Niche marketing is the decision to use a mix of marketing tools to address a specific target: a niche in the market.
The place to start in selecting a niche is to conduct a marketing audit of your firm. The key areas on which to focus are the following:
- An analysis of your firm’s client base. Segment your clients by Standard Industry Classification (SIC) or North American Industry Classification System (NAICS) codes. Then, for each industry, calculate the gross fees, net fees, realization, average fees billed, average hours billed, average billing rate and number of clients. Also, analyze your client base by sales volume, geographic location and services provided. Graph this information to give an accurate picture of your client base. This will show you in which industries you are spending the most time, earning high fees, experiencing high collection rates, offering a variety of services — all opportunities for niche market development. It will also show unprofitable industries, those you should avoid.
- An analysis of your firm’s current services and skills. In addition to traditional accounting, auditing and tax services, what services is your firm competent in providing? What services does your firm provide that your competitors do not provide? Do your partners and professional staff have the skills to build a niche or should you consider hiring an industry specialist?
- The trends affecting your clients. Talk with experts and clients in the industry to understand its service needs and hot buttons. Trends that influence an industry niche can create opportunities for additional firm services, expand the scope of services to existing clients and provide services to new clients experiencing the same trends.
Using the information gathered in your marketing audit, answer the following questions prior to pursuing a particular industry or service specialization:
- Is pursuing this niche consistent with your firm’s mission?
- Is there a market? Is the market size sufficient to generate revenue goals? Is there a market demand? Will clients and prospects be willing to buy these services?
- What are the current growth rate trends for this industry?
- Is there a champion within your firm to lead the effort for each niche?
- Can your firm deliver? Can your firm meet the market’s perceived needs? Are additional resources needed to deliver? Are they accessible? A dissatisfied client can undo the benefit to your firm of having sold its services to that client.
- Do you have enough knowledge about this industry? If not, what more do you need? Where can you get it?
- What kinds of clients do you like to spend time with?
- What fees can you expect?
- Can you anticipate premium pricing or value billing?
- Can your firm reach the target market?
- Do the individuals in your firm have a network of referral sources to obtain work in a specific niche?
- What level of manpower and resources will your firm need to enter this niche and service prospects?
- What firms in your marketplace are currently providing services to this industry? What are your competitors’ strengths and weaknesses?
- What marketing effort will your firm have to make to enter this niche and serve prospects?
- Will your firm’s size affect its ability to succeed in a particular niche? Keep in mind that certain industries are predisposed to Big Four firms.
- Are there other obstacles?
Kinds of Opportunities
The following are the four types of opportunities your firm can pursue, each with its own level of risk:
- Market penetration. Better known as cross-selling, market penetration is providing existing services to existing clients. This is the least risky opportunity since you are already familiar with the service and the clients. For example, you may be developing a niche in the construction industry. Currently, succession planning is a firm specialty. This is a service needed by and could be offered to your builder and contractor clients.
- Market development. Provide existing services to new clients. This is a bit more risky since you need to learn about a new market segment. For example, you may currently offer retirement planning services to your current clients. This is a service needed by and could be offered to new business prospects.
- Product development. Provide new services to existing clients. This is also a bit risky since you need to learn a new service area.
- Diversification. Provide new services to new clients. This opportunity is the most risky since you are moving into a new line of business. Sarbanes-Oxley compliance work has provided many regional and local firms with opportunities to expand their bottom lines.
Implement the Strategic Market Plan
There are many success factors critical to the effective implementation of your strategic market plan. The more of these factors that exist within your firm, the more likely the plan will succeed. These factors include the following:
- Active support from the managing partner or director. The managing partner or director must support the strategic market plan with time, dollars and personal commitment.
- Commitment to and ownership of the plan by the entire group that will be responsible for its implementation. Without total commitment, it is easy for your strategic market plan to fall off course and things to return to “business as usual.” Hold monthly meetings to review the progress of each niche group. This will help keep your efforts on track.
- One person who will be the “driver” of the plan. This is the person who makes sure the plan stays on schedule. Your firm’s marketing director is an excellent candidate to fill this role.
- The group who will be the visionary force behind the plan. This is the group that provides the overall view and much of the input in developing the objectives and strategies. It should consist of one or two technical partners who are knowledgeable in the industry, assigned staff members and a marketing-oriented partner or marketing professional.
- An internal marketing awareness and mind-set within the firm. It is important for everyone in your firm to understand the purpose of your strategic market plan and to be knowledgeable about the services offered by your firm and the promotional materials available to market these services. Share your goals in firm meetings and internal publications. Explain the why and how of your goals and what they mean to each individual in the firm. Everyone in your firm is a potential salesperson; everyone needs to know what they are selling.
- Integrated marketing tools. Analyze how the various marketing tools will work together. The goal is to maximize all the marketing opportunities by selecting the best marketing mix. Marketing tools include but are not limited to brochures, websites, proposals, newsletters, seminars, webinars, speeches, direct mail, e-mail, blogs, telemarketing, news releases, articles with bylines, media interviews, advertising, sponsorships organization memberships, surveys and mixers with clients, prospects and referral sources. When developing a niche, it is important to gain name recognition. Brochures, Web sites, newsletters organization memberships, advertising, sponsorships and news releases can help you do that. Seminars, Webinars, speeches and mixers can help you generate leads, if you are better known in the marketplace.
- Project management tools. This is a system to track the status of your plan’s implementation and budget. This system can be a simple as a spreadsheet outlining the specific activities and deadlines of your plan and the date on which each activity was accomplished. You’ll also want to track the expenses incurred including promotional materials, CPE, entertainment, seminars and advertising to ensure that you stay within budget. Be sure to communicate this within your firm on a regular basis.
- A recognition and reward program. These will differ from firm to firm. Determine what kind of program will work best with your people and culture. An Atlanta-based CPA firm initiated a recognition and reward program. A marketing activities list was developed and points assigned for each activity. Each level of personnel, from administrative staff to shareholders, was assigned quarterly and annual point goals. Monthly, quarterly and annual prizes were awarded. Plus, at year end, those who had achieved their minimum annual point goals were eligible to earn redemption credits, which could be used to claim additional prizes. Not only did the firm achieve nearly 15 percent growth, the recognition and reward program encouraged an increase in marketing activity. Recognition and reward programs can be as simple or elaborate as the firm sees fit. In addition to offering monetary bonuses for new clients, firms may offer other prizes like dinners or tickets to a concert or show. Recognition can be given in the firm’s internal newsletter and on signs and plaques hung in the office. In his book, 1001 Ways to Reward Employees, Bob Nelson offers many other suggestions including parking spaces, movie passes and electronic equipment in addition to offering guidance on developing recognition and reward programs (Bob Nelson, 1001 Ways to Reward Employees (New York: Workman Publishing Co., Inc. Revised 2005.)).
So there you have it. Eight tips on getting your niche practice started. What are you waiting for?
This article has been excerpted from Bull’s Eye: The Ultimate How-to Marketing Guide for CPAs. You can purchase this product on CPA2Biz.com.
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Jean Marie Caragher, president of Capstone Marketing, provides marketing consulting services to CPA firms including Brand SurgerySM, marketing and strategic planning, retreat facilitation, training and marketing/business development professional recruiting. You can contact her at 757-673-6826.