Research Paper By Lynne Elder
(Professional Training & Coaching, UNITED KINGDOM)
The coaching industry is expanding. The International Coaching Federation (ICF) estimates the number of professional coaches worldwide at 47,500 in 2011 (ICF, 2012) compared with 30,000 in 2007. Latest figures from the ICF 2012 Global Coaching Study show that membership of the ICF increased from approximately 11,000 in 2006 to around 19,000 by the end of 2011 (ICF, 2012).
However, anecdotal comment and industry statistics indicate that only a small proportion of coaches entering the industry with the intention of building financially-thriving practices actually make a good living.
Dunn & Bradstreet cite inadequate or poorly-focused marketing (MasterCard, 2008) as a contributing factor to underperforming businesses.
This paper considers the correlation between one element of marketing – the marketing message – and its impact on the ability of coaches to attract clients and make a good living.
Latest industry statistics (ICF, 2012) appear to support anecdotal comments regarding coaches’ relatively low earnings showing average annual revenues from coaching in 2011 at US$47,900 with median annual revenues at US$25,000.
Fig 1: Average annual revenue earned by coaches (US$) (ICF, 2012)
Given the extreme highs and lows of earnings, which are a feature of the industry, it’s prudent to focus on the median figures. These show that even in the more mature coaching markets of North America and Western Europe, the annual medians are relatively low at US$29,100 and US$27,700 respectively when compared with the general median earnings in those regions.
The latest figures available for general median earnings in the US are $26,364 (Social Security Online, 2012) and in Western Europe are around $26,000 (OECD, 2012).
So coaches earn more than the median earnings in the USA and Western Europe – but not significantly more. In a growing industry, attracting well-qualified, dedicated practitioners, providing services which typically bring high value to clients, it begs the question:
Why are the majority of coaches earning only marginally more than a median income?
This question, along with Dunn & Bradstreet’s earlier pointer of a correlation between marketing and business performance, prompted further qualitative research into potential marketing-based causes of the just-above-median incomes earned by coaches.
Is Marketing Relevant?
It is widely acknowledged that marketing activity is an essential pre-requisite for business success.
Philip Kotler, hailed by the Management Centre Europe as
the world’s foremost expert on the strategic practice of marketing’ (Philip Kotler Center, 2012) defines marketing as the ‘human activity directed at satisfying needs and wants through exchange processes, (Kotler, 1986).
This definition contains arguably the most important four words for coaches building a successful business…’ satisfying needs and wants’….
Why are these words so important? Because to do so effectively requires the coach to comprehensively understand what their clients ‘need and want’. Thus they need to know who their clients are, what their clients are seeking and what they must provide in order to satisfy their client.
Modern marketing calls for more than developing a good product, pricing it effectively, and making it accessible to target customers. Companies must also communicate with their customers. (Kotler, 1986).
So communication is key. Again, a simple word but laden with relevance. Communicate with whom? How? When? How frequently? Using what media? What message? How do I establish a two-way communication? How do I establish an on-going communication?
Put at its simplest,
Prospects don’t buy, they choose. (Trout, 2001).
Thus, client-attracting activity means communicating with potential clients in such a way that they are able to make an informed choice.
Good marketing on its own doesn’t make for a successful coaching business. Without effective coaching skills leading to results, a financially-sustainable coaching business is not viable. However, it is equally true that effective coaching skills on their own don’t lead to a financially-sustainable business.
A combination of strong coaching skills PLUS effective marketing is essential, particularly as so many new coaches are entering the industry (ICF, 2012) adding to client choice and competitive pressure.
Leading management theorist, Peter Drucker tells us that
What a business thinks it produces is not of first importance…What the customer thinks he is buying, what he considers ‘value’ is decisive…(Drucker, 1954).
This firmly places the emphasis on clear communication with the potential client….not of what the coach is selling, but of how the client will benefit. It calls for clear communication of the value of the coaching engagement to the client.
This is particularly relevant in the coaching industry. The benefits of coaching – what the relationship produces, delivers, provides – are unclear to many potential clients. Indeed 30% of research respondents identified ‘Marketplace Confusion’ as a key issue facing the industry (ICF,2012).
So, clarity of product, benefits and value, in the mind of the potential client, is key. Delivered via clear communication by the coach to the potential coachee.
To Niche or Not to Niche?
With communication at the heart of successful marketing, coaches need to be clear about who their client is and what they want. An effective strategy, well-suited to small businesses (Mercer, 1999) , is to identify and focus on a small but viable sector of a market with clear wants and needs.
In marketing theory, this is termed ‘niche marketing’ and comes from the marketing practice of segmentation, or grouping together consumers with similar characteristics, needs and wants.
Niches typically describe smaller sets of customers who have more narrowly-defined needs or unique combinations of needs. (Kotler, 1999).
The clearer the coach is about their potential client-base, the clearer they can be with their communication.