“Differentiate for your clients, not from your competitors”
Understanding strategic differentiation is critical to the leaders of professional services companies. In a hyper-competitive world, companies without differentiation quickly find themselves pushed down into commoditized roles where it is hard to generate the profit needed to attract the talent required to succeed.
Companies that do manage to achieve and communicate differentiation are able to win the projects where they can deliver exceptional value and are rewarded for this with higher fees.
So far so good, but what is differentiation in professional services and how do you achieve it? This question came up in a recent conversation with Brian Conlin. Brian was the President & CEO for Golder Associates Corporation, a global consultancy, and has recently been coaching a number of companies on where to play and how to win in the highly competitive engineering, architecture and construction space. Brian is also an advisor to TeamFit.
Steven Forth (SF): Brian, you have mentioned that too many companies try to develop strategic differentiation from a ‘company-out’ perspective, but that what really matters is to take a ‘client-in’ view. Can you say a bit more about what you mean by this?
Brian Conlin (BC): Professional services companies tend to spend a lot of time looking inward to their organization and benchmarking themselves to other similar competitors in their field of practice, that is the ‘company-out’ viewpoint. The ‘client-in’ view requires those same people to learn more about their existing and target clients; the client’s wants and needs and what they hope to accomplish by hiring you and what motivates them to select one firm over another. The interesting part is this: if you ask them, your clients will share this information. With these insights you can now work on differentiating your services and solutions from the client’s view, rather than the other way around.
SF: OK, that makes sense. Can you give another example of a company that is doing this?
BC: Some of the big accounting firms are working hard to crack this code. They are building teams that have in-depth knowledge of their client base to create offerings that address specific needs using innovative pricing. For example, knowing that a client has a strategic goal to reduce operating costs, they create a package of services that they help implement and value the offering on the basis of cost recovery rather than hourly fee-for-service. Sometimes they offer to provide the services for free if savings are not achieved, that is risk sharing! In the Engineering-Architecture-Construction industry some innovative firms are doing the same, unfortunately not many though. This is an area of opportunity.
I found the work of Hinge Marketing on client buying habits to be interesting and something E/A/C firms should keep in mind. Adjacent is one survey result they presented regarding the top client selection criteria for professional services. Interesting how high in the criteria that team experience and skills ranks. This underscores the focus on skills and teams.
SF: From a skills perspective, what role do you see skills playing in strategic differentiation?
BC: The skills needed for this pursuit certainly include attentiveness and ability to read clients as well as knowledge of the client’s business area and their key metrics. The team at Help Scout have produced a good list of 15 skills that would be a place to start. I’ve added a few comments in brackets on a few of them for clarity.
Help Scout’s 15 Customer Service Skills
Attentiveness (really listening)
Clear Communication Skills
Knowledge of the Product (or services provided by firm not just yours)
Ability to Use Positive Language
Time Management Skills (client’s have limited time too)
Ability to ‘Read” Customers (intuition)
A Calming Presence
Goal Oriented Focus (check out Net Promoter Score)
Ability to Handle Surprises
Closing Ability (ending conversation with confirmed satisfaction)
Willingness to Learn
SF: What are companies doing today to demonstrate their skill differentiation in a way that is meaningful to the customer?
BC: They are keeping up with the changing needs of their client’s business and delivering solutions that delight clients who are willing to provide great referrals. In many cases they are creating solutions to problems that clients may not know exist. They are helping their clients achieve real performance improvement and better manage their risks. These firm demonstrate their impact using common metrics, financial and non financial. They do this by creating diverse teams of people who have the right mix of complementary skills to challenge each other and be creative. I know it doesn’t happen every day but when it does, it is magical!
So there you have it. Professional services companies need to look at the world from their customer’s perspective. This means building teams that combine technical skills with domain and customer specific skills. It requires empathy, the ability to stand in the customer’s shoes. Listening is a core skill that feeds empathy and is a precursor to customer in differentiation. Beyond that, professional services firms have to learn how to share risk with their clients. There are many ways to do this. By making investments together, by having shared performance metrics, through innovative pricing arrangements. The future of professional services lies in shared commitments and rewards.
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