Boutique Consulting Club - On Targeting

Hello there, this is Dan. This week's topic is targeting.

Hope you all had a great holiday pause - Happy Easter and chag pessach sameach. We all need some family time. I try to remind myself work is just a part of our lives, and one can never buy back time and stories we experience with others.

Wish you a great reading.

Estimated read time: 7 minutes.

"Who are your dream clients, and what are you doing to connect with them?"

This is the "million-dollar question" I often ask when meeting new consulting partners. This is a fair question for someone who wants to generate opportunities and win more business. Sadly, more than half of the time partners and principals can't seem to answer it.

There are two reasons why that's a powerful question to plan for growth:

1. Many firms don't know who their dream clients are.
2. The ones that know it, often don't use this information to inform their marketing and business development initiatives.

Let's talk about the first point today.

After documenting a high-level vision for your consultancy, the next step to almost every growth strategy work is to document and narrow your targeting. It’s impossible to skip this step, for the simple fact that who you choose to sell to affects every single business decision.

Your choice of a target market will determine, among others:

• The problems you can potentially solve for clients;
• Your direct or indirect competition, and your choice on how to differentiate from them;
• Feasible alternatives of a business model for your consultancy, based on your clients' preferences to hire, work with, and pay for your services.

Of course, as consequence, your targeting also directly influences your offerings, go-to-market strategy, engagement model, team and management structure, and so on.

Where do you start? In one word: Research. Consultancies who do it right perform at least some kind of internal and external research.

Internal research means looking at your own records and data to understand:

• For what kind of clients have we produced the best results?
• Who are the people or organizations we enjoy working with?
• Where are we most profitable?

This needs to be coupled with external research, which is focused on the market as a whole:

• Which industries or client segments are growing fastest?
• Is there any strong reason to expect growth to slow in the next 2-5 years?
• Is the demand in that niche so strong that even mediocre consultancies are thriving?

Based on this research, you will prioritize the right people and companies you want to engage with. Following intuition is not enough. This needs to be written down, and clearly documented.

You can hire external support to help you with this process (we will run a targeting and positioning workshop in the second semester!) or do it yourself. What I recommend every consultancy to do:

1. Start with an open mind: Brainstorm indicators, traits, and characteristics of your ideal client profile. Add both objective and subjective criteria.
2. Document "non-negotiable criteria": Discuss with your team which of those are absolutely essential - meaning you could not work with any company without those characteristics.
3. Ensure it's narrow: Too few targets and you might suffer with insufficient opportunity. Too many and you’re easily replaced with no pricing power. Evaluating this requires context on the specifics of your consultancy, but you might take David C. Baker's research as a starting point. "For an expert within the professional services sector, the appropriate number of competitors is 10–200 and the appropriate number of prospects is 2,000–10,000."

The last activity of your targeting work is, of course, to build a list of target clients.

This will also be different depending on your context. If you have a larger universe of prospects whose targeting criteria are interest-based (rather than demographics and industry), your list of targets will include those who have engaged or responded to marketing initiatives. If you sell to Fortune 500 companies, however, you can build that list manually.

Cleaning up the CRM. Deciding, one by one, which companies out of these 50, 500, or 5,000 your marketing initiatives should target. Finding out the names and titles of the specific people that you need to connect with...

This is the kind of work that is boring but needs to be done. Continually. But it will make a disproportionally positive impact on your marketing effectiveness and sales pipeline.

"You have limited time and money. Don't waste either pursuing the wrong buyer or nonbuyers."

Source: Alan Weiss, "Million Dollar Consulting"

It is also a good idea, initially at least, to focus on one (ideally CXO) target buyer role. High-growth consulting firms were 55% more likely to specialize in serving a specific role in client firms.

Source: Hinge Research Institute, "2018 High Growth Study: Consulting Firm Edition"

What if you could only work with 10 consulting clients in your lifetime?

The average firm needs much more focus. How can you create initiatives that are relevant to your prospects when you don't know who these organizations are? How can you invest time in building relationships if you don't know who are the exact people you want to connect with?

You are selling consulting and advisory, not products or generic services. Adopting a narrow targeting and positioning ensures you are scarce in the marketplace. If you solve the right problems, you only need ONE dream client to drive significant revenue and profit to your pocket.

Now question why you are marketing to everyone.

You can (and should) pursue fewer targets with a greater level of effort each. Pick one of the companies on your dream list. Market to them. Win them.