Gini Dietrich

Why You Must Make Agency Specialization a Priority

By: Gini Dietrich | October 5, 2016 | 
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Agency SpecializationIf you’ve read Built to Sell, you already know agency specialization is ideal.

To compete, you must specialize.

If you want to grow, you must specialize.

And, if you eventually want to sell, you must specialize.

No one will buy a company that does a little bit of everything for everyone.

Or, if for some reason you’re lucky enough to have built a personal brand and they want to buy you, you’ll most certainly be locked into a five- to seven-year contract.

And, after working for yourself all these years, it’s hard to imagine that kind of agreement.

No, to be in the driver’s seat, you must focus on agency specialization.

When You’re a Generalist, You Can’t Charge a Premium

I also know how hard it is to do that, particularly when you’re just starting out.

When you go out on your own, you just need business.

Any business will do.

You do, after all, have bills to pay and you can’t afford the luxury of specialization.

So you start working with organizations of all shapes and sizes and, if they ask if you can do X, you say you can do X and Y.

Soon, you need to hire some help and then you have payroll to make.

At this point, there is no room for agency specialization because your bills to be paid are even larger and now people’s livelihoods are dependent on you.

I get it. I really, really get it.

But now that you’re a generalist, no one is going to look to you as the expert at anything, which means you can’t charge a premium.

And, suddenly, you face price wars, which is the last place you want to be as a services firm.

Agency Specialization Equates to Having True Expertise

How often are you asked to list your hourly rates in a request for proposal?

When it comes to negotiate the fees, how many times does the new client ask for more for the same price?

How often do you end up overservicing, just to keep your client retention rates high?

Do you pay attention to how much your profit margins are squeezed?

These are all questions every business owner, not just those who run agencies, should be able to answer.

Yet, I’m willing to bet most of you do overservice, do give more for the same price, and have no idea when or how your profit margins are squeezed.

But you should…and being able to answer those questions with 100 percent certainty will give you every reason you need to focus on agency specialization.

Because, if you know the answers to those questions—and they’re bleak—you will work hard to compete on expertise, not on price.

If, however, you do work just like everyone else, you will have to drop your prices, your hourly rates, or squeeze your profit.

Sure, you may have better client service or you may be more fun to work with, but those are not reasons for someone to pay you more than your competitors.

Having an expertise in a certain area or field is the only reason you will be paid more.

Have the Nerve to Not Be Good at Everything

Former Cadbury marketer and current CASSIES editor, John Bradley, recently wrote an interesting article about why agencies compete on price.

Throughout the entire article, he speaks from a client’s point-of-view about why they ask their agencies to work for less.

He describes how brands work through pricing wars when their own products cannibalize markets.

He compares product cannibalization to the large, publicly held companies where, in many cases, they compete against themselves for larger pieces of business.

And, in many cases, they compete on price, even though they’re owned by the same conglomeration.

It’s interesting and I recommend reading the entire thing (it won’t take long; it’s fairly short).

But the real meat of the article is in the last few sentences of the article:

A necessary component of any successful segmentation strategy is having the nerve to not try to be good at everything. Unless you can identify areas you are not going to focus on, and demonstrate why you are the best at what you will focus on, you don’t have a strategy and will keep dropping your shorts on price.

And that’s what agency specialization is: Having the nerve to not be good at everything.

It’s not easy. It’s not fun. You will have to walk away from really lucrative business.

But in the end, you will win.

You will become the best in your industry.

People will clamor to work with you, no matter how much you cost.

And you will never, ever compete on price.

image credit: the dictionary and my iphone

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro. Join the Spin Sucks   community!

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