Does Your Business Have an Expiration Date?
By Tim Williams
Like food on grocery store shelves, the services offered by professional service firms have a “sell by” date. There’s no law compelling you to disclose outdated offerings, but if there were, the menu of competencies in many firms might be significantly reduced.
In an era of exponential change, capabilities can abruptly outlive their usefulness. Nowhere has technology had a more profound effect than in the marketing space. The skills that equipped advertising agencies with the ability to build powerful brands for their clients in the age of mass media are only partially relevant today. The art of crafting compelling messages is still central to an agency’s success, but the science of effectively reaching target customers is now beyond the skillset of many established firms.
On the media front, multinational agency networks are scrambling to catch up in data science, while more and more client organizations bring media planning and buying functions in house. Meanwhile the daily proliferation of online channels creates an insatiable need for “content,” which many client organizations now believe they can create themselves, faster and cheaper than outside providers like agencies.
To protect your margins from the relentless disintermediation of professional services, it’s useful to plot the utility of your services on a value continuum.
Showcasing the short tail
On the far left of the spectrum — the short tail — are the high-value competencies that require leading-edge expertise. These are state-of-the-art offerings that can and should be premium priced, because they are valuable and hard to find. Unless your business strategy is to offer widely available services at a low price (not a very desirable business model), every firm should cultivate and support a catalog of short tail offerings, which requires a constant level of investment in talent and resources.
Optimizing the mid tail
The majority of your revenues will likely come from the mid tail, because this segment represents the programs, products and services that are in highest demand in your category of business. These offerings must be constantly sustained and supported in order to optimize revenues.
Sustaining the long tail
In the long tail are services and competencies that may have started in the short tail a decade ago, then moved into the mid tail, and are finally now living their last life stage in the long tail. The vast majority of products and services in every category live here. Because they are plentiful, easy to find, and available from a wide variety of providers, long tail services are subject to tremendous price pressure.
Knowing the difference
By charting your firm’s offerings on this three-part spectrum, you’ll be in a position to evaluate the usefulness, desirability, and potential value of the services you sell to your clients.
It’s an unfortunate fact that many firms have a minuscule (or almost nonexistent) short tail. They have virtually no blockbuster programs or services; nothing that meaningfully distinguishes them from other firms in their category or geography.
Firms that lack a short tail generally have only a moderate mid tail, because most of their offerings live (or more accurately, languish) in the long tail. Unless you have the confidence to innovate and invest in short tail offerings, your firm will be resigned to competing on the basis of cost and availability.
To identify which of your services are close to their expiration date, ask the following questions:
1. Is there an abundant supply of providers?
2. From the client’s perspective, is this service widely available and easily obtained?
3. Is it fairly easy for other firms to duplicate and offer this service?
4. Is the development and delivery of this service fairly consistent across providers?
5. Is this service subject to industry standard expectations and requirements?
Remember, unless you constantly resupply your business model with fresh thinking and new offerings, it’s possible that eventually you’ll be out of stock.
