How to Find and Focus on Your Niche

Welcome to today's firm of the future webinar. We are going to be talking about find and focusing on your niche. It's one of the topics that's near and dear to my heart. I've actually been on the road and we've been talking about this quite a bit. We're going to talk about the various different reasons for it. Again, if you're looking to lower your costs and increase your revenue or your profitability per client, this is something that's really, really critical for your practice. We'll get to this.

This is, again part of Intuit's firm of the future. It's brought to you by Intuit. If you haven't checked it out, go to, if you're not using QBO.I'm from Karbon. I'll get a little bit about that, but you can learn about us at

This is part of our June webinar and article series strictly around business strategy. You will see on, if you go there, you'll see the various different articles coming up over the next week or the next two weeks on Embracing Change Across Your Firm; Scaling Your Business: The Why, What, and How; and then Organization Design of Modern Practice. We actually taped that one hour just a short bit ago. All of those will be up on either this week or in the next week or two.

Find and focus on your niche is what we're talking about today. Again, for those of you that are listening to this on tape, you've already obviously gone to the firm of the future site to do that. If you want to learn about other events, you can go to events as well. We have other events that are tied to the business strategy theme as well.

Before we get started, a couple of tips and tricks and some things to know. First is if you're new to go to webinar, you use that orange button there to expand or collapse that. We will have my coworker, Andy, on the line as well. She is helping to answer questions as I go through the webinar. I will try to answer some as we go, though my multi-tasking skills are not that useful or not helpful so I'll be addressing most of those questions at the end.

If you have anything like Skype or other applications that are taking a lot of bandwidth, slow them down, or turn them off, I'm sorry, so that ultimately I don't sound like a robot and your connection's really good. For those of you that want CPE credits, yes are there CPE credits to be had today, we're going to have a special keyword that you will see somewhere through the presentation today. Then I will ask you a question at the end to be able to recite that keyword. Again, those of you looking for CPE credits, look for that keyword on the slides.

Moving forward, who is the person speaking to you today? My name is Ian Vacin. I'm co-founder and vice-president of product marketing at Karbon. My email is there. As well, you can check out the Karbon site. You can email me after the webinar at any time if you have questions regarding the content or some thoughts. Happy to answer them. I have been a part of Karbon for the last year or so. Karbon's been around for the last two years, but I've worked inside in the accounting industry for well over fifteen years and tech for well over twenty five. Ten of those years were at Intuit, where I used to lead the QuickBooks Pro advisor program and various other product divisions at Intuit. I'm familiar with the topic.

I also, in terms of this particular topic in general, I have a Masters in Business Management. I have another Masters in Engineering Management, but I spent some time focusing on this in my past. I've got a little bit of an understanding of it overall.

If you're interested about Karbon, we're not going to be talking about Karbon or demo, but it is task management for accountants. You can go to Karbon is the place for you to bring your email together to ultimately collaborate on the work, bring the work into one view, which is lead by and processed a checklist, which ultimately creates tasks for you so you can prioritize your day. It brings all your team into one place so you get viability across everything that's happening in your firm. If you're interested, go to to learn more. If you need a demo, go to

Let's move straight into finding focus on your niche. Any good presentation that's going to talk about a marketing topic cannot be done without having a Phillip Kotler quote. Actually was a professor of mine at Kellogg, typically thought of as the godfather of marketing. I put a few in here just to appease all of you marketers out there. "The most thing is, for [inaudible 00:04:29], to forecast where your customers are going and be at that point." You want to know what your target is today, but you also want to know how that target is changing over time. We're going to discuss that in a little bit.

Second quote is, "Your company does not belong in markets where it cannot be the best." There's a bunch of truth to that. Your best can be measured on different ways. If you're happy or you're not satisfied or motivated by the customers that you serve, it translates in the work that you do. Also, your best assets, your best capabilities must coincide with the target market that you're trying to actually be able to attract, but also be able to serve.

The third thing is, "It's more important to do what's strategically right than what's immediately profitable." When you make short term decisions, again, this is a good lesson learned for when you first start your business, for those of you who are [inaudible 00:05:24] your accounting practices at this point, you ultimately take anybody that comes in through the front door. What happens is you ultimately are sacrificing profitability, there's a necessity by doing it, but over time you ultimately then have to become more and more narrow focused so that you can ultimately get better profit, more revenue per client that comes in that respects the expertise that you have and that ultimately feeds on itself. You're able to be more and more, to life to bring more and more value, which inherently gives you more value in terms of the fees that you're able to charge.

