What drives growth in professional services companies?
At Client Talk, we are regularly asked two things. One, what makes a great marketing strategy? And, two, what drives growth in professional services firms?
We had our own ideas on how to the answer those questions. However, we decided to test some of our assumptions by asking CMOs and Heads of Marketing and Business Development at professional services firms*. We received a range of responses from smaller firms (under £5 million) to firms with turnovers of more than £90 million.
The results that we collected shone light on two features which had a big impact on growth and showed that these were common to both small and large firms.
What element of a strategy drives growth?
All of the firms surveyed had grown. Some modestly – between 0 and 2% - others more substantially, with 30% of firms growing by more than 8%. We analysed the responses to see if there were any features that were shared by the high growth firms or were lacking in those with modest growth.
All of the firms were asked whether they had a marketing strategy and to categorise the features of their strategy from a list of nine. The features that we listed covered client feedback, segmentation, vision and new product development.
We found that only one of the features demonstrated a strong association with growth. That wasn’t whether the strategy was informed by client feedback, or whether it contained a clear segmented target market, as you might expect. These features were present across the sample, sometimes in high growth companies and sometimes in those with modest growth.
The feature that was the best indicator of growth – will all high growth companies in strong agreement that it was something their strategy contained – was whether or not the strategy looked forward by more than 2 years.
Why might a forward-looking strategy drive growth?
A marketing strategy that doesn’t look forward by more than 2 years, lacks the vision and direction of one that does. A marketing strategy that only looks 0-2 years ahead, is perhaps better thought of as a tactical plan to confront the here and now. It probably contains some of the features of a strategy, but in lacking the long-term vision, it is probably more focused on quick returns and is less effective at building a brand. Whilst it is important to have a plan that keeps the business growing/surviving in the short term, our survey suggests that if you want significant growth you need to bet on the long-term.
Our survey also uncovered another interesting statistic, which might also explain why a long-term strategy is the best driver of growth.
People: the second feature seen in high growth professional services firms
The second factor shared by high growth professional services firms and lacking in those with modest growth was the engagement of professionals in business development. Not only did high growth firms all strongly agree that their professionals were engaged in business development, they also all strongly agreed that the professionals were recognised for the business development they did.
It is unsurprising that the more professionals feel recognised for the work they do, the more they are motivated to do it. At Client Talk our business development diagnostic measures motivation and we find the same correlation when we ask professionals individually.
Is it just the cumulative effect of all professionals taking part that drives growth?
Whilst everyone being active produces a cumulative effect, we believe there might be something else going on. A clear strategy for the future helps professionals all row in the same direction.
Perhaps firms with a long-term vision also recognise the importance of engaging professionals to deliver the strategy and that is what has led to them being recognised for the work they do. In turn, longer-term strategies could be a better way to engage professionals, who then in turn are better able to buy into the longer-term vision of the firm.
At Client Talk, our unique approach centres around the fact that it is the professionals who hold the key to unlocking a strategy’s potential. If you want to find out how to unlock your strategy’s potential, contact us.
[*survey of CMOs of 17 leading law firms.]