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How to become a niche agency – PART 3

WHO not WHY…

In my previous articles on how to become a niche agency, I outlined the benefits of a niche positioning. I also explained what I see as the differences between a Value Proposition and a Positioning Statement. Here in PART 3 of this series, I’m going to start to unpack my approach to building a Value Proposition so that you as an agency owner can apply these principles to your own agency (or any similar business for that matter). Firstly, and at risk of being controversial, I suggest you start with WHO you’re targeting!

I’m a long-term admirer of the speaker and author Simon Sinek. I’m naturally a big fan of his best selling book, Start with Why. I’ve spoken to many people who use this book as a reference point when looking at positioning. They first look for the WHY in their business proposition. They try to find, identify or clarify their purpose, cause or belief.

For some this makes sense. A compelling purpose or WHY is a powerful thing and forms an excellent foundation for creating a Value Proposition. For the majority of agency owners though, identifying a WHY is a difficult and frustrating exercise. In my experience, it often stalls the positioning process before it has really got started.

I think many often overlook the fact that Sinek’s book is fundamentally about leadership, not marketing.

Simon reminds us frequently that “People don’t buy WHAT you do, they buy WHY you do it”. I totally agree. If you’ve read my previous articles on positioning, you’ll know I get frustrated when I see agencies marketing themselves with WHAT they do (simply listing the services they provide). 

However, I believe it’s often particularly difficult for agency owners to identify their WHY. I also note that Sinek’s mantra “People don’t buy WHAT you do, they buy WHY you do it” in itself starts with People (the audience). The people who are your existing or prospective clients. 

My point is, if you’re not clear on your market then how can you effectively communicate with them? Moreover, how can you effectively build a business designed to serve them? That’s why I always recommend you start with WHO you’re targeting. WHO is your target audience?

Why is the WHY so hard for agencies?

Marketing agencies are not unique in finding a purpose or compelling WHY difficult to easily define.  However, as a sector, they do share some similar characteristics that make defining a WHY particularly challenging:

  1. Reason for starting – Agencies are often started by people who have worked in other agencies but decide they want to go out on their own. Their purpose is really just to work for themselves. This is a great thing, but it doesn’t translate well into a customer-facing value proposition.
  2. Reason for being – Agencies, particularly those with a more creative focus, are set up by people wanting to test their own skills, to create work that they themselves are proud of. To work on clients that they like or have an affinity with. Again, this is a perfectly valid reason for starting an agency, but it’s not an easy thing to translate into tangible a client benefit.
  3. Standing Out – In such a crowded market it is hard to stand out. Of course, this is exactly the reason we are considering positioning in the first place. But, with so many similar agencies with similar offers in the market creating a distinct message supported by a unique mission is difficult. 
  4. Intangible Assets – As service businesses, agencies naturally don’t have a product to guide or help them crystallise their WHY. For example, they can’t point to wanting to produce the finest quality, ethically farmed meat. Or they can’t claim to be driven to produce cosmetics that don’t contain any harmful chemicals and are kinder on people’s skin.
  5. Client motivations – A client may use an agency for a number of different reasons. Frequently the defining success factor of the relationship is more sales for the client. This works well as a shared goal, but I’ve never come across a situation where the agency has to encourage the client to embrace the concept of selling more. Its a very valid purpose, but one which doesn’t feel particularly differentiating and is perhaps a little too obvious.

I’m not suggesting that the WHY should be ignored, far from it. I’m just advocating a more pragmatic approach.

Start with WHO

I’ve worked in the industry for nearly 25 years. With the possible exception of those 15th round of client amends moments, I’ve seen few things cause more frustration or the rolling of eyes than strategic client briefs that fail to mention the target audience.

“How can they possibly expect us to create great marketing communications for them if they’re not explicit about who they’re targeting?” would be the cry. 

It’s the very first thing we looked for in the brief. If it wasn’t clear or focussed enough, it was the very first thing we fed back to the client. Have you ever taken a strategic client brief and not asked them who their target audience is?

Eat what you cook

As agencies, we often fail to heed our own advice. We spend hardly any time dissecting our target audiences. We rarely question the need to become more focused. We seem to find a positioning “for everybody” perfectly acceptable and often desirable.

Defining who your agency is for is important. Defining who your agency is NOT for is equally important.  The exercise of positioning your agency in a niche is not about appealing to more clients. It’s actually about attracting fewer clients, but making a stronger connection with them. Being more relevant to them and their needs.   

Its also about differentiating yourself. Positioning yourself as an expert in the minds of your target audience. Clearly communicating you are “for them”, already sets you apart from the thousands of other agencies offering similar services but in a less targeted way. You can connect more easily with a smaller audience and when you have a connection with somebody it’s far easier to sell to them.

My advice is to treat yourself as your own client. Take your agency through the same process you would if you were talking to a client about positioning strategy.  Start by segmenting your market. Ask yourself who your target audience is. Encourage your colleagues to get as tight as possible to the target market. A niche is not your entire market, try and find your niche.  Build some audience personas to test your approach and help you and the team become familiar with the target audience

Take charge of your own destiny

As I’ve said, defining a target market is challenging for most agency owners. Many of you will already be working with a wide spread of clients. Either you or your team may crave the variety of work that this in theory at least, provides. Some of you may be worried that niching or focussing on a more tightly defined target market will present problems such as conflict of interest. Some of you may be unwilling or afraid to change.

