The Challenges of Maintaining Your Firm’s Competitive Advantage

The accounting profession is currently undergoing dramatic changes, creating new competitive challenges and altering the dynamics of how accounting firms market themselves. Now more than ever, it is critical for professional services such as CPA firms to demonstrate their expertise and differentiate themselves. CPA firms that are intent on growth and profitability will only succeed if they develop a differentiation strategy.

So what exactly is a differentiation strategy? It’s the way in which you make your firm stand out from otherwise similar competitors in the marketplace. It provides an accounting firm competitive edge. Usually, it involves highlighting a meaningful difference between you and your competitors. And that difference must be valued by your potential clients. A strong differentiator will provide a competitive advantage for your firm.

Determining your differentiators starts with a close and unbiased examination of what it is that truly makes your firm unique – the attributes that provide value to your clients and attract them to your company. You are well on your way to a solid differentiation strategy once you know what sets you apart from your competitors. Especially if you can explain — and prove — it in a way that is relevant to your target audience.

Unfortunately, the marketplace doesn’t stand still. Shrewd competitors will look at your success and attempt to copy it. Over time, what was once a distinctive characteristic may be neutralized. Your competitive advantage will be lost.

To build a sustainable differentiation strategy you need to build your reputation around those distinctive characteristics. Fundamentally, that means determining where your firm’s particular expertise lies. What is it that your team does exceptionally well? For example, does your experience and expertise lie in large enterprise regulatory compliance issues? Are you especially skilled at minimizing tax obligations? Whatever your differentiating expertise is, it’s critically important to make it exceptionally visible to your target audience.

Visible Expertise: the best CPA firm competitive advantage

If you’ve been in the accounting profession for any length of time, this truth is self-evident – expertise is what you have to sell.

Clients don’t buy your services because they like them or because they come in their favorite color. Clients buy your services to solve a business problem or to seize an opportunity. For example, they may need help complying with a regulatory requirement or solving a critical tax strategy challenge.

Our research into professional services buyers describes what criteria companies use to select one service provider over another. The most common selection criterion is expertise, and it is the factor that most often tips the scale in favor of the contract-winning firm.

But what about the argument that professional services are “a relationship business”? Well, that assumption is partially true. Good business relationships are certainly helpful — both buyers and sellers of professional services understand the importance of an existing relationship, but sellers consistently underestimate the role their reputation plays in the final selection.

Also, a strong reputation for expertise is the one factor that can overcome an existing relationship. If a company does not believe their current provider can solve a problem, they will look for a firm that can.

Going from invisible to Visible Expert®

Developing expertise as a differentiation strategy sounds like a great idea, but there is a catch. Clients are notoriously uninformed when it comes to judging actual expertise. Consequently, your firm’s expertise is often unseen by the marketplace.

And if your firm’s expertise is not visible, for all practical purposes it doesn’t exist. Fortunately, it’s possible to make intangible expertise visible and real to create a distinct accounting firm competitive advantage.

We conducted extensive research on highly visible experts and the professional services buyers who hire them. As a result, we determined that there are certain strategies and techniques that can elevate the visibility of your expertise in the marketplace.

Public speaking, writing blog posts and articles, and publishing books are all effective ways to demonstrate your expertise [hyperlink to https://hingemarketing.com/blog/story/thought-leadership-marketing-for-the-subject-matter-expert]. And there are many others. The value of these different techniques, when put together as part of a differentiation strategy, has been proven time and again by firms who successfully boosted their on- and offline visibility through thought-leadership-building content and events that helped them muscle past the competition.

A well-thought-out differentiation strategy and a commitment to implementing your plan will accelerate your firm’s visibility and perceived expertise.

Michael Porter, the famous strategist, maintains that there are only two ways to gain a sustainable advantage over your competition. One way is to compete on price, highlighting the similarities you share with your chief competition: “We’re just as good as our competition, but we cost less.”

Unfortunately, unless you have a sustainable cost advantage, you can’t keep up this strategy for long.

Porter’s other way — and a better way — is to stand apart. Be different. Separate yourself from competitors in a way that is both important and relevant to potential clients. Visibly promoting your firm’s expertise is the best way to do that.

Firm Management