A helpful reference to inform the discussions within your team on where to invest your finite marketing resources.
How to invest a firm’s thought leadership resources can sometimes be a source of great contention. While everyone is interested in the best long-term interests of the entire firm, practice leaders are often incentivized to grow their individual practice right now. So, to start there’s often a conflict between long-term wants and short-term needs.
Simultaneously, the leaders of the largest practices generally assume they should get the largest share of the budget. After all, they’re driving the lion’s share of the revenue. On the flip side, leaders of smaller practice areas are politicking for more resources. And for good reason; they’re trying to stand up a future revenue stream for the company. Everyone wants the biggest slice of watermelon they can get, but all too often there’s only a few seeds available.
No firm can invest in everything — effective strategy is more about determining what you’re not going to do than what you are. No matter how you slice it, if you’re going to have success you’ll have to make some hard choices. Should marketing budget be allocated commensurate with a practice’s share of revenue? Or, should we give more resources to a practice that’s largely unproven and needs a catalyst? Maybe we should give the most resources to the practice with the most articulate and compelling practice leaders? After all, one of our most effective ways for taking thought leadership to market is by speaking at events. Having a charismatic leader at the helm should improve returns.
Clearly, there’s no simple answer to these questions. What makes sense in one situation won’t make sense in the next. The balance of this article will outline situations when it might make sense to put more resources into:
- Your dominant service or practice area
- A small, struggling niche service offering
When to Invest More in Your Dominant Service
Just about every successful business I’ve seen has a cash cow — a product or service whose contribution to revenue and profit dwarves other areas of the business. As a marketer, it’s tempting to always just pour more resources into the cash cow because it’s proven its merit time and again. After all, it’s the bread-and-butter of the business so we should support it against all else. But, that’s not always the case. In my experience, at least 2-3 of these conditions should apply for your cash cow to continue to demand a share of marketing budget commensurate with its current role in the business:
- Still Growing — Just because the practice is big doesn’t mean it’s growing. As you look to the future, you should still feel confident that client interest in this service or practice area is expanding. Simultaneously, you should be comfortable that you don’t have the majority of the market already (of course, this is rarely the case).
- New Entrants — You’re seeing a growing number of new entrants; possibly even from new places. Maybe you’re seeing software companies selling adequate substitutes for your higher touch service or larger firms coming down-market. Regardless, you’re seeing a growing need to defend your expert position and create separation from a new set of peers.
- Need for Innovation — You’re recognizing a need to explore new ground. The practice, in its current state, is selling today’s solutions to today’s problems. But, your marketing intuition tells you that the ball is moving quickly and you need a fresh point-of-view if the practice is going to remain relevant tomorrow.
- Flat / Declining Interest — For one reason or another, you’re seeing less interest (measured as website traffic or leads) in the service or practice area despite the fact you sense (or see) that clients’ need for the service is expanding.
When to Invest More in Your Struggling Niche Offering
Often, the future of the firm hinges on a rising star — a service or practice that constitutes a small portion of the revenue and profit today, but has tremendous potential to be the primary engine of tomorrow. That said, it’s sometimes hard to spot a rising star even when you have one. Today’s niche practice may just be tomorrow’s….niche practice. In my experience at least 2-3 of these conditions should apply for your niche service to demand more than a niche of your budget:
- Significant Upside — Sometimes it’s just clear. There is an unmet need to solve a problem yet broad lack of awareness from the market of your available solution.
- Adjacent Opportunity — Often, a niche practice can open doors to higher-levels or different types of decision-makers (for instance, an operations consulting practice within an A/E firm). Or, it can provide an avenue into an adjacent market that will diversify your revenue streams without compromising your positioning.
- Higher Margins — Sometimes, a niche practice may be perceived as higher value, therefore offering a higher margin than a firm’s broader services (i.e. strategy work for an accounting firm).
- Key Differentiator — Occasionally, the niche practice represents a key point of difference relative to other firms in the market. Perhaps, the niche enables the firm to offer a service other firms don’t or simply can’t (i.e., an analytics practice in an architecture firm).
- An Entry Point — Finally, niche practices frequently can function as an entry point into a broader business relationship (i.e. an M&A practice within an operations consulting firm).
Allocating Your Budget
In every firm of every size and expertise, marketing resources are finite. While it’s tempting to just divvy up resources according to a practice’s contribution to revenue and profit, there may be a lot of reasons to appropriate resources in a different way. I hope this article gives you some helpful thoughts on making those decisions if you’re wrestling with them in your marketing planning process.