The impulse for marketing services firms to be everything to anyone has always been strong, but now it has become nearly irresistible, given the current economic circumstances. This has given clients the upper hand, driving down the price of generalist services and distracting many firms from developing deep competency in a given area.
To maximize effectiveness and profit, however, marketing firms should strive to be as narrowly positioned as possible, says business consultant, David C. Baker. His firm ReCourses, Inc. has provided individual consulting, seminars, speaking, and writing exclusively for firms in the marketing industry since 1996.
1. What exactly is positioning, and why is it so important?
"Positioning is a statement of relevance. Broad positioning isn’t all that unique; it means your services are relevant to many possible clients," says Baker. "To maximize effectiveness and profit, your firm should be very narrowly positioned, which increases your relevance to and ability to draw a smaller, specific subsection of clients. The purpose of this is to diminish the availability of substitutes. Offering expertise that is narrow and deep (rather than general and more shallow) means there will be fewer substitutes for what you do best.
"Being broadly relevant increases the number of available substitutes, which drives down the value of the services, because they are widely available. It also makes it more difficult to experience the application of specific expertise to a similar situation and get smart quickly. If you’re continually having to 'become an expert' to service a client properly, you’re learning on their dime and not delivering the value you should."
2. How are effectiveness and profit connected to positioning?
"Focusing your work in one area allows you to collect an enormous amount of intelligence, and develop the ability to recognize patterns," Baker notes. "Meaning, once you’ve had the opportunity to apply your expertise, patterns begin to emerge and enable you to begin to take shortcuts safely. Your work becomes more effective because you’ve seen the patterns and know what works and what doesn’t, allowing you to work more efficiently than your generalist colleagues, so you can do more of what you know works. For example, if you look at a generalist firm that is about 10 years old, you typically find that their expertise in each area is one year’s worth repeated 10 times, rather than 10 years of experience in one area.
"Increased profit is related to efficiency. When you don’t have to continually learn what it means to be an expert, that savings can fall to the bottom line and you can charge more. Fewer available substitutes in the marketplace rewards you by paying you more money based on the law of supply and demand."
3. Tight positioning requires business leaders to say no to business that doesn’t fit. What are some things you tell your clients to do to ease the transition?
Baker offers this advice: "I ask them to develop a focused marketing plan that will build the new position. In other words, divert all available money and time to looking for a certain kind of work that falls under new positioning. They can accept other types of work via referrals and repeat business ... as long as they don’t tell anyone about it. You become intentionally schizophrenic, only putting marketing money into the work that you are seeking to build up under the new positioning.
"Another way to reduce the pressure is to trim your capacity to the point you cannot accept unrelated opportunities. When you have more capacity than opportunity, you wake up every morning with sense of dread, because you know you need to feed the machine. This leads to compromise and lowering of the bar for what kind of work and client you accept. It also affects what you can charge.
"In developed cultures, there is a mantra: 'Never say no to opportunity.' Looking back, however, we will find that most of the problems that are created result from not making tough choices about the opportunities that come to us. Anyone, once they are established, and assuming they are competent, will have opportunities. The question is what kind of opportunities and what are the consequences of accepting them. Saying 'no' is a wonderful antidote and keeps you from being forced into situations that will not serve you in the long term."
4. Can you give an examples of a businesses who has made this transition?
"Tim McAlpine at Marketingcurrency.ca comes to mind," Baker says. "His was a generalist firm and on top of that, located in the middle of nowhere, BC. Narrowing his positioning allowed him to build a very niche business doing great work exclusively for credit unions and charging a lot more for it because his clients appreciate his deep knowledge and expertise."
5. Besides positioning, what do you think is the biggest obstacle to profitability and effectiveness for businesses?
"Discipline, or more specifically, lack of it," Baker says. "Many firms make great plans but don’t follow through. For example: A firm decides it wants to narrow its positioning, and comes up with a plan that makes sense. But then it takes them three months to get website up, five more months to get materials ready, etc. Good ideas aren’t enough; there has to be execution and commitment to consistent action. And that means finding a way to do what you say you are going to do."
For a more information about David C. Baker, visit ReCourses.com.
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