For the great majority of professional services firms, growth is on-again, off-again. It’s often unclear what exactly drives the periods of growth, and it’s even less clear how to trigger similar growth in the future.
But there is a smaller group of firms that don’t follow this rule. Unlike their peers, they seem to keep their firms moving at high velocity, year after year. Some are already leaders in their markets, while others are moving up rapidly. They seem to have a special quality or strategy that their competitors lack. But what, exactly?
At Hinge, we’ve been studying the drivers of firm growth, and why businesses succeed, for many years. We’ve learned a lot over time, and have become a high-growth firm ourselves. In this post, I want to share some of our key findings about growth and explain how any firm — yours included — can borrow from the playbook of these high performers, and start generating above average revenues and profits as well. I’ll start with the key things you can do that will have the greatest impact on your firm’s success, and then mention several pitfalls to avoid.
But before we get going, however, let me take a moment to define what we mean by high growth. There are other definitions, but at Hinge, we define high-growth firms as ones that have shown a 20% year-over-year growth rate over three consecutive years. Average firms, in contrast, grow less than 3% per year.
How Your Firm Can Transform into a High Performer
If your firm seems to be stuck in a low growth/low profitability mode, it’s time to do something about it. At Hinge, we’ve seen many firms go from low to high performance. But it’s probably no surprise that it takes more than simply wanting it. It takes a solid commitment to change from your entire leadership team — and the understanding that the transition may feel difficult at first.
For one thing, your leaders will need to modernize your marketing program. For example, the change will not only require spending marketing dollars in entirely new areas, but more than likely, pulling the plug on some current marketing activities. It will also mean focusing intently on creating and promoting content — even more than on publicizing your capabilities. And it will mean changing priorities from traditional referrals to a new approach that emphasizes educating your prospects and building their trust.
Fortunately, the challenging period doesn’t last long. In fact, once you’ve transitioned from a traditional to a modern marketing mindset, many things get much easier.
But before that can happen, you will have to retool your marketing approach — a process that will include tapping new skills, making investments in new technologies and updating old ones. To demonstrate what I mean, Figure 1 shows the top 10 marketing techniques rated by high-growth firms, and how they compare to their no-growth counterparts:
Note that not one of the techniques that high-growth firms value as the most effective is rated highly by no-growth firms. Instead, the no-growth firms tend to rely on a quite different set of techniques. While those techniques aren’t shown in this chart, they include the traditional tactics you may know well, such as print advertising, sponsorships, and asking for referrals.
7 marketing priorities for 2018
Once you’ve gotten your management team starting to think about a new path to greater growth and profitability, here are the seven key changes to marketing that will help get you where you want to go.
- Gear up for online marketing: For most firms, perhaps the biggest single change is tuning up their online marketing machine — and then throwing it into overdrive. Most companies we’ve surveyed are not very effective at using online tools, let alone ready to tie these tools to actual financial results. But that mindset has to change. In general, you should aim for a roughly 50/50 mix of online and offline marketing techniques. Based on our research into why businesses succeed, firms that invest in both categories grow up to 4X faster and are up to 60% more profitable than firms that skew too much in one direction or the other.
- Identify what’s currently working: Traditional marketing techniques work better for some firms than others. If you’ve found success in securing new clients by exhibiting at tradeshows, for example, then keep it in your mix. If you can’t tie a current marketing technique directly to new business, toss it. Part of the problem is that most traditional techniques aren’t readily measurable, so determining out what’s working and what isn’t can be difficult.
- Do focused research: To really understand your firm’s position in the marketplace, you’ll need to do some foundational research. The insights you gather can help you build a valid and powerful positioning for your firm. Later, if you can conduct follow-up client surveys on a regular basis, so much the better. Our studies have shown that high-growth firms are twice as likely as no-growth firms to conduct systematic, ongoing research.
- Identify your differentiators: Many professional services firms find this to be one of the most difficult strategic challenges. The chief reason for this difficulty is that to be a real differentiator, a claim must be true, provable, and relevant to your clients and prospects. Our research shows that high-growth firms are 3X more likely to have a strong differentiator. There are several approaches that are effective:
- Reorient your positioning and marketing to focus on an underserved segment. This strategy can feel counterintuitive, because it generally means letting go of one or more client segments in order to build momentum and mind-share in another. Specializing your firm in this way can be scary at first. But it also is liberating. For the first time, you will be able to describe your firm in a way that means something to your prospects — and sets you apart.
