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December 2002 |
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Effectively Selling Professional Services In Times Of Uncertainty|
Effectively Selling Professional Services In Times Of Uncertainty In 1966, Warren J Wittreich wrote a Harvard Business Review article, identifying three concepts as fundamental to professional services. Thirty-six years later, these principles still stand. First, a professional service must make a direct contribution to reducing the uncertainties involved in running a business, second it must address a specific substantive issue and, third, the service provider should be uniquely qualified to deal with that issue.
Professional services providers have their work cut out for them at the moment - there is deep uncertainty on a range of issues. To name a few: opinions on stock market trends change every couple of weeks; nobody is quite sure if the economy is recovering or going for a double dip recession; and, the outcome of the tension between the US and Iraq is unclear, as is the possible impact on petroleum prices. You might think that this level of uncertainty would dent the credibility of professional services providers given that nobody is providing easy answers. However, service providers' 'unique qualifications' are not necessarily an issue, according to RAN ONE accountant Scott Shackleton of Shackleton CPA & Consulting in Raleigh, North Carolina. Uncertainty simply means that professional services providers need to communicate more closely with their clients. For example, it means looking very closely at the underlying assumptions in any business projections. It means making sure that all areas of risk have been considered and that appropriate strategies are in place for dealing with those risks. Clients are aware that uncertainty is high and they may actually be more willing to seek professional advice to deal with it. “When clients face challenges they haven't handled, they often turn to consultants,” says Shackleton.
Fine-tune your marketing efforts This is one reason that professional services providers should work on their marketing in tougher economic times. “In tough times you need to not only maintain your marketing, you also need to improve it, fine-tune it,” comments Shackleton. This should involve working more closely with existing clients and refining or developing services that meet their business needs - needs that may be particularly liable to change in uncertain times. It also means pushing on with marketing to new or prospective clients. “In good times we try to get clients to market and go for strong business growth,” said Shackleton. “In the current situation, we suggest that clients continue to focus on marketing, though businesses may only be able to inch forward. You need to work hard on marketing to maintain what you have.” However, marketing is not the only 'specific substantive issue' that Shackleton and his clients need to deal with.
Work as efficiently as possible Lower business growth throws up some specific problems, as professional services businesses tend to suffer when the local economy suffers. People get laid off, for example, and this will cut into their discretionary spending. Professional services might therefore find that they are running on lower returns and this can mean some belt tightening. So Shackleton spends a lot of time working with clients, helping them ensure that they are running as efficiently as possible. He helps them take an analytical look at the financial and operational structure of their business. “It's not just cutting costs,” said Shackleton. “We don't advise cutting costs across the board. That's not an effective strategy - you can cut costs right back to zero and then you're simply out of business.”
Distinguish yourself from your competitors Shackleton also spends time helping clients analyze their unique core differentiators. In a tougher competitive environment, businesses need to work harder at establishing services that distinguish them from their competitors. That's because clients don't simply cut spending in hard times; they look harder for value. If a business can develop a distinctive high-value package of services, they're going to stand out from the crowd. They'll cope better with tough economic conditions.
Another way to ride out hard times is to maintain a well diversified business, according to RAN ONE accountant Dan Messersmith of Duncan, Messersmith & Associates in Hot Springs, Arkansas. Messersmith points out that while discretionary spending suffers in a poor economy, it doesn't necessarily fall across the board. A business that is not adequately diversified may find itself hit much harder than it needs to be. Messersmith mentions one of his clients, a dental practice that serves a large number of retirees. The decline in the stock market has really limited the discretionary spending of this client group. The dentists used to be able to say to a patient 'Let's put on a crown here,' and the patient would say, 'No problem.' These days, many clients are saying, 'No thanks; I'll come back when it hurts.' The problem here was that the practice hadn't renewed its client demographic, says Messersmith. The dental practice would be in much better shape if it had a higher proportion of clients who were young, working people, and whose discretionary spending was not so closely tied to the state of the stock market. Messersmith knows of another local business that is facing diversification issues. As a provider of engineering consultancy services, the firm used to do a lot of business through the timber industry. But then the industry consolidated and started to source these services in-house. The consultancy has suffered. “We were so busy making money that we never had time to diversify,” one of the owners commented. Now they regret that. “We're always recommending that businesses put time into diversification,” said Messersmith. “It may take some time to achieve this but a business that serves a diversified demographic is always better placed to deal with uncertainty. And it's never too late to start.”
An Important Message While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.
Terms of Use All rights to the content in this publication are reserved by RAN ONE Inc. Any use of the content outside of this format must acknowledge RAN ONE Inc. as the original source. © 2002 RAN ONE Inc
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