The 5 Ways Consulting Firms Can Differentiate

Here's what consulting clients see as different and valuable.

Yesterday I wrote about the "value problem": the fact that even clients who have a positive view towards consultants are often skeptical whether their investment is actually generating value for money.

Taking relevant insights from a recent research published by Source Global Research, we saw that there are three different levels at which clients think about the value created by consultants:

  • Level 1: Delivering against expectations. Did the firm deliver what they were contractually obligated to, in the timeframe and to the budget that they promised?
  • Level 2: Differentiation. Did the firm help us to achieve something that we couldn't have achieved through our own resources or by working with a different service provider?
  • Level 3: Personalization. Did the firm do anything to make my life easier, help me achieve my personal ambitions, or strengthen my position within my organization?

Finally, I ended the post with a question for you: If you agree to focus on differentiation to maximize the value perceived by clients, what do we bring to the table that no one else can?

The Five Dimensions Of Value

Clients will hire your consulting services because, ultimately, they recognize they don't have enough in-house resources and capabilities to achieve a given goal.

But in practice, this can mean different things for different people. When researchers asked clients why they hire consulting firms, they found mentions to five main reasons (or dimensions):

  • Better: Consultants help us produce better project outcomes than we could achieve ourselves.
  • Easier: Consultants simplify the project delivery process and make it easier for us to make decisions.
  • Cheaper: Using consultants is less expensive than completing projects with internal resources or using other types of service providers.
  • Faster: Consultants help us achieve results faster than we could ourselves.
  • Safer: Using consultants minimizes the risks associated with the project.

If you want your clients to see value in hiring your services, you need to show proof of competence in at least one (but ideally more than one) of these dimensions. This is how you differentiate.

It's worth highlighting that there's no single way to create value within any of these five dimensions. If you want to be seen as a safe alternative for clients, for example, you could:

  • Take some of the project risks by adopting an outcome-based pricing, or adding a guarantee to some of your services;
  • Produce clear project documentation or standard procedures for the client;
  • Ensure compliance with industry regulations or standards.

All of these initiatives will convince clients of your value add.

Picking Your Dimensions

If you want to build a reputation as a value-adding partner, you need to understand what value means to your clients. That's when the importance of research, and knowing how your prospects think and behave comes into play.

Your clients' industry plays a big role. Companies in the manufactory industry, for example, may be more likely to care about safety, whereas clients in fast-moving sectors like tech and direct-to-consumer retail might want to see results as quickly as possible. But even within the same industry, companies with a different culture and personality of the leadership team will seek out some types of value over others.

These dimensions are also key for your positioning strategy. While some firms are seen as generally competent across all five dimensions, others shine by focusing on just one or two of them. Choosing which you want to be associated with - and ensuring that is clearly communicated in your marketing material and brand identity - is a great way to make competition irrelevant.

Thanks for reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

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