Building a Service Factory: Interview with Sean Murphy

Sean MurphyI had a chance to interview the always interesting Sean Murphy of SKMurphy on the concept of a “Service Factory.” We edited our conversation to 20 minutes. An edited transcript follows.

Bruce: Can you explain what you mean by the “factory in your service firm?”

Sean: To me, it’s the specialized set of tools that you bring to bear on a problem and typically this may be masked, at least in part, from the outside, even from your customers. In the theater it is the area behind the curtain or backstage.

Bruce: Say a little bit more about that in terms of are you talking about infrastructure? Are you talking about things that people are served with but they don’t really realize that it’s a special offering?

Sean: At a high level, it’s decomposing your business into what is in front of the customer and what else that you do that may not be in front of the customer.
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Marketing’s Surprising Impact on HR

HR Challenges

Great thinking is timeless. Proving this point is the wisdom of Peter Drucker. Eclipsed for many years by trendier thinkers, Drucker expansive thinking is coming back into vogue. Among his most famous quotes is his assertion that, “A business has only two functions: marketing and innovation.”

Drucker’s point is not to diminish other activities, but rather that “marketing” is a horizontal activity reaching into all aspects of a firm. It’s a core function at the very heart of the business. Over the next several weeks I will discuss how marketing’s impact reaches parts of the firm not generally associated with marketing.

Today, I discuss marketing’s impact on HR.

Conventional leadership wouldn’t look to marketing for help in overcoming the top HR challenges of retention, engagement, succession, and recruitment as identified in a recent survey by SHRM/Globoforce. For a less conventional thinker, doing so might give you a competitive advantage. Drucker, of course, would agree. Read on to see how.

Top HR Challenges

First, a brief explanation of how I see the role of marketing will help explain the connections I detail below.

The foundation for effective marketing is understanding, then communicating, why a firm’s best clients select that firm in the presence of other, often excellent, options. Not why the firm’s principals would select their own firm. Not why clients ought to select that firm. Why they actually do.

This is the essence of what distinguishes a specific firm and makes it unique in the eyes of its best clients.

In my experience, 60-80 percent of professional firm leaders fail to fully grasp their own firm’s “secret sauce.” The result leaves their firm under-differentiated and the firm’s growth and profitability at risk. Luckily for most firms, their competitors suffer in exactly the same way, focusing on the tasks they perform do rather than why their best clients select their firm. 60-80% of professional firm leaders fail to fully grasp their own firm's 'secret sauce.' Click To Tweet

Once decoded, a Strategic Marketing Plan is the best vehicle for transmitting a firm’s decoded secret sauce across the entire firm.

Now, back to the SHRM/Globoforce survey.

Employee Engagement

The number two challenge, employee engagement is the difference between having a job and being part of a larger endeavor. When employees understand why the firm’s best clients select their firm–these are the most profitable clients and the ones most enjoyable to work with–it’s easy for employees to see how their individual actions contribute to the firm’s overall success. When managers and the rank-and-file alike grasp the big picture, autonomy and self-direction can replace enthusiasm-sapping command and control. That’s the sort of environment that engages the best employees.

The marketing focus on why clients select a specific firm helps mid- and lower-level employees–the ones often tasked with creating the primary deliverables–do their jobs. They require less supervision because they have direct knowledge of what the client expects and clearly see how their specific actions contribute.

Employee Retention/Turnover

Retention is not all about money, although firms with above average retention can afford more generous compensation. Spiraling salaries attempt to fill in for something else that’s missing. For employees, seeing how they are making a difference offers a huge psychic reward. Better employee engagement not only makes for more productive employees, it leads to employees interested in the long haul. While this may be less important for technology firms, it is critical for building and maintaining the client relationships at the core of professional firms.

