Differentiation Guide for Professional Services Firms, Second Edition
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Table of Contents
Understanding Differentiation for Professional Services
21 Ways of Looking at a Differentiator
How to Find and Own Your Differentiators
Real-World Differentiation Case Studies
Brand differentiation is one of the most poorly
understood pillars of professional services marketing. A
surprising number of executives and marketers believe
that it’s simply not possible to differentiate ﬁrms that
offer similar services to similar clientele. In fact, this
way of looking at the marketplace is the very reason
that differentiating your ﬁrm is essential.
Differentiation is not about being different for sake of being different. It’s about helping
your audience make smarter, easier, more conﬁdent buying decisions.
We wrote this guide to set the story straight. You not only can differentiate your ﬁrm
from competitors, you must do it if you want to attract the right clients and thrive in an
overcrowded marketplace. Here’s what you’ll learn:
Chapter 1 explains the concept of differentiation as it applies to professional
services ﬁrms and why it is so important.
Chapter 2 examines 21 ways that a ﬁrm might differentiate itself.
Chapter 3 steps you through a comprehensive differentiation process.
Chapter 4 explores four ﬁrms that have successfully differentiated themselves
and how they did it.
After ﬁnishing the guide, you will appreciate why differentiation matters, understand
how it works and know exactly what you need to do to set your ﬁrm apart from lookalike competitors in a way that is meaningful and compelling to your target audience.
Ready? Let’s get started.
Understanding Differentiation for
Have you been competing for work that you are
more than qualiﬁed to perform, only to be underbid
by your competition? Or maybe you have been the
one underbidding, which leaves you with paper-thin
margins and stalled growth.
If you want to stop competing on price alone, it may be time to develop a stronger
What Is Differentiation Strategy?
Differentiation strategy is a deliberate plan to make your ﬁrm stand out from
otherwise similar competitors in the marketplace. Usually, it involves highlighting a
meaningful difference between you and your competitors — a difference that your
potential clients would ﬁnd valuable. A strong differentiator will provide a competitive
advantage for your ﬁrm.
Michael Porter, the famous strategist, maintains that there are only two ways to gain
a sustainable advantage over your competition. One way is to compete on price,
highlighting the similarities you share with your chief competition:
will provide a
“We’re just as good as our competition, but we cost less.”
Unfortunately, unless you have a sustainable cost advantage, you can’t maintain this
strategy for long. All it takes is someone willing to undercut your lowest price. The
lowest-cost strategy also exposes you to commoditization and a much wider range of
competitors, including do-it-yourself options, off-shoring and automation.
Porter’s other way — a better way — is to stand apart. Be different. Separate yourself
from competitors in a manner that is both important and relevant to potential clients.
Using our deﬁnition above, this is a differentiation strategy.
A point of differentiation can be broad-based and set you apart from the rest of the
industry, or it can be narrower, appealing to a niche market. This latter approach is
often referred to as a focused or concentrated strategy.
Differentiation Strategy Examples
Here’s an example of a broad differentiator: adopt a very different business model.
Suppose that hourly billing is widespread in your industry. Offering a pay-for-results
billing model, instead, would separate you from competitors.
Of course, developing a broad-based differentiation strategy, in which your ﬁrm
is substantially different from your industry as a whole, isn’t easy, especially for
established ﬁrms. And even if you were able to pull it off, what’s to keep a competitor
from copying your approach?
This is why many ﬁrms choose to compete with a focused strategy. In a focused
strategy, you narrow your appeal to a niche audience. Your established competitors —
most of which are broadly diversiﬁed — are unlikely to follow your lead.
For example, an accounting ﬁrm that works exclusively with chain restaurants has
a very compelling differentiator targeted squarely at that niche market segment.
However, a different audience segment, such as automobile dealers, would ﬁnd no
value in working with the restaurant specialists. By being exclusive — not pursuing
clientele outside its narrow industry focus — a ﬁrm has a real opportunity to dominate
the niche they target.
Advantages of Differentiation
There are some big advantages to using a differentiation strategy. Here are some of the
You do not have to compete on price alone
Since you have distinguished yourself from your competitors the prospective
client cannot reduce their choice to the dimension of cost alone.
You have greater appeal to your target audience
Since you are different (and, presumably, better), you become a more
appealing choice. This makes it easier to generate interest and close sales.
There is no direct substitute
If you are demonstrably different from your competitors, you cannot be
directly compared to them. Instead, prospects have to focus on the qualitative
value of your difference. This adds value that other options lack.
4. You increase loyalty
The combination of greater value and the lack of comparable substitutes can
generate greater loyalty to your ﬁrm. There is no good reason to switch (if you
are delivering on your promise) and no comparable alternative to switch to.
You can command higher fees
If your differentiation adds true value and is not available elsewhere, you
should be able to command higher fees. This is especially true if your
differentiator is based in specialized expertise.