That is my quick little primer on quotes from Phillip Kotler. I want to go through a little bit of an importance of a niche and why to focus on that. I do feel like this has become a bit of a buzzword over the last year. I assure you, it is not a buzzword, but an actuality, a very, very, very important factor to take in account on what you're doing and how you're doing it. I'll articulate that here in this next little section.

I've been around the country for the last almost a year now. I've been meeting with folks around what their barriers are and what they're facing and their struggles and ultimately grow. Growth could be in terms of getting additional clients. It could be in terms of raising profitability per client, how to up-sell, how to cross-sell. It could be also in terms of how do you free up more time in the day to do what you what. This was the list of the top ten things that people had articulated in order about what their barriers were.

One of the interesting things here is when you are targeting on a smaller set of customers, when you have a niche focus, you can impact eight of the ten different barriers that people are struggling with, everything from talent, being able to attract the right talent, to value pricing, making it simpler and easier, to the technology you need to serve, and to the processes by which your business is going to operate. Again, all of these eight are impacted by having a narrower focus and more of a concerted effort on what you do.

What I mean by that is, a little bit of why a niche is important. I'm going to go through an example that brings it to life here in a short second. It's a good little quote out there, a good old statement which is, "You can be the jack of all trades and the master of none." What happens is when you're doing that, again a lot of folks face this when they're first starting out because you just don't have the same sort of flexibility to go on a narrower focus when you have nobody to serve currently, but by trying to serve everyone and doing everything for everyone, you really start to stretch your resources.

Unfortunately, we all only have a limited amount of resources. That includes your time, your capital, your emotional energy and everything else. The more broad of a net that you cast, the harder it is for you to be able to leverage economies to scale and to be able to ultimately provide better and higher quality and dedicated service. There's so many things you have to take into account and so many things that are going to be pressing against your time and your money and your focus. What I mean by that is on the bottom pieces here. When you're specialized, it ultimately provides these different pieces of success.

For instance, when you're passionate about the things that you do, all of you I can tell you if you thought and sat back, again, a great exercise for your staff, but if you ask them who are the clients that you would want to get rid of, they immediately come to the top of your head. When you think about which are my best clients, you gravitate to a few. Generally the clients that are the best are ones that you have alignment with in terms of what they're doing and the passion that you have inherently with your business. That ultimately leads to higher job satisfaction and translates better directly into better client service.

The biggest thing here is again the impact on both the top line and the bottom line. When you're specialized, your sales and marketing efforts become much and much more honed and focused. It's easier for you to do communication with those folks. It's less costly to create the materials. Again, you're always wanting to do them in the customer voice. The broader the customers you serve either the more genericized the voices or the more materials you have to generate that are actually specific to that particular audience. Materials can be web assets. They can be print assets. They can just be in terms of social articulation. Again, you're most effective in actually selling and closing deals when you're actually being able to communicate and have expertise in the subject matter that you're talking to. That's again why sales and marketing provides a better ROI.

On the actual cost side of the equation, the more similar your clients are, the more repeatable your processes are. If you want to free up capacity, if you want to be able to get more value per client, it's about reducing costs. Those costs are reduced by the ability to serve in a repeatable fashion. I'm on a huge bent and I think a lot of folks today are doing really, really well on market these day have a phenomenal processes and phenomenal visibility and consistency across what they do and who they serve. That similar clients reduces the amount of work in order to make sure those processes can span larger or go across a larger base of customers that are different.

That leads directly into standardized processes, which I've already kind of mentioned. By having those standardized processes, your service quality is going to increase because you have less variance to deal with. It ultimately drives down lower costs. That also helps you in terms of recruitment. When you are doing things that are more repeatable, you're doing them in a more focused manner, it's easier for you to be able to train people coming in. You could get more junior people. It also attracts more specialized folks who actually do that kind of work in a more specific fashion to have more likelihood to be able to come on board.

Lastly, it all comes down to expertise. The more and more that you become a knowledge expert in a given domain, the higher there is a willingness for those folks to pay for those services. It comes down to when more people, when they're looking for someone to be their trusted advisor, they want the best in the business. The question is whether or not they can afford that. That changes again who they can select and how they select that. You as a practitioner, the more and more expertise you have gives you flexibility in terms of what you're going to charge and how you're going to charge and who you can attract and who you can turn away. That expertise provides you more flexibility and more capability going forward.