Young professionals often must “pay their dues” for many years before being entrusted with important client relationships. For years they toil in the shadows, absorbing via osmosis key lessons about how the firm works with clients that the senior partners can’t fully articulate themselves. Decoding the firm’s secret sauce to release the firm’s differentiating story lets firm leadership entrust these up-and-comers with responsibilities not available under the “paying your dues” model at rival firms. In today’s overheated job market, the best employees need a reason to stay.

Recruitment

Greater autonomy and responsibility is also a good recruiting tool in the fight for the best talent. Incorporating a firm’s brand into recruiting isn’t a novel idea. The best firms increase their odds of finding the “right” candidates by using their brand to attract via self-selection. Employee referrals work towards the same goal without explicitly telling candidates what makes for a good match.

The foundation of the firm’s marketing strategy is also a vehicle for attracting well-matched candidates. Candidates can’t self-select for a firm’s culture and approach unless the firm is able to communicate what distinguishes that firm and makes it unique in the eyes of its best clients.

Succession Planning

Number 3 on the list is a growing issue at many services firms as founders reach retirement age. They must worry not only about leadership transition, but also succession in the business development role. For many clients, services firms are closely associated with one of two key leaders. When these leaders leave the business, clients often have few reasons to continue with that firm. Buyers see this as a significant risk, and often deeply discount purchase prices for professional services firms.

The decoded knowledge of what truly differentiates the firm at the heart of a broad marketing strategy–the firm’s secret sauce–smooths a variety of succession issues. First, by connecting and aligning the entire firm with a common playbook–why clients select their firm–it’s easier to operationalize what makes the firm successful in the market. The impact on the firm’s valuation at sale is even more profound. A broader and better understood business development process is less dependent on a few key individuals. Seeing this, buyers have greater confidence in the firm’s ability to continue to generate revenue and growth. Less risk translates into a higher sales price.

Additional Impacts of Marketing

The impact of marketing extends beyond the four top challenges. Viewing a business through this broad lens makes Drucker’s wisdom easy to appreciate. Marketing relegated to merely supporting sales and business development is a business engine not firing on all cylinders.

How else does marketing impact the challenges facing HR? Leave a comment below.

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Trust or Confidence: Which Will Make Your Marketing Strategy More Successful?

Confidence requires focusWhat’s the difference between success and failure? More than anything else, it comes down to focus. Lots of companies come up with the right priorities, and still fail. Success requires focus. Focus takes more than doing the right things; focus requires not doing everything else.

Power and impact flow from focusing concentrated effort on a very defined goal. The true power of focus comes less from determining what you should do than from decisively acting to stop doing everything else. Anything less is merely piling more activity onto an already challenging stack. That’s not focus. Scaling back may help at the margin, but the resources recovered–be it time, money, or attention–are disproportionately small until the non-core activity is actually eliminated. You’ve got to stomp it out completely to see any real gains.

While focus requires you go all in, the incentives to keep at what you’re doing are strong. Nowhere is this more true than in marketing and business development for professional services. Most marketing is akin to throwing mud at the wall and hoping enough sticks, which is the opposite of focus. Professionals are reluctant to kill off any activity that created business–or even might have created business–in the past. The emotional fear of missing an opportunity swamps the rational knowledge that the right focus produces more in the long run.

As a result, the number of marketing initiatives in most organizations keeps growing over time. Well-meaning efforts at pruning are inexplicably difficult and generally fail.

Two approaches: Trust and Confidence

There are two ways to overcome the reluctance to let go of non-core activities that stands in the way of real focus. To avoid semantic issues, let’s assert that “trust” involves faith in someone else’s ability, and “confidence” flows from your own understanding of the situation. That is, trust has a greater external component while confidence has a greater internal component.

  1. Trust me.” The bread and butter of traditional consultants, this approach is built around the consultant. You must trust their expertise and experience regarding which doors to enter and which to close off. Most consultants love this situation because it’s all about them. Because they need you to trust them, they build you up with talk of how you must be bold and not afraid of change.
  2. Your confidence.” Instead of trusting me, the consultant, to have all the answers, you merely have to believe that my process will lead to the right answers. This is a fundamentally different approach. Confidence comes from the process, making the experience open and transparent. At its core, the confidence approach is about teaching more than showing. It requires a certain humility.

