Positioning Agency Brands
There is only one reason marketing communication firms are hired, and therefore only one viable basis for the positioning of your firm. It is not personality, it is not process, it is not price. Marketing communication firms are hired for what they can do for their clients based on their expertise. The entire list of valid positionings can be distilled to one word: expertise. Category expertise, discipline expertise or a combination thereof.
When I ask principals and personnel of creative firms the simple question, ‘Why do your clients hire you?’ the answer is almost always ‘personality’ (they like us) or ‘process’ (the proprietary method which we use to address their marketing challenges). While personality and process are important, they are almost never the reasons why creative firms are hired, and therefore should never be the basis for the positioning of your firm. At best, personality and price are tie-breaking metrics used to choose one firm over another when all other important criteria (expertise) appear to be equal. If your prospects perceive your expertise as equal or similar to that of many other firms then you have a positioning challenge that merits some attention before you begin selling. Process is extremely important but only as proof of that expertise; it should never be the basis of the positioning itself.
A poorly positioned creative firm is a tough sell. Personality and process are not reasons to buy, and broad expertise (another common claim) is an oxymoron and a lousy sales proposition. Poor positioning is the starting point of business development frustrations for many firms. You pick up the phone and introduce your firm to your prospect only to have him brush you aside like one of your many homogenous competitors that approach him each week. Your odds of breaking through in that first interaction are based on your ability to succinctly deliver your expertise and its benefits in a manner that separates you from other firms. Poor results at the very front of the sales cycle are the first indicator of a positioning problem.
The second indicator of the strength and value of your positioning is profit margin. The ability to command a price premium is the by-product of a differentiated and valuable offering. This is a basic lesson in supply and demand economic – the law of price elasticity, which states that the availability of substitutes affects the elasticity of price. More simply put, the fewer your competitors, the more you can charge and therefore the higher your margins. The more alternatives to your firm, the less you can charge and therefore the lower your margins. If sustained profitability is elusive or your net profit margin is a single digit from year to year, then, without discounting any operational challenges you may be facing, your clients likely do not see your services as sufficiently different from those of readily available alternative firms.
Differentiate or Die
The ability to premium price is a function of differentiation, which is the starting point in positioning a creative firm or any brand. Once your firm is highly differentiated, any attempt at growth (if that is indeed your goal) should be rooted in making that difference (your narrow expertise) relevant to more prospects without diluting it. This is one of the few avenues to profitable growth: broadening the relevance of your offering without diluting your point of difference. Top line growth coupled with a bottom line decline is one indicator that suggests positioning may have been sacrificed for size.
Most firms start out successful because they were built on what made them different. Often, however, in pursuit of growth many of these firms water down their expertise in hopes of appealing to a wider audience. A firm that cut its teeth on, and built up expertise in, the hotel and resort categories would do better to focus on that expertise and try to broaden the appeal of it (to airlines, cruise lines, and other travel or hospitality verticals as an example) than it would to walk away from that expertise and chase prospects in unrelated categories. Ironically, many firms that amass expertise in an area do not trumpet that expertise for fear of being pigeon-holed into a narrow expertise. These firms would do well to imagine those pigeon holes stuffed with cash. It is the narrow positionings that are most lucrative and by far the easiest to sell.
If you are considering re-vamping your business development efforts, begin by taking another look at your positioning. If you cannot comfortably use or strongly imply the word ‘expert,' ‘expertise,' or ‘leading' in your positioning statement then you are likely positioned too broadly. If the words you use to describe your firm speak to personality or process, then start again. People do hire people they like, when all other variables are equal. When someone has a job to do and a business or a career on the line, they will hire the expensive, belligerent expert over the amiable, affordable generalist every time.