I had an interesting discussion with a member of the Staff Digest forum on the challenge of differentiating a staffing firm. To make a long series of posts short, this firm was first to market their hospitality staffing services in their local market. They successfully grew their services by providing great service. And just a short time later, the started to face serious price competition from other, non-specialists, moving into their niche.
This is a pretty common problem, especially when you’re in a service business. The issue is that just about anything you do can be copied by the competition. And when you find a profitable new niche, low priced copycats are always soon to follow.
So what can you do to maintain your differentiation. While there is no one solution, here are a few of the tips I shared with my new friend on the Staff Digest forum.
1) Quantify the value of better service.
Then target decision makers who appreciate that value. It’s hard (i.e., impossible) to get a price buyer to purchase value, so you have to find a value buyer. We did this with an LI firm that sold “higher quality LI staffing.” We translated this value into delivering a higher ROI on staffing investments, and then developed a marketing campaign to go after plant managers and business owners. HR only cared about price, so we targeted the people who understood that better temps means lower production costs and higher ROI. The campaign allowed us to direct market around the HR department.
2) Leverage your expertise.
In differentiating from the LI and generalists firms, focus on your expertise in hospitality. Again, you would have to target buyers that appreciate that you know the difference between a head chef and a sous chef. The good news is that same person is typically so swamped with work that he/she will appreciate a staffing firm that actually understands their business and can get it right – THE FIRST TIME.
3) Offer services the competition can’t easily copy.
I know of one hospitality firm that differentiates by offering training services. They charge more because they guarantee better trained servers, bar tenders and other wait staff.
4) Move up the food chain.
Sell higher level strategic staffing solutions like on site staffing and single source management. By combining your hospitality expertise with your staffing expertise, you can offer a service that’s tougher for the LI firms to replicate. You might also be able to sell more of a partnership with clients like caterers who could take on larger events knowing that you will manage the staffing requirements.
5) Find a sub-niche to own.
Are there other positions in either the front or back of the house where you could outperform the competition. By focusing on recruiting for these positions or being able to provide better fit employees for these positions, you could cherry pick disciplines where the LI firms cannot compete.
6) Be more selective in targeting.
Unfortunately value is in the eye of the beholder. Some prospects will never see your value, so if you can’t win these firms over, skip them and focus your efforts on the types of organizations that need the value you offer.
How do you deal with commodity pressures?