I want to culminate this to an example. This is directly related to an Intuit example when I worked there. It's happened at various times through the years, but I'm going to go back in time to roughly 2006 or so. We were doing a lot of work with Apple directly at the time. One of the initiatives that we put in place was we were pairing QuickBooks Pro Advisors directly with Apple stores in local geographies. What we were doing is inside of every Apple store, there is a small business consultant. That person's job is to ultimately help business owners as they come in to ultimately find, at this time, find the right machine that they would need to use and get them going in terms of being able to have the hardware and ultimately part of the software set up so that they could be able to move their business forward and use it as a platform to deliver.

The issue was these small business consultants aren't too knowledgeable beyond the products and the hardware that Apple sold. At that day and age, if you were creative, if you were a designer or an architect, any of those sort of standard, professional services types that have more creative bents, problem solving sort of capabilities, you ultimately idolized Apple over all. When you started your business, you would go the Apple store to collect your first most important thing when you left your big corporation and now were starting on your own, which was to get your shiny, new Mac laptop. There was nothing more satisfying for these folks than to go in there and figure out a laptop. That really set them apart a determined that they actually had a business and they were moving forward.

The issue was as soon as they set the laptop, they would turn to the small business consultant and say, "Where do I go from here? I am trying to do work for so and so, I ultimately need to invoice them. What do I and what software do I use?" The small business consultant would typically be confused and wouldn't know what to pick at, so they would just point them towards the software wall. We brought a lot of QuickBooks Pro Advisors in to work directly with the small business consultants. There was a mixture of success that existed. Those who actually were focused on the creatives overall did it really well. Those who were broader in nature and weren't really focused on the audience, didn't do so well.

The reason for that was the small business consultant would be able to have a conversation with the actual QuckBooks Pro Advisor and they because top of mind. If that small business consultant felt like they understood the audience that they were mutually trying to serve, they were more likely to recommend that person over to the small businesses that came in, outside of the webinars and the seminars that were being conducted at the store. What was happening was when someone would come in the door and they would ask the small business consultant, that small business consultant would say, "You know, I actually don't have the answer for you, but I know that they're using QuickBooks. Here's a person who I can refer you to that ultimately can help get you going." There was confidence in the referral. Not only that person was coming back on a frequent basis talking to that small business consultant and nurturing that relationship.

The takeaway here was those who were focused on that particular audience, that could speak to their language and provide a good outcome, that ultimately drove into referrals, found a way to be able to market themselves that cost them nothing but literally showing up to the Apple store once a week and having a conversation with that small business consultant, maybe also doing a seminar once a month, which may have been an hour of their time. Their marketing costs were literally just the time they spent doing that. It's an unlikely scenario that how to ultimately capture customers by understanding the lifecycle and the journey that they go on and being at a critical moment within that small businesses formation or the actual movement there forward to where they're going to need a trusted advisor.

The reason for having and finding a niche and knowing where to actually look is so that you can take a smaller look or a more narrow look at the customer or clients that you want to serve and be able to understand the lifecycle that they go on and map out where are the places that I can be that I can be able to be in the conversation where someone may not see the obvious connection.

There's limitations to this. If you're serving manufacturing, or let's say home remodeling clients and maybe some commercial real estate folk, going to a Home Depot and talking to cashiers there is not going to be your answer. Possibly, you may determine that the local renovation shows that happen are a good place to go. Understand the audience and where they shop. What they do, what they read, where they get their advice. Being able to understand that, and gain you can't do that with a really broad mix, allows you to understand where you can best place yourself and how you can go ahead and both attract them, but also retain them. Again, that's a little bit of an example to bring up.

I want to go through a little bit of marketing theory, not because I was doing quote before, but also it helps you understand where finding and focusing on the niche will ultimately bear you fruit and how it fits within the entire pipeline of strategy and marketing overall. Then I'm going into how to actually do the targeting itself in five steps right after this. I want to go into this real quick, and then we're going to spend a bulk of the time really on just being able to understand how to find what your particular focus should be.

My first theoretical piece I want to bring up is what's called the three C's. Again this goes back to, strategically how do you position your firm and knowing where to focus overall. How it's defined is there's this image here that I've picked up and placed in the slide for you. There's three different C's that exist. There's the competitors in the market. There's the customers that you have, that you want to attract. Then there's your company overall.

The intersection of those, of what your company does well, the separation from the competitors that you have in market, and the customers that you want to serve is where you should have your narrow focus at. Any given firm can have three different ways that they can differentiate themselves. They can differentiate themselves on price, which again a lot in our industry do, which is a race to the bottom. I strongly encourage you not to do that. Then the other two metrics are you can actually differentiate yourself as an innovator or in terms of customer service.

