1. Why consulting firms open new markets
Even within one firm, there are a myriad of individual reasons why consultants may seek new pastures. In summary, these may be grouped as follows:
Expansion: geographic or sector extension to fuel revenue growth. This ranges from top-tier firms establishing global brands, to mid-sized firms seeking to profit from both public and private sectors, to boutique firms reaching out beyond the personal networks of the founders.
Contraction: the need to reach out may be driven by shrinkage in an existing niche market, or reduction in demand for a specialism. As a result, this might mean that expansion is happening against a ticking clock
Protection: a consulting firm may feel exposed due to all proverbial eggs being in one basket - perhaps even with one client organisation - and may therefore seek to minimise risk by profiting from a more diverse client-base.
New Frontiers: a consulting firm may have identified a specific emerging market or sector, (or supply base e.g. India), which represents a specific opportunity for the skill sets of the consultants as well as revenue opportunities for the firm. Similar to expansion - but here the growth is driven by specific opportunity rather than a policy of expansion per se.
From the foregoing, it should be immediately obvious that the context will be hugely important in determining how a new market is conquered. For example, a mid-sized firm looking at geographic expansion will approach a new market differently (and on a different timeline) to a small partnership whose existing market is drying up and urgently needs some low-hanging fruit elsewhere.
Q. What are your drivers for finding new markets?
Q. What is the anticipated timeline?
Q. What approaches does this rule out?
2. Common Pitfalls
If there is one common "root-level" misunderstanding, it is probably this: that a new market or sector will operate in much the same way as the customers we already know.
The examples are many and various:
Doing business in France is not the same as in England; both will be very different from Japan
Pitching for business in the public-sector is substantially different to the private-sector
The language that works with SME's often does not work with large organisations
Charities and NGOs often do not have the same set of drivers and priorities that we might find in commercial organisations
The decision-making processes in professional firms such as lawyers and accountants are not the same as in FMCGs
The importance of security processes / policies, risk-management and compliance are very different in the MoD (or in nuclear producers) than in young, sales-led, entrepreneurial cultures
Expectations around promptness of payment vary enormously between countries and sectors
Engineering, oil & gas, and similar sectors often have very different appetites for soft-skills than might be found in new-media or technology companies
The list could be extended ad-infinitum. In a nutshell, the buying practices and expectations of every culture and sector are different. For example, in Latin countries (and in Ireland!) the dinner the evening before the meeting may be more important than the meeting itself. Culturally, these are "high-context" cultures, where it is necessary to win the person before we win the sale. Yet the same practice in the UK public-sector might be misconstrued as an attempted bribe!
It follows that before getting involved in a brand new sector, market or culture, we should get some extensive briefing from those who already have first-hand experience there AND also some appreciation of the world in which we work. Simply getting the former is not enough: those with first-hand experience of the new market often have little understanding of the leap we may need to make. Their competence is often of the "unconscious" variety, and so they cannot fully brief us about the challenges that we may expect to face.
There are some other pitfalls that deserve special mention:
i. TIME: It generally takes longer to open a new market than is planned. Even when the new niche is already knocking on the door, e.g. in the form of a prospective client, it takes time to understand their decision-making processes, the politics, the procedures ... not the mention the added-value we might be able to bring.
ii. PERSPECTIVE: Sometimes our new niche may be so close to us that we cannot see it. Maybe we are thinking "local government" and the real market is "extending the life of systems". We can easily be prisoners of our own labels. Moral of the story: enter new arenas with partners or advisers with whom we can have honest discussion and evaluation.
iii. OVER-ENTHUSIASM: We all see what we want to see. For example, it's all too easy to equate "need" with "demand" (= need plus a budget). It's tempting to assume that because a large company might value our modus operandi that SME's will too. This is why is often useful to get someone neutral to do our research for us: we tend to do our own research with a lot of "filters switched on".
Q. Towards what pitfalls might you be led, because of your expansion rationale?
Q. Who is already providing a related service to that market ... and if the answer is "nobody", why not? How much are they charging?
Q. How are we reality-checking ourselves? Who are we consulting for advice or as a sounding board? Are they in a position to challenge us on our strategy?
3. Telling the story early on
"Articulatingthe offer" is a significant challenge for most firms. This is particularly true in the early stages of developing a service or a market, when as yet there are still few success-stories to trumpet from the housetops.
However, this challenge is often overstated. They key to overcoming it is to talk about "them", and not "us". Compare the following two approaches:
"We are specialists in providing outsourcing advice, with offices in London, Frankfurt and Bangalore. We provide our clients with a structured needs-assessment, and work with them to tailor an outsourcing strategy that works for them. We can then help them to implement it if necessary, as well as working in a support role during the early months of transfer."
"You know how many service companies are looking for cost-reduction, but are understandably apprehensive about the risk of outsourcing their back-office. We guide them through a full risk inventory so they can make an informed decision, which in turn allows then to achieve their cost-reduction by the best possible means ... whether this involves outsourcing or not."
Notice how the first introduction is about "us" and prompts more questions about "us" and how we might work. The second introduction uses similar language, but is about "cost-reduction" and "outsourcing risk", and prompts further conversation about these topics, and their relevance to the potential client. It also improves the chances of being involved at an earlier stage in the process ... while they are still making up their mind.
