In our previous post (How industry focused is your firm?) we posed a series of questions to help you evaluate how industry focused your firm is. Of course such an evaluation is only worthwhile if industry focus actually matters – and indeed our first question asks whether firm leadership believes industry focus is important?
At Muzeview we strongly believe that industry focus matters. We’ve seen the benefits directly earlier in our careers as accountants and consultants serving clients in the telecoms, technology and financial services industries. More recently we’ve seen the benefits working with professional services firms to enhance their focus and ability to market and serve clients within specific industries.
But believing and seeing are only part of the story. Is there actually a rational analysis for why industry focus matters?
The answer is yes!
Clients Value Industry Focus
Firstly there is strong research evidence that clients believe industry focus matters.
The most compelling evidence is probably the “Finding and Choosing Professionals on the Web” research published by Greenfield Belser in 2010 which found that:
- Specific industry experience tops the list of things executives find important on professional services firm (PSF) websites with 78% saying it is “must have information” (pages 8, 21).
- When searching for a professional 46% always (and 29% often) include industry keywords (page 17)
- Industry is the first (30%) or second (46%) search criteria when looking for a professional on a firm’s website (p.22)
- Information on industry experience is also a “must have” for 77% of client decision makers when reviewing service area descriptions (p.23)
- 84% like receiving electronic industry updates (#1 along with original research on topics most important to them) (p.30)
In 2009 Rain Today published a study titled “How Clients Buy” which had similar findings including:
- Experience in my industry/business was the #1 factor in hiring decisions; and
- Descriptions of industries served was the second most important element of a providers website.
A 2006 survey by Consulting Magazine “Consulting Client Satisfaction: Leading Firms’ Performance, Reputation and Brand Awareness” found that “depth of industry expertise” was the third most important selection criteria.
We even have research going back to our Arthur Andersen days (over 10 years ago) that shows “back in the day” the importance of “knowing our business” and “industry knowledge”.
So it’s clear that clients do value industry expertise, but if we assume that clients are rational (at least most of the time!) it is helpful to consider why industry expertise should matter so much to them.
Industry Focus Delivers Client Value – and Firm Benefits
One of our favorite sayings is:
“Clients don’t have financial, legal, technology or other technical problems, they have business problems. Those business problems just happen to have financial, legal, technology or technical elements to them”.
Hence for a professional advisor to offer valuable advice to their clients they must first understand the client’s business problem.
Understanding the client’s business problem requires understanding the client’s business. It is at this point that industry becomes relevant as it becomes a proxy for understanding many aspects of the clients business – such as:
- industry terminology;
- kinds of products and services offered;
- industry specific revenue sources and revenue recognition issues;
- common contractual terms;
- industry specific laws and regulations;
- typical business practices;
- types of talent employed;
- technologies used; and
- supply chain structure and practices.
Having this kind of industry knowledge enables you to speak the client’s language, which helps you gain credibility and quickly get to the client’s issue and need. Equally importantly, experience within an industry enables you to solve problems more quickly because you have likely seen them before and solved them before. Industry knowledge can also enable you to more quickly and accurately interpret new trends and issues – such as the impact of new or proposed regulations, proactively alerting clients to potential problems and solutions.
Hence clients who are served by industry experts will typically get quicker, more tailored advice and pro-active insights about how to address emerging issues.
Those are pretty compelling benefits for a client. But this isn’t a one sided bargain. There are benefits for the firm too.
The benefits for the firm include:
- More efficient service delivery by leveraging experience and getting to the problem and the solution more quickly;
- The ability to charge premium rates for focused, tailored advice; and
- More cost-effective marketing and business development through industry targeting and the virtuous circle resulting from daily interaction with industry executives and experts.
So in addition to the evidence that clients value industry expertise, we now have a clear rationale for why industry focus benefits both clients and the firm.
Industry Needs a Seat at the Table
One final point that we should make with respect to our advocacy for an industry focus is that we are not suggesting it becomes the only focus for firm strategy, marketing or service delivery.
Deep professional technical expertise remains critical as does outstanding client service. We are simply saying that industry is a critical but often overlooked or undervalued component of the client focused professional services model. Elevating industry to being an equal partner in defining how a firm targets and serves clients will, in our view, deliver significant revenue and profitability enhancements.
In the coming weeks and months we will explore the other questions we have raised that address how industry focus can be enhanced within your firm.