It's interesting is I think everybody out there claims to have the best customer service. I'm sure everybody on this webinar does. It is a bit of a requirement for what we do in this industry. Innovation is the other area that you could go down. Examples would be Wal-Mart would be the low cost leader. Apple would be the leader of innovation. Let's say USAA Bank would be the highest in customer service. You need to figure out which of those three pillars is going to be your focus point. A lot of what you're going to do is stemming out of that in terms of, strategically, how you're going to both serve people, but also attract people overall.

The next particular framework to think about is what's called the SWAT analysis. Most of you are probably pretty familiar with this. This is taking a look at your business overall and how it stand out from an outside in perspective, from an inside, out. There's really four different metrics on there. There's you're strengths, which is internally looking at and how you are able to stand above others and how you're able to deliver the best to customers and clients out there. The next stop in inward looking is your weaknesses, what you're not able to do well. On the external looking out side is what are the opportunities that are existing for you in the market that you're in. That could be a local market. That could be broader than that. What are the treats to that market? How is that market changing over time so you know how to actually change yourself within that context. A SWAT analysis is something quite good to do once a year.

What it does is it opens up your eyes to understand what customers you may not be good for and what customers you may have a great ability to be able to serve. Then to see whether there are enough customers in the market for you to be able to attract or to be able to try to sell to and whether that market is changing on you over time so you might have to migrate your target focus on a progressive fashion. The SWAT analysis is helping to understand the changing landscape that you operate in.

The next one is the most important of these which is called STP. This is where a lot of what we do with finding and focusing is really where we spend the effort on. What that particular acronym stands for is segmentation, targeting, and positioning. The reason for this is when you are more focused on a market, it's all about the message. It's all about how you're communicating to that audience. When you take a very generic message and try to sell to somebody and you trying to be the trusted advisor with them, it falls flat. You need to understand their language. This all comes down to the value conversation. For those of you that are trying to make the leap to value pricing or fixed fee billing, that value conversation is what all the value is determined and what someone's going to pay for the expectation of what you're going to deliver and what level of competency you can deliver it at.

This is about understanding the market overall, understanding the segments of those markets that you can go on, and this is what we're going to be studying in the five steps, determining which of those are the right ones for you, and then going on the back end of this and understanding how to target it, how to speak to that audience and then how to market it and sales to close. The STP model is the key model within focusing on a niche and being able to take that to the next level.

The issues will be wrapped up in this last one which I'm not going to spend time on, which is called the four P's. This is your execution and your delivery. This is when you get through that value conversation explaining what you're doing and how you're doing it. There's really four components to it. It's really what is your product, this is the services that you offer. What's you're price? It could be hourly, but hopefully you're doing something like fixed fees or value pricing. Where are you placing yourself at? What's your distribution around that? Where are you trying to intercept your customers? How are you trying to do your marketing? Then how you do your marketing, which is really on the promotional piece. There's the where and the how.

This slide: what does all this mean? Why in the heck did we just go through that? Good thing you asked that. Here are the four models again. This is how it breaks down. You start from the three C's to understand how you want to be strategic with your business overall. You then do that SWAT analysis so you can understand yourself and understand the market that you want to operate in or the basic client broader spectrum to be able to get a sense of where you want to focus and narrow down. The segmentation, targeting, positioning is all geared around being about to carve a message that's very specific to the audience that you've chosen that you want to serve. That is the outcome and the next step of what we're going to be doing after to figure out your particular niche. The last one is really how you're going to address your clients and be able to deliver that and be able to get them, not only across the line, but to serve them at the end of the day.

That is a bunch of the preliminary discussion, let's get into the meat of it. This is a perfect time for us us to have the CPE keyword as we're almost halfway through today's webinar, which is hippopotamus. The CPE keyword today is hippopotamus. You will not be in the spelling test to be able to spell hippopotamus. It will be on a self selection, so don't worry about the spelling. Just remember that today's keyword is hippopotamus.

All that being said, how in the heck do we determine which place that we want to focus on? What underlying clients do we want to target and work on and be able to spend our effort and our money to be able to attract and be able to get across the line? Step one is actually the simplest of the steps. We're going to look at this at different perspectives to be able to ladder in from different vantage points to where you should be focusing your efforts.

