Differentiating a Service Business – Part 1

Uncategorized Jan 07, 2019

I want to do a deep dive into differentiation, specifically what’s involved to differentiate a service business.

I’ll start by looking at law firm differentiation today and will discuss other service sectors in the future.

Background

More than two-thirds of businesses nowadays are in the services sector. Their founders have a specific area of expertise. So, when they set up in business it’s to deliver knowledge-based skills.

This is the upshot of the trend for the corporate sector to retain smaller teams of permanent staff and to use contractors with specialist skills to increase resources to deliver specific ad hoc projects.  Consequently, there has been an explosion in the number of self-employed people in the market.

The common issue these new businesses face when it comes to the need to stand out among competitors is how to operate in an environment that is likely to be quite competitive.

For example, small intellectual property law firms were rare 15 years ago, yet they’re commonplace now as many practitioners have left larger law firms and set up their own practices. 

With such an oversupply of service providers, it’s important for businesses to communicate their point of difference if they’re to stand out from the competition.   With an intangible like a service, the customer has no way of judging quality. They don’t know how the experience of working with one service provider would differ from that of working with another provider.

Taking Stock

The starting point when positioning a business is to take stock of the landscape. What businesses are there already in your space?

It can be quite confusing to know how to do research when there are so many competitors. For example, in the legal field, there will be large firms offering intellectual property services, boutique law firm practices, trade mark attorney firms, international companies that advertise to the UK market via Google ads and so on.

When you look more closely at the competition you see that some of them don’t offer registration of trade marks, or that the main competition comes from a separate industry – one of trade mark attorneys. It can quickly become overwhelming to even assess the competition.

It’s essential to start by having a good idea of the main one or two services your business will be offering so you can focus your competitor analysis by reference to each service offering.

For intellectual property, I would consider who is providing registration services separately from who is providing litigation services, or who is providing both services. All the time when doing research, I would be wondering what my options would be if I were a client looking to register a trade mark, or someone in a dispute looking for help to resolve it.  What process do others offer, what are they charging, and what service offerings do they have?

Firstly, consider the local competition in your vicinity – that is, around your physical office address. Secondly, look at the in the entire country. Thirdly, consider the global competition.  Depending on the service area, there may be many different options available to buyers of particular services. 

For intellectual property services, I’d be looking at the competition for our core services of trademark registration and intellectual property advice or help with disputes as two distinct types of service. That’s because some people may buy trademark registration services without an expectation of meeting you, whereas if they want advice or help with a dispute they are more likely to choose a business near them. If they want a local, because they want to meet the lawyers, then your competition is the law firms in your vicinity or easily accessible to your business.

Learning From Books

In most areas of business, I have found books to be a very useful source of guidance. To better understand marketing and branding, Differentiate or Die – Survival in Our Era of Killer Competition by Jack Trout, and Positioning: The Battle for Your Mind by Al Ries and Jack Trout were really useful.

Having assessed the competitive climate and range of services on offer, the next step is to determine your strategy. How will you communicate your point of difference?  How might you position yourself as distinct or unique? Is there something about your worldview or the way you do business that you could draw from? Does feedback from past clients you’ve served hold the key to a unique selling proposition you might develop? Do you have industry expertise which could form the basis of your positioning messages? For example, could you become the ‘go to’ law firm expert on iPhone Apps so that anyone needing advice in this area would be more likely to choose your firm?

As you work on this you will begin to have ideas that encapsulate your point of difference.  Getting the help of a coach who understands your industry may be useful to complete the process of identifying whether your ideas for differentiation are capable of standing for something that will endure. If so, you can then work out how best to convey the message in a short, clear and easy to understand marketing proposition.

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