In our previous post Does the Market Know (and/or Care) That You Exist?, we discussed performing a market assessment of your industry practice, primarily from a competitive standpoint. This time we address question number four in our fifteen question series, “Does your Firm understand how much importance clients place on industry knowledge and does your firm measure clients’ perceptions of your firm’s industry knowledge and expertise?”.

This question gets at understanding the role that industry knowledge and expertise plays in selling and delivering industry expertise from the client’s perspective. As we have discussed previously clients have frequently indicated that they consider this to be important, but it pays to understand what they consider constitutes “industry knowledge and expertise” and how this may differ from one client or one engagement to the next.

In our experience the bar for industry knowledge varies considerably. For industries such as Financial Services, Life Sciences or Oil & Gas, a solid grasp of industry fundamentals and practices is a prerequisite; in other industries it is possible to “get away” with limited industry knowledge, particularly around commodity work and generic cross-industry issues. The requirements can also vary by client issue/service. For example, industry may be an important factor in advising on specific international trade regulations but less so for a pensions matter. However, typically the more complex the issue, the greater the need for industry perspective.

“I’m not an industry expert” (and being conversationally competent)

We have seen numerous firms whose professionals are reluctant to engage in conversations with clients or prospects around a specific industry because they say they “are not experts in the industry, and don’t want to look foolish”. Part of the issue here is the way term “expertise” is allied with industry.

In reality, clients are rarely looking for industry expertise in the sense that a professional is an expert in key technical or operational aspects of the industry. An attorney is not typically going to be an expert in jet engine manufacturing techniques or high-end fashion design trends. When we talk about professionals having industry expertise, we are really talking about their ability to understand the implications of industry issues and apply deep professional expertise, be it legal, financial, technology etc., to that issue.

One of our clients coined the term “conversationally competent”, which we have shamelessly borrowed, as expressing the level of industry knowledge a professional commonly needs in order to be effective in applying their professional expertise in the industry.

What does that mean?

When I was responsible for telecom industry training at Andersen’s back in the day, I illustrated “having telecom industry knowledge” as, for example, the ability to know that when a telecom client said they were building an ATM network that it meant they were building a network using Asynchronous Transfer Mode (ATM) technology – not that the client was planning on rolling out cash machines!

In this instance, in-depth knowledge about ATM technology or network design was unlikely to be important. However, knowing that the client was about to make a significant capital investment would enable a consultant to explore, say, the financial impacts on their business of this new initiative and identify areas the client might need assistance: How much are you investing? How are you funding it? Have you considered the tax implications?

That really is the yard-stick for industry expertise:

What do I need to know about the industry in order to understand what the client is talking about, explore the implications, and deliver service and advice that is relevant and appropriate to the client’s industry?

Horses for courses

At this point it is worth recognizing that this likely differs across the mix of professionals in your firm. Different levels of professional seniority may require different levels of industry knowledge based on the nature of their work and client interaction. Also, firms that run key client programs and/or work effectively across practice disciplines can typically be successful leveraging one or two key industry lead professionals who can help explain the industry characteristics to other professionals that are bringing some specific deep expertise around say a tax or technology issue.

It should also be borne in mind that industry expertise may be of little value if other aspects of your value proposition are out of whack. If your fees are too high, your responsiveness too slow or you simply fail to demonstrate deep expertise in the relevant professional discipline, industry expertise will not make up for these failings.

Client Expectations

Armed with an appreciation of what might constitute industry expertise and knowledge, we can now return to the original question and its call to understand what is important to clients. Clearly the best way to do this is to ask them. This can be done both directly through conversation and often particularly effectively through client satisfaction programs.

Another important and effective method is to follow up on both client wins and losses to understand whether industry expertise impacted their decision.

Also be on the lookout for signals that you or your team are not up to speed on industry matters:

• Do clients express frustration at “…having to teach your people our business”?
• Do you find yourself sheepishly asking questions about basic terminology in client meetings … or bluffing your way through the meeting and frantically researching the topic later?
• Do clients and prospects explicitly ask to see industry credentials or meet with professionals in your firm that have industry expertise?
• Do you avoid following up on a particular discussion point (and therefore miss opportunities) because you’re really not sure what the client is talking about or its significance?

