“Business has only two functions – marketing and innovation.”
That quote by Peter Drucker illustrates the importance of innovation in business. Innovation is what makes the world go around, and it should be part of regular operations. Who in your firm is responsible for innovation? What are you innovating now?
Innovation is imperative when revenue from a service offering has increased to a significant amount while your margin has dropped. To drive additional revenue in this area, you need to change up what you are doing. That may include conceptualizing something entirely new that you want to take to the marketplace. It could also include adopting a service delivery model that that differs from your competitors. Or it could include providing a special feature to every buyer of a specific service. There are many ways to innovate.
Before you tell yourself that you can’t innovate your services because they are compliance-based – STOP. You can innovate while complying with all the rules, laws and regulation that guide you. Innovation is simply introducing something new or different to the marketplace, but that doesn’t mean only new service offerings. You can also innovate your business model, service methodology, processes and much more.
In the accounting industry, there are three key elements that play a role in innovation. Whether you are looking at a new invention or simply reinventing what you do now, be sure you focus on the following:
In most cases, you can’t claim to be better than your competition. You can, however, show how you are different. This requires that you research how your competitors describe themselves and find something you do differently. This could include activities you perform differently or even different activities that you perform.
Product differentiation is how you stand out in a way that truly matters to the buyer. It creates value for what you have to offer and makes it harder for the buyer to consider a competitor’s offering a suitable substitution.
You need to first define (through market segmentation) and then understand your target market. Only then can you demonstrate and communicate how you solve issues your buyers face. You need to understand the pain buyers experience and tap into those emotions to position yourself as a solution. Don’t forget to consider how you are different in your positioning.
Positioning requires creativity to find your uniqueness. More importantly though, use it to show the value you provide. In the end, it’s not about you – it’s about those people you help.
This is how you position and differentiate. Each offering should have its own packaging. If you were to put your offering in a box and tie it with a bow, what would it look like? What would it include? What makes your box stand out from the competition? You need to clearly describe this so people know exactly what they are buying; increasing the likelihood they do buy.
One way to package is to present different levels of service as a way to encourage people to buy the highest level – it’s human nature to want the best. Minimally, it allows the buyers to match their needs to the specific service received. There are many ways to differentiate pricing levels beyond bronze, silver and gold, but thinking of levels in that way can help you get started. Also increasing in popularity in the accounting industry is the concept of bundling. This is where you take services that a buyer group is most likely to buy and offer them as a single offering. For example, this could include all services small business owner needs or it could be what every company in an industry gets when they work with you.
Innovation is a Growth Strategy
If you can’t differentiate, position and package your offerings, you will miss out on potential revenue. More importantly though, you need to first innovate. Innovation is a driver of growth and it’s important for those firms really looking to thrive, regardless of firm size.
According to a PWC study, those businesses that focus on innovation forecast revenue growth 10 percent higher than their peers. And the number one business objective for private companies that innovate is to improve earnings. Number two is to increase revenues.
Business changes rapidly. There have been substantial changes that have impacted the accounting profession in the past few years alone including the increase in providing advisory services, the popularity of cloud-based products and anything technology, to name a few. You have to innovate not only to keep up with these trends, but to use them to your competitive advantage.
Businesses that don’t innovate face decline, according to Peter Drucker. “Within five years, if you’re in the same business you are in now, you’re going to be out of business.”
Focus on innovation and then properly differentiate your offerings, position them in a way that speaks to the buyer and package them in a way that stimulates a purchase, and you’ll grow the top-line revenue to your firm.