How do buyers select professional services firms? Conversely, how do sellers close more sales and expand relationships with current clients? In order to help answer these questions, we conducted research of over 1300 buyers and sellers of professional services.
This research is the foundation of a new book, Inside the Buyer’s Brain, where we discovered some major disconnects in how buyers and sellers see each other and the marketplace. In the book, we uncovered some misconceptions. Here are three of the most common:
1. Sellers overestimate the importance of their own services
In our b2b market research, we asked buyers and sellers in four industry groups (Accounting/Finance, A/E/C, Management Consulting, and Technology) to rate the importance of the seller’s services to solving the buyer’s challenges.
The results demonstrate that sellers overestimate the importance of their services across all industries, with the technology sector showing the largest perception gap. Clearly, buyers and sellers see the key issues differently. And they disagree about how important sellers’ services are to addressing them. Want to close this gap and close more sales? Here are three steps you should follow:
It’s impossible to be everything to everyone, and it’s not a very sound business strategy. Specialization increases your chances of meeting the needs of a very specific group of clients, differentiating from your competitors, and getting referrals.
Performing research on your target client groups provides you a better understanding of their unique business challenges and how you can alter your services to address them. This practice is supported by b2b market research that we conducted for an earlier book, Spiraling Up, where we learned that systematic research is associated with higher firm growth and profitability.
It’s not your client’s job to figure out how you can help them or to keep track of your many service offerings. You might have the best solution in the entire world, but if your clients don’t know about it, what’s the point? It’s your job to communicate how your services address the client’s key challenges.
2. Sellers don’t know their competition
One of our most surprising findings is that sellers don’t really understand who they are competing against. How did we learn this? We did a simple thing: we asked sellers to list their competitors. Then we asked the sellers’ clients the same question. When we calibrated the results, there was only a 25% overlap.
There are two likely reasons for this common seller mistake:
1. Sellers understand the nuances among firms in their own industries
First, since sellers are more tuned in to their own industry, they may realize that certain other firms do not share their specialization, but the client may not. A seller might think, for example, ”There is no way Firm Y could do that.” Potential clients, on the other hand, make no such judgments because they lack the technical knowledge to evaluate firms in this way. Instead, they tend to lump more firms into the same general category.
2. Clients may consider a wide range of ways to address a problem
Second, clients may consider a very wide range of service providers to tackle a specific problem. For example, a business that experiences declining revenue may hire a sales trainer to increase revenue, a consultant to cut costs, or a new product guru to help launch a new product. A single problem can have many different cures.
Understand that many clients will not understand the nuances between various service providers in the same industry. Taking the time to help the client define and articulate the problem, and to communicate how your service offerings can address the problem, will make it easier for client to make the decision to hire you.
3. Sellers don’t understand how a buyer selects a firm
The research showed that sellers don’t understand how buyers select professional services firms. Sellers generally believe they are selected for their expertise and prior performance. But they dramatically overestimate the significance of those factors to the client.
The results revealed that buyers value reputation much more than any other factor when selecting a firm. In fact, a strong reputation is the single factor that can overcome an existing relationship that a prospect has with another provider.
The good news is that building your reputation can be done at the same time that you’re educating and communicating your service offerings. Deliberate content marketing and social media strategies, for example, allow you to educate clients, helping them to articulate and solve problems, while simultaneously boosting your reputation.
Putting it all together
These common seller misconceptions all circle around a theme: a lack of communication and understanding between buyers and sellers. Sellers can overcome this gap by differentiating themselves from the competition through specialization, by helping clients articulate and define their business challenges, and by educating their target audience. Sellers who follow these steps will find themselves generating more business with both potential and existing clients, and poaching clients from firms that have not yet addressed the gap.
About the Author
Lee W. Frederiksen, Ph.D., is Managing Partner at Hinge, a marketing firm that specializes in branding and marketing for professional services. Hinge is a leader in rebranding firms to help them grow faster and maximize value. Lee can be reached at LFrederiksen@hingemarketing.com or 703-391-8870.