We’ve been working with one of our clients for several years now to help them avoid just these kinds of client signals. Through the development of industry courses and the delivery of hot topics briefings we have helped bolster their industry knowledge and give their professionals the confidence to engage with clients and prospects around industry issues.

Closing Thoughts

Knowing what is important to clients in terms of industry knowledge and expertise is clearly critical to making the right investments in practice marketing, service development and professional development. If you’ve not asked this question or can’t clearly articulate an answer in each of your target industries, we’d encourage you to spend some time exploring the issue.

Let us know if we can help you assess or develop your industry expertise, and as always your comments and feedback are appreciated!

In our previous post (Which Industries Should You Focus On?), we challenged your firm to make deliberate, strategic choices about which industries to focus on and provided some practical tips on how to get started. This time we address question number three in our fifteen question series, “Does your firm assess the strength of its industry practices relative to key competitors and best practice professional services firms?”

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This month, in our continuing series on building and growing industry focused practices, we explore the question of how to assess the strength of your industry practice relative to competitors and best practice professional services firms.

Does the Market Know (and/or Care) That You Exist?

It is one thing for your firm to say it has an industry practice; it’s another for the market to say so. In assessing the strength of your industry practice you need to ask the following questions:

• Are clients in our target sector aware of our industry practice?
• Do they consider us a viable option to service their needs?
• Do they proactively inquire about our industry capabilities and ability to address specific opportunities?
• Do they hire us in preference to competitors?
• Do they continue to hire us?
• Would they recommend us to others?

These are both quantitative and qualitative questions.  Firms should understand market share in financial terms (both share of total market and share of individual client spend) but also in terms of having pedigree clients and performing high value work. Do the top companies and top executives in the industry trust you with addressing their most complex problems or do they just send you their commodity work?

Clear Definition of Target Market Is Critical

Evaluating market share requires clearly defining your target market. For example, calculating your market share for legal advice in the financial services industry would result in a very different number to calculating your market share for M&A legal advice for community banks in the Pacific North West region.

Of course answering these questions is not always straightforward.  Firms need to implement effective market and competitive intelligence capabilities to understand which firms are working with which providers in what areas.  Such intelligence is vital – not just for evaluating market share – but also for identifying relative strengths and weaknesses and opportunities for growing market share.

However, the by-product of an effective industry practice is the ability to gather insights and intelligence about the competitive landscape through regular interaction with clients, prospects, advisors, media and other market participants.

Assess What Really Matters

Competitive assessment should not stop, however, at measuring fees and comparing client lists.  The competitive battle is won long-term by being the most effective firm at winning work and delivering great results.  Doing so is the result of effective marketing and deep industry expertise, packaged in a way that is relevant to client and prospect needs.  Hence competitive assessment should also focus on areas such as the strength of a firm’s thought leadership, its industry professionals and service offerings.

For example, in the last couple of years, we have worked with a number of professional services firms to help them evaluate the breadth and depth of their competitors’ industry-specific thought leadership.  This work has looked at the quantity and frequency of thought leadership, the quality of thinking and research, the variety of delivery formats and the interaction with leading industry associations and media. Such analysis can help identify white space opportunities as well as highlight where a firm is failing to rise above the crowd with its industry focused insights and activities.

Related to the thought leadership area is the strength of a firm’s industry professionals.  Does the firm have luminaries who are widely recognized as experts on key industry issues? Does the firm have bench strength that enables it to effectively serve multiple clients or bring full scale teams to bear on complex high stakes engagements?  Is the firm able to attract, develop and retain the best industry talent or do talented industry experts seek out opportunities elsewhere?  Is the firm one that young professionals with an emerging focus on the industry aspire to work with?

