Specialization Strategy

Last week, I reviewed “Who Owns The Future?” by Jaron Lanier. It’s a book about the impact of technology on the middle class.

I think the reality Janier describes in that book is self-evident - that the middle class is being gouged out by large data aggregators - but it’s hard, having read it and accepted his thesis, not to feel the future of the web might be a little bleak. Laniers solution of distributing value back into the chain via reverse linking is elegant, but is probably unlikely to happen, and even if it does, unlikely to happen in a time frame that is of benefit to people in business now.

So, let’s take a look at what can be done.

There are two options open to someone who has recognized the problem. Either figure out how to jump ahead of it, or stay still and get flattened by it.

Getting Ahead Of The SEO Pack

If your business model relies on the whims of a large data aggregator - and I hope you realize it really, really shouldn't if at all humanly possible - then, you need to get a few steps ahead of it, or out of its path.

There's a lot of good advice in Matt Cutt's latest video:

It could be argued that video has a subtext of the taste of things to come, but even at face value, Cutts advice is sound. You should make something compelling, provide utility, and provide a good user experience. Make design a fundamental piece of your approach. In so doing, you’ll keep people coming back to your site. Too much focus on isolated SEO tactics, such as link building, may lead to a loss of focus on the bigger picture.

In the emerging environment, the big picture partly means “avoid getting crushed by a siren server”, although that's my characterization, and unlikely to be Cutts'! Remember, creating quality, relevant content didn’t prevent people from being stomped by Panda and Penguin. All the link building you’re doing today won’t help you when a search engine makes a significant change to the way they count and value links.

And that day is coming.

Are You Flying A Helicopter?

Johnon articulately poses part of the problem:

Fast forward and we’re all spending our days flying these things (computers). But are we doing any heavy lifting? Are we getting the job done, saving the day, enabling the team? Or are we just “flying around” like one of those toy indoor helicopters, putzing around the room dodging lamps and co-workers’ monitors until we run out of battery power and drop to the floor? And we call it work.”...More than ever, we have ways to keep “busy” with SEO. The old stand-byes “keyword research” and “competitive analysis” and “SERP analysis” can keep us busy day after day. With TRILLIONS of links in place on the world wide web, we could link analyze for weeks if left alone to our cockpits. And I suppose every one of you SEOs out there could rationalize and justify the effort and expense (and many of you agency types do just that.. for a living). The helicopter is now cheap, fast, and mobile. The fuel is cheap as well, but it turns out there are two kinds of fuel for SEO helicopters. The kind the machine needs to fly (basic software and electricity), and the kind we need to actually do any work with it (seo data sets, seo tools, and accurate and effective information). The latter fuel is not cheap at all. And it’s been getting more and more expensive. Knowing how to fly one of these things is not worth much any more. Knowing how to get the work done is

A lot of SEO work falls into this category.

There is a lot of busy-ness. A lot of people do things that appear to make a difference. Some people spend entire days appearing to make a difference. Then they appear to make a difference again tomorrow.

But the question should always be asked “are they achieving anything in business terms?”

It doesn't matter if we call it SEO, inbound marketing, social media marketing, or whatever the new name for it is next week, it is the business results that count. Is this activity growing a business and positioning it well for the future?

If it’s an activity that isn't getting results, then it’s a waste of time. In fact, it’s worse than a waste of time. It presents an opportunity cost. Those people could have been doing something productive. They could have helped solve real problems. They could have been building something that endures. All the linking building, content creation, keyword research and tweets with the sole intention of manipulating a search engine to produce higher rankings isn't going to mean much when the search engine shifts their algorithms significantly.

And that day is coming.

Pivot

To avoid getting crushed by a search engine, you could take one of two paths.

