Marketing Considerations for Professional Services
It is nopt about more clients and more business, but better clients and better business
Most professional service firms measure their marketing success through increased revenues. At their marketing briefings/debriefings all they talk about is revenues. While this is perfectly normal in the area of marketing things, it can seriously mislead the marketing efforts of professional service firms.
While the purpose of marketing products is to get more business, that is, to sell higher volumes of “stuff”, the purpose of marketing professional services is to get better business, not merely more business.
What is the point of clogging up the firm with boring projects nobody has passion for, for lousy clients nobody really cares about?
The key to successful marketing is developing proper indicators that reflect not only the quantity but also the quality of the work the firm lands. But how do we exactly define better business? It is important to check the new business against both quantitative and qualitative indicators.
Is this business more profitable than the business we usually get around here? Unfortunately many firms’ mantra is: “Any business is good business.” Then the firm gets entangled in this “busy-ness”, and there is no time left for marketing and business development in order to attract high-calibre clients. And then when new business gets evaluated, it is quantity, not quality of new business that plays the major role. In most cases performed tasks get evaluated not quality of service. There are only a handful of firms that actually assess their client feedbacks.
Accepting all sorts of business is certainly a way to grow, but as the years go by, the per person revenue of the firm is fairly certainly is going down. And this is the problem.
Most firms do not even measure their revenues per person. They just say: “Our revenues have grown 100%” during the last year. It is nice, except that personnel and operating expenses have grown by 400% during the same space of time, meaning that revenue per person has actually gone down quite significantly.
Most firms accept junk work out of insecurity. They simply do not have the courage to bet on their own abilities to attract high-calibre, top-tier clients with sexy, exciting projects. Also, the condition of becoming partner at most firms is in one’s ability to land more business, not better business.
Also, increased revenue is financial growth but there can be growth in reputation, market penetration, brand recognition, colleague and client fulfilment, and various other hard-to-quantify factors.
The other thing is compensation. People get compensated on the volume of business they bring in regardless of profitability. Firms believe that any business is better than no business because it keeps their people busy.
We have all heard that 20% of clients provide 80% of revenues. Now, if this is the case, why the cricket keep firms that 80%, instead of jettisoning them and fill the space with better clients?
By abandoning that low-profitability business people could spend more time on personal and professional development, which in turn could justify a fee increase.
In order to see the overall profitability of the projects, firms must implement adequate costing systems that indicate the profitability of every single project.
There are two types of work firms can engage in: Asset exploiting and asset developing.
Asset exploiting is when we just do what we have always done because that is easy. We can do it standing on our heads with our eyes shut.
Asset developing are the gigs during which we learn and grow.
It is vital to maintain balance between the two types of work. Both provide revenues, but while asset exploiting is a shortsighted, tactical approach, asset development is a strategic investment in the future.
Look at computer professionals who have been studying Linux, the open platform system. For years and years they were ridiculed, beaten up and burnt at the stake. Today, when the more and more people are getting tired of crashing Windows systems and cumbersome Microsoft licensing regulations, these same Linux people can see their long-term investment get ready for harvest.
To avoid too many asset-exploiting engagements, it is important to regularly evaluate each new engagement. Bring in an external facilitators, an ignorant antagonist and let her/him lead the discussion. By answering those questions you will get answer to the key question (See some sample questions below): “What did we gain from this engagement?”.
And if the answer is simply: “It kept us busy and gave us money”, then there is a problem. So, now let’s move into evaluating our gigs. Pull up each engagement and check them against these criteria on a scale of 1 (No way) to 10 (Definite yes):
1. Are we learning new skills here? 2. Are we being exposed/introduced to new potential clients/buyers? 3. Are we improving our relationship with this client? 4. Are we leveraging (more junior work and less senior work) more then we did in the past? 5. Are we receiving higher fees than before? 6. Are we working at a higher level in the client’s company? 7. Are we being exposed/introduced to new industries? 8. Are we doing less “outsourced labourer” work than before? 9. Are we moving towards new work with this client? 10. Are we building the firm’s legacy with this engagement?
Now you can see how effective your marketing really is. It is hard to score full 100 on the test, but there must be a bottom low limit under which you want to walk away from the project if you can.
So, make sure that in the future you focus on better business, not merely more business. You will have more free time with your family and have more appreciative clients who are willing to pay premium fees for premium services.
Remember, it is not the size of your clientele that counts, but the depth of the individual relationships.
About the Author
Tom "Bald Dog" Varjan helps service businesses to improve personal and organisational performance. Requests his FREE fee-setting guide "Why Most Service Firms Grossly Undercharge for Their Services?" by sending an email to booklet@di-squad.com with "booklet" in the subjectline.
Written By: Tom ''Bald Dog'' Varjan