Why “trust me” doesn’t work over the long haul

The big failing of the “trust me” approach is it flies in the face of our own experience that most markets are diverse and heterogeneous. If markets are diverse and heterogeneous, then “industry experience” is overrated (heresy alert) and what works for other firms won’t necessarily work for your firm. If a customized solution is needed, then you must trust that the consultant knows your business really, really well. Not just your industry, but your business.

Viewed another way, why is it a requirement to be “bold” or “fearless” when marketing your business? You can still be courageous and innovative in your marketing without being fearless.

Being bold and fearless feels great–at first. However, once the consultant is gone, you don’t really know how to deal with changes in the market or unexpected events. If results aren’t uniformly great, your confidence slowly erodes. You look for familiarity and start covering your bases. Before you know it , you “expand” your focus. You’re back to throwing mud at wall, and hoping you find enough that sticks.

What Confidence does that Trust can’t

By contrast, when focus is fueled by a personal understanding of why your best customers select your firm, you are inherently prepared for the unexpected and how to react. I emphasize to my clients that the market environment is going to change and they will need to adapt. A deep understanding of “why” creates confidence. For non-marketers, this is a brave new world. Before long, they begin feeling the power of real focus. The confidence that accompanies their focus is critical for vigilance against the return of undead activities that refuse to die. Marketing no longer seems like a black art–or if you prefer, smoke and mirrors.

Of course, the same factors work to your advantage when talking to potential clients. A strong focus on helping them understand why your firm is the best choice for their needs and situation, aids them in making a confident decision to work with your firm.

Putting Confidence in your marketing strategy

I build confidence in my process by making it open and transparent. By exposing and uncovering the actual reasons your best clients select your firm, you’re able to focus directly on winning more of these “best clients.” With no marketing-speak or techno-babble, even non-marketers clearly see where they need to act and focus. No leaps of faith required. It’s marketing engineers and other professionals can understand and appreciate–and implement with confidence.

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What You Can Learn From Your Consultant’s Methodology

5-step process
Every good consultant has a methodology. In a world of intangibles, it’s how they differentiate themselves, and as with any other business, they can charge you more when they successfully differentiate what they do. This isn’t news. You may do the same thing with your clients.

Thinking a bit about how you buy services can help you as you sell your own services. Put on your buyer’s hat and let’s think about how you hire a consultant.

What do you actually care about?

Does a specific methodology lead to better results? That’s what you care about. If the primary goal of the methodology is marketing and differentiating the consulting firm, better results aren’t a given. Well-marketed solutions frequently outmaneuver technically superior ones. How can you look past the hype and pick the best solution for your firm and needs?

Before you sign on the dotted line, you need confidence the consultant can deliver results for you. Does the consultant’s methodology give you confidence they can deliver the results you need?

Is this methodology right for you?

First, any methodology you don’t fully understand is suspect. If you don’t fully understand how the consultant operates, what’s the chance that you will fully understand–and have confidence in–the recommendations? I’m process-oriented, so even a great track record, if it’s combined with hand-waving, generates little confidence for me. Know what gives you confidence to act on the consultant’s recommendations.

Getting what you really want

The most valuable thing you can get from a consultant is a fresh perspective and insightful analysis enabling you to make strategic decisions and execute the necessary tactics. Is the methodology clearly built to deliver this kind of result? A disconnect I often see is a methodology designed to support a pre-ordained recommendation (all paths inevitably lead to X) rather than recommendations that are an outgrowth of perspective and insights developed by the methodology. If you are expecting externally-centered consultant thinking from an internally-centered contractor methodology or mindset, disappointment is your destiny.

