It is becoming increasingly difficult for services firms to differentiate themselves when they all seem like they’re offering the same quality of services. For example: All the Big Four firms are seen by clients to be almost identical. Similarly, they may perceive very little difference between strategy consulting firms McKinsey and BCG or IT services companies such as TCS, Accenture, Infosys or Wipro.
The challenge that these firms face is how they can post high growth based on clear differentiation from their competitors. There are a few examples of firms being outliers and posting growth rates of 25-30 percent year-after-year, while their competitors have struggled with less than five percent growth. The winning firms have created a differentiation based on three simple strategies:
Build great products and services
Many large firms have achieved a dominant market share over the decades because they once used to build outstanding products and services. They built a strong reputation for themselves by delivering these services. Over the years, “product or services builders” in services firms have been replaced by two types of individuals–number-crunching bureaucrats who don’t understand the business, and sales executives who indiscriminately sell anything and everything without caring what the clients wants. With expertise to create unique differentiated services gone, firms have become increasing reliant on selling and pricing tactics.
Winning firms have brought back the culture of creating outstanding products and services for their clients and this has become their differentiator. While their competitors are busy innovating on sales tactics and techniques, the high growth firms focus on product and service innovation to add significant ongoing value to their clients.
Make your clients feel privileged and important
Firms often refer to their clients as “targets” or “accounts” and assign an ambitious revenue goal that gets cascaded top-down. Larger the firm, the greater is the focus on monitoring an army of sales executives who are “chasing the targets” to achieve revenue goals, so that they get the bonus they’re working towards. For these firms, it is all about revenue generation, and they lose sight of their relationship with their key clients, as it becomes transactional and short-term in nature.
Winning firms with high growth rates built long-term trusted relationships with clients. The firms make their clients feel like they are part of a “highly privileged and exclusive club”. They go out of their way to consistently deliver value to their clients by treating them well and respecting them. These firms are focussed on the well-being of the client’s business, and not their potential to pay. This has become a differentiator for the winning firms.
Treat your employees like your best clients
With quarterly results and share prices often dictating day-to-day decision-making in many companies, employees end up becoming financial statistics on spreadsheets that managers actively manage without much emotional investment. Often short-termism drives these firms. Companies that are struggling to grow have lost their key individuals and talent during their frequent upsizing and downsizing exercises. Often those who are left behind are either of mediocre calibre or have no commitment or loyalty for their employers.
Winning firms have created a differentiation based on developing an “emotional connect” with their employees, where they feel a sense of pride and privilege to a part of the firm. A winning firm treats its employees like its best clients. Employees become brand ambassadors with clients and community, creating a goodwill and reputation that becomes a differentiator for the winning firm.