Now, whether your strategy is broad or very focused it must always start by identifying
your ﬁrm’s differentiators. Let’s begin with a deﬁnition.
What Is a Differentiator?
A differentiator is something that makes your business both meaningfully different from
your competitors and more valuable in the eyes of your target audience. Differentiators
are the building blocks of a differentiation strategy.
But simply calling something a differentiator doesn’t make it so. First it must pass
Three Tests of a Successful Differentiator
How do you know you have a good differentiator? We recommend you put each one to
the test. If it can pass these three critical checks, it is worth developing into a broader
Is it true?
Differentiators can’t be fabricated. Apart from the moral hazard of making
stuff up, it is simply too easy for people to see through exaggerated claims.
You’ll need to deliver on your promises.
For example, many ﬁrms say they have superior client service, but they do
nothing special to make it a reality. No special policies. No special training.
Nothing to ensure it actually happens. The bottom line is they are no different
than a slew of competitors that make the same claims.
Is it relevant?
If your point of distinction doesn’t matter to your prospects, it won’t bring
you more business. In the end, what is most important is what plays into
your target prospects’ selection criteria and decision-making process. Any
irrelevant differentiators are wasted effort.
the building blocks
of a differentiation
We once had a lobbying client that believed their strongest differentiator was
their ﬁrm’s lack of conﬂicts of interest. Their competitors certainly could not
make the same claim. But, when we dug a bit deeper, we discovered that their
clients and prospects hardly valued impartiality at all. So much for a strong
In our research of professional services ﬁrms, we have found another reason
to reject client service as a differentiator — buyers don’t even consider it a
selection criterion. A lack of customer service may be a reason you lose a
client, but it rarely plays into the initial selection process. Unless a buyer has
been burned recently by poor service, it’s just not relevant to them yet.
Is it provable?
This is the often the toughest test of a differentiator. You may have identiﬁed a
true and relevant point of distinction, but without tangible proof it won’t stand
up to buyer scrutiny. Buyers have become inured to — and learned to ignore —
Here’s a differentiator candidate that we encounter again and again: “We have
great people.” It is a trap! Why? Well, have you ever heard a ﬁrm claim they
have average people? Didn’t think so.
But there are exceptions. One of our clients provides highly specialized
software development services — and they hire only PhD-level programmers.
They can actually support a “great people” differentiator with hard evidence.
The Challenges of Maintaining a Competitive
Once you know what sets you apart from your competitors, you are well on your way to
a solid differentiation strategy. Especially if you can explain — and prove — it in a way
that is relevant to your target audience. But you are not done yet.
The marketplace doesn’t stand still. Shrewd competitors will notice your success
and attempt to copy it. Over time, what was once a distinctive characteristic may be
neutralized. Your competitive advantage will be lost.
To build a sustainable differentiation strategy you not only need to build your
reputation around distinctive characteristics, you need to make your expertise highly
visible to your target audience. This “Visible Expertise” will become the foundation of
your professional services brand1.
Why Visible Expertise Matters to Professional
This brings us to the topic of expertise and why it is so critical to professional services.
In the professional services, expertise is what you sell.
Clients aren’t buying your services because they like them. They are buying your
services to solve a business problem or seize an opportunity. For example, a company
may need help complying with a regulatory requirement or solving a critical strategic
Our research into professional services buyers2 describes what criteria companies
use to select one service provider over another. The most common selection criterion
is expertise, and it is the factor that most often tips the scale in favor of the contractwinning ﬁrm.
But what about the argument that professional services are “a relationship business”?
Well, that assumption is partially true. Good business relationships are certainly
helpful. As we describe in our book Inside the Buyer’s Brain3, both buyers and sellers of
professional services understand the importance of an existing relationship, but sellers
consistently underestimate the role their reputation plays in the ﬁnal selection.
Also, a strong reputation for expertise is the one factor that can overcome an existing
relationship. If a company does not believe their current provider can solve a problem,
they will look for a ﬁrm that can.
According to our most recent study of referral marketing4, visible expertise plays
the single most signiﬁcant role in driving referrals. Relationships — both social and
professional — are still important, but only when there is an awareness of your
21 Ways of Looking at a Differentiator
As we’ve seen, ﬁnding a differentiator for your
professional services ﬁrm is not easy. Many
ﬁrms struggle mightily, only to come up with a
“differentiator” that doesn’t differentiate them at all.
But take heart — there are many ways to successfully differentiate a brand. In this
chapter, we’ve compiled 21 strategies that work for many professional services ﬁrms.
Remember, you can have more than one differentiator. In fact, differentiators can often
be combined to create a more powerful competitive advantage.
Specialize in an industry.
This is perhaps the easiest and most successful differentiator for a ﬁrm to
adopt. Clients value ﬁrms that specialize in their industry — they perceive
specialists as more experienced and skillful at solving their problems. But be
careful. If you try to specialize in too many industries, you will lose credibility.
