I’m a researcher and educator, first, and an consultant, second. At times, that creates an uncomfortable requirement to tell you what the data shows even when it doesn’t serve my advisory practice. That leads to some uncomfortable truths about positioning.
Tight positioning is always good: you make more money, you know what you’re talking about, you know where to find your clients and what to say to them, and you know who to hire to fulfill the promises that you make. That’s the premise, and it usually works.
The problem is that there are many outliers who undermine that claim. Many firms who aren’t positioned well are making a lot of money. I love that, though, because usually it means that they are either lucky, confident, or disciplined, or a combination of those qualities. I’ll go further and say that there are no successful generalists firms who aren’t one or more of those things. But as I said, that doesn’t bother me at all. More power to them.
What bothers me is the inverse of that: well-positioned firms who aren’t making money. They just aren’t killing it, and their performance mimics their poorly-positioned peer firms. That bothers me deeply, in part because it undermines what I’ve been saying to anyone who will listen. That’s what I want to talk about here: why well-positioned firms are yielding poor financial results.
A Definition of Killing It
Let me pause, first, to clarify what I mean by killing it. It means that you are paying yourself hundreds of thousands of dollars on a fixed, predictable basis and then distributing hundreds of thousands more randomly during a given calendar year. It means that when you divide your fee (not revenue) base by an FTE (full-time equivalent employee) count, including unbillable people, you are at $160,000 or more (ideally $275,000 and up). And so on.
If you are positioned well but are not at that level, these are what I’ll call the “positioning corollaries” that will need some attention.
These positioning corollaries are built on top of the right positioning, where you occupy that place in the prospect’s mind that is not interchangeable with many other options. They rightly sense a draw to work with you–even with a price premium and even though you’ll direct the relationship as all experts do–because you have something that they can’t easily get elsewhere. That’s the positioning that we’re chasing.
When a firm has powerful positioning like that but isn’t seeing the basic financial results described above, the challenge will be to move to the next steps in order to nail the positioning corollaries. That’s the full positioning journey that great firms master.
The presence of these corollaries is what transforms tight positioning into a meaningful difference in the marketplace that yields enough money to change a family tree:
- Great positioning must be built out with insight that demonstrates the value to the prospect (and then client). Pretend that I’m a prospect and I review your website, built entirely just for me, and I review the website of an unpositioned firm, built entirely just for everybody. Will I see myself uniquely in your web presence? Will it eerily feel like you have a camera in my office? Will it be obvious that you’ve worked for many other companies just like mine who have unique needs? Or will you talk about digital marketing and how important it is to listen to your customers and how social influence is changing the world and how important it is to be aligned internally as a company and how consumers have so much more choice than before and blah blah blah. Pretend that I’m a neutral observer who is both smart and knows a lot about marketing. I should have one aha moment after another when I read your insight because you’ve drilled down to apply all this stuff to your unique client base and I–as an outsider–simply don’t have the insight that you do. If you build it, they will not come. If you position it and couple it with killer insight, they will come with checkbook in hand. Great positioning without building out the insight is like a pool with no water.
- Great positioning requires the crafting of a disciplined lead generation plan. So many firms get sucked into client work and slowly devolve into waiters in a hurry, taking orders from clients in an understaff restaurant. In that process you lose control of your own future and the leash slips over your neck. Once it’s in place, you’ll get tugged around by what clients want and not what’s in your mutual, combined best interest. Great positioning without lead generation is buying a gym membership on January 2 and never showing up in February.
- Great positioning depends on the right people doing objective pricing for profitable client relationships. By the way, that’s not you, the principal, and it’s not the person who is leading the client relationship. Each of you have your own worries, skewing pricing down. As the principal, you want to meet payroll and your client people want to get to “yes” too quickly. Well-positioned firms translate that power into a pricing premium, and that pricing premium shows up in their financial results (see above).
- Great positioning chases profit rather than growth. This is not a scale game, folks. You aren’t Uber or Amazon or Groupon. You can’t blindly chase scale with other people’s money, dominate the market, and then flip a switch to suddenly make money. If you aren’t making money as a matter of course, all along the way, you’ll develop some bad habits that will be hard to break. Fix what you have and then add another layer or two with thoughtful growth. Growth as a concept is overrated.
- Great positioning requires a killer instinct to maximize potential. I tested this with a particular research tool, using a subject size of 1,340 successful principals. All but 4 of them possessed it, which is an unheard of margin of error. Even without that killer instinct, it’s still an excellent idea to be an expert. You’ll sleep better at night and your place in this very competitive world will be safer, but you’ll leave a bit of opportunity on the table.
So you can make a lot of money as a poorly positioned firm, as long as you are confident, lucky, or disciplined.
The safe bet is to be well positioned and to cover the five items on the checklist above. Competence is the new drug, and positioning is the first step on that path.
Does your firm need some in-depth help with this? Let me know if you’d like to connect.