Focus and Commitment Are Critical

Finally, firms should evaluate whether their service offerings, tools and methodologies and participation in industry-specific associations and initiatives, demonstrate a focus, understanding and commitment to delivering professional advice and expertise in a way that truly reflects the specific issues and challenges of the industry.

The process of evaluating your competitive strengths and weaknesses is a continuous one, but if you have not performed an assessment recently, a fresh look will likely reveal new insights about your target market and raise new questions about both the current and future state of your firm’s industry practice.

Critically, making decisions on strategic and tactical goals and initiatives without a current competitive assessment may result in sub-optimal investments or missed opportunities to gain market share.

If you think you could benefit from a fresh and independent assessment of the competitive strengths and weaknesses of your industry practice, we would welcome the opportunity to discuss how we might help.  You can also use our Industry Practice Competitive Assessment Checklist.

Have Your Say!

As always your questions and comments are welcomed. Please share your thoughts in the comments section below.

Our next post will tackle understanding the importance clients place on industry knowledge and measuring client perceptions of your firm’s industry knowledge and expertise.

Below is a complete example of a hot topic update from the PracticeView monitoring service.  It includes background information, client discussion points, and resources and commentary which can be used by your firm and its professionals to stimulate discussions with clients and/or prospects.  Click here to learn more or subscribe to PracticeView.

Background

A smart grid adds monitoring, analysis, control, and communication capabilities to the electricity supply chain.  This promotes efficient and economic energy usage by informing the customer exactly how much electricity they are using on a real-time basis.  As electricity providers transition to a smart grid system, they will be better able to optimize the operation of the entire electrical grid.  Maintaining the security of this infrastructure is the next hurdle that electric companies are beginning to face – as data is collected, there are increasing concerns as to how that data will be used, how it will be stored, and how it will be secured.

A security breach can result not only in data loss or service disruption; it can result in financial losses, intellectual property theft, fraud, and reputational damage.  Electric companies need to be proactive in the protection of their smart grid, reducing the risk of unauthorized access and the misuse of the smart grid and its capabilities.

Implications

To best protect their company, electricity providers must become familiar with traditional and emerging threats to cyber security.  They must become familiar with indicators of security breaches and whether systems have been compromised.  As these breaches are identified and resolved, a security assessment should be conducted to confirm resolution and to ensure protection against future threats.  Companies must take an aggressive stance against cyber security threats by:

• establishing security policies that are continually evolving
• identity and access management
• evaluating threats and vulnerabilities
• regular testing for compliance with security regulations
• virus and intrusion detection
• education and awareness
• reviewing incident responses

Client Discussion Points

1. Are electricity providers familiar with emerging threats to cyber security?
2. How frequently are security assessments schedule to identify and resolve system compromise?
3. What security policies are in place to actively manage cyber risks?
4. Are virus and intrusion detection programs up to date?
5. How are responses to incidents evaluated for continuing improvement?

Resources & Commentary

• PwC:  Getting Real About Cyber Threats: Where Are You Headed?
• Navigant: Paths to Smart Grid Interoperability
• Ernst & Young:  Turn Risks and Opportunities into Results: Exploring the Top 10 Risks and Opportunities for Global Organizations
• VPR News: Privacy Issues Raised By Smart Grid Technology
• Grant Thornton: The State of the Industry – Technology, Opportunity and Regulatory Change

Click here to learn more or subscribe to PracticeView.

This is a free excerpt of a hot topic update from our PracticeView monitoring service. Click here to learn more or subscribe to PracticeView.

Background

During challenging economic times, not-for-profit organizations experience further struggles in raising funds.  Rather than emphasizing individual agency brands and programs, support may be best leveraged by identifying core issue and causes, championing a movement to create a vision and goal for change.

Implications

Subscribers to our PracticeView monitoring service receive detailed commentary on the implications of this trend and/or emerging news.

Client Discussion Points

Below is an example question which subscribers of our PracticeView monitoring service receive. This type of question can become a talking point to be used by your firm and its professionals to stimulate discussions with clients and/or prospects.