- “Own” a trait. Find an aspect of your approach to business that you want clients and prospects to associate with you. It’s not a problem if competitors also do it as well — as long as no one else is doing it in exactly the same way. It could be a unique business model, a shared credential or characteristic, or even the type of clients you serve.
- Create a hybrid of options A and B above. Choose two primary traits, functions, or target markets of your business, and combine them. The goal is to be able to claim leadership at the intersection of those two things. For example, an appraisal company might decide to position itself as the “Authorities in Historic Appraisals” — combining the idea of being the leading authorities in their field with a focus on a certain type of property.
- Build strategic partnerships: This technique was revealed as the most popular among high-growth professional services firms in our 2017 High Growth Study. To find a partnership marketing relationship that works for you, look for firms, associations and other organizations that fit these criteria:
- Serves your own target audience. Even if a potential partner’s audience only partially overlaps yours, you may still find them to be a valuable asset.
- Isn’t in direct competition with you. In most cases, you wouldn’t want to partner with a competitor (except in government contracting, where competitors routinely partner with each other). Rather, look for organizations with complementary services. For instance, accounting firms and law firms don’t compete with each other, but they do provide services that each other’s clients need.
- Can also benefit from the relationship. Examples can include relationships where you can cross-market your services, share referrals with each other or market to one another’s lists. Try to structure the relationship so that the benefits each organization receives are more or less equal. This can be a challenge if one organization is much larger than the other or has broader exposure.
- Upgrade to a High-Performance Website: Make sure your website is living up to its potential as a lead-generating, trust-building content platform. In fact, it should be the centerpiece of your marketing program, where you house free educational content and your blog. It’s also the mechanism you can use to attract many new prospects, and then convert them into leads. And it’s the place where you can promote your Visible Experts® — those professionals within your organization who want to raise their industry profile and increase the perceived value of your firm. (You can learn more about how to transform your website in our free Lead Generating Website Guide.)
- Measure everything, and make strategic adjustments: You probably don’t need to be convinced on this recommendation. But in case you do, consider that high-growth firms monitor 33% more metrics than no-growth firms. These days, most online marketing tools include robust analytics, so you can fairly easily target those metrics that will be most helpful to collect, and build a dashboard that incorporates the essentials. Most high-growth firms monitor metrics on a weekly, monthly and quarterly basis. As much as possible, monitor how your offline tactics perform as well. Just a few examples:
- Number of speaking engagements by your team, and the types of audience members
- Quantities of phone inquiries, and where prospects learned about you
- How many proposals are going out each week, and your closing percentage
Of course, this short list only scratches the surface. And remember: don’t get so absorbed in the data collection that you forget to put it to use. Think of your marketing as a laboratory, and don’t be afraid to experiment. If a certain marketing tactic or channel seems to be underperforming, try to change it, and if you still don’t see results, consider dropping it altogether.
Avoid these pitfalls
Now that I’ve shared some recommendations for what works, let’s briefly look at some behaviors or strategies to avoid. The same research my firm conducted into why businesses succeed also revealed some traits that tend to be used by firms with average growth rates, and that act like a drag on any progress they’re making.
Here’s what average firms do:
- They’re often run by practitioners who were trained to deliver a technical service, and have little business training beyond the University of Hard Knocks.
- They use competitors for marketing guidance. This is quite understandable — after all, at least one of your competitors must be doing something right. However, the results are predictable: vanilla, interchangeable firms that move at a snail’s pace.
- They avoid risk. In general, professional services firms are fiscally conservative. They often steer their marketing investments toward “tried-and-true” techniques such as face-to-face networking, tradeshows and sponsorships. Unfortunately, this “safe” marketing approach limits opportunities and the chance for success.
- They focus too much on client service. When practitioners are running businesses, their top priorities tend to be delivery and client service. That makes sense, and these activities are crucial to a firm’s success. The problem is that when the team is busy with client work, they may neglect to spend enough time and effort generating new business. This leads to a self-perpetuating feast-or-famine existence, a real growth killer.
- They serve the same clients and provide the same services. In any given professional services industry, most firms don’t differ meaningfully from each other, and within a given market, they also tend to compete for the same clients. Think how this feels from the buyer’s perspective, and how difficult it makes choosing one firm from an undifferentiated array of competitors that all look and sound alike?
Start your engines!
So there you have it: some marketing do’s and don’ts based on the behavior of the fastest-growing professional services firms. Remember what they say about battleships, however. It takes considerable effort and resolve to change course, let alone get up to cruising speed.