Tony Rice, Partner at consulting firm M&A specialist, Equiteq
Are prospective clients and acquirers beating a path to your door, while growth seems to come easily to your firm year on year? If so, this would be a very positive indication that you have something special on offer to the market. No doubt your firm has achieved trusted advisor status in its space with a great market proposition, or Unique Value Proposition (UVP) acting like a magnet to clients, trade buyers and financial investors.
Developing the UVP for your firm and each of its services can be transformative to growth and attractive to acquirers willing to pay premium prices. I hope this article will provide some useful tips, open up a new strategy, or simply help you to generate more sales and profit by selling your services differently.
We describe our equity growth programme using the metaphor of a wheel: the Equity Growth Wheel and it is made up of 8 Levers. We call them levers because by pulling these 8 levers you can increase the speed of the wheel and the equity growth of your firm.
Each lever in our Equity Growth Wheel model is weighted in terms of importance to buyers and Market Proposition sits right at the top (along with two others).
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It has top rank weighting for two very good reasons:
• Firms with strong UVPs always take market share in good times or bad, they command high quality fees and are less vulnerable to price competition
• Buyers want to acquire growth firms with a clear specialism that they can leverage across their organization, and they will pay a premium to get it. They are less attracted to generalists
Developing your UVP
Your UVP should set you apart from competition and provide a WOW factor to clients, hungry for the value you can create for them. If you look just like your competitors and sell the features of your service, rather than the value it creates, then growth can feel like an uphill battle.
Two qualities needed to have a UVP with a WOW Factor:
Uniqueness – What are your unique selling points that, combined, set you apart from your competitors? For example, you may be a domain expert in a certain discipline, focussed an ‘inch wide and mile deep’ in a vertical niche, with a proprietary methodology that delivers rapid results.
Value – What are the business gains or outcomes that your clients can reap thanks to your consultancy’s intervention? Clients are interested in the business gains they can achieve thanks to you. The price they pay for a project will not keep them awake at night, but the risk that they won’t meet their business objectives will. Leap right into the head of your client and then jump again into the head of his/her boss. What business needs and issues do you think the boss is worried about; how will your engagement contribute and ingratiate your client within his/her organisational hierarchy? Where possible, quantify the value your consultancy’s involvement will bring. Think big.
Most consultancies are good at describing their services (Features), but not so good at talking about the outcomes clients will experience, so try this exercise to stretch your thinking. Make a spreadsheet with three columns and work with your team to brainstorm ideas.
• Features (Inputs): What are the key or unique aspects of your service? e.g. A proprietary gap analysis tool that quickly discovers the high priority performance improvement areas
• Benefits (Outputs): What business changes do clients experience? e.g. Our clients experience sales performance improvements of 23% on average
• Outcomes (Value): What business and personal, tangible and intangible values do you create for your clients? e.g. Business – market ranking shift, top line growth of x, or bottom line growth of y, or annualized savings of z
Proposition – What are you offering your clients and what are the major components of your service? Use each component to identify either how it demonstrates your superior level of expertise and/or how it delivers additional value. Identify particular features of the deal that reduce clients’ risk, such as fees contingent on results, or reverse the risk entirely, no gain/no fee.
The service you offer clients should provide overwhelmingly more perceived value than they pay, because if the service is both high value and unique, then clients will rush to buy it. If it is perceived to be low value relative to cost and others are seen to do the same, then it will be difficult and costly to sell.
Are you in the business of value creation or selling bodies?
It matters! If you sell on value creation, the cost of your service will be insignificant compared to the gains, you will be selling in at higher levels in the organisation, commanding higher fees, selling on to similar clients and reducing cost of sales.
• If you develop a UVP for your firm and adopt value selling for your services it will grow faster and be more profitable.
• The service you offer clients should provide overwhelmingly more perceived value than they pay.
• You can become famous in a niche and attain market leading trusted advisor status.
• If your UVP includes a tight focus on a certain specialism or niche, rather than a general range of sectors and services, then it will be even more attractive to buyers.
• Even better, if you are alone in ‘white space’ (a gap in the market and a growing market in that gap), your firm will be in the growth fast track with acquisitive firms (buyers) competing for you to join forces with them!
For more insight on how to grow and sell your business, join Equiteq’s free thought leadership program, Equiteq Edge