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.