You could spread the risk. Reverse-engineer the shifting algorithms, with multiple sites, and hope to stay ahead of them that way. Become the gang of moles - actually, a "labour" of moles, in proppa Enlush - they can’t whack. Or, at least, a labour of moles they can't whack all at the same time! This is a war of attrition approach and it is best suited to aggressive, pure-play search marketing where the domains are disposable.

However, if you are building a web presence that must endure, and aggressive tactics don’t suit your model, then SEO, or inbound, or whatever it is called next week, should only ever be one tactic within a much wider business strategy. To rely on SEO means being vulnerable to the whims of a search engine, a provider over which you have no control. When a marketing tactic gets diminished, or no longer works, it pays to have a model that allows you to shrug it off as an inconvenience, not a major disaster.

The key is to foster durable and valuable relationships, as opposed to providing information that can be commodified.

There are a number of ways to achieve this, but one good way is to offer something unique, as opposed to being one provider among many very similar providers. Beyond very basic SEO, the value proposition of SEO is to rank higher than similar competitors, and thereby gain more visibility. This value proposition is highly dependent on a supplier over which we have no control. Another way of looking at it is to reduce the competition to none by focusing on specialization.

Specialize, Not Generalize

Specialization involves working in a singular, narrowly defined niche. It is sustainable because it involves maintaining a superior, unique position relative to competitors.

Specialization is a great strategy for the web, because the web has made markets global. Doing something highly niche can be done at scale by extending the market globally, a strategy that can be difficult to achieve at a local market level. Previously, generalists could prosper by virtue of geographic limits. Department stores, for example. These days, those departments stores need to belong to massive chains, and enjoy significant economies of scale, in order to prosper.

Specialization is also defensive. The more specialized you are, they less likely the large data aggregators will be interested in screwing you. Niche markets are too small for them to be bother with. If your niche is defined too widely, like travel, or education, or photography, for example, you may face threats from large aggregators, but this can be countered, in part, by design, which we’ll look at over the coming week.

If you don’t have a high degree of specialization, and your business relies solely on beating similar business by doing more/better SEO, then you’re vulnerable to the upstream traffic provider - the search engine. By solving a niche problem in a unique way, you change the supply/demand equation. The number of competing suppliers becomes “one” or “a few”. If you build up sufficient demand for your unique service, then the search engines must show you, else they look deficient.

Of course, it’s difficult to find a unique niche. If it’s profitable, then you can be sure you’ll soon have competition. However, consider than many big companies started out as niche offerings. Dell, for example. They were unique because they sold cheap PCs, built from components, and were made to order. Dell started in a campus dormitory room.

What’s the alternative? Entering a crowded market of me-too offerings? A lot of SEO falls into this category and it can be a flawed approach in terms of strategy if the underlying business isn't positioned correctly. When the search engines have shifted their algorithms in the past, many of these businesses have gone up in smoke as a direct result because the only thing differentiating them was their SERP position.

By taking a step back, focusing on relationships and specific, unique value propositions, business can avoid this problem.

Advantages Of Specialization

Specialization makes it easier to know and deeply understand a customers needs. The data you collect by doing so would be data a large data aggregator would have difficulty obtaining, as it is nuanced and specific. It’s less likely to be part of an easily identified big-data pattern, so the information is less likely to be commodified. This also helps foster a durable relationship.

Once you start finely segmenting markets, especially new and rising markets, you’ll gain unique insights and acquire unique data. You gain a high degree of focus. Check out “Business Lessons From Pumpkin Hackers”. You may be capable of doing a lot of different things, and many opportunities will come up that fall slightly outside your specialization, but there are considerable benefits in ignoring them and focusing on growing the one, significant opportunity.

