If you were to ask me what is the one common marketing error most professional services firms make, I would not hesitate to say, “They fall in love with their ‘solutions’.” By that I mean they make their internal P&L structure their market face and become proverbial hammers looking for nails to pound. Unfortunately, clients do not view their lives and challenges as nails.
Please indulge me for a moment.
This past weekend I went out to my local hardware store and bought a generator. I had been contemplating purchasing one for years but had not pulled the trigger. Many of my friends and neighbors had purchased theirs years before and had enjoyed the benefits while I sat in the dark waiting on ComEd to return power to the grid.
I had researched features and benefits and determined my requirements for my home and use. I read article after article on the “best” units. I understood the pros and cons of size, fuel, accessories, manufacturers, etc. Still, I never bought one.
The fact of the matter was that I did not value what a generator had to offer more than the alternative uses of my hard-earned money. I rationalized that the chances of an outage were slim, the time to get power returned was acceptable, storing a generator in between uses would be a pain, and I’d rather purchase a new bike or other experience.
Then, something changed.
A combination of events shifted the locus of my decision-making. Russia invaded Ukraine, cyber-threats to infrastructure escalated, a blizzard rolled through, Spring storm season was approaching, and working remotely had become tenuous with ever-changing COVID restrictions. You might empathize or laugh at my threat assessment, but it reflects the typical calculus in most human fight-or-flight-response-driven brains.
So, I ask you, “What did I buy?” Did I buy a generator or something else?
In my mind, I did not buy a generator. Instead, I purchased insurance that mitigated risk to my family’s warmth, comfort, and safety. It was an easy purchase and I questioned why I had not simply done it earlier.
I share the story because the purchase reflects the old marketing maxim, “People do not buy drill bits, they buy holes.” If firms do not appreciate that fact and apply it to their sales and marketing efforts, they are at a competitive disadvantage because they become the deaf hammer looking to pound a nail. To be successful, firms must position their expertise, and cultures in the language of “holes” not “drill bits” or “hammers,”
So, what are the holes that clients buy and how should professional services firms position themselves? I have found that there are 3 evergreen areas of value clients buy: growth, efficiency, and financial performance.
3 Value Drivers Client Buy from Professional Services Firms
Market leadership and performance for all companies is measured and driven by a simple equation:
Growth Rate X Profit = Share Value
In other words, to lead a company must grow faster and more cost-effectively than its competition. These three variables undergird each purchase decision value driver below.
The first driver clients buy is Growth.
In simplest terms, growth is measured in increasing revenue, but it is not limited to a dollar sign. Growth can be measured in market share, geographic expansion, employees, etc.
So, what are people actually buying when they buy Growth? They are buying opportunity.
Growth provides scale. Growth provides capital for expansion. Growth attracts talent. Growth allows employees to grow more quickly in their careers. Growth powers reputation and brand strength. Growth leads to wealth creation. Bottom-line growth provides the opportunity to do more and be more.
If your firm positions its expertise as helping companies grow, your marketing sells the “hole” called opportunity and your solutions must deliver tangible results in 5 core areas highlighted by Brian Treacy and Jim Sims in Taking Command of Growth (Harvard Business Review, Apr. 2004):
- Base Retention-holding on to the growth you already have (i.e. reducing customer churn)
- Gross Share – taking business from competitors
- Marketing Positioning – showing up where growth is already occurring
- Adjacent Markets – attacking neighboring markets
- New Lines of Business – investing in unrelated new businesses
Growth is the purview of the executive, sales, and marketing buyer. It doesn’t matter if you sell product quality, scalability, innovation, branding, strategy, client satisfaction, product development, or capital investment. Your demonstrative results must speak to these five areas and your value is the opportunity that growth provides.
The second value driver clients buy is Efficiency. If Growth is a measure of outputs, Efficiency is a measure of throughputs. When clients buy efficiency, they are buying Productivity (i.e. doing more with less).
Often this is misconstrued as cost-cutting. While cost-cutting is one dimension of productivity, it does not take rocket science to reduce cost. It does take expertise to reduce costs while increasing productivity.
There are two efficiency drivers. The first is investing in operating efficiency. This includes the purchase of new equipment, technology, processes, distribution systems, services, etc. The second is divesting of efficiency-destroying activities. This includes selling off unprofitable business units, replacing outdated people/skills, eliminating redundancies, etc.
If your firm sells and positions itself as an expert in Efficiency your buyer is Operations (IT, HR, Production) and your “hole” is Productivity. Your solutions and products must demonstrate value like:
- Lower Costs
- Time Savings
- Reduced Effort
- Less Rework
- Reduced Shrinkage
- Decreased Hassles
The final value is Financial Performance. In its simplest form, this value is a measure of reducing the cost of capital needed for an organization to achieve its strategic objective of creating shareholder value. Working capital is the lifeblood of any enterprise. Without it, an organization can invest neither in growth opportunities nor operating efficiencies.
When you sell Financial Performance, your buyer is Finance and Treasury and your hole is Shareholder Value. That means your solutions must always speak the language of finance:
- Risk Mitigation
- Working Capital
- Interest Rates
- Assets and Liabilities
- Inventory Turns
- Payback Period
- Internal Rate Of Return
- Myriad Ratios Of Revenue/Cost/Profit
My talented daughter is a college freshman studying Marketing. She can’t wait to get a job writing ads and posting stuff to social media. She bemoans the fact that classes in economics, finance, and accounting stand between her and her creative dream. I coached her recently that marketing is in fact a business discipline and not just a “creative” one. The courses that she is resisting will teach her the importance and calculation of the three big numbers that undergird the equation above–Revenue, Costs of Good Sold, and Profit.
Simply put, clients buy Growth, Efficiency, or Financial Performance, For example, when an enterprise buys an annual review of its financials, it is not buying an “audit.” It is first and foremost buying access to the capital markets because a firm cannot borrow money or issue stock without audited financials. There’s a big difference between positioning a regulatory mandate and access to the lifeblood of the organization.
When marketing your firm, don’t fall in love with your solution. Fall in love with helping your client overcome a hurdle to realizing the value he or she is tasked to deliver to the big financial equation in the sky. Give your clients holes, not drill bits.