As a Partner in a Professional Services firm, you are expected to be both a rainmaker and a client services expert. You have been able to increase your service delivery productivity by delegating more tasks to your staff, but your ability to drive significant increases in new business has been disappointing.
In contrast, recent studies have shown that other firms are achieving up to 30% annual growth in professional services revenue without increasing their marketing budget.
You can adopt the same proven strategies to fuel your firms growth. It’s time for you (and your firm’s Partnership) to explore and implement a more effective marketing and business development strategy for your firm.
Marketing and Business Development Challenges Facing Professional Services Firms
US accounting services and legal services firms realize that they need to steal market share from someone else if they want to grow:
- The US accounting services industry, including CPA firms, is expected to remain in a slow-growth mode, with annual revenue expected to rise only 1.3 percent, according to a study by IBISWorld.
- There are no more incremental dollars coming into the US legal services market according to research by BTI Consulting.
However, your competitors want to grow as well, so they will be trying hard to steal market share from you! Since it’s 10 times more costly to acquire a new client than retain an existing client, improved client retention must be a key component of your marketing and business development strategy.
The challenge is how to improve marketing and business development effectiveness. Clearly, some firms generally understand they must do better in this area: Law firms only gave themselves a score of 6.93 out of 10 on marketing and business development according to research by BTI Consulting.
Simply increasing the marketing budget will not ensure revenue growth:
- The average marketing budget for Law firms and CPA firms is about 2 to 3% of gross revenues. According to a study by Association for Accounting Marketing, high growth firms spent only 1% of gross revenues.
- Law and CPA Partners are typically expected to be business development rainmakers. If each Partner’s discretionary “marketing budget” and “associated non-billable labor cost” was taken into consideration, your firm’s total marketing and business development cost is significantly higher than just 2 to 3%!
Your marketing and business development strategy is not working as well as it did 5 or 10 years ago. Simply increasing budget is clearly not the solution. So what is the root cause for your disappointing growth rate?
The Clients Buying Process Has Changed
Internet, social networking and mobile devices have changed your client’s buyer journey. With the increased availability to the internet, prospective clients have become better informed about industry issues, solutions and competitive offerings before they seek out the expert help of a professional services firm.
Prospective clients (or their staff) regularly receive articles and blog posts of interest to them, directly on their smartphones and tablets, allowing them to read it whenever and wherever they have a few minutes. When they’re ready to take the next step, they use social media, such as LinkedIn, to reach out to trusted industry colleagues for recommendations. They might further check out these recommendations by doing a Google or Bing internet search for information about the firm, including independent customer reviews and testimonials. Just because the decision maker is not very active in social media doesn’t mean their staff is not active!
As a result, both your clients and prospects have increased expectations of you and your firm. For example, more than a third of client attrition was caused by law firm inefficiency according to research by Acritas.
If your firm has not updated its marketing and business development process within the past 5 years to better align with the new buyers decision process, you are at a significant disadvantage in your industry.
A More Effective Professional Services Business Development Strategy Is Needed
You need to improve your business development productivity by delegating as much of it as possible to others, analogous to how you improved your service delivery productivity by delegating tasks to others.
Your primary focus as a Partner rainmaker should be in these 3 areas:
- Closing qualified new prospect opportunities. Marketing should help you identify potential clients, nurture new potential clients into qualified prospect opportunities for you to contact, and nurture past customers into becoming repeat customers.
- Deepening your personal relationship with existing customers. Marketing should help you cross-sell into existing accounts.
- Strengthening your connection with high-value referral sources. Marketing needs to provide you with ongoing content that you can share with your personal referral sources to stay on their radar.
As part of the new marketing and business development strategy, you and the firm’s Partnership needs to delegate the above marketing activities to Marketing. However, simply giving them additional responsibilities will not solve anything.
The Partnership needs to ensure that Marketing is capable to take on an expanded role by doing the following:
- Ensure Marketing has the right experience, skills and budget
- Provide active executive support to breaking down any internal silos or challenges
- Measure the Marketing impact for each Partner group as well as the Partnership overall.
To further increase your business development productivity, and to fully leverage the new contributions from Marketing, you will need to sharpen a few of your skills:
- Effectively leverage social networking to identify and develop targeted referrals
- Quickly identify high-value prospects and referral sources at networking events
- Efficiently increase your personal brand
A More Effective Professional Services Marketing Strategy Is Needed
The Hinge Research Institute and Association for Accounting Marketing recently released a study that contrasted high-growth firms (the fastest-growing 20 percent) with low-growth firms (the slowest-growing 20 percent). The Key findings:
- High-growth firms showed an average organic growth rate of 24% while low-growth firms shrunk by an average of -3.7%.
- High-growth firms had a higher ratio of marketing staff (one for every 48 employees) than did their low-growth counterparts (one for every 64 employees). The average of all firms in the study was one full-time marketing employee for every 65 employees.
One might assume that high growth firms had spent more on marketing to get their results. After all, they had more marketing personnel.
However, the high growth firms actually had a lower spend rate:
- High-growth firms actually spent less on marketing (1.04 percent of revenue) than did low-growth firms (2.08 percent of revenue).
