply to their small corner of the marketplace. Growth and profitability come easier because their business models are inherently more efficient. And they are positioned to be perceived as an authority in their domain.