Respin

Are you having trouble competing against other consultants? Consider respinning so you serve a specific niche. To specialize, an SEO might build a site all about dentistry and then offer leads and advertising to dentists, dental suppliers, dental schools, and so on. Such a site would build up a lot of unique and actionable data about the traffic in this niche. They might then use this platform as a springboard to offering SEO services to pre-qualified dentists in different regions, given dentistry is a location dependent activity, and therefore it is easy for the SEO to get around potential conflicts of interest. By specializing in this way, the SEO will likely understand their customer better than the generalist. By understanding the customer better, and gaining a track record with a specific type of customer, it gives the SEO an advantage when competing with other SEO firms for dentists SEO work. If you were a dentist wanting SEO services, who's pitch stands out? The generalist SEO agency, or the SEO who specializes in web marketing for dentists?

Similarly, you could be a generalist web developer, or you could be the guy who specializes in payment gateways for mobile. Instead of being a web designer, how about being someone who specializes in themes for Oxwall? And so on. Think about ways you can re-spin a general thing you do into a specific thing for which there is demand, but little supply.

One way of getting a feel for areas to specialize in is to use Adwords as a research tool. For example, “oxwall themes” has almost no Adwords competition and around 1,300 searches per month. Let’s say 10% of that figure are willing to pay for themes. That’s 130 potential customers. Let’s say a specialist designer converts 10% of those, that’s 13 projects per month. Let’s say those numbers are only half right. That’s still 6-7 projects per month.

Having decided to specialize in a clearly defined, narrow market segment, and having good product or service knowledge and clear focus, you are much more likely to be able to spot the emerging pain points of your customers. Having this information will help you stand out from the crowd. Your pitches, your website copy, and your problem identification and solutions will make it harder for more generalist competitors to sound like they don’t know what they are talking about. This is the unique selling proposition (USP), of course. It’s based on the notion of quality. Reputation then spreads. It’s difficult for a siren server to insert itself between word of mouth gained from good reputation.

Differentiation is the aim of all businesses, no matter what the size. So, if one of your problems is being too reliant on search results, take a step back and determine if your offer is specialized enough. If you’re offering the same as your competitors, then you’re highly vulnerable to algorithm shifts. It’s hard to “own” generalist keyword terms, and a weak strategic position if your entire business success is reliant upon doing so.

Specialization lowers the cost of doing business. An obvious example can be seen in PPC/SEO. If you target a general term, it can be expensive to maintain position. In some cases, it’s simply impossible unless you’re already a major player. If you specialize, your marketing focus can be narrower, which means your marketing cost is lower. You also gain supply-side advantages, as you don’t need to source a wide range of goods, or hire as many people with different skillsets, as the generalist must do.

Once you’re delivering clear and unique value, you can justify higher prices. It’s difficult for buyers to make direct comparisons, because, if you have a high degree of specialization, there should be few available to them. If you are delivering that much more value, you deserve to be paid for it. The less direct competition you have, the less price sensitive your offering. If you offer the same price as other offerings, and your only advantage is SERP positioning, then that’s a vulnerable business positioning strategy.

If you properly execute a specialization strategy, you tend to become more lean and agile. You may be able to compete with larger competitors as you can react quicker than they can. Chances are, your processes are more streamlined as they are geared towards doing one specific thing. The small, specialized business is unlikely to have the chain of command and management structure that can slow decision making down in organizations that have a broader focus.

Specialized businesses tend to be more productive than their generalist counterparts as their detailed knowledge of a narrow range of processes and markets mean they can produce more with less. The more bases you cover, the more organisational aspects come into play, and the slower the process becomes.

In Summary

There are benefits in being a generalist, of course, however, if you’re a small operator and find yourself highly vulnerable to the whims of search engines, then it can pay to take a step back, tighten your focus, and try to dominate more specialist niches. The more general you go, the more competition you tend to encounter. The more competition you encounter in the SERPs, the harder you have to fight, and the more vulnerable you are to big data aggregators. The highly specialized are far more likely to fly under the radar, and are less vulnerable to big-brand bias in major verticals. The key to not being overly dependent on search engines is to develop enduring relationships, and specialization based on a strong, unique value proposition is one way of doing so.

Next article, we’ll look at differentiation by UX design and user experience.