In order to compete in the accounting profession in the new century, firms must focus their energies on building industry and service specializations or niches. Client survey results tell us that industry knowledge is one of the main reasons why prospects select a CPA firm. Industry specialization has been cited as a factor of local firms’ ability to survive and prosper.
The many benefits of niche marketing include high profitability, services that are of high value to clients, more easily identified prospects and work that is not seasonal. Finally, niche services lend prestige to your practice.
Niche marketing can also provide personal and professional challenges and rewards. In fact, industry consultant David Maister asserts that you can only become successful if you care about what you are doing.
There are benefits and risks associated with niche marketing. Therefore, do your homework before you decide to utilize a niche marketing strategy for your firm. Review this chapter carefully before deciding whether your firm is ready to market an industry specialization.
Benefits of Niche Marketing
The following list includes short descriptive summaries of the benefits of niche marketing:
- High profitability. Niche marketing offers higher profitability for two reasons:
- Clients are willing to pay a higher fee for industry expertise.
- There is less danger of losing clients if your firm is the industry specialist.
- Economical. Marketing dollars are being spent on specific niches rather than random efforts.
- High-value services to clients. Firms specializing in an industry niche have the ability to offer services far beyond an audit and tax return. There are often opportunities for consulting engagements that benefit the client’s bottom line.
- Easily identified prospects. By utilizing basic market research techniques, firms can identify prospects by geographic area, sales, number of employees, Standard Industry Classification (SIC) code or North American Industry Classification System (NAICS) code and CPA firm. This information can then be used to define your market.
- Fewer geographical barriers. Being known as an industry specialist opens the door to clients outside your local marketplace. The skills and services offered by your firm can be leveraged to build your client base in other geographic markets.
- Personal and professional challenges and rewards. Being known as an industry specialist provides opportunities and exposure for your partners and professional staff. Also, building a book of business is an effective career path to become a partner.
- Easily identified competition and strengths and weaknesses. While researching your prospects, determine the CPA firms that currently serve these companies. Then, research the CPA firms to find their industry specialists, marketing products and industry involvement.
- Prestige. A reputation as a specialist in a specific industry makes your firm more valuable to your clients and leads to additional marketing opportunities, for example, published articles, speeches and leadership positions in trade associations.
- Year-round work. By expanding the range of services offered to clients, it is more likely that you will provide services on a year-round basis, unlike traditional, seasonal accounting work.
- Increased knowledge of your clients. By focusing on a specific niche you are also able to focus on continuing professional education (CPE), trade association memberships and outside reading on topics of need and concern to your clients. This in turn makes you better able to serve your clients’ needs and more valuable to them because you have an enhanced knowledge of their industry.
Dangers of Niche Marketing
The following list includes short descriptions of the dangers of niche marketing:
- Misidentifying the niche. Research is very important when identifying your niche. Be sure there is truly an opportunity by defining the niche by industry or industry segment (for example, electrical contractors) in a particular metropolitan area, sales range and number of employees.
- Misdirecting the message to the niche. Define the message you will send to your clients and prospects. For example, it would not make sense to be known as a high-cost provider in a not-for-profit niche.
- Relying too heavily on one niche. The danger here is a downturn in a particular market (for example, real estate) that could adversely affect the future of your firm if that market represents the majority of your client base.
- Services may not recur each year. Consulting services may be one-time projects that would need to be replaced by new consulting services to continue growth.
- Increased travel is necessary to reach prospective clients in narrower markets. Your geographic market may expand as opportunities for new business increase. This may result in increased revenue for your firm but may also result in increased staff turnover.
Niche marketing is the decision to use a mix of marketing tools to address a specific target: a niche in the market.
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 is president of Capstone Marketing, providing marketing consulting services to CPA firms including Brand SurgerySM, marketing and strategic planning, retreat facilitation and training. You can reach her