Let’s face it, being everything to everyone is not an easy thing to do. If you’re a generalist in professional services, this is especially true for you. You may find it’s hard to say ‘no’ to less-profitable and interesting work, differentiating your firm in the marketplace is particularly challenging, and it’s hard to keep up with the expectations of today’s buyers. Here’s how defining your niche can help attract and retain desirable new clients, support your rising leaders, and increase profit margins. I’m even sharing my tips for how to define your niche and begin to transform your firm.
Attract and Retain Desirable New Clients
One of the best parts about having a niche is that when your firm becomes known in a particular area, prospects actively seek you out! When done right, your brand will do the work of attracting more of the types of clients you want to work with and politely repel those you don’t. Over time, you’ll find that as you earn respect within the industries you serve, you’ll see a boost in referrals. As these changes start to take effect, the cost of new client acquisition decreases and time spent doing proposals and engaging in the sales process goes down as well, and you’ll still win more clients!
Once you’ve got the right clients in the door, be prepared to serve as their advisors. That means you may have to modify your service offerings, let some go to make room for new offerings, or change the way you package your work. Your niche clients will expect more than transactional services. They will want to benefit from your experience with businesses like theirs. Making adjustments to serve these desirable new clients will lead to deeper and longer-term client relationships.
Set Your Next Generation of Leaders Up For Success
Today’s buyers are looking for advisors who will be a good fit for their needs, which makes it harder for generalists to standout from the crowd. Start encouraging emerging leaders to make a name for themselves within your niche markets. This will help them build their network and bring in clients that the firm can serve really well. Getting known in a niche also develops their personal brand and creates trust with clients, prospects and referral sources. In time, the firm will be known and respected for your work and relationships within your niche, and less reliant on the reputation of partners and founders. Having clear niches also helps your recruiting efforts and will appeal to professionals with interest or experience in the specific work your firm offers.
Increase Profit Margins
When you do a lot of work in a niche, certain aspects of the job become easier. You already know what you to look for when scoping out a new engagement, and getting started becomes even easier as the process is more familiar. You won’t waste time on the learning curve or spending time in areas that won’t make an impact for the client. You’ll increase profit margins by working smarter, not harder.
Further, as your reputation in your niche grows, you can command higher prices. Clients will be willing to pay for the experience and value you bring to the engagement. In other words, differentiate your firm and stay out of the commodity vendor position. It’s hard to charge more when you’re selling deliverables (explaining the difference between your tax return, will, or insurance policy, and the other firm they are considering can be tedious and not particularly fruitful). As you now know, you have to be prepared to serve as advisors to these clients. The good news is that advisory services are worth more, and clients will be happy to pay. Niche firms also find that cross-selling is easier - as you prove that you can provide value to clients, they will want to work with you even more, and will be less likely to look elsewhere.
How To Do It
Not sure how to get started? First of all, you just have to start with ONE. Begin by asking yourself, what is the industry where the firm already has a concentration of clients? Don’t have one? That’s OK. Spend time figuring out who you could serve very well. Pick one that doesn’t have a lot of strong competitors, that has a concentration of businesses that are the right size for you to serve well, and that will be around for a while (not being eaten up by VC firms or too many that go out of business quickly.) Or, pick one that you’re interested in because your interest will fuel your conversations and interest in making in-roads within that industry.
As you develop your specialization, commit fully. Be willing to say no to work that doesn’t fit in. Join industry associations, sponsor conferences, make connections with key individuals within the industry who can help expand your network and serve as referral sources. Update your website to communicate your new focus. This includes keyword rich site content and planning your blog posts based on relevant keyword clusters. Make it easy for prospects to find you!
As you make this fundamental change to the firm, be open to some other structural changes. For one, you’re no longer inhibited by geography. As a specialist, you can advise clients in your niche wherever they are. You will also need to train employees at all levels and assign them reliably to the clients in this niche so they gain expertise - the knowledge and expertise can’t stay at the partner level.
Conclusion
If you want to grow, engage with more interesting work or are thinking about succession planning, making the shift from generalist to specialist is one of the most meaningful changes a firm can make. It’s not easy, and it doesn’t happen overnight, but the payoff is well worth it. Wondering if defining a niche is right for your firm? Contact me today, and let’s talk about your goals.