To get past the hype, try to define what you mean by results. Your macro goal may be seeking ways to grow profits, expand into new markets, or reverse a slide in profits or revenue. Unfortunately, you can’t get there directly from here. You need recommendations you are able and capable of acting on. “Moderate” results that come with peace of mind are what a lot of executives actually want–but nobody ever comes out a says that. Try to think beyond the obvious.

Now, put on the other guy’s hat

A hard, honest look at how you buy prepares you to for the same hard, honest look at how you market and sell. What do prospective clients see when they look at your firm?

Your methodology is the repeatable process that ensures consistent deliverables. A cutting-edge process for achieving breakthrough results is notable in it’s own right. For most firms, the real value of process or methodology (from a marketing standpoint) is the confidence it creates in the client’s true selection criteria. It might be that the deliverables reflect the application of hard science. Or that you looked under every rock for potential options. Or that your final report isn’t built on guesswork.

Where to focus

Remember, marketing that helps clients make the right decision for them (not for you), is a huge benefit to your clients. You win by attracting more of your best clients. An appropriate methodology can add clarity on both the business development and delivery sides of the equation.

The Internet pundits talking to their vast email lists will tell you that you must have a unique methodology. Not true. You must be able to gain the confidence of your prospect that you are better able to address their true selection criteria better than other options. A branded methodology is only one way, and not always the best way at that.

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4 Hard Truths About Your Marketing Strategy

You need a marketing reality check
Regardless of what form your firm’s marketing takes–be it through face-to-face contacts, on-line, or a combination of the two–much of the time, money and other resources firms put into their marketing creates little or no benefit in the form of additional sales and profits. The big question is, which activities are valuable and which are wasted? For B2B and professional firms depending on seller-doers, the stakes are especially high.

Finding the marketing that works is critical to your firm. It’s also anything but an exact science so there’s not a precise formula to dial in. The resulting fear, uncertainty, and doubt paralyzes many firms into dangerous inaction, or the pressure to “do something” lures them to the Siren-song of consultants eager to gobble up your budget.

Just because it’s hard to accept doesn’t make it not true

The first step to discerning where you should commit resources and where you can safely prune is accepting four hard truths. It may take you awhile to see the wisdom, but once you do, your perspective is forever altered.

  1. It’s not your prospects’ job to care about your firm. It’s your job to make them see your product or service as essential. Your customers more than likely see your firm as a blip in the much larger effort of running their business. You’re never as big on their radar screen as you imagine. Accept that and you’ll re-orient your perspective around how you fit into your customer’s business rather than how they fit into yours.
    It's not your prospect's job to care about your firm. Click To Tweet
  2. On paper, your competitors are just as good as you are. Your prospects have heard it all before. If you don’t believe me, go look at your top competitors’ web sites. If you’re saying you are the “best value,” chances are strong that other companies are saying the same thing. To your prospects it becomes a cacophony of marketing-speak that is all too easily dismissed.
  3. If everyone’s great, you’re all average. When your competitors are saying the same things, it’s no longer a differentiator. This holds regardless of whether the competitive claims are true. You don’t want to be average. Average is where companies go to die. If not the entire company, certainly the profits. Average is the realm of commodities and where pricing is the only factor buyers can use to figure out who’s best.
  4. Your priorities are screwed up. Bad plans make for poor results. Smart business people adopt the wrong priorities for a couple of reasons:
    • They don’t understand the true role of marketing. Thinking marketing is only (as in 100%) focused on getting new customers shortchanges your firm enormously. In addition to helping win new customers, marketing is an equally potent tool for increasing the frequency that customers buy, reducing customer churn, and introducing additional offerings to existing customers. For professionals, securing the client’s next project should be your top priority. If you sell a software or service subscription, minimizing churn can be more profitable than developing new customers. Any expanding business should recognize what a valuable asset they have in their existing customer base.
    • Their firm is under-differentiated. Most firms focus on why customers ought to select their firm rather than why they actually do. Embedding the knowledge that it’s your customer who makes the buying decision, not you, will alter your perspective and priorities. Re-aligning your perspective in this way often benefits from the assistance of a third-party.