The first one is really discover your passion. Go grab a glass of wine or the bottle, I'm not one to judge. Take a step back from your business and from things in general and just start to think about what is it about what you do and who you serve makes you get up each day? It's simple as that. It's hard to do, but it's as simple as which clients, when I look at them, that when they call I get excited about the phone call? Which ones when I actually dive into the work, I'm looking at the work in a different way and I'm trying to think beyond the scope of the work to be able to think about how I better can serve their business? Which ones are those clients, again, that'd be for your staff, do they talk positively about and that they seem to have good things to say? It's those particular client opportunities and those particular projects that lead you down to understand whether or not there's similarity in the experiences that you're having across those clients to understand whether or not that is where your focus already lies.

There could be some folks, some of those clients might be because they're the easiest ones and the most profitable. The question is really is that something that's repeatable? Again, you always want to start from where you already gravitate towards and understand whether or not if there actually is a target there or maybe it's a way of delivering. That is step one on the process.

Step two is looking at it from a more quantitative approach and understanding what your customers might think of you. While you may be passionate about something, your customers can understand your passion based on the outcomes that you're delivering for them. The best way to be able to get that is by doing a net promoter survey. You should be asking all of your clients at the end of any given project or if you're doing on an ongoing basis maybe on a quarterly review this specific question at the bottom, which is the net promoter question. How likely is it that you would recommend our company to a friend or colleague?

That question could be followed by several other questions trying to drill into the details. Can you tell us why you gave it that ranking? What about what we do ultimately drove the ranking that you gave? When somebody answers that question and it's on the zero to ten scale, you're able then to understand who are the people who are super excited about you, aka the promoters, versus those people that are not at all satisfied about you, which is the detractors. By doing that, you can create a score to see how you're doing and how that translates over time.

However, in the exercise what we're doing here, you're using that promoter to figure out who are your promoters. Those promoters you want to find what are the similarities that exist within those. Those are the ones that seem to love what you do and are probably having a higher willingness to pay and might pay more to continue to work for you in the future. Being able to identify them in this manner allows you to follow up with them and have some conversations that might open up your eyes to the similarities that may or may not exist there. This is another exercise in terms of how to manage your clients overall in terms of making sure you mitigate the bad things that are happening and drive in more promoters. For today's discussion, I just want to focus on that bit about leveraging those promoters to give you some insights.

Now, the next way to go is if you have those particular customers identified, you're looking again for those vectors of similarity. Again, I used some big words there, but basically what you're trying to do is you're trying to understand what sort of ways do these people mostly operate. The easiest one and the one that everyone always gravitates towards is what industry are they in? Are they all eCommerce? Are they all retail? Do they have inventory needs and therefore they're producing products? Manufacturing? Distribution? Are they lawyers, chiropractors, dentists? I don't know. Those are some of the industry related ones. Those are the classic ones that people talk about. If you need a list of the industry verticals, feel free to email me. I'm happy to provide them. THere's also the census. You can go look at the census and there's, I think, thirty two categorized on the census. That might give you a good indication. Most of you, if you do have a grouping of them, you know roughly what they do and who they serve and how they serve them.

Another one that a lot of people use that is pretty typical is the size of the company. That size can be measured on a couple of different ways. One is the number of employees. Typically a company that has one person or just an owner is going to look and operate differently than one that's got two to five employees, you know six to ten or it's actually six to twelve, twelve to twenty, twenty one, twenty to one hundred and a hundred plus. Each one of those companies has very different needs, has different levels of complexity, and has different requirements for the services that you offer. The employee head count can be a good indication.

Another one is the revenue size, whether you're serving people that are making one thousand dollars or less or one hundred thousand to five hundred thousand, five hundred thousand to a million, a million to five million and so forth. I hear a lot of folks who are very focused, who have a particular niche, they will recite the exact revenue amount because the revenue really determines the level of the systems and the complexity in the business, the type of advice they need, the type of analysis that you have to perform, and those types of things.

The other ones, again, are a little bit different, different ways of looking at it that are non-traditional. What are the type of services that you provide? Bookkeeping, accounting, payroll, advisory, audit, IT consulting, tax, whatever it might be and maybe some sub-components of that that might be more interesting. Another one is business complexity. Business complexity determines the type. There's different types of people that can serve different types of complexity within businesses. That could be a subset of maybe an industry or something else.

Geography: where the hell are they located? Maybe you only focus on a local market. Maybe you focus on the northern part of your city versus the southern. I don't know. Maybe you're actually working with import/export businesses so you're really doing well with folks that are based out of Australia that are doing work here in the states. You do tax work with them because of the complexity of it.

