By Mike Antonczyk and Matt Hirschland Ph.D.
Like every industry, professional services have been in the midst of a radical transformation. Increasingly sophisticated competitors with non-traditional business models have gained acceptance and forced many firms to re-think how they attract and serve clients. As major firms grow (largely thought acquisition) and client needs change, firm brand, reputation and ‘social-proof’ are no longer enough to break through the noise and secure new business. Throughout our careers, we’ve seen this evolution first hand and continue to see it in today’s rapidly changing professional services environment. Three trends have taken center stage in the 1st Half of 2017:
Making acquisitions pay is not for the faint of heart.
Many firms (from consulting to accounting) have gotten bigger by acquiring a host of new, and by expanding existing capabilities since the recession. Take the growth in the product and service design sector alone which has been fueled by 42 notable acquisitions, ~50% of which have been acquired within the last two years*. For some, the integration of these new services means bringing the acquired entities under the primary firm’s brand umbrella (e.g. PwC and BCG). For others it has meant keeping the brands separate (e.g. Accenture).
Regardless of the approach, many have failed to find the true synergies for these new services in their typical service line structures. The result is often overlapping, confused and even competing entities inside the same firm.
These are all classic challenges associated with digesting acquisitions, but we are hearing our clients increasingly ask: How do we capture the full potential of our new size and make these new capabilities pay in a world where offerings are often undifferentiated and increasingly price inelastic? Often the answer to making them pay is revisiting the assumptions behind the purchase of and the very architecture of these expanded capabilities. That takes real courage.
Automated marketing solutions are only part of the growth solution.
In recent years, investment in automated marketing platforms has soared with 53% of B2B companies now using these tools in some form: 82% are using email marketing and there are 11x more B2B organizations using automated marketing tools than in 2011.
However, half the organizations using these platforms report no increase in qualified leads since implementing.**
Our clients regularly tell us that it is actually more difficult to break through and target high-likelihood buyers of high-end services in meaningful ways precisely because of the widespread access by so many to these very technologies. Using automated tools for casting a wide net does create easily quantifiable outreach and lead-gen metrics, but seems to do little in converting prospects into clients. Instead, the most successful firms balance these broadcast approaches with thoughtful, narrow-cast ones focused on 1-on-1 relationship building. The latter being something that by definition cannot be easily scaled and takes careful care and feeding that goes beyond typical CRM platform capabilities. Marrying the best of these two approaches in disciplined ways is the right path to building a balanced, powerful client engagement growth engine.
Skilling-up the next generation of consultants.
In many firms, the art of client development has yet to make it fully to the comprehensive performance assessments conducted with junior level colleagues. We often hear about those that have ascended to more senior roles without having had to grown their own book of business as a result of great deal/engagement flow from “rain-makers” and from the acquisitions described above.
This has left a growing skills shortage among young consultants, lawyers, accountants, and similar who are now in leadership roles and must be counted on to sell new and more complex work. Couple this with the fact that many of the very rain-makers inside firms are retiring or being lured away. This is leaving a sizeable and very real gap in relationship and business development at firms of all sizes.
Add to this the fact that ‘partner learning’ has always been a difficult challenge given the demands on time of these individuals.
Novel approaches are required to address these gaps and can be made a valued, welcome component of professional development and what great looks like at every firm.
Given these and many other factors at play we predict a significant shift in how and where professional service firms will add value in the future. We already see many firms moving from services to products as enterprise customers look to embrace digital and leverage technology to create new business models as well as connect with their customers in more meaningful ways. The best providers are building capabilities to provide technology recommendations; bundling their expertise with tangible software solutions that can be adopted by their customers. Unlike the models of the past this approach forces firms to provide solutions that are tailored to those whom they serve.
Will marrying consulting services to customized software solutions that need to be built for customers (SaaS -like models) be the future for the best firms?
H2A team analysis
*Design in Tech Report, John Maeda Kleiner Perkins Caufiled & Byers (March 2016).