How to Unlock the Advantages of Specialization in a Service Firm

In the start-up world, there’s an obsession with finding your product-market fit — that point where you find the right mix of features, benefits, pricing, and marketing messages that capture the needs and desires of your target market in a way that makes them come toward you, that makes closing deals easy. 

It sounds like a miracle, but I’ve seen it happen for creative agencies and service firms too. When they start out, they build some momentum, but then growth stalls. Some agency owners keep grinding on trying to push their way through it. Others pivot and innovate a new way to offer their services — usually by narrowing the focus of what they offer, and more importantly, who they offer it to! The result is accelerated growth with less effort!

What is specialization in business?

In our previous two articles, we’ve discussed product-market fit and the segmentation process for agencies. Specializing your agency will help you to focus not only on the clients you have identified through your segmentation process but also on the niche service that is most profitable and that you do the best.

Specialization will help you become the go-to resource for your target clients and potential clients that fit into your targeted segments.

Instead of spreading yourself thinly across a range of services, you focus on one or two. 

The advantages of specialization in service agencies

When you specialize, you can focus your time and effort on a narrow range of services. You’ll become a bigger fish in a smaller pool. There will be fewer competitors with your focus. 

Because you’re doing what you do best and what is most profitable, your learning curve is shorter. Market innovation and advances in technology are easier to embed. You’ll be faster to react and innovate, helping to retain your clients.

You’ll also find that the perception of your authority improves – and that helps your earning potential. If you’re ill, you’ll visit your family physician. They earn an average of around $210,000 (salary.com) and provide general medical advice. If you have a heart problem, you’ll see a specialist, a cardiology physician. They earn around $430,000 on average (salary.com). Specialization pays.

When you specialize, you’re also more likely to convert more quickly. Consider if you want advice on a mortgage. As you are searching for a solution, you find that there are potential firms in your search results:

• Financial Services

• Finance Specialists

• Finance Brokers

• The Best Mortgage Company

Undoubtedly, all four are likely to be able to find you a mortgage. Which do you think attracts more customers, converts more, and commands higher prices for their services? There’s only one answer, isn’t there?

The importance of specialization in business

In his book ‘Built to Sell,’ John Warrillow describes the steps to build and grow a business that you can sell one day. The very first lesson is to specialize. 

Warrillow describes a fruit tree in his garden that was a few years old and not producing good fruit. He pruned it, thinning out the branches. The following year, the tree grew the largest, tastiest peaches it had ever done. The moral? Stop trying to feed too many opportunities. Focus on one and enjoy more fruitful rewards as you develop a business that you can – one day, and if you wish – sell.

How do you find your business specialization?

Right now, you’re servicing a myriad of clients. You’ve got a book of business but no specialization. How do you specialize in a niche?

First, focus on the services you provide. Figure out the services that:

• You do best

• Make the most profit for you

• You love the most

As you’re considering these, evaluate your skillsets and background, the resources you need, and the tasks you need to outsource to provide each service.

When you find the intersection of all these factors, you have discovered the specialization that is your niche. This specialization will attract clients to develop your business faster, allowing you to adopt value-based pricing and boost your sales and profit margins.

Taking the time to focus your business on one or two services that are the perfect fit for one ideal client is crucial to this process. The more focused you become the better.. As you narrow to your services, consider the clients you will be selling to. Look across your current clients and use the market segmentation process to discover your target markets for your niche service.

Learn to be brave

Many firms make the mistake of accepting business that they can do, but is outside  their niche. Consequently, you spend more time providing services that you don’t like doing and aren’t as profitable as other work. 

Why do you accept such business? Because you’re chasing sales and profits. This mentality blunts your capability to take on new clients in your niche and market to potential clients in your niche.

To combat this, you must be brave. Learn to say ‘no’ to requests for work outside of your specialization. This can be difficult at first, but it is critical to your success. Market the right service to the right clients, and you will start to attract more and more of your ideal clients. It’s the only way to elevate your sales to $1 million and above.

Three final lessons

Before we sign off, we’d like to leave you with two lessons from John Warrillow:

1. Specialize in one service to make it easier to be successful

Being the expert and go-to resource in your specialization will help potential clients recognize what you are best at and the value you offer.

2. Plan on your company replacing you as a founder if you want to sell it

Spend more time on your business rather than in your business. When you are responsible for delivering services to clients, or if you are the sole business development resource, you become the bottleneck. The business can’t grow until you let go! 

With your market segmented and your specialization defined, the last step in shaping your service market fit is to make a statement when marketing your niche service to potential clients in your market segments. That’s what we discuss in our next article in this mini-series: developing a positioning statement.

In the meantime, to learn more about how specialization can help to ignite your sales and put you on the path of exponential revenue growth, reach out to Anchor Advisors.