1. How is the not-for-profit organization aligning its message with the values of today’s donors?

Resources & Commentary

Subscribers receive a number of direct links to interesting/authoritative articles on a particular topic and/or trend. Below is an example of a direct link which subscribers of our PracticeView monitoring service receive.

• The New Zealand Herald – Non-Profit Sector Lifts Its Game

Click here to learn more or subscribe to PracticeView.

This is a free excerpt of a hot topic update from our PracticeView monitoring service. Click here to learn more or subscribe to PracticeView.

Background

As the global economy has begun to turn around and lending terms are becoming more flexible, private equity and corporate capital have become more readily available, and investors are looking for deals.  Asset managers are beginning to feel the pressure to get back into the game.

Implications

Subscribers to our PracticeView monitoring service receive detailed commentary on the implications of this trend and/or emerging news.

Client Discussion Points

Below is an example question which subscribers of our PracticeView monitoring service receive. This type of question can become a talking point to be used by your firm and its professionals to stimulate discussions with clients and/or prospects.

1. What are the asset manager’s strategic goals – e.g., entering new markets, growing market share, developing new products, reducing costs?  How can M&A help the client execute this strategy?

Resources & Commentary

Subscribers receive a number of direct links to interesting/authoritative articles on a particular topic and/or trend. Below is an example of a direct link which subscribers of our PracticeView monitoring service receive.

• PwC – Asset Management M&A Insights: Navigating Through Stormy Markets

Click here to learn more or subscribe to PracticeView.

Leading law firms invest a lot of time and money trying to talk to clients and prospects – in print, online, at conferences and in the media. But being heard can be difficult when everyone is talking at once.

This is a free excerpt of a hot topic update from our PracticeView monitoring service. Click here to learn more or subscribe to PracticeView.

Background

Business is booming in the healthcare industry, with 76% of the Fortune 50 in the industry or with a health division. More and more businesses are turning to the US health system as an opportunity for innovation, differentiation, and profits. To attain success, businesses will need to find and exploit the right niches by building innovative healthcare business models.

Implications

Subscribers to our PracticeView monitoring service receive detailed commentary on the implications of this trend and/or emerging news.

Client Discussion Points

Below is an example question which subscribers of our PracticeView monitoring service receive. This type of question can become a talking point to be used by your firm and its professionals to stimulate discussions with clients and/or prospects.

1. As more businesses develop products and services within the healthcare industry, what strategies are existing healthcare companies developing to remain competitive?

Resources & Commentary

Subscribers receive a number of direct links to interesting/authoritative articles on a particular topic and/or trend. Below is an example of a direct link which subscribers of our PracticeView monitoring service receive.

• PwC – 10Minutes on Why You Want to Get into Healthcare

Click here to learn more or subscribe to PracticeView.

This is a free excerpt of a hot topic update from our PracticeView monitoring service. Click here to learn more or subscribe to PracticeView.

Background

Banks are faced with unprecedented challenges with regard to the current economy, as well as with increasing regulation and oversight. The industry needs to better understand this environment to effectively manage risk and drive performance. Deloitte has identified three business drivers that emphasize the importance of using analytics within the banking industry: regulatory reform, customer profitability, and operational efficiency.

Implications

Subscribers to our PracticeView monitoring service receive detailed commentary on the implications of this trend and/or emerging news.

Client Discussion Points

Below is an example question which subscribers of our PracticeView monitoring service receive. This type of question can become a talking point to be used by your firm and its professionals to stimulate discussions with clients and/or prospects.

1. How are analytics currently utilized to assess bank performance?

Resources & Commentary

Subscribers receive a number of direct links to interesting/authoritative articles on a particular topic and/or trend. Below is an example of a direct link which subscribers of our PracticeView monitoring service receive.

• Deloitte – Analytics in Banking: Taking a Fresh Look at Your Challenges

Click here to learn more or subscribe to PracticeView.

This is a free excerpt of a hot topic update from our PracticeView monitoring service. Click here to learn more or subscribe to PracticeView.

