The 2 Best Ways to Make Your Company Special
Specialising in one product or service lets you focus on delivering that thing better than everyone else. It enables you to hire (or train) specialists in your field, improving the quality of your work, which leads to happier customers. Satisfied customers buy again and refer their friends.
That’s why specialists often grow faster while spending less on marketing, leading to better profit margins and, ultimately, a more valuable company. Specialising in a specific product or service has tremendous benefits, but what if your customers expect you to deliver a range of offerings?
That’s when the second form of specialisation can help: focusing on a specific industry.
The Benefits of Becoming an Industry Expert
Specialising in serving a specific industry confers several benefits. First, offering your products or services to one industry allows you to learn the language spoken in that sector. Every industry and profession has a unique language, and being able to speak the jargon can benefit your company. Knowing your industry’s lingo can indirectly communicate to your customers that you are experienced, knowledgeable, and able to navigate the space.
Furthermore, focusing on one sector ensures you stay current with industry trends, which will result in identifying new opportunities for your customers sooner than a competitor who serves multiple industries.
Most importantly, specialising in one industry allows your employees to become experts in a sector. You may be an expert in an industry, but chances are they’re not (particularly when you first hire them). Focusing on a sector accelerates how quickly your staff can become fluent in your industry’s lexicon, which allows you to delegate customer relationship management faster and more successfully.
Specialising in an Industry Led to a 20x Increase in Revenue
For example, look at the story of founder Raman Sehgal. Sehgal started a small marketing agency called Ramarketing in 2009. By 2015 the business had grown to around £350,000 in revenue, but the company was losing customers as fast as they were winning new ones.
Frustrated with his company’s lack of progress, Sehgal decided to do a complete analysis of his business. He found that Ramarketing’s most valuable customers (low maintenance, sticky, high gross margin, etc.) were in the pharmaceutical industry. Sehgal decided to pivot his business to solely serve clients in the pharmaceutical supply chain.
Beginning to serve one industry created a sequence of positive events for Ramarketing.
Becoming an industry specialist allowed Ramarketing to stay up to date with industry trends, learn the lingo, and ultimately improve the quality of their work. An increase in customer satisfaction led to more referrals and a strong reputation in the sector.
His employees began to understand the intricacies of the industry. In the pharmaceutical space, there are many rules and laws to adhere to. Understanding the regulations allowed Sehgal’s employees to better serve their customers.
Subsequently, the business boomed.
The Proof Is in the Pudding
Sehgal’s once stagnant marketing agency grew from around £350,000 in turnover in 2015, to over £8 million by 2022, which is when Sehgal accepted an acquisition offer from NorthEdge Capital of more than 10x EBITDA.
Sehgal’s bold decision to specialise in the pharmaceutical industry led to a 20x increase in revenue and, ultimately, a lucrative exit.
Narrowing your product or service line is the most common way to increase your company’s value but specialising in one industry carries many of the same benefits.
If you have any questions about this article or would like to speak to one of our advisors about how you can improve the value of your business, please do not hesitate to contact us or call our office on (08) 6212 7200.