The savvy-ness of the business owner. In small businesses, the owners ultimately drive the behavior of the firm overall. Knowing the savvy-ness of the owner or some other capabilities of that might see similar patterns. That's where again you're getting better outcomes because you can relate better with the owner of the business overall.

Life stage of the business. Are they just starting out? Are they a start up? Are they growing heavily? Are they becoming more mature? Are they basically going out of business or there's the succession plan?

The last thing is, again, more on that tech savvy-ness, but what does the owner exude in the behaviors that they have? Again, these are all different ways to look at it in non-classical terms to figure out whether or not- There is going to be similarity. The question is which one of these is that similarity going to lie on. Okay?

That's going to lead to your step four which is really consolidating those similarities, looking at those different vectors that exist. It's trying to understand whether or not you can pair them together and whether or not there really is a correlation that exists there. At this point, on this step, I just want someone to try to craft together where they think those similarities exist. What we want to do is try to create these segments. Maybe you're pairing together the industry with the tech savvy-ness. That is one segment that you would articulate. Maybe you're going to be taking an owner characteristic and putting it with the size of the company. That might be another segment that you look at. You're trying to carve together these different underlying segments that are able to articulate the kind of businesses that you're serving or don't want to serve.

We're doing this just as a preliminary, in terms of just trying to use our gut to be our guide. On step five is where I want to take a scientific approach to that. We'll step into that right now. Step one through four is to use more of a qualitative approach using your gut, using NPS, which is scientific, to give you an idea of the customers to look at, and ultimately being able to group that together by what you can see in terms of similarities.

Now I want to take those steps and that preliminary idea of what you have in terms of who might be your target and actually use a more quantitative approach to help make some sense of what may seem like a hard exercise to do. This is how you can do it in a more scientific approach.

The first step of this is to take and determine the ten to twelve different ways that you might measure or evaluate each one of your clients in terms of their importance to you or their ability to be a good customer of yours. This is determining what are the different factors of evaluation that you want to have. I've put a few of them up there already. The amount of fees that they could be paying, willing to pay is one. The amount of fees that could possibly be collected form them. Maybe it's fitting with the passion that you have. Maybe it's that business fits within a larger market, so how big is the market in relation to the customer or the client that you're trying to serve? What is the complexity of the business overall? Again, there are different variables that you can choose, that you can evaluate your clients all together and be able to understand whether it's good or it's bad, if it's important to you or not. We're going to use that measurement scale in order to get some more scientific evaluation.

Then what you're going to do is, before you actually look at the details, you're going to take those twelve criteria evaluation and you're going to choose out of that which five. You don't necessarily want to go higher than that. You could go up to maybe seven. What are the five of those that you think really have the most importance to you? You've done this sort of broad brain dump of here's the ten or twelve things that I think I could measure a company on and now you're going to pick out five of those are really important to you. Then you're going to weight each one of those.

You're doing what's called a hundred point exercise. You get a hundred points. You've got the five different criteria that you're going to use to evaluate, and you're going to apply those one hundred points across that. Maybe passion fit is my most important. I'm going to give it forty points. Then maybe willingness to pay is my second most important and we give it thirty points. Maybe the size of the market that it sits in is the third. I'll give it twenty points. Whatever that last criteria is, ten. The reason we're doing this is we're creating a weighting mathematical formula that we can use after we've done the evaluation of the clients that we have.

Now what you're going to do is you're going to take every client or you can take the top twenty percent, depending on how big your client list is going to be, and you're going to list them all down. Again, I'm going to show you. It looks like this. You're going to create a spreadsheet like this. I'm happy to pass this spreadsheet to you. I've got one that's templated, that you can copy and leverage on your own. What you're going to do is you're going to take and list every one of those clients and you're going to go. You're going to look at client A and you're going to say client A. You're going to imprint the image of that client in your head and you're going to ask yourself, on criteria number one, passion fit, how well do they fit what I believe that passion fit criteria is? Are they not at all? I'm going to give them a score of one or are they are perfect fit and I wish every single client was like this one because that's where I want to spend my time? I'd give it a score of five.

On each one of these now you're going to score them on a one to five scale. One being it's not a fit at all. Five being it's a perfect fit. You're continue to do that. You're going to do that for client A, passion fit, I give it a five. On willingness to pay, you know, they're kind of cheap. I seem to be fighting with them all the time to get the fees that I think that I deserve. I'm going to give them a two. How big is the market that they're in? Well, these guys are in E commerce, it's a huge market right now, but probably not the biggest out there. I'll give it a four. Then I'll do the last criteria. Maybe give it a three.