Putting your new realizations to work

Facing the truth can be hard. It’s also the best way to improve. Confronting these four hard truths you don’t want to believe will improve your firm’s marketing, often quite significantly.

Once you recognize that it’s your job to fit into your customers’ business and that the only claims you should make are ones that reinforce why your firm is a better choice, you’re in a position to re-think your priorities to dramatic effect.

With well-understood priorities, you’ll be able to apply resources where they create the greatest return while recovering time and money spent on current activities generating little or no benefit. Best of all, you’ll be able to tell the difference between the two.

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3 Things Your Clients Tell Me, But They Won’t Tell You

Your customers will tell me things they won't tell you

Conventional marketing strategy says talk to your clients frequently. Build this into your marketing plans and you’ll learn a lot with really no downside.

However, in a perverse bit of irony, the more your clients like you, they more they’ll try to please you with what they think you want to hear. So, while they mean well, no matter how hard you try, there are a few areas where clients aren’t particularly forthcoming,

The most valuable insights rarely come in the form of information that is easily accessible.
Over the past decade, I’ve engaged hundreds of my clients’ clients in structured, yet free-wheeling conversations. Here are three valuable bits of information your clients can tell you, if somehow you can get them to really open up.

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Customer Interviews: How To Organize Findings

Sean MurphySean Murphy of SKMurphy invited me onto his podcast to talk about the art of customer interviews. Getting one’s customers to open up is an essential step in learning the real reasons why their clients select your firm over other options.

Edited highlights are below (11:40).

Our discussion touches on the unique value interviews offer, deciding between customer interviews and surveys, and reporting the results so they are clear and actionable.

If you prefer to read, an edited transcript of our conversation with some helpful links is posted on the SKMurphy blog.

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Resist the Siren Song of “Excellent Customer Service”

Ulysses and the SirensI got into a bit of a disagreement the other day. Rick, a professional colleague, insisted the day has come when success–maybe even survival–requires every company to deliver “excellent customer service.” He argues that, without it, you eventually run out of people to offend and your pool of potential customers dries up.

The distraction of “excellent customer service”

I countered that fixating on “excellent customer service” actually draws companies away from the differentiation that brings success. Let me explain.
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Better Marketing the Mr. Spock Way

In Four Marketing Changes that Take Courage, #3 was to ask questions and act on what is said rather than what you want to hear. With his famous lack of emotion, Mr. Spock would make a courageous marketing leader. The Vulcan “mind meld” allows Mr. Spock to directly tap into the thoughts of others. As a marketer, he would confidently know where to focus and efficiently allocate resources.

How much better would your marketing be if you could “mind meld” with your customers? It’s easier than you think.

A few years ago I worked with a client who looked great on paper. The firm regularly surveyed their customers and achieved awesome NetPromoter Scores. I talked to many of their customers and it was no fluke: the firm was respected and its leadership genuinely liked. The firm executed well and the principal stockholders were ready to expand the business, taking it to the next level.

There was only one hiccup: they were submitting more proposals while seeing fewer contract wins.
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Four Marketing Changes that Take Courage

Cowardly LionWhether you are concerned about wasting limited resources on ineffective or unfocused marketing or simply tired of working harder rather than smarter to grow your firm, change is part of the solution. Change away from the comfortable and familiar is hard. That’s why marketing in today’s environment takes courage according Kathleen Hessert, CEO of Buzz Manager.

Courage is the inner power that enables you to face difficulty or danger while overcoming fear. In the workplace, it often takes courage to face change and the unknown, especially when conflicting advice comes at you from every side.

The courage to change is a whole lot easier when you have confidence your priorities are the right ones for your firm. Without confidence, the highly analytic professionals I work with spend much of their time second-guessing their priorities. They know they are better off focusing, but without confidence they have the right two or three top priorities, they quickly revert to doing six or seven or more activities that are familiar and comfortable.
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