In a new sector or marketplace, it is generally much easier to talk about "them" rather than "us". If done coherently and articulately, our credibility is established by implication. The question of our experience in that sector is not so much answered as never even posed.
There is so much more than could be said about this, and we may at some stage have to field questions about our experience. (Not always, surprisingly) Nevertheless, it is best to have this conversation when we have already added value, and established credibility ... rather than being "interviewed" all the way through the initial conversation.
Q. What is your one-minute introduction? Does it talk about "them" or "us"?
Q. Where can you practice it and get honest feedback?
Q. What questions are we usually asked at the outset? How might we be contributing to these questions by the way we talk about our services?
4. Making use of alliances - partners
One of the biggest lessons in many professional lives is the distinction between "finding clients" and "being found by clients". From this distinction springs many shifts in strategy as regards positioning, thought-leadership, communication-planning and marketing. (now encapsulated in "The Outstanding Professional" programme, see www.success121.com)
If we are going to adopt a "finding clients" approach to a new sector or market, we are in for a long slog. Whether we attempt to do this my mail shots, cold-calling, advertising or PR is secondary. Thinking of the challenge as a funnel, we face the prospect of building from scratch ....
... AWARENESS that we exist, of what we do, and ...
... RECOGNITION i.e. that they have heard about us a few times, and ...
... UNIQUENESS i.e. that there is something different about our approach, and ...
... PURCHASE INTENT i.e. that they are willing to open the legendary kimono and bring a real problem to the table, and then ...
... PURCHASE i.e. they are willing to find budget and pay money for our services
That's a lot to establish from scratch. Unfortunately, many consultants spend far too much time in the early stages of the above funnel - even in their "home" market. In a new market or sector, with no brand presence, this problem can be even more intense; not to mention very expensive for the consulting firm who has to pay their consultants (and perhaps external agencies) during the "build" phase.
In two words, the shortcut is called "alliance partners" i.e. other service providers already positioned in the target market, with a reservoir of relationships, to which we can provide added-value.
In doing so
They make others AWARE of our existence, and add value in so doing
As long as we build multiple touch points, this builds RECOGNITION
We have an opportunity to demonstrate our UNIQUNESS by speaking, writing, research etc, all the time enhancing the relationship between prospect and partner as well as between ourselves and the prospect.
We can even build in a mechanism to evoke response, e.g. whereby the prospect asks for assistance, requests more information, has a no-obligation sessions etc
This in turn frees up the consultants to focus on the later stages of the funnel; having automated the "top of the hopper" via the strategic alliance process.
There is much more about strategic-alliances that can be written here. One caveat: too many alliances are constructed to "give us leads", and not surprisingly this expectation is frequently disappointed. A good strategic alliance is set up to deliver value - three-ways - and if this is taking place, it can be producing results in a matter of weeks or months.
Benefits of a strategic-alliance:
It allows us to reach decision-makers that we could never reach from outside
It harnesses the power of existing brands and relationships, rather than building these from scratch
We can tap into other people's reservoirs in a way that adds value for them and at the same time "cross-pipes" these contacts into our own reservoir. (It helps to have a communications plan in place so that this is done effectively.)
We can get honest and relevant feedback, which is particularly important when we are approaching a new sector or market
Because there is three-way value, alliance initiatives are usually low-cost - certainly much lower than the costs of promotional marketing
As consultants, we are best positioned at thought-leaders by other people, as opposed to trying to do that ourselves. The benefits of third-party credibility are particularly valuable in a new market
Nor surprisingly, the question that is often posed in our workshops and coaching sessions is: how do we begin to form strategic alliances? If there was a single answer to this question: it would certainly qualify as an elusive silver bullet. All we would then ever need to do was create the necessary alliances and our marketing problems would be solved for ever!
In practice, there seems to be three ways in which working alliances form. Some firms produce high-value materials, research or reports, which then get circulated and sooner-or later generate a response, and in turn the response generates the alliance. Secondly, some firms actively seek out alliance-partners and then collaborate with them to produce events, research etc, ... even in producing high-quality materials for a specific target-group. In this way, the alliance develops as the two companies create business-development initiatives together. Thirdly, alliance partners may meet while delivering an assignment; indeed one of them may well be a client of the other to begin with, and the trusted relationship may begin from there.
It is interesting to note that in nearly all three cases, alliances are found in the course of doing other value-based "things". This is no accident: if the focus is genuinely on providing value, sooner or later the alliances will appear. In our development work with dozens of consulting firms over the past seven years, we see this principle proved again and again. The focus on value seems to provide an almost magnetic rapport with others who think the same way.
Sometimes the consulting firm has to review what "value" means: a lightweight report that does not offer any substance and/or is blatant advertorial for the consulting firm does not qualify. Sometimes we need to get honest feedback about this; it is difficult to assess our own productions. This applies in two senses: we may be just repeating the very obvious, or we may be blind to the true value of the data that we handle very day.