Now I'm done with client A and I move on to client B. I do the same thing. Client B, how big is the passion fit? I hate these guys. They always irritate the crap out of me. Nobody wants to work with them. I give them a one. Willingness to pay? They actually pay really, really well though, which is why we keep them around. Give them a five. How big is the market that they're in? It's pretty big. I give them a four. You get the idea. You do this for every single one of your clients.

What's you've now done is you've created a quantitative view of your clients and you're just going to do the math. Now you've got your criteria across the top. Each one of them is weighted, forty points, thirty points, twenty points, ten points. Now you've got your criteria and they're weighted on a one to five scale. You just multiply the one times the forty. You then add that to the next one, which is, I think it was, four times thirty.

It creates a composite score for you. It's going to be somewhere between one to five. Now you've got a rough idea of exactly which customers fit the ideal customer that you want to have and you just sort the list to figure out which ones are at the top, which ones are the closest to five versus which ones are the closest to one. You now can take the twenty percent, do the Pratel rule, take the twenty percent of those at the top and you start to go back and determine what is the similarity looking across these different things. You've got this now scientific approach to now start to do the detection work on which ones pop to the top and why do they pop to the top. That creates another viewpoint versus the qualitative one we just did. We've now got a quantitative approach and we can see how those two marry to one another. We can feel confident we're working on the right set.

That then leads to your picking of the segment that seems to fit best to what you do. That's where you get to marry the passion with the net promoter, with the actual data that you have. Again, you don't have a full amount of data to work form. This spreadsheet is the one I use to prioritize. Again, you can list the metrics across the top. You can then put your weighting percentage there on the bottom. There's two different ways you can do it. You could actually have a hard, quantitative metric that actually gives you something that's actually got some data on. I don't recommend that here. I use this for other things as well.

What I talked about with that one to five scale is what's called a Harvey Ball scale, if you're at all curious. This is stem, if you ever go to a consumer reports and you're trying to look for a new car, they always have these circles and one's black and one's red and some of them are half filled, that is a Harvey Ball analysis. That's what you're actually doing here. That is how you're able to get to a point where you can get some understanding of the list that you're trying to serve and how you're trying to serve them.

Let's go back and take a look at that and what I meant by that. Again, there's really five steps to this. The first one is using your passion, using what you inherently believe and where your immediate gravitation is, using your gut, your initial instincts on which clients and why and what about this client seems interesting.

The step two on this is going to be which of clients am I satisfied with? Which of the clients I have are satisfied with me? That's using net promoter score. If you want to understand more about net promoter, by the way, you can go to There is an article up there that talks about net promoter specifically. It will go into more detail on when and how to do that.

Step three is really the one you're coming back to time and time again, which is the understanding of how are your customers going to be similar in nature, understanding the different types of similarity that may exist to combine that into a proper segment that you can use to focus on and create a profile of the type of client that you want to actually speak to, attract, create marketing materials for, and also the processes that you need to use to serve them.

Fourth one is a consolidation of that. The first one is using steps one and two to actually do the grouping. Then when you're doing step five, which in this case was doing more of the quantitative piece, that's using that quantitative perspective to actually be able to do the same steps, three and four, again, to use those two analyses together to choose your niche on step five.

With that, what I want to do here is quickly take a look at the questions I haven't yet. I just want to make sure that nothing's been un-addressed that's going on here. It hasn't, so that's good. What I want to do is, we're going to go a little bit further here. We're going to talk about- I actually think it's a good time to be able to bring out the polling questions because I've been going on here quite quickly.

I actually want to bring up the CPE keyword. Those of you looking for CPE credits, there is rhinoceros, armadillo, elephant, hippopotamus, and manatee. Please give your votes. The quicker you give your votes, I still see about twenty, thirty percent of you that haven't voted yet. The quicker I can shut this down and the faster we can move on to the rest of the webinar. Again, rhinoceros, armadillo, elephant, hippopotamus, and manatee. I'm going to close the poll here in three, two, one. Poll is now closed. I'm not going to show the results.

Going to here and talk about, again, today's talk was really around business strategy. It was on find and focusing on your niche. There's three others that fit within this conversation is on organizational design talking about whether a firm is horizontal or vertical, hybrid, what the implication of that is on terms of production planning, in terms of how you're going to be able to attract and attain talent, how do you build redundancy and so forth. Scaling your business and embracing change are interrelated. It's understanding if you're going to scale, what are the things you have to be aware of. Scaling requires change management in general. Change management fits within scaling as well. Those two articles are coming up pretty soon.

