Is your business differentiated? Or just different? If you can’t answer with confidence, you may be leaking revenue — and that’s not good for your firm’s future. This is why you should learn what each label means so you can be sure you fall squarely into the “differentiated” category.
It’s common for professional service firms to be different but not differentiated. This happens when the prospective client is not skilled enough to recognize the difference between service providers. Or, they do understand the difference, but they do not care.
Boutique professional service firms often lose lucrative contracts to inferior competitors. And the reason this happens is often that some founders of small service firms do not understand the distinction between being different and being differentiated. The prospect informs them they lost to competitor XYZ, and the founder says to themselves, “Oh my God. How did we lose to those guys? We are a much better fit for this project.”
So, how do you recognize you are making this mistake, redesign your unique competitive advantage, and win more deals?
Separate your differentiation in your client proposal as a distinct line item, and tag it with a price. If the client is willing to pay you for it, then you are differentiated. If the client is not willing to pay for it, you are only different.
Actions speak louder than words. Simply asking a client is not enough. (Clients sometimes say one thing and do another.) Make sure the price you charge for the form of differentiation is more than the cost to deliver it. Differentiation costs money to deliver and it needs to be profitable.
It costs money and requires effort to build differentiation. The value of being differentiated should be greater than winning a deal or two. Your model of differentiation should be very difficult to replicate.
You might think a feature of your service is exciting but if the client doesn’t, the feature makes you different but not differentiated.
If you’re thinking that the differentiated-different contrast is nuanced, you’re correct. That’s why you need to be perfectly clear (and honest) about whether what you’re calling “differentiated” is truly differentiated and not merely different.
Take people, for instance. Sometimes founders of service firms think their primary, if not only, source of differentiation is their people. However, this is never true. Why? Pinning your form of differentiation on your people is not sustainable.
Your competitors can hire qualified employees and train them, just as you’ve done. I’m sure you have a wonderful culture and have created a great place to work, but so have your competitors. A great team is an example of being different but differentiated. Most of the time, in the eyes of prospective clients, it really does not matter. They cannot tell the difference between Lisa and Eric before they sign the line that is dotted.
So, if your people can’t be your differentiator, what can?
Below are some forms of true differentiation available to most boutique professional service firms that can build unique competitive advantage:
Delivering a project for a client often requires a lot of coordination between the client, the service provider, and third parties such as technology firms and/or other service providers. Case in point: Broken links are the number one cause of failed projects.
Things move fast and when the right hand does not know what the left hand is doing, key items get dropped. This frustrates the heck out of clients because they have to jump in and fix the mess after the fact. They have too much to do already and do not need this headache.
Highlight for your client how you have built an insurance policy into the project to prevent this from happening. And give them the good news, “It only costs an extra $25k”. If the client bites, and most do, presto! You just became differentiated. Why? Your competitor won’t even think about this.
Clients understand that after their project is completed, you will leave. And that means the responsibility to use the deliverable correctly sits with them.
Clients might not admit it, but this causes them great concern. Why? They are not experts; you are — but you’re moving on. This means they will be on an island with no support. What happens when a screw-up occurs?
Put a line item in your proposal devoted to transferring your knowledge to them before you leave. Build something (e.g., a training product, a certification, an advanced help desk, etc.) into your proposal. Call it out separately and put a dollar value on it. This becomes how a firm maintains its competitive advantage through differentiation when other firms are delivering the same services.
The “thing” you deliver to the client is going to have to live in the client’s environment. This means it will need to be integrated with the other “things” in the client’s shop.
Less mature boutiques don’t realize this, and therefore, they do not offer help in this area. They leave it up to the client to handle the integration on their own. And this is why there is so much shelfware on clients’ hard drives — great work that never gets fully implemented.
Offer your clients an integration service that eliminates the risk of shelfware, and charge for it. This is not easy to build, and therefore, it is difficult to replicate.
There are dozens of ways boutique service firms can go beyond being different and become differentiated. Hopefully, the three above will get you started. However, keep in mind that you cannot differentiate in a silo or vacuum.
It is important that your sales and marketing efforts communicate the differentiation correctly. After all, if you don’t toot your own horn, no one will hear your music. Signaling to your prospects how you are differentiated (not different!) can be done in several ways through your marketing.
It is not enough to just slap the differentiation label on something and assume it sticks. To truly differentiate, you need to take matters into your hands and make changes. Listen here for more on how to set your company apart.
The first expert community for
boutique professional services firms.