1st January, 2015
When considering options to grow your business, one question that should be addressed is your product or service line. Specifically, are there opportunities to grow revenue by expanding your range of products and services, or is there more leverage in focusing on a niche for one or a small number of products and services?
A classic example of this crossroad is when Steve Jobs returned to Apple in 1996. He found the product development team working on over 100 different products. One of his first decisions was to slash the number of products Apple was developing to just four. Suddenly, the company had extraordinary focus and clarity around its product strategy and stopped being distracted by products not considered to be core to the company’s success. It is generally acknowledged to be a turning point in Apple’s distinguished history.
Let me give you a couple of examples from my business and client base. At Proactive Accountants Network, we specialise exclusively in accounting firms. It is our niche and our sole focus. This is not a decision that we took lightly, as our coaching, content and technologies could be equally well applied to other professional service firms. But we know accountants inside out, there are plenty of them and we like dealing with them. Weighing up the pros and cons:
Our clients (the accountants) tend mainly to be generalists rather than specialists. Their clients (typically small to mid-sized business owners) have many and varied needs. All of the surveys show that the accountant is a business’s most trusted advisor, and, as such, they are regularly approached by their clients for assistance in a range of different areas. A significant risk to this strategy is that if you’re not careful, you end up with a long list of ‘Our Services’ on your website, often written in jargon that clients struggle to comprehend. (The most I have counted is 68 on one web page — way too many.)
To counter this risk, we advise accountants to market their services using a small number of ‘catch all’ headings. For example, an accountant might offer to help a business owner with growth, profitability, cash flow, asset protection, tax minimisation, succession planning and sale. Within each of those headings there could be several disparate products and services that could be rolled out depending on the client’s circumstances. The key to this strategy is not to overwhelm your client or customer. It’s fine to be a generalist, but ensure you review all of your marketing and positioning collateral with your ‘customer eyes’ on. Would your typical customer understand it, be drawn into it and not be overwhelmed?
We are seeing a trend in accountants developing niche markets. For example, we have accountants who specialise in pharmacies, medical practices, construction, legal, restaurants and many others. But rarely do they forego their clients in other industries to focus exclusively on one particular industry. In other words, they strive for the best of both worlds, retaining their general practitioner business model but with a niche industry ‘on the side.’ It can work very well. If your strategy is to focus (either on a product, service or industry) then you should lead with content, meaning you become known as the expert and go-to person in that particular field.
When taking a generalist position, your product or service expansion plan will often be customer driven. So, for example, you might be having a discussion with a customer, and he or she might ask if you could help out in a particular area. You may or may not already have a product or service that applies to the request, but with a generalist strategy — and as long as the request is within your range of capabilities — your response should be ‘of course, we can do that for you.’
Similarly, you might run focus groups or customer advisory boards to ask your best customers what sort of products or services they might need from you but are not currently receiving or buying from you. Beware of relying too heavily on this approach. Customer advisory boards are terrific for gathering feedback around customer service or garnering input into new products or services that you might suggest, but don’t expect your customers to become your innovation team.
Customers rarely know what new products they need until they see them. You need to take the lead in this area. To do that, use your own team members. They are the people closest to the customer and will often give you ideas and suggestions that you have not considered yourself.