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.
When you understand the people that you want to work with and the way that they like to communicate, you can create rapport…by using your marketing. (McNamara, 2007).
Clarity in the coach’s mind transfers to clarity in their prospective coachee’s mind. ‘I deliver this to that type of client’ is easily interpreted by the potential client as ‘I will get this from that coach’ Clear. Understood. Relevant. Desired. Bought. And without a niche?
Without a niche, your marketing attempts will be diluted and haphazard, leading to wasted effort, muddy marketing messages and an overwhelming number of choices about where to go, who to contact and what to say. (Hayden, 2007).
For many coaches, the encouragement to niche feels alien to their desire to help as many people as they can. They question if identifying a niche restricts their ability ‘to make a difference’.
However, by attracting more clients via niche marketing, the coach whose greatest desire is ‘to make a difference’ is surely fulfilling their purpose.
The importance of delivering a clear message is further emphasised in the ICF Global Coaching Client Study for 2009 (ICF, 2009) as it gives details of the Coach Selection Process showing that:
- less than one third (29%) of respondents contact or interview more than one coach before entering a coaching engagement
- 58% of clients engage the first (and only) coach they contact
This indicates that if the initial communication, in whatever format, clearly communicates the coach’s appropriateness, value, credibility, and confidence, the coaching agreement is made and the potential client looks no further.
What Does this Mean for Coaches and their Earnings?
While recognising that there are many contributors to financial success, further research was carried out to determine if there is a potential link between the marketing message and a coach’s ability to attract clients.
Purpose of the Research
Two elements of qualitative research were undertaken.
The first element took the form of informal personal interviews designed to gather qualitative feedback from coaches in terms of their:
- Level of satisfaction or otherwise with their annual earnings
- Perceived challenges faced in trying to run financially-successful practices
The second element was desk research designed to review examples of coaching websites to identify any common factors related to the perceived challenges.
Informal discussions were held with twenty coaches in London, UK during July 2012. The questions (Appendix 1) asked the coaches for feedback around the subject of their income and their challenges.
Results of Personal Interviews
The feedback showed that the coaches were:
- not satisfied with their earnings
- concerned with the sporadic nature of their earnings
- limited by having to 'trade their time for money'
- not confident about being able to attract a steady stream of new clients
Regarding their challenges, they cited the following:
- being able to clearly articulate what they do and the benefits to their clients
- feeling confident about selling their services
- finding and signing new clients
- knowing how to package their 'unique gifts' in a compelling statement
- 'getting their message out'
- lack of focus in terms of their specific market
- 'wheel-spinning' and overwhelm
Despite their concerns and challenges, all of the coaches interviewed were confident about their coaching abilities but hesitant, reluctant, confused and overwhelmed about marketing, selling and building a thriving, successful business.
Twenty coaching websites were reviewed. They were randomly selected from Google results using ‘coaching’ search terms generated by the Google Keywords Tool (www.googlekeywordtool.com).
The purpose of this research was to look at websites in relation to the challenges cited by the coaches. The websites were reviewed in terms of:
- clarity of market - who is the coach specifically targeting?
- do I feel that this coach understands me?
- will this coach help me with my specific problem?
- what are the benefits (to me as client) of working with this coach?
- is their message clear and compelling?
- am I clear as to what I do now?
Results of Desk Research
While recognising the subjective nature of this research, it was nevertheless possible to determine recurring patterns across the reviewed websites which typically showed:
- poor client targeting ie, who does this coach work with specifically?
- unclear communication of the core message
- unclear communication of the value that a client would derive from working with the coach
- an assumption that the site visitor would be able to work out for themselves if the coach would be able to resolve their particular challenge
- lack of a clear value and benefit message as to why the visitor should contact the coach
Most sites reviewed clearly explained the ‘next steps’ and how the coach could be contacted.
The research appeared to substantiate that coaches are generally not satisfied with their earnings from coaching and are unclear about how to attract a steady stream of clients.
