Personalization is no longer a ‘nicety’ for today’s sophisticated customers – it’s a requirement.
Leading-edge firms recognize this evolution and are creating tailored service offerings for clients. These firms are moving away from “generalist” services to practice areas specializing in one or a few industry verticals. This shift to niche practices enables them to deliver deeper expertise and strategic guidance through insights such as industry KPIs, benchmarks and business strategies.
Types of niches
Building and growing a niche practice offers many benefits, but first, let me explain the two primary areas of specialization— practice area and industry vertical.
Firms that specialize in practice areas have expertise in how to offer and implement a particular service offering such as Financial Planning and Analysis (FP&A), Client Advisory Services (CAS), Sales & Use Tax or Cybersecurity services.
Firms that specialize in industry verticals have deep knowledge in advising businesses in a particular market segment. Examples include restaurant/hospitality, agricultural, financial institutions, real estate, healthcare or professional services, among others.
Some firms have gone so far as to specialize in both a practice area and industry vertical, positioning themselves as leading subject matter experts in particular industries for specific services. For instance, a firm might specialize in outsourced accounting & CFO services for microbreweries, or SOC examinations for SaaS technology companies.
Regardless of whether your firm decides to specialize in a practice area or a vertical or both, a key benefit is the opportunity to realize numerous operational efficiencies.
As staff is focused on just one industry or practice area, you’ll have more capacity to truly understand your client’s business – the important trends and sector disruptors, as well as their customers and competitors. You’ll also be better positioned to invest in new technologies and systems that create and enhance efficiencies. And since multiple clients will benefit, you can justify the time and expense associated with implementing new technologies.
Firm specialization also makes marketing your practice easier and more effective. You’ll know the right vernacular to target prospective clients and can achieve a higher return on investment on marketing spends because you’re focusing on the right messaging, channels, and keywords.
It’s no secret that specialists create higher quality output. By focusing on a specific service line or industry, you naturally establish a body of knowledge and deep expertise from your experience and repetition. It also results in a more consistent and quality work product and the ability to spot errors when they arise.
Technology also helps drive quality. Whether you automate work deploying robotic process automation (RPA) or other capabilities such as machine learning and artificial intelligence to process industry specific data, you remove the human (mistake-prone) element from the process, thereby increasing quality.
The ability to deliver clients insights on how their KPIs compare against industry benchmarks is a key value of specialization. Restaurant clients, for example, might be interested to know their competitors’ average check amount, tables turned per hour, peak traffic by meal and the takeout versus dine-in variation by day or time. Likewise, subscription or SaaS-based companies would be interested to see how they stack up against their industry’s customer acquisition cost, lifetime value of customers, customer churn, and more. As a subject matter expert in your client’s industry, you’ll be well-versed in benchmarks, putting your services in high demand and positioning you well to charge a premium fee.
Creating a niche practice
If your firm is offering general accounting services to a broad array of clients across a variety of industries, now is the time to assess how to focus on a few key specializations. Consider these steps to build your niche practice:
- Assess your resources. Ensure your firm has the presence and reputation to specialize without overextending you or your staff. Also explore opportunities to partner with other firms to build a niche.
- Be strategic in selecting your niche. Analyze your revenue to see if a particular type of client or industry is making up a significant portion of your revenue – then spend more time developing business in this area. Consider also building a niche based on you or your firm’s interests or hobbies – passionate employees deliver the best work.
- Establish yourself as a subject matter expert within your niche. Learn the issues impacting your niche clients – then create a solution. Seek out opportunities to be a guest speaker or author for industry events or publications.
- Ensure firm alignment. While your firm may have several focus areas, it’s important that partners and staff understand the strategic vision and goals for the niche practice. To identify staff, it’s not necessary to recruit those with your niche industry knowledge. Hire smart people and then teach them the industry.
- Promote your niche. Don’t just rely on your reputation – branding and marketing should be critical components of your outreach strategy. Many niche practices have also secured their preferred .cpa web domains, including dentist.cpa, church.cpa and forensics.cpa, to promote their firm’s services to target clients.
For more tips and strategies on how to accelerate your firm’s journey towards a thriving niche practice, leverage the following CPA.com resources: