Differentiation: A Key to Success for Accounting Firms.

• Author: Lowe, Suzanne

Accounting firms today face a more complex and crowded marketplace than ever before. The combination of increased competition, commoditized services, and more demanding clients has placed new strains on firms. Many firms feel compelled to pursue differentiation as a means to establish, rebuild, or maintain a competitive advantage. According to the findings from a recent study conducted by Expertise Marketing, 84% of accounting firms indicated that they are implementing some form of differentiation in their marketing programs.

However, the research also shows that there is little agreement on exactly what differentiation means. Moreover, some of the approaches that many firms are pursuing are actually reported to be unsuccessful by the study's respondents. So while it is clear that accounting firms recognize the advantages of incorporating differentiation as an element in their marketing strategies and tactical programs, it is equally clear that many don't know how to do so effectively.

A critical link in a chain of market-driven concepts

Part of the problem may be that many professional service firms don't link differentiation to their firm's strategies. Instead, they randomly experiment with a spectrum of (mostly tactical) differentiation approaches. This kind of trial-and-error approach might make sense in today's hyper, competitive environment. But it doesn't come close to providing the positive results that a firm could enjoy from programmatically pursuing a framework that links differentiation to business strategy, positioning, and branding. The simplest way to apply differentiation strategically is through a two-phase approach. I call these phases "minding the gap" and "mining the gap."

Minding the gap

Minding the differentiation gap revolves around gaining a better understanding of your firm's business landscape. It can be broken down into three components: your firm's marketplace, clients, and competition.

Marketplace. First, you must gain a keen understanding of your market. This involves observing overall business trends and examining the activities of clients, partners, and suppliers. Marketplace questions that could be answered include:

* Why is there an apparent upswing in M&A activity?

* Which firms are experiencing client "price sensitivity" and why?

* How is technology changing the way we--and others--do business?

The answers to these questions provide a perspective that can point to differentiation opportunities.

Clients...