Ways to collaborate with an alliance-partner
Do some research together
Put together a useful publication for a specific niche
Organise a joint-event (but be sure everyone takes appropriate responsibility for putting "bums on seats"!)
Offer complementary resource on each other's websites
Use each other's services (possibly discounted or in a contra-deal) which becomes the basis of a testimonial, to begin with
Write articles in each others newsletters or bulletins
Feature as author, speaker or host; and/or recommend accordingly to others
For an advisory board, which can also include representatives from potential customers (tip: keep it simple and informal, otherwise it never happens)
Introduce potential clients to each other (which is ideal, but tends to happen as a result of the above)
5. Should we stay or should we go
As with any new venture, there are risks involved in a new market. Regular review is valuable, but too much review can also dilute the effort that is going in, and can certainly dilute the motivation of others.
Suppose it's now six months later, and the results are still not coming. What do you do? Do you carry on with the initiative, or do you abandon the exercise and re deploy your resources elsewhere?
Obviously the answer to this question will vary from one situation to the next, but the following grid has been found to be useful by consultants (and others) who are reviewing their investment in a new sector.
Consider CONTINUING if ....
Consider STOPPING if ....
Your initial communications are generating reasonable response, or expressions of interest ... even in small numbers
You are getting nothing back, or just emails from non-prospects, no requests for a meeting: you are doing all the running
Some prospects have a budget for this ... even if they are not willing to release it to you
There is no budget, or the budget for this is shrinking, or it is totally unclear who has it
You are accessing, or close to, the appropriate decision-makers (not always the CEO!), and they are signaling interest
You can only reach influencers, "gofers" or assistants; or your are getting lots of resistance from those you meet
Your skill-base is 75% compatible with the skills being sought, and you can recruit or train for the gap
The skills being sought (or the rates being paid) do not fit with your strategic offer, nor skills you can profitably deploy elsewhere
There are significant shared values and matching culture between your organisation and the client-organisations you are meeting
It is becoming apparent that there are fundamental value-differences between your organisation and this sector; particularly as regards how people are treated
The type of work available will develop your team and add to the attraction of your firm as a place to work
The work available in this sector might result in loss of valued staff, (due to work or travel or culture) or might devalue your attractiveness to potential recruits
Working in this niche will be profitable
This marketplace will require such a high cost of management, or cost of sale, as to make conquest of the sector a Pyrrhic victory.
Prospective clients are willing to involve you in planning their investment in change or development
There is no planning process, or they are not willing to discuss it with you, or the planning and resourcing happens elsewhere which is still inaccessible to your firm
You can begin to see a client-journey: a series of steps by which prospects can find you and avail of your services
Despite several attempts, it is still unclear how you can set up stall in their marketplace and/or deliver services
Further exploration of this niche can be sustained without jeopardising the core business
Continuation of this initiative is likely to involve using vital resources of cash or people that will threaten existing profitable business
This sector can not only afford our fees, but can pay them in a timely manner
This market is characterised by non-payment, late-payment or inability to budget for our services
There is solid evidence this is a growing market, and one in which your consulting firm could (realistically) have a niche-reputation
This market is shrinking, likely to offshore, already served by established niche-suppliers, short-lived and/or loathe to invest in change
Q. What headings would you add to the table above?
6. Parting Shot
The drive for progress rarely lets up, and most consulting firms are constantly probing, constantly searching for new opportunities and new ways of doing things. At the same time, most firms also value some stability: some anchorage to core ideology, service or even client base - which basically defines who we are.
This tension - between the known and the unknown, the actual and the potential - can be a thriving source of energy. Equally, it can also be a chaotic maelstrom of anarchy which can cost a consulting form some of its best troops. The dynamics of uncovering a new market are not the same as managing a project, and the criteria of success are different. Great care therefore needs to be taken that good people are not alienated in the campaign to conquer foreign fields, and that they are adequately supported as their career progresses from "minders" to "finders".
For more assistance with this topic, you are welcome to contact the author by emailing john@success121.com
© John Niland, Success 121, June 2008. May be reproduced on condition that the "Further Information" section above is included.
Opening Up New Sectors, New Markets - To learn more about this author, visit John Niland's Website.
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John Niland
(Visit John's Website)
“Creating a world where prosperity grows
from the shared experience of success.”
As the principal coach and founder of
Success 121, John Niland works throughout
Europe. With full accreditation from the
International Coaching Federation, John’s
passion for excellence is widely
recognised among consultants, advisers and
trainers. He is best known as a speaker at
professional conferences on topics such as
“Hidden Value”, “More Revenue in Less
Time”, and “Time Rediscovered”.
To date, John has worked with hundreds of
organisations and professionals across ten
European countries. These include top
Fortune 500 firms, such as Procter and
Gamble and The European Free Trade
Association, plus over 300 entrepreneurial
organisations and individuals. He was
coordinator of the “Building Business”
track for the 2006 European Coaching
Conference and is active in providing
clean water to sub-Saharan Africa through
his support of the charity Pump Aid.
Despite his numerous roles, for John it is
all really quite simple: “It is about a
better world at work, where business
people share the experience of sustainable
success; where they prosper via the
outstanding value they provide.”
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