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Positioning Professional Service Firms
Scottish inventor John Logie Baird gave the first public demonstration of television in 1926 in Soho, London. Ten years later there were only
100 TV sets in the world.
So, how does this relate to service firms? About a century after Claude Hopkins wrote his marketing masterpiece, Scientific Advertising, only a handful of professional firms understand and practise proper positioning.
So, to help the situation a little bit, let us discuss in a few words how service businesses scan better position themselves for higher demand, recognition and compensation.
In terms of market positioning professional service businesses fall into one of three distinct categories.
* Commodity type volume work
* Commercialised "one size fits all" approach
* Highly personalised premium work
COMMODITY VOLUME WORK
The mantra of this kind of business is tactically out-brawn the competition with backbreaking hard work and bottomachingly low prices, earning a living through sheer brute drudgery. This is basically the Wal-Mart approach of providing professional services.
This type of firms deal with a preponderance of customers (definitely no clients), employing an army of trade barbarians (people with great technical skills but as total lack of other necessary skills) and churning out high volume of low margin deliverables, such as workshops, websites, etc.
The typical examples of these businesses are web site developers and seminar companies. These firms have rigid policies and procedures to follow, and the idea is that they can hire low-skilled underpaid "labourers" who have enough skills to follow the procedure manual even with their eyes shut and standing on their heads.
In these firms we cannot talk about careers. They offer jobs for their people for short-term survival. Usually people take these jobs as stop-gap measures, but do their best to move on as quickly as humanly possible.
These firms specialise on solving very specific problems in very specific ways. For example: You have a computer problem, so we install a new IBM server. The solution to every problem is an IBM server.
When you are an IBM partner and receive a kickback on your sales from IBM, then the solution to everything happens to be the most expensive IBM "box".
"In your specific case you need good old mercury filling" - says your dentist, who also happens to be a shareholder in the local mercury mine.
Fee sensitivity is very high in these firms and they are willing to drop their prices in order to land any business. Remember the motto is high volume work whatever it takes.
To compensate for low price though, these firms employ armies of junior staff on their projects, and they can make up for their low fees in asking for a low hourly rate for an army of people.
One of the problems these firms are facing is that tomorrow someone else may be willing to do the same work cheaper, so the commodity firm goes down is history as a perfect loser.
Commodity firms run on very high overheads, and often one way of cutting overheads is cutting corners.
Since these firms operate like manufacturing plants, it is vitally important to implement quality assurance and productivity measurement processes. The value-added components of these firms are their processes, procedures and internal operating methods.
Most of these firms are operated and managed like large corporations, and operate more as contractors than as consultants. The personal touch is almost non-existent and the emphasis is on churning out the next piece of work and moving on.
COMMERCIALISED "OUR UNIQUE APPROACH" TYPE WORK
These firms have extensive institutional experience at solving certain types of problems. Individual talents are largely ignored because everyone is expected to feed the firm’s institutional competency.
These firms' engagements have less diagnosis and more implementation of predictable, off-the-shelf solution. At this level there is some collaboration with clients, but the work is largely based on the "doing it for you" approach.
There is quite a bit of leverage. The senior “consultant” (consultant? Gag me with a spoon!). The senior peddler just enough grey on the temples comes and closes the deal, and then an army of junior staff descends on the poor client to implement the project and bump up billable time.
Due to
repeatability and increased operational structure, the major role shifts from senior professionals to junior staff and temporary help. The firm uses senior staff to go out and hunt for new business.
Skill-building is up to people' individual drive, and largely left in their own hands. The firm' mission is to exploit the skills these people have already acquired, and there is no interest in helping them to build new skills. Senior talent is used mainly for managing
engagements and reinforcing policies and procedures.
Since these firms deal with issues as problems to their pre-packaged solutions, there is some compartmentalisation. There is a clear hierarchical difference between the implementers (junior staff) and business getters (senior staff). In these firms there is an increasing
pressure to provide career opportunities for juniors, as opposed to merely giving them jobs. However, juniors are still often treated by seniors as necessary evils eating away the seniors' margins.
HIGHLY PERSONALISED PREMIUM WORK
These firms do not have well-defined approaches. They can be regarded as "organised confusion" in which people of diverse backgrounds and expertise perform a pretty broad range of work in an unpredictable fashion. This firm' mantra is "How can we deliver higher client value at higher fees using less of our time, effort and resources?"
They stay on the cutting edge of their disciplines and walk into every new assignment with a clean slate and an open mind. You can recognise them because they ask a hell of a lot of questions.
The success of these firms is based on the unique knowledge base of their people. They do not have "standard approaches". Everything they do is "frontier" stuff, involving lots of experimentations.
The use of junior staff is almost zero. Leverage is usually achieved by using clients’ own implementing team, which also becomes part of the knowledge transfer process. This way one single consultant, co-ordinating the implementing team, can achieve amazing results.
And here lies another difference. There is a huge difference in focus between the first two and this type of firm. The first two type of firms focus on tasks, activities and deliverables. For example, we write 12 1000 page reports, we deliver 10 half day workshops with 50-page student manuals.
Premium firms go for results and outcomes. For instance, we help you to increase sales by as much as 20% in the next six months, we help you to reduce talent turnover by up to 15% in the next three months.
Can you see the difference? One firm can build you a website. It is nice but useless. The other firm can help you to reduce the cost of acquiring new business from the global market place. That is something. Having a web site only for the sake of having a web site is just as useful as putting a pimple on an elephant’s arse. It makes no difference at all. At least not to the elephant. Well, unless it is a small elephant and a huge pimple, but now we are into zoology, so let us get back on track.
The other differentiating factor of these firms is that head count is the bare minimum with minimum operating overheads and maximum margins.
Talking about "frontier" work, clients are looking for the best and most reputable firm. For the firm it is vitally important to seek this pre-eminence by building the reputation of individuals.
Among the three type of professional service firms, this is the only one that recognises that people build relationships, thus do business with people, not with firms.
ON SUMMARY
Now take some time and have a hard look at your firm. Think about how you present your solutions and how you interact with clients.
* Which type of firm is yours?
* How could you step up to the next highest level?
* Who do you have to become and what do you have to do to be able to step up?
* What would be the pay-offs of stepping up?
* What are the investments you have to make in order to step up?
About the Author
Tom "Bald Dog" Varjan of Dynamic Innovations Squad helps professional service businesses to build high trust client relationships in which they can deliver higher value at higher fees, using less of their time and effort. You can request his e-booklet “Why Most Service Professionals Consistently and Persistently Undercharge for Their Services” by emailing booklet@di-squad.com
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