- The average marketing spend (including compensation for the marketing department) of all the accounting firms in this study was 2.19 percent of revenue.
The marketing strategy of high growth firms clearly aligned better with the new buyer process:
- High growth firms spent much more on lower-cost marketing techniques that helped prospects move through the buyer decision process: marketing materials, networking and trade shows, Web site and search engine optimization, and educational events.
- Low growth firms spent much more on higher-cost marketing techniques that do not align as well with the new buyer decision process: advertising, sponsorships, individual partner business development set-asides, non-educational firm events, and public relations.
The Right Automation Technology Can Increase Revenues Even Higher
When properly deployed to support the firm’s marketing and business development strategy, CRM/Sales Force Automation and CRM/Marketing Automation can better align business processes between Marketing, business development by Partners, and the firms target market. According to Aberdeen Research, companies with better alignment grew revenues 13.1% versus a revenue decline of -.5% for laggards.
To convert potential C-level executives into highly qualified prospects for their Partners, Crowe Horwath, an Accounting and Consulting firm, recently launched their first email automation campaign. According to the case study published by Marketing Sherpa, they had to develop multiple pieces of content related to specific industry issues that the C-suite cared about, including content that moved them through the their decision process: from lead to potential prospect to qualified prospect.
- Even though the typical sales cycle was 12 to 18 months, the automated campaign achieved 133% ROI in less than 7 months.
A More Effective Professional Services Growth Strategy Must Be Explored
To grow the firm’s professional services revenue, and increase the Profit Per Partner, you need to implement a more effective marketing, business development and client retention strategy.
To maximize your professional services revenue and profit growth, your firm’s strategy must incorporate the following elements:
- All marketing and business development activities must be aligned to the client’s new Buyer Decision Process.
- Marketing must develop qualified prospects by leveraging cost effective marketing techniques that align with the buyer journey and the buyer decision process. Professional firms that execute the right marketing techniques can enjoy a 28% higher growth rate (and a better ROI from Marketing) than laggard firms.
- Partners must improve business development productivity by adopting more effective professional networking techniques.
- The firm’s CRM/Marketing Automation implementation must align with the firm’s professional services revenue strategy to fuel even higher growth. Firms that effectively leveraged automation technology can enjoy a 13% higher growth rate than laggard firms.
- The Partnership must continually measure the effectiveness of their marketing, business development and retention strategy with key metrics such as new client acquisition rate, existing client cross-sell penetration rate, and client retention rate.
All the Partners will obviously welcome the benefits from being in a high growth firm, yet few will want to give up any control. Growth through expansion of new services may initially appear to be a less controversial approach, however, adding it to the existing low growth revenue strategy will just prove to be a distraction. It’s analogous to building a new room on a crumbling house foundation.
Therefore, any substantive transformation into a high growth company may impact the roles and budgets of every Partner. Therefore the Partnership, not the Marketing department, needs to provide leadership throughout the transformation.
There will be 3 ingredients that are critical for success.
- The Partnership needs to agree on a more effective marketing, business development and client retention strategy. It will require every Partner to change their focus on new business development. In addition, in order to fund the new enhanced strategy without increasing the firms overall expense budget, it may require that individual Partners eliminate some sponsorships, individual partner business development set-asides, and non-educational firm events.
- The Partnership needs to commit to provide active support of the growth strategy implementation. Marketing needs to increase focus on developing qualified leads for Partners, creating content and tools that improve Partner productivity in closing deals and strengthening referral sources, and creating high-quality networking opportunities for Partners. Partners need to participate in the design of selected Marketing initiatives, such as the email automation example described above, to improve ROI.
- The Partnership will need to ensure Marketing has the personnel and resources needed to execute the new model.
The design and implementation of the growth strategy needs to be customized to fit your firm’s situation. Your situation represents unique challenges and opportunities as defined by your history, culture, leadership, organization and financial performance.
To accelerate the adoption of a high growth revenue strategy, outside expertise will be necessary to help the Partnership develop and execute a more effective growth strategy, help Marketing execute a new set of initiatives and success criteria, help Partners adopt more effective business development techniques, and help ensure that any new technology can be fully integrated across the firm with the least disruption.
Your Next Steps
Revenue and Profit growth is not meeting Partner expectations. Next year will be even more challenging. Things need to change.
As a Partner in the firm, you are in the best position to help sponsor a discussion within the Partnership to explore a better growth strategy.
To help get things moving, you should identify a consultant to lead an unbiased discussion about options and impact to the firm’s marketing and business development strategy. The consultant needs to be experienced in modern marketing and business development techniques, with a track record of increasing an organization’s revenues by designing and executing successful growth strategies. Strategic business and technology experience with enhanced CRM systems would be an added plus.
However, who has the time and experience to lead the implementation internally?
The consultant that leads the strategy discussion needs to also “walk the talk”. The CEO/Partnership should have the option of engaging the consultant as their “lieutenant” to lead both the design and internal implementation of the enhanced growth strategy; Someone with the requisite experience to quickly get the various groups in active support of the strategy, proactively help Marketing design and manage the right set of initiatives, help Partners implement productive business development techniques, strategically align the firm’s technology strategy with the revenue strategy and establish metrics for the Partnership to measure the ongoing performance of its growth strategy .
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