If you need to have an intro on Karbon, again, we didn't talk about that. We do that every Tuesday and Thursday. You can got to All the materials, all of these webinars, are going to be on the Firm of the Future site at Good little plug, again, there's a lot of content that's being up there and being updated. You definitely need to continue to check back on that because it's just a wealth that's going up there. You can just go to to do so.

We go into this slide as I go into some questions. First of all, I just want to say thank you from my side and from the Karbon team. My email's up there at Again, if there's specific questions I don't answer right here, then I can answer them offline as well.

Let's take a look at the questions that are up here. One of the questions that came up is somebody wanted the spreadsheet that I was showing. You can have that spreadsheet. The best way to do that is actually to email me there at and I'll invite you into the Google document that I created. You just need to copy that to a new Google doc. Otherwise, who comes in after you is going to see what you've done and how you've changed it. Please don't use the one that I send to you, but go ahead and copy that and modify it there.

The second question that I want to go through here is these processes seem to apply to establishments, which is for someone who's just starting out? When you're just starting out, what you want to do is regardless of whether or not you have the luxury of being able to go after one particular target, it's always easiest for you to have a person in mind or a set of people in mind of the type of people you want to serve. For instance, if you were going into value pricing, for instance, and you're just staring that out.

It's obviously a lot easier to do that as a someone with a new practice than an establishing one that you're trying to transition. Whether it be onboarding, whether it be business processes, whether it be marketing or whatnot, you're always best having an idea of who you want to have as your ideal customer. You don't have the luxury of looking at your existing client base and saying, "Where have we done well with?" It's primarily going on to either looking at the general market of small businesses that you can serve. It might be the small businesses in your area and understanding them as where are there enough businesses that I can work with? It's doing that SWAT analysis that I talked about. What do I do well? What do I not do well? How does that intersect with the small business customers I can serve based on the services I want to provide.

It's also looking at what services do I want to provide. Am I going to be providing bookkeeping, payroll, advisory, tax, whatever it might be. I need to narrow that down. Based on narrowing it down, it will also narrow the target market collectively that you can serve. Then it's looking at where do I have experience and passion in. Maybe, for instance, I love working with non-profits. That has a very different articulation to it then someone who says I actually like working with product companies because I'm really good at inventory. It's something I not only have expertise in, but I have passion. It could be I don't do well in either one of those, but it's interesting because when I look at the people that I talk to on a daily basis, those people that call me up looking for advice, my friends and my family, they typically seem to be people that are just starting out or entrepreneurs, people just getting going. I seem provide good advice because they thank me for it and I'm able to continue on having additional conversations.

You go and look at things in a little bit non-traditional, but it really goes back to your passion, where you have expertise or experience in prior, what type of customers are going to appreciate that expertise, and where you're located or where you're putting out your feelers, where is there going to be the highest likelihood for people to actually take that. Regardless of whether or not a customer comes through the door, if you use that to then ultimately determine here are the processes by which I serve, here's the way I can have a value conversation, here's the technology that's going to help me serve those clients, here's how an engagement's going to be from start to finish if I use that.

The majority of what you create there will be able to be translated into another target audience that might not be directly related to the one that you targeted initially. All that work is going to give you dividends in either case. It's just a matter of you want to continue to fine tune and hone it as you go forward in time so that while you're not bringing everybody in, you can be a bit more selective when you have the opportunity to be more selective and you're using your marketing and your sales in a directed fashion to drive the pipeline in a more effective manner. You can't control, necessarily, who walks in the door, but you can control how you're going to market and how you've getting better effectiveness on the dollars that you spent.

I'm sorry. That was a long winded answer. I think it's definitely applicable. It is harder for some folks who are just starting out versus those who have more mature practices and are able to go down a more scientific approach then the more qualitative and more gut approach that's out there.

What I want to do now is check to see if there's any more questions. Thanks for giving me thanks on that long winded articulation. At this point, it looks like I've got all the questions answered. Appreciate Andy that has been doing a bunch of the work in the background and answering questions that popped up. Again, I wanted to say thank you for myself, for the Karbon team, from Intuit, Firm of the Future. Go check out Got any questions, feel free to email me at That's it for the webinar. Thanks everybody! Have a great day or evening, wherever you're at.