How to Become a High Growth Professional Services Firm
Hinge Marketing recently reached out to us on Twitter, and I’ve enjoyed getting to know them in the last few weeks. I was interested in the research they had done with professional service firms, so agreed to have them guest post on the BBR Marketing blog. Now that I see their results, I’m pretty happy to find that the things we’ve been telling our clients are backed up by their research results. See…told you! Enjoy!
by Lee Frederiksen, Ph.D., Managing Partner, Hinge Marketing
There is a group of professional services firms that grows nine times faster than their peers, is 50 percent more profitable, yet spends slightly less than average on sales and marketing. When it comes to valuation, these firms are typically worth three – five times more than their competitors.
The obvious question is, “How do they do it?”
After four years of studying over 850 professional services firms, we’ve uncovered some consistent answers. These high growth, high value firms share a number of key strategies and techniques:
1. They are found in all of the professional services industries, from technology to accounting to management consulting.
2. High growth firms are much more likely to be very specialized within their industry. This narrow focus allows them to concentrate their resources. Generalists have slower growth.
3. They put more emphasis on pursuing a clearly defined target market and are much more likely to research that market systematically. Our research shows that firms that conduct systematic research on their target customer group tend to grow faster and be more profitable.
4. High growth firms are more likely to have easy differentiators that set their company apart. While average companies point to their “great people” who offer “great service,” high growth firms tend to have differentiators that are both easy to understand and believable. An industry specialization or an atypical business model (for example, offering services for a fixed price when competitors bill hourly) are common ways that high growth firms set themselves apart.
5. When it comes to spending their marketing dollars, high growth firms are more likely to seek out partners and employ online marketing techniques. They also favor training their non-sales staff in business development, and they are not shy about using outside expertise to improve their results.
There is not a single technique or single strategy that propels this diverse group of firms. Instead, their advantage comes from the cumulative effect of doing many things right. It is this virtuous cycle of growth that we call spiraling up.
A final word about implementation: when we share these results, a few folks claim our findings are common sense. That may be true, but the harsh reality is that the vast majority of firms do not implement these strategies. Knowing and doing are indeed two different things.
Lee Frederiksen PhD is the Managing Partner of Hinge, a branding and marketing firm specializing in the professional services and the co-author of Spiraling Up: How to Create a High Growth, High Value Professional Services Firm.