Why do management consultancies sometimes succeed better or worse in standing out from the crowd and reinforcing clients' perception of and trust in their own expertise in the long term?
Same same but different
Differentiation does not mean being "different" at any price. Differentiation should help potential clients to distinguish a consulting firm's offering from other consulting providers. However, distinctive positioning, which should lead to more new customers and sales, only works under two conditions:
Visibility and Client Perception
Appreciation and Credibility.
«However, a distinct market position that leads to new customers and increased sales only works under two conditions: Visibility and customer perception as well as appreciation and credibility.»
Visibility: From «moderate» and «low» to «virtually unknown»
40% of the consulting firms that we surveyed in our study on the consulting market in 2022 described their awareness among potential new clients as moderate, almost 30% as low and almost 10% as virtually non-existent.
«Almost 80% of consulting firms describe their awareness among potential new clients as moderate, low or virtually non-existent.»
Effective differentiation strengthens brand awareness: customers can better memorize a specific consulting offer and the consulting firm associated with it.
Credibility: strengthening customers' trust in your own performance
A consulting company gains credibility when it manages to convince clients to trust in its own expertise. This can be achieved when potential clients perceive a strategic competitive advantage in a management consultancy because the consulting company can realiably demonstrate that it's able to provide significant added value for clients and their (specific) problems.
«A distinct market position should be communicated in a simple, understandable and verifiable way. A competitive advantage is useless if it is not visible or convincing to potential customers.»
A distinct market positioning should be communicated in a simple, understandable and verifiable way. A competitive advantage is useless if it is not visible or convincing to potential customers. The above-mentioned study also shows that this is not always the case:
Successful differentiation: avoiding the risk of interchangeability
A unique market position is built from two sources: the company's own core competencies and the needs of its clients. Both must match; a management consultancy's competitive advantage finds its "counterpart" and its relevance in the requirements and challenges of potential clients.
Market needs are subject to constant change. This means that differentiation strategies must also be constantly reviewed for their relevance or be realigned.
The question remains: How can a consulting firm effectively strengthen its clients' perception of and trust in its own expertise?
Unique blend of experience, delivery and culture
Consulting firms differentiate themselves and create value for clients not only through visible expertise, but increasingly also through the way they work together with their clients.
However, in-depth expertise alone is not enough. Ideally, in-depth specialist knowledge is complemented by the ability to help customers solve their specific challenges and problems through rethinking, new perspectives and creativity, specifically in the customer's given business context and with the involvement and motivation of the employees who are to help shape and support these changes.
Differentiation strategies can include the following possible, usually combined components:
Specific expertise
Innovative service formats
Unique technologies
Distinct target groups (client companies that share a specific characteristic or have similar "special problems" to solve)
Unique business model
Outstanding behavioral components (e.g. persuasiveness, commitment, dedication, trustworthiness).
Differentiation strategy: raising awareness & overcoming operational blindness
Consulting companies (even established ones) often lack transparency, distance and awareness of their own competitive advantages, strengths (and sometimes also weaknesses). Market and competitive analyses are rarely undertaken on a regular basis. What is often needed is a impartial outside perspective, new ideas for issues to put under critical scrutiny so that the company's own position and strategic orientation can be reviewed. In most cases, all it needs is a fine-tuning of the existing strategic position, but sometimes the business models must be refocused and realigned, and resources, communication and revenue models must be adapted.
«Market analyses and critical scrutiny of your own business model are essential in order to objectively identify opportunities for differentiation.»
Analyze your own differentiation strategy with Cardea and unlock hidden potential
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