Why do some firms grow nine times faster than others?
How do you join that elite band of high performers? Well the answers are often simpler than you think, says Robert Craven
There is a group of professional service firms (PSFs) that grow nine times faster than the average. They are 50% more profitable than the average. So, what’s going on?
Doing the research for the new Grow Your Service Firm book, it was easy to see that high- performing service firms are the ones whose clients believe in the business.
The ‘positioning’ (and ‘targeting’) talks to clients in a way that the client can relate to and understand. The firm understands the client needs, hurts and wants, and has a solution. The likelihood is that the service firm is a specialist and not a generalist. That is the Grow Your Service Firm ‘ology’.
High performers have always had a particular profile; they have always been identified as being different from the average. One of the eternal searches of small business research and economic policy has been to find and assist the high performers who create jobs with their growth. This has always been a goal for policy makers and those who sell services to these gazelle, lions, or whatever you wish to call them.
So, how do they drive their growth? They could just spend more on marketing and sales. But the high performers don’t do that; they just become qualitatively better at the marketing and sales aspect. Frederiksen and Taylor point out that the high performers do not spend proportionately the most on marketing and sales, because they are already very good at it. They are simply more effective, so don’t need to compete by spending the most – obvious really!
The high performers actually spend (slightly) less than the average on their sales and marketing activities. The high performers’ marketing spend isn’t quantitatively higher; it is qualitatively better. They spend less and get better results. Every firm says pretty much the same boring thing, selling similar services to similar people using similar straplines, and getting similar people with similar qualifications to sell similar services at similar prices. Clients have switched off; shouting louder just irritates them some more.
The days of interruption marketing are over: people trust referrals, recommendations, word-of-mouth and reputation way more than any paid-for sales campaign. In fact, most people believe that businesses lie in the adverts!
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The high performers, meanwhile, focus on client needs and priorities. They are not preoccupied with their own capabilities and expertise. They are not mesmerised by the reflection of themselves like some Greek myth. They focus their limited budgets on specific target customer groups, and use a clear and easy to understand message. Again, simple when you think about it!
So, who are these professional service firms that grow nine times faster than the average, and are 50% more profitable than the average? How can you join them? What do you need to do? The starting point, I am afraid, comes straight out of day one of your Marketing 101 class. You have to create and communicate a clear position that demonstrates how you can help your target clients… unequivocally. A totally compelling proposition becomes seductive. As a starting point, ask yourself if you consistently communicate:
1. Your overt business benefit
2. The real reason you can deliver
3. The dramatic difference between you and your competitors
I meet very few service firms who have actually done this properly. As a result they deliver average results.
Robert Craven is an entrepreneur, businessman and author who has run Mastermind Groups and action-centred learning with Warwick Business School, Business Growth Programme and London’s Accelerated Growth Programme among others. His latest book is Grow Your Service Firm. He is managing director of The Directors’ Centre.