On the other hand, if you specialize in a single industry you could be
vulnerable to its economic cycles.
Specialize in serving a speciﬁc role within your client’s organization.
This role-based specialization is also quite successful, especially if combined
with an industry focus. If you head IT at a law ﬁrm, it’s comforting to know that
your service provider specializes in helping people just like you.
Specialize in offering a particular service.
This approach can also be quite successful, especially if the service you
specialize in is rare. But beware, unique service offerings can quickly become
mainstream. Your success may be noticed and copied by others.
many ways to
4. Offer a truly unique technology or process.
By truly unique, we mean a process that approaches the problem in an
entirely new way and offers a unique beneﬁt to the client. Most “proprietary
methodologies” fall well short of this standard.
Focus on understanding a particular target audience.
A key differentiator for some ﬁrms is their in-depth understanding of a speciﬁc
audience. For example, your ﬁrm might specialize in marketing to Baby
Boomer women, and your clients might be retirement planners, insurance
companies, and clothing retailers.
6. Specialize in serving clients of a certain size.
This is a common differentiator, although some people don’t think of it as one.
For instance, some ﬁrms work exclusively with the largest companies in the
world. Contrast that with a ﬁrm that focuses on solo practitioners. Either ﬁrm
could have a competitive advantage over a ﬁrm that serves clients of all sizes.
All of your staff shares a speciﬁc characteristic or credential.
Almost every ﬁrm believes it has a great team, so it can be tough to make the
quality of your people stick as a differentiator. Buyers hear this claim so often,
it’s become background noise. But if you hire people with rare or exceptional
qualiﬁcations (think top consulting ﬁrms like McKinsey or Booz Allen that
vacuum up Ivy League grads like crumbs), you can still make a good case for it.
8. Specialize in clients that share a common characteristic.
This differentiator focuses on a client characteristic rather than an industry or
role. Let’s say you provide accounting and tax services for expatriates. They
might come from any country, industry or corporate role, yet you will have a
competitive advantage over ﬁrms that don’t serve that niche market.
Focus on solving a speciﬁc business challenge.
In this case, the spotlight is on the nature of the business challenge your
clients are facing. Their challenge must be common enough that the market
can support your revenue goals, but difficult to solve without specialized skills
and experience. An example might be a ﬁrm that helps businesses secure their
ﬁrst government contract.
10. Have one or more individuals who are high visibility experts in their ﬁelds.
To have one of the country’s top experts in your specialty on your team can be
a very powerful competitive advantage. Many ﬁrms’ reputations are built on
this differentiator alone. Add multiple high visibility experts and you will have
a compelling and exceptionally valuable brand.
A unique business
model can be both
easy to prove.
11. Offer a unique business model.
Suppose everyone in your profession bills by the hour, but you offer services
for a ﬁxed fee. Voilà, a perfect differentiator is born! A unique business model
can be both meaningful and easy to prove. But be watchful. If it works well,
you are likely to accumulate imitators.
12. Have a speciﬁc geographic focus.
This time-honored differentiator is losing some of its punch today, as
technology makes geography less important. But it can still work when clients
value local knowledge or face-to-face interaction.
13. Offer access to a unique set of information not available elsewhere.
Sometimes, access to certain information can be very valuable to potential
clients. Do you have a dataset (for example, benchmarking data) that no
one else possesses? Some ﬁrms have built very valuable practices around
proprietary data that is not easily duplicated.
14. Offer a unique set of contacts or relationships not easily accessible.
While the previous differentiator focused on information, this one features
relationships. Public relations ﬁrms have long used relationships with reporters
and editors as differentiators. Lobbying ﬁrms have powerful government
contacts. What valuable relationships can your ﬁrm bring to the table?
15. Do business with a truly distinctive level of service.
Every client expects you to deliver good client service. But to be a
differentiator, your service must be truly exceptional. Delivering service at
this level is not easy, and to rise above the noise — that cacophony of ﬁrms
that say they provide great customer service — you’ll need solid evidence to
16. Distinguish yourself by the clients you have.
Having an impressive client list is a plus for many ﬁrms. But what if you take
it further? Some ﬁrms differentiate themselves based on their client list. For
example, if your ﬁrm serves the higher education market and your clients
include Harvard, Yale and Stanford, you have a differentiator.
17. Focus on the size of your ﬁrm.
We are the largest ___________________ (ﬁll in the blank). Size sends a strong
signal that you are doing something right. And when you can combine size
with a specialization, you communicate both relevance (the specialty) and
success (the largest). Find your niche and dominate it.
18. Emphasize your relationship with a parent ﬁrm or partner.
Being bound in a close relationship with a parent ﬁrm can be a limiter (for
example, if you are owned by a large software ﬁrm, some potential clients may
feel like you can’t be objective about other companies’ technologies). But for
other prospective clients, it can be ...
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