Warren Buffett claims that “Diversification is for people who don’t know what they’re doing.” So why do so many of us cast a wide net when selling our services?
In the short term, brand diversification may be a tempting strategy to cover the spread and mitigate your risk. But does it really work? Or does it risk you looking like a jack of all trades and master of none?
When you specialize, your market pool may become smaller — but this forces you to dive deeper to identify solutions and services that address very particular needs, instead of staying at surface level, where everyone else is floating along. Becoming an expert in a smaller area of business is a bold move, and it’s challenging because you need to commit yourself to a clear focus instead of constantly adapting to the whims of the market and your client base. But it can be highly rewarding.
A More Focused Brand Story
I hate to say it, but simply having a compelling brand experience is no longer enough to differentiate yourself in today’s modern marketplace. We’ve entered an era where every business, in every sector, has adopted the philosophy of brand. Of course, some organizations manage their brands better than others, but too many have created brand experiences based on processes that are no longer unique — like customer/client service. There is simply too much competition for one-size-fits-all services.
Having a focused area of expertise gives your brand story more definition and your content marketing greater relevancy. Instead of spreading your resources to keep all your bases covered — and therefore not producing anything really meaningful — you can focus your thought leadership on one area and produce content that controls the conversation, rather than merely adding to it.
For instance, I follow several members of the architecture and design community on social media, and it pains me how often they all share the exact same content (usually from Fast Co. Design) and try to pass it off as a unique insight. Now, I’m not saying that you shouldn’t share articles that you think will be of interest to your audience, but if you’re an expert in your field, you’ll likely have something distinctive to add to that article. Or better yet, that article will inspire you to offer your own perspective — because as content sharing becomes more ubiquitous in B2B and professional services sectors, the best way to increase page views is through sharing viewpoints.
More Meaningful Client Engagements
There’s an inherent power imbalance in any client–supplier relationship due to the simple fact that the client controls how much they’re willing to pay for the supplier’s service. That limit is based on many needs and factors, but a big one is your competitive set: the easier it is for a client to replace your services with someone else’s, the harder it is to demand a premium price.
But if your service isn’t easily replaceable, that power dynamic changes. The client will be willing to pay your rate to access your expertise.
Say you’re an architecture firm. If you’re simply selling your skills in architecture, you’re competing with every other firm in the market. So the client has the choice to pick which firm they want to work with — and although they may have preferences based on aesthetics or ‘process,’ your price will still be compared against everyone else’s. But if you specialize in designing smart office buildings for technology companies, then all of a sudden, you’re in a field of your own. Sure, your pool of prospects may be smaller, but if your expertise is relevant to them and addresses a specific pain point, they will hire you because they don’t see you as having any competitors. Your expertise becomes irreplaceable.
There’s a reason why the world’s most successful entrepreneurs and marketers tout the advantages of the Blue Ocean Strategy. It’s a more profitable strategy than continually trying to compete with other like-minded service providers. Not only can you command a premium price, but when you identify a specific niche with a select customer base and dominate it, your strategy becomes a concrete filter for hiring and marketing decisions. A clear focus makes it much easier to systematize your process and train team members to effectively execute it. This frees you to build a profitable platform to expand your model to other markets.
Scale-up Success Stories
The biggest companies in the world actually started out very focused and small. Today, the Apple iPhone has mass appeal and serves as the one device that connects with every single aspect of your life, but it started as an iPod that was highly focused on revolutionizing digital music sharing. Only when Apple became the expert and dominant player in that specific niche was it able to scale and take over the gaming and communications industries.
PayPal started by providing an easy digital payment system specifically for collectors trading on eBay. Once that market was captured, Thiel, Musk and the team scaled to other consumers requiring online payment capabilities.
It can be hard to claim an expert positioning. Maybe that’s modesty, because it feels extremely ballsy to have a brand story that’s so narrow. Maybe no one wants to feel like they’re alienating an existing client base. Maybe it’s FOMO. But if you look at your existing base right now, it’s the projects or clients that are outside your expertise that will eat up the most resources, and ultimately, your profitability.
From experience, narrowing your focus is far from constraining. It’s actually liberating.