Their challenges include determining their message, their value and their specific market. These challenges were typically reflected in the sampled websites.
And so, comparing the findings from the personal interviews and website reviews:
- dissatisfaction with earnings
- challenge in packaging and clearly articulating benefits
- 'muddy' messaging with the wisdom of leading marketers:
- the importance of marketing communication and message clarity it suggests there is a correlation between the financial performance of coaches and the communication of their marketing message.
Coaching to develop the Marketing Message
Kotler (Kotler, 1986) highlights the vital role of communication and McNamara (McNamara, 2007) how essential it is to understand your target group of potential clients. This points to the robust business strategy of niche identification which, when carried out successfully leads to the development of a financially-successful practice.
Coaching focussed only on clarifying the coach’s ‘passion and purpose’, leads to the classic strategic error of developing a product first and then trying to find a market for it. By the same token, coaching to find a market ‘need’ without coaching to identify ‘passion and purpose’ ignores the defining characteristic of coaches and will lead to a lack of vital emotional rapport between the coach and the coachee – and ultimately, dissatisfaction for the coach.
Once the ‘sweet spot’ – the area of overlap – is identified, the coach is then able to start to develop their compelling marketing message which attracts, resonates with and convinces the potential client of the absolute appropriateness of engaging the coach for the mutual benefit of coach and coachee.
Coaching skills alone don’t lead to financially-successful coaching practices. Coaches who are looking to build successful commercial practices must be able consistently to attract clients willing and able to pay for coaching services.
Increased competition, which is set to rise, requires that the coach who wants to be successful must firstly be found by prospective clients and then quickly identified as the coach of choice within their target market.
Sound marketing strategy points to the identification of a viable niche which the successful coach thoroughly understands, targets and with which they then develop a relationship.
Coaches who determine the needs that their prospective clients are actively seeking, who clearly articulate their solutions to these needs and then develop and consistently communicate their marketing message with clarity, conviction and confidence are the ones who build financially-thriving coaching practices.
ICF 2012 Global Coaching Study
MasterCard, Common Reasons for Business Failure. Retrieved Oct 5 2012 from: http://www.na-businesspress.com/JMDC/Cronin-GilmoreJ_Web6_1_.pdf
ICF 2012 Global Coaching Study
Social Security Online. Retrieved Oct 5 2012 from: http://www.ssa.gov/cgi- bin/netcomp.cgi?year=2010
Society at a Glance 2011. Retrieved Oct 5 2012 from: Society at a Glance 2011 - OECD Social Indicators
Philip Kotler Center. Retrieved Oct 5 2012 from: http://philipkotlercenter.net/about- kotler.html
Philip Kotler, Principles of Marketing, London, Prentice-Hall International, 1986, p 4.
Philip Kotler, Principles of Marketing, London, Prentice-Hall Int'l, 1986, p 486.
Jack Trout, Positioning, McGraw-Hill, 2001, p196.
ICF 2012 Global Coaching Study
P.F. Drucker, The Practice of Management, New York, Harper & Row, 1954 pp 37-38
David Mercer, Marketing, Blackwell Publishers, Oxford, 1999, p 151
Philip Kotler, Kotler on Marketing, New York, The Free Press, 1999 p 27
Hannah McNamara, Niche Marketing for Coaches, Thorogood, London, 2007, p 23
C. J. Hayden, Get Clients Now!', American M'ment Assoc, San Francisco, 2007, p 126
ICF 2009 Global Coaching Client Study
Appendix: Survey Questions
Informal discussions with twenty new and established coaches in London, UK during July 2012 asked the following four questions:
Q1 In terms of your annual income from coaching, how satisfied are you with the level of your income?
Q2 How evenly-generated is your income through the year?
Q3 How able are you to generate income which does not require your personal input?
Q4 How confident are you about attracting a steady stream of new clients?