Having run my own agency and worked with many others, I can empathise with these points of view. I believe passionately though that niching your offer and – at the very least – marketing your agency to a more specific target market is the way to grow a profitable independent agency in the current market.

If you’re still not convinced, maybe this thought will tip the balance. I’ve met 2 agency owners this year that, in slightly different words, lamented that they “don’t get to choose who we work with” i.e. they regularly attracted and won new business, but felt they had little influence over what sector or type of client they won. This really struck a chord with me.

If you are an entrepreneur you’re in business for many reasons but one of them is control. You have the ability to decide what your business does, when you do it etc. Of course, all businesses have customers of some sort and you need to keep them happy if you want to succeed. But the ability to decide what you sell and WHO you sell to is a fundamental part of being a business owner. Why then do agency owners feel that they have no control in this area? Lack of confidence may be one factor but I believe the root cause is that they don’t set out to work with a target market.

WHO you want to work with is as important as WHAT you do and a fundamental part of WHY you do it.

How to define WHO

When I work with established agencies on defining WHO they should target, I often find that my clients want to start with a wish list. They focus on which clients they would really like to work with and/or which sectors they have a personal affinity for.

This exercise has some value of course. It uncovers what motivates people and where they would like their business to go. They can become quite excited (particularly if they feel constrained by working with anybody that comes their way as I suggested above).

The visioning process can be counter-productive though. An agency’s perfect clients may be some way from the reality of their current situation. Whilst I’m all for setting ambitious goals, blue-skying the client list can quickly become demotivating.

What I find works better is to start with who they are currently working with and refine the target market from there. This doesn’t mean that the agency must continue to target the same clients, but it highlights the agency’s strengths and track record and who they are best suited to. If you dig deeper sometimes you can be surprised by what treasure you can uncover.

I follow a 4 stage process which is outlined below:

1. Type of Business

Firstly I look at what type of businesses the agency works with. This in itself can be cut many different ways and is an interesting exercise. Some of the areas I explore: 

  • Are the clients in B2B or B2C (i.e. start with who they – your clients – serve!)
  • What market sectors, industries or verticals are the clients in?
  • What sizes of companies are they?
  • Where are they located?
  • Do they share similar problems (even though they might be in a different industry)?
  • Do they share similar audiences (even though they might be in a different industry)?
  • Do they have an established marketing department?
  • Do they have in-house capabilities for marketing production?
  • Do they work with other agencies?
  • Are they growing, struggling, flat-lining?
  • Are they value/premium brands?
  • Etc, etc…

2. Type of People

An agency’s clients have 2 identities. They’re a business first and foremost, but they are also a collection of people. I like to uncover not only what types of clients businesses an agency works best with but the type of people they are most suited to working with. What people does the agency support best and help to thrive? Who do they work with when they get the best results?

Some of the areas I explore: 

  • How senior are your main/regular client contacts?
  • As marketers, how sophisticated and experienced are they?
  • Do they control the budget?
  • Do they have a team?
  • What motivates them in their career?
  • What motivates them to work with you as an agency?
  • How would you describe the dynamics of the relationship?
  • What problems do they have?
  • Etc, etc…

3. Impact you (can) have

Thinking about the current clients I then go on to explore the impact that the agency has on – and for – them.

Some of the areas I explore: 

  • What tangible results do you deliver for your clients?
  • What’s special about how you deliver these results?
  • How do you make your clients’ lives easier?
  • Why do you deliver good results for some and not so good results for other clients?
  • Etc, etc…

 

4. Not for you

Finally, I look at refining the list to see whether there are any client types (not individuals) who the agency doesn’t want to work with.

  • Which type of clients would you resign immediately (if you could)?
  • Which type of clients would you never work with (this might be industry-specific and related to your values e.g. SOME agencies might prefer not to work with clients in the gambling sector)
  • Be honest, what type of clients don’t get results from you.

N.B. This exercise comes with a caveat. A reminder that business is not easy and the perfect client doesn’t exist. We’d all like to think we could live in a world where clients don’t change their minds and budgets weren’t finite and/or timescales were flexible. The reality is we don’t and therefore a dose of reality often needs to be applied here.

The importance of WHY

I hope this article has achieved 3 things as a minimum:

  1. Convinced you that thinking about your target market first is crucial to a great Value Proposition.
  2. Highlighted to you that the deeper you can go into your target audience, the more information you will have and the easier they will be to find and convert.
  3. Given you a head start on how to go about defining your WHO.

As a final point, by suggesting you start with WHO you’re targeting, I want to make it clear that I’m not for one second saying that having a compelling WHY is not important. Nor is it impossible for agencies to find.  

Indeed, having a strong purpose or mission is vital for the modern organisation. Studies have shown that it’s particularly important and motivating to younger people.

For the reasons outlined above, I just think it is easier to start to piece together a niche positioning and articulate a compelling Value Proposition for an agency when you start with who.

Next Time…

In Part 4 I’m going to be looking at WHAT your agency does for its clients.

You’ve defined a market and have a clear focus on WHO your clients are. But WHAT do you actually do for them? How does it really add value and what motivates them to buy from you? If you’re thinking we build websites or we do their digital marketing, then I think you’ll find this next piece interesting. Stay tuned.

If you don’t want to miss it, sign up for my email updates here.

How to become a niche agency – PART 3
Gareth Healey

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