To compete with the big firms, a boutique must sharpen its message.

By David L. Goetz, author of Native Tongue: Translating your message into the language of prospects, is founder and president of CZ Strategy, a marketing strategy company that works with consulting and professional services firms.

The start-up was a cliché, typical of the ever-expanding universe of wealth management firms.

A successful sales executive from the private client side of a major brokerage left the firm, tip-toed around his non-compete, and launched an RIA. A year later, two others from the same brokerage joined the start-up. Within three years, the firm was humming, with almost $400MM in assets, a good start.

But after siphoning off a bevy of clients from the big brand, the young firm plateaued. The three principals struggled with the most elemental marketing question: What is our marketing strategy to land the next client? The principals lived well, but their bloated overhead left little for investment in a real marketing strategy. They generated a few referrals from existing clients, but then they’d lose a client or two. They were lucky to grow marginally after the initial rush of clients.

Today’s marketplace, no matter the sector, is like a roiling sea of piranhas competing for the same piece of meat. There are a seemingly unlimited number of competitors, and a finite supply of prospects. Every start-up must answer the same hard question:

How does a boutique begin to create trust with prospects and carve out a sliver of the pie? After you’ve onboard all the clients taken from the former employer, how does a small firm compete with the big brands that can spend $5MM or more per year in advertising?

The Comanche Way

In short, it can’t. A brand serves as a proxy for trust. It’s one thing for a person to succeed in a branded house, it’s an entirely a different journey for an entrepreneur to build a brand from scratch. If the word brand is a synonym for trust, then the early years of a start-up are all about creating trust.

I recently met the principal of a firm that had developed visualization software as means to lure families away from their old school wealth management firms. In the sales process, families could visualize their future with a couple dozen financial inputs. That’s certainly one approach. However, in many situations, technology is a poor differentiator. It works for a while, but then others catch up. For many prospects, I’m not sure the word “platform” is really much of a competitive advantage these days, since every major brand is selling one.

To a prospect, often what a firm trumpets as unique sounds the same as what every other firm is selling. To create a unique position in the minds of prospects, a start-up must specialize. It must go deep into one area. That is one of the most basic truths of positioning strategy. A lesson from American history illustrates the power of specialization.

Every American Indian tribe (and every Texan and Mexican) feared the Comanche in the early 1800s. Their rise to dominance is in part a story of positioning strategy. In Empire of the Summer Moon, Sam Gwynne narrates the rise and demise of one of the most feared tribes in American history. Only the Sioux on the Northern Plains rivaled Comanche ferocity. The Comanche ascent can be traced clearly to their expertise in raising, breaking, and riding horses. Over the course of about 200 years, the tribe developed a specialty in handling horses. Consequently, the Comanche made their living by hunting buffalo and warring against other tribes (and stealing their horses) and, eventually, killing settlers moving west into the tribe’s territory. The tribe, which was really a loose federation of many Comanche tribes, had no patience for subsistence farming.

At a young age, Comanche boys had a horse to ride, even if it was an old mare with a sway back. By his teen years, a young brave could sweep off the ground a wounded warrior at full gallop. For years, the Comanche raided frontier settlers at will, butchering men and women and occasionally abducting children. For most of the first half of the 1800s, the Comanche flummoxed even the Texas Rangers, rendering them hapless like boys with water pistols. When U.S. Army soldiers pursued warring Comanche tribes, the soldiers were out-horsed. They rode plodding Army horses and dismounted to shoot their single-shot muskets. It took a minute or so to reload the rifle.

The Comanche, however, stayed on their mustangs, which were much leaner and faster than the horses of the soldiers, and would charge into a line of standing soldiers. By the time a soldier reloaded his musket, a Comanche brave could shoot a dozen or more arrows while hanging on to the side of a horse at full gallop.

Eventually, the white man slowly learned to ride more like a Comanche warrior—and bred faster horses. But then the game-changer was invented: the Walker Colt, the repeating revolver. Not long after came the Spencer carbine. Then it was the white man’s turn to slaughter the Comanche. The singular expertise in horses contributed directly to the rise of the Comanche. And their competitor’s expertise in technology (the Walker Colt and the Spencer carbine) eventually rendered the Comanche expertise irrelevant.

The takeaway for the small firm is this: Become an expert in horses—one thing. Start with one service or deliverable. Begin to change the experience of your current clients. That’s incredibly hard work. It’s a long pull in the same direction.

Aligning Message with Expertise

It’s at that point, a firm’s specialization, where creative and strategy should intersect. The story that a firm narrates through its advertising, collateral, web site, etc., must align with what I call the “Truth.” I define the Truth as simply “how your most recent clients perceive you.” I say “most recent,” because once a client engages a firm, their perception tends never to change. That’s why for an older firm, changing its position in the market is almost impossible.

The question for the boutique is this: Are clients truly experiencing what the firm provides as unique?

For organic growth, most boutique services firms depend on referrals or some form of word of mouth for the majority of new business. That’s why making sure that one’s external messaging aligns with how the firm is actually perceived by its clients, especially its most recent clients, is so basic. The only “language” that a client understands is her experience of you. The story she tells to a friend or acquaintance (a prospect) is the Truth. My simple point is that your messaging strategy should begin with the Truth, your expertise as narrated by your most recent clients.

If you want to think like your next prospect, stay in conversation with your most recent clients. They can still speak the language of those you want to reach.

Narrating one’s story clearly and simply in the language of prospects is marketing’s most basic activity. Too often creative is not based on the substance of an organization’s true reality. If a firm trumpets that it is the leading provider of something, but it’s not, the message doesn’t align with the Truth. If the firm says it is innovative, and it launches a gaudy website to prove its point, but its clients do not experience the service as innovative, then firm is innovative only in its own mind. Executives have simply trained prospects to ignore the message. “Innovative” creative does not make an organization innovative.

Creative that is not based in reality (the Truth) is impotent. It’s important, then, to message to your position. Your creative is then built on your differentiation. There is almost an unexplained power when creative matches the experience of the client.

The first baby step for any start-up is to discover, as soon as possible, the Truth about itself: What do our most recent clients say is our expertise? Why did our first few clients take the risk to join a small firm? Obviously, the first answer is, “It’s because of Don. He went to college with the son of the owner.”

But after that, what would your clients say? Are you really good enough to be a specialist? Is that what your clients say is the Truth?