Challenger brands are relatively rare in professional services – despite conditions being ripe for them. More mid-sized firms could benefit from adopting a challenger brand strategy.

Ziggers and zaggers

A challenger brand approach can be a very effective way for many ‘big-but-not-biggest’ professional service firms to achieve strong market positions and competitive advantage against highly-entrenched incumbent firms.

Genuine challenger brands are relatively rare in all sectors. Brands like Virgin, Patagonia and Uber are ubiquitous in any discussion, but beyond that, the list thins out pretty quickly. And, as we’ll see, while all these come under the challenger brand umbrella, they follow pretty different approaches within it.

These more nuanced models can cause a bit of confusion when brand leaders think about being a challenger: “We’re not aiming to disrupt the whole market like Uber, and I’m not flying around in a balloon like Richard Branson to get publicity.”

Challenger brands are categorised by a mindset which sees they have business ambitions beyond conventional resources and an intent to bring change to an industry.

The real deal

Many brands like to consider themselves challengers but, in reality, aren’t following a challenger brand strategy – which has evolved to mean something quite specific.

The Wikipedia definition is a helpful place to start. “A challenger brand is a brand in an industry where it is neither the market leader nor a niche brand. Challenger brands are categorised by a mindset which sees they have business ambitions beyond conventional resources and an intent to bring change to an industry” (Wikipedia).

It’s useful because it raises the bar significantly higher than merely competing. Being ‘categorised by a mindset’, having ‘ambitions beyond conventional’ and coming with ‘intent to bring change’ are not everyone’s cup of tea.

It gets much more exciting and relevant to many professional service firms when you go deeper and look at the various challenger brand models in the literature. It starts to open up many more potential routes for different kinds of firms to adopt quite specific challenger brand models.

Here’s a quick canter through the most relevant models for a premium professional services firm.

LinkedIn has already totally disrupted the low-value recruitment market

Dramatic Disruptor 

This is the Uber model (and Amazon, Airbnb and Netflix), where a new entrant to a market adopts a radically different business model to offer a new and significantly superior product or service. For obvious reasons, these brands are always technology-led.

In the professional services sector, there are many of these types of brands circling the premium markets, building up scale and reputation to – they hope – one day compete for the more premium parts of the market.

Xero, the accounting software, is a good example. Today it’s effectively competing with and displacing much or all of what some accountants do. In the future, they hope to displace them completely, just as Netflix once simply distributed other producers’ content and now competes directly with them by producing some of their own.

LinkedIn has already totally disrupted the low-value recruitment market. Firms like Axiom and Keystone have their eyes on the vast, premium legal market, even if they are a long way off denting it today.

These brands use communications rather than technology as their weapon of choice and thrive on being provocative.

Feisty Maverick 

This is the Virgin model (and BrewDog, Innocent and Red Bull) where a relative newcomer attempts to blow up a cosy market dominated by giant incumbents who – they believe – have become a bit slow and complacent.

These brands use communications rather than technology as their weapon of choice and thrive on being provocative. One attraction of this model is that it requires relatively little investment. In fact, the owners of these brands often tell their shareholders that they spend far less on their brand communications than the incumbents because they generate much of their exposure through PR – Richard Branson is the poster child.

However, despite the low cost of entry, it seems to be much harder to make this approach work in professional services. In the UK, Foxtons – the residential real estate company – is probably the best example.

Many professional service firms adopt a kind of ‘a little bit feisty maverick’ approach to their branding in the hope that this will cut through without upsetting the client market apple cart. But it doesn’t work because it’s too timid.

They’re probably right that most professional service firm clients aren’t looking for a maverick. I advise you to steer clear of this model unless you’re prepared to be a bit unpopular with the mainstream.

Whilst this challenger brand model can be potent, if it’s not 100% authentic, it will quickly be exposed

Passionate Missionary 

This is the Patagonia model (and Tony’s chocolate and Riverford Organics) where a brand proudly and loudly wears its purpose on its sleeve. This is the classic ‘we want to make the world a better place’ model and can be tremendously effective and appealing if your business model is fully aligned with it.

Leigh Day, the UK law firm, has earned a strong reputation for representing the Davids against the Goliaths in legal disputes. In the world of executive search – where companies are highly focused on improving their diversity and inclusion – Audeliss has made its almost zealous commitment to DE&I the central theme of its brand.

It goes without saying that whilst this challenger brand model can be potent, if it’s not 100% authentic, it will quickly be exposed, so tread carefully and ensure your board is fully aligned.

This model takes the idea of a specialist brand and turbo-charges it with a massive passion and enthusiasm

Enthusiastic Specialist

This challenger model is followed by brands like Sonos, Mini and Rapha (cycling, not the tennis player). This model takes the idea of a specialist brand and turbo-charges it with a massive passion and enthusiasm for what it does and the market it serves.

However, it’s easy to be enthusiastic about Bonsai trees if you only sell Bonsai trees and only ever will. The difficulty in adopting this model is finding a way of defining your specialism coherently but not immediately constraining in terms of growth. The strategic skill is in finding a mass niche that can grow with you and provide tons of stretch without breaking.

In law, firms like Quinn Emanuel and Stewarts have achieved this balance by focusing on litigation (as opposed to transactional work), and others like Cooley have exploited the mass niche of technology.

Many mid-sized and, in some cases, even bigger firms could successfully adopt this challenger branding approach, but it requires the strategic discipline to stick to your knitting as you grow.

Radical innovation around a traditional service to take on the incumbents directly

Next Generation 

This is the Tesla model (and also brands like Oatly, Impossible Foods and Monzo) where the challenger uses radical innovation around a traditional service to take on the incumbents directly. Not by disrupting their business model but by competing, customer-by-customer, with a ‘next generation’ product or service that makes the market leaders seem outmoded.

It can be harder for existing firms to pull off in professional services, but those who can do it have seen impressive results. A good example is True Search, the executive search firm that has come from nowhere to become the 6th largest firm in the US (behind the five so-called Shrek firms that have dominated the market for many years).

PA Consulting has had great success competing head-to-head with incumbents such as Accenture, Deloitte and McKinsey by developing a next-generation brand proposition around ‘bringing ingenuity to life’.

The law firm Shillings, unleashed by changes in legislation in the last decade, acquired firms offering complementary services such as cyber security and investigations experts and remodelled themselves as a next-generation brand.

Mid-sized firms with big ambitions should take a serious look at the opportunities

Informed choice

The value in all this is that you can look at these models and think a bit harder about which one might be most relevant to your firm’s strategy.

The models give you a framework to discuss the pros and cons of adopting any one of them in a wholehearted and determined way and not just dabbling around the edges with elements of different models.

Mid-sized firms with big ambitions, facing strong and entrenched market leaders, should take a serious look at the opportunities presented by adopting a challenger brand strategy. Many firms will take a look and decide that, for various reasons, the implications are beyond them, but others will see a path open up that could be transformational.