I wrote this answer in response to a question on Quora.
Clarity is critical: it also requires a degree of courage.
Jim Collins’s best seller, Good To Great, describes something he calls The Hedgehog Principle. In essence it instructs you to find the one thing you can claim or aspire to be the best in the world at, and pursue it relentlessly.
Jaynie Smith’s best seller, Creating Competitive Advantage, also provides instruction: understand that differentiation is about that which is differentiating about your company in the eyes of your clients as compared to your competitors.
The trap that most agencies fall into is that they try to win all clients and any work going. 99% of the agencies in your market are trying to be all things to all people because they don’t want potential revenue to get away. In fact this just makes your agency the same as every other agency. In the UK, that means you are competing with something like 30,000 other firms.
Differentiation is about making your agency stand out. Yes, it means you won’t win every client, nor will you win every project. It means you won’t get your tiny share of the millions being spent on digital. But you will get a huge share of what’s being spent on the one specialist thing you do where you have few competitors.
It means that if your competitive differentiation is crystal clear, any client that needs the specific thing you claim to do will seek you out.
I was one of the founders of a discipline called eCRM. My agency at the time was the first to say “we only do eCRM.” The result was that every time a client wanted to do eCRM, they had to put us on the list for consideration. Every person who wanted to work in this new field came to us to find work. And every journalist who wanted to talk about it came to us for our opinion. I’ve taught the subject to over 350 companies, and at business schools including Hult.
In the end, when we decided to sell the agency every group that wanted eCRM in its service portfolio talked to us. We had nine offers from acquirers to choose from.
The interesting thing is that that agency also quietly offered most digital services. But the flag above our door said eCRM (and our previous agencies’ flags had said web design when the market talked about multimedia, interactive television when the market said web design, SEO when the market said Online PR). Once we’d delivered on our unique promise, other work came our way because of the trust we’d built with the client we worked with.
I can’t tell you which unique selling point your agency should use (well, unless you engage me to do so, as this is part of), but I can say read those two books, find your unique thing that you can strive to be the best in the world at, and forsake all distractions. It will take guts, focus and time, but it will give you standing and value that you cannot get by trying to be the same as everyone else.