How To Use Specialization To Differentiate Your Business

How To Use Specialization To Differentiate Your Business


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How To Use Specialization To Differentiate Your Business

Today's video is the first in a short series on how to differentiate your business – specially tailored for service businesses.

Today we're looking at how to use Specialization to stand out from the crowd and ensure you get hired rather than your competitors. If you get it right, specialization can be a shortcut to rapid business growth. If you get it wrong it can lead you down an awful dead end that will really constrain your business.

In the video I show you how to identify what type of specialist niche will work effectively for you.


Video Transcript

Hi, it's Ian here. Welcome to another 5-minute marketing tip. This video and the next couple of videos are all about the vital topic of differentiation. How to stand out from the crowd, and make sure you get selected, rather than your competitors. This first video is about specialization. Specialization, if you get it right, can be a great way of accelerating growth of your business. If you get it wrong, it can lead you to a dead end that will suck the life out of you. Today's video will show you how to get it right. See you after the break.

Hi. Welcome back. As I said, these next few videos are all about differentiation. A couple of quick caveats before we jump into the details. Firstly, remember that differentiation, in and of itself, is not necessarily valuable. You have to differentiate in a way that adds value to your clients, and isn't just being different for difference's sake.

Second thing is that when you're a service business in particular, differentiation on paper is easy. It's easy to write on your website that you're brilliant at X, you're great at Y, you're fantastic at Z. But in service businesses, clients judge your differentiation, not just by what you say about yourself, but about how you act. Their experiences working with you, or their experiences interacting with you before they hire you. Differentiation is about more than just deciding on how to differentiate. It's about how you live your differentiation. More about that later.

This first video is about using specialization as a form of differentiation. There are typically two different types of specialization. The first is vertical specialization. That's where you focus on a particular type of client. Clients in a particular industry or niche. I, for example, focus on working primarily with consultants and coaches. Dan Kennedy, the famous marketing guru started off by focusing on marketing for chiropractors and dentists, before he expanded his reach to all sorts of other businesses. That's vertical differentiation.

Horizontal differentiation is where you focus on a specific problem or solution that cuts across all different types of industries and sectors. You might focus, for example, on female executive who have hit the glass ceiling, and want career coaching to help break through it. Or you might focus on Google AdWords, specifically the display network. All of those are applicable to every kind of niche, every type of business, for a very specific problem or solution. Of course, you could combine both – although the danger here is that you get too narrow in your specialization there. For example, going back to Dan Kennedy, he focused primarily on direct marketing – a particular solution – for chiropractors and then dentists, and then moved on to other types of small business.

Specialization can be really valuable for a number of reasons. First, it makes it easier to choose. If your potential client is in automotive, if they’re a car sales company, and they're looking for sales training for their staff, then given the choice between a generic sales trainer and a specialist in automotive sales, they're probably going to pick the specialist, all other things being equal. It can also help you develop expertise much more quickly.

If you're regularly working in the same industry sector or on the same problem, same narrow problem all the time, you're going to develop a lot of experience and expertise in that particular area. Obviously, don't neglect outside knowledge and experience, because that's often where big breakthroughs come from. But by working in the same field again and again, you can become an expert in that field pretty quickly. Certainly much quicker than people who are spreading their experience more thinly across different things.

Finally, it's much easier to get known in that specific field, because the clients you work with will obviously talk to you about their peers in the same industry. You can write for industry publications, websites, etc. For example, most people in business would have no idea who ZS Associates are, but if you work in pharmaceutical marketing and sales, you absolutely know who they are. You always have them on the short list for any type of sales force work, because that's what they specialize in. Specialization can be really powerful, but you've got to get it right.

The way to get it right is first of all, think about some of the clients you've worked with before, or you're currently working with. In particular, the ones that you've done your very best work for, who you got the best results for, who you've really enjoyed working for, who have been very profitable to work for, and look for common patterns amongst them. Are they all in the same sector? Have they all had the same problem? Obviously, you won't get all of them, but look for a majority in one area. Whatever you come up with when you brainstorm this through in different options, you've got to satisfy three big criteria. The three E's, as I call them.

The first is that you have to have expertise and experience in that area, that sets you apart from your competition. You have to know something more in that particular field. That might mean that you've done more work in that area. You've got an established body of knowledge, but if you don't have that expertise or experience in that particular area more than anyone else, then there's no reason to pick you, more than anyone else. You do need to have that.

The second thing that you need to have, is you need to have enthusiasm. A passion for that particular area. If you don't have that passion, then you're not going to continue to develop your knowledge. Clients are going to pick up that you don't enjoy working in that area, or working with them. Having said that, passion is not enough. Sometimes you hear people saying, “Just follow your passion, and the profits will come.” I have not found that to be true. I'm hugely passionate about Newcastle United, for example, but I have not found a particular way of making that profitable for me. I have found that you can get passionate. You can get enthusiastic about a number of things. I've been enthusiastic about a number of different things in my life.

My eldest son, for example, is at college right now. He's been enthusiastic about Dungeons and Dragons, Warhammer, computer games, Newcastle United. That may have been some of my doing. Really passionate about marine biology and zoology. That's what he's studying at university. He's moved from passion to passion, and you can do that. People aren't just restricted. It's a fallacy to think you just have one passion in life, and that's all you can follow. Get passionate, or find a passion that also satisfies the other criteria of you having some expertise and experience.

Also, the critical one you mustn’t overlook is that the economics must work. What does that mean? When you look at your particular niche that you're in for your specialization, whether that's a group of potential clients, or a particular problem, or a particular solution, firstly there has to be enough clients for those to build a successful business. You don't need millions. Most of us are sole practitioners. Maybe in your business you only need ten clients a year, or maybe it's a hundred clients a year. You need to have a realistic view of how many you need, and what size the market is. If that's more than 20, 30% of the market, probably you're going to struggle. You would have to be the biggest player in that particular niche, to get that number. If it's 10% or less, you should have no problem in that market.

It's also nice to have a growing market. If you were, for example, doing websites, if that was your particular business, I would rather do websites for people in green niches or health and fitness. Ones that are growing all the time right now rather than ones that aredying. Old-fashioned manufacturing, for example, where the number of businesses is shrinking. You ideally want the area you specialize in to be growing. The number of clients to be growing, year on year. That's going to make things easier for you.

They also have to be reachable. That's one of the challenges with a problem- or solution-focused specialization, is for example, that thing about women who have hit the glass ceiling in their career. How do you know from outside who they are? It's sometimes easier to identify engineers or people like that, than it is either to find people with a problem. You do need to be able to reach them. If you tend to want to work locally and you have to deliver your services face-to-face, then obviously that sets geographic boundaries around what you're having to do.

You also want to make sure that the people in that specialized area have plenty of money to buy services. Sounds a bit mercenary, but if your particular client specialization happens to be in a very tough sector with very low profit margins, it means they're not going to have a lot of money to pay you. For example, Don Kennedy specialized in chiropractors and dentists. One of the reasons for that is, chiropractors and dentists made more money per client than a plumber, for example, or a beautician.

There's no harm at all in specializing in those other areas, but you do have to recognize, you're probably going to have to work a bit harder, because they make less per client than for example, a dentist, and therefore, they've got less money to give you, to help them get more clients, or whatever it is you do. You do need your clients to have the money to be able to pay you.

You also want to see, if you're looking at a particular specialist area, that there are existing players in that market who are being successful. Sometimes you can look at a niche or a specialization, and there's nobody else in there. You can go, “Aha. I found a gap in the market.” Usually what a gap in the market means is, there isn't a viable market. Usually other people have looked at it, tried it, and found they have been unable to set up a successful business. What I would really like to see, my ideal circumstances, are to see that there are successful players in that market, targeting the same sorts of clients, but that their marketing isn't all that great.

If you look at all the type of marketing I have been teaching you, about giving value in advance, having a lead magnet, nurturing relationships over time, systemizing your marketing, if you look at the players in the field and they're doing all right, and they're not doing any of that sort of marketing, there's a great opportunity for you to sweep in and beat them up a bit, because you will be doing marketing in a more effective manner. Ideally, you also want to be differently positioned to them, so if they're going for the low end of the market, you might go for the high end of the market, or vice-versa.

The other key final factor for the economics of the market is, you have to be able to deliver a brilliant ROI for your target client. If you were to look … Let's say in my case, I help my clients get more clients, themselves. If I look at the customer services, how much I would like to charge, and I look at the typical client I might be aiming for in that particular niche, I need to make an equation where I say, “If I am going to charge 2,000 pounds for a day's work, then from that day's work, my client has to get 20,000 pounds, for example, of new business.” That's a really lovely ten-to-one return on investment they'll be getting from working with me. That's a no-brainer. If you're down two-to-one or less range, it's going to be difficult. It's a really tough decision for your ideal client, to make that decision to hire you.

You want to be working in areas where you can deliver your client a brilliant return on investment. Of course, you may not be able to calculate a return on investments so easily. You may work in a leadership field or something like that. Just think about the benefits. Make sure the particular clients you're working for are out of the different choices you could be working for, are the ones who get the biggest benefit from working from you.

That's my quick rundown of the three big E's that you should use to decide whether the area you have chosen to specialize in, is viable for you. Have you got expertise and experience that puts you at the top of the pack, or could you acquire that quite quickly? One of the things working in your favor is that many competitors are a bit lazy and complacent. Often by doing some research, doing a survey, going out and interviewing and talking to a whole bunch of those clients or even just doing a couple of projects probono, you can build up expertise more than people already have in that particular area. You need the expertise and experience.

You need the enthusiasm to keep things going, and you need to check out the economics. Is this viable for me? Am I working in a growing niche where there are plenty of clients, where there are other successful businesses that I can do better than, and establish myself as a leader in that field?

On the topic of establishing yourself as a leader in authority in your field, that's next weeks' video. It's one of the best ways of differentiating yourself. I'll see you there.

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Ian Brodie

Ian Brodie

Ian Brodie teaches consultants, coaches and other professionals to attract and win the clients they need using "Value-Based Marketing" - an approach to marketing based around delivering value, demonstrating your capabilities and earning trust through your marketing.

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