Background

Rather than short-changing research & development activities in light of shrinking budgets, pharmaceutical companies are looking to streamline their process for new product development.  Drug discovery outsourcing is becoming more popular, and companies are encouraging more collaborative approaches to innovation.  R&D tax credits continue to serve as critical incentives for drug development, and government initiatives strive to support strong infrastructure for entrepreneurs and start-up companies, as well as established pharmaceutical businesses.

Implications

Subscribers to our PracticeView monitoring service receive detailed commentary on the implications of this trend and/or emerging news.

Client Discussion Points

Below is an example question which subscribers of our PracticeView monitoring service receive. This type of question can become a talking point to be used by your firm and its professionals to stimulate discussions with clients and/or prospects.

1. What strategic prospects can pharmaceutical companies explore in order to sustain innovation in drug development?

Resources & Commentary

Subscribers receive a number of direct links to interesting/authoritative articles on a particular topic and/or trend. Below is an example of a direct link which subscribers of our PracticeView monitoring service receive.

• KPMG – Pharma Execs Set Aggressive M&A Strategy to Develop Products, Spur Growth 

Click here to learn more or subscribe to PracticeView.

Below is a complete example of a hot topic update from the PracticeView monitoring service.  It includes background information, client discussion points, and resources and commentary which can be used by your firm and its professionals to stimulate discussions with clients and/or prospects.  Click here to learn more or subscribe to PracticeView.

Background

Holiday shopping surveys are predicting cautiously optimistic returns.  Today’s consumer is more likely to shop around for the best value, and e-commerce sales are becoming increasingly important to retailers’ success.  Bain & Company forecast that e-commerce holiday sales will grow 15% in 2011, 4 points higher than 2010.  An important matter for retailers to consider is the role that social media plays in consumer behavior.  IBM’s studies show that people who arrive at a retailer’s site from Facebook are nearly twice as likely to buy something than other shoppers.

As the number of social tools has increased, consumers expect more from retailers and desire connections with brands and retailers on many platforms.  Big players in e-commerce offer a variety of products online, easily compared for the bargain shopper, with free shipping.  Successful businesses identify brand advocates and encourage ratings, reviews, and conversations.  Businesses must recognize that today’s consumer has a multitude of ways to communicate their opinions to thousands of potential customers, and they must strive to achieve positive ratings for product quality and value, as well as for customer service.

Implications

Retailers must effectively promote value to consumers while using technology to provide a constructive customer experience across multiple channels.  Characteristics of a positive experience include large amounts of user content (reviews, comments, pictures), exclusive deals available to followers via social channels, and quick response time to customer comments and needs.  Additional considerations include a smartphone-friendly environment, useable customer apps, previsualizing a purchase (the customer can superimpose the eyeglass purchase they are considering onto their photo), and incentive programs.

Client Discussion Points

1. Are e-commerce sites and customer apps user friendly and efficiently taking customers to the point of sale?
2. How are social channels being maximized? What further incentives can be introduced to support a retailer’s social following?
3. Are customer expectations supported with quick response time across the retailer’s channels?
4. How are retailers prepared to incorporate the next wave of technological advances?

Resources & Commentary

• Deloitte – Deloitte Store 3.0™
• Accenture – Accenture Research: 2011 US Holiday Shopping Survey
• Bain & Company – Bain Predicts Solid Growth for the Holidays
• J.H. Cohn – Retail Outlook 2012: Staying One Step Ahead of the Economy
• Booz & Company – Shopper Marketing 5.0: Creating Value with Shopper Solutions 
• IBM – Why Social Commerce Matters on Black Friday and Every Day
• Kurt Salmon – Tech Tools That Bring the Consumer into Focus
• L.E.K. – Which Retailers Are Winning in Social Media, and Why They Win
• McKinsey – Reimagining Retail
• PwC – Understanding Consumer Trends to Help Weather the Storm

Click here to learn more or subscribe to PracticeView.