It’s All About Revenue
The fallout for professional services firms from the 2008 credit crisis had several distinct phases. In 2009, a free fall in demand precipitated knee-jerk cost cutting. By 2010, firm leadership surveys gave Chief Marketing Officers a clear message that business development and revenue growth were the top priority. And a year later, many of those CMOs indicated they were adding revenue-generating talent to their ranks. In the years since, the role of CMO itself has now broadened, and the most successful are leading change and building new capabilities within their firms.
Earlier recessions had impacted market share and market position. Responses typically were about improving efficiency in the business. When competitors with new business models arrived, the incumbents either ignored them or fled to higher margin work and mostly survived. But sometime in the 1990s, the impact of technology accelerated business model changes. By a decade later, Barnes & Noble found its main competition not from other brick and mortar booksellers, but from Amazon. And now the same forces that have disrupted businesses from retailers to steel companies will exert themselves on law, accounting, and consulting practices.
Since the 2008 recession, clients are hiring professionals who offer compelling value, and top talent is looking to move where they will have a competitive advantage. The firms who’ve kept revenue streams flowing and maintained high margins have a number of key factors in common:
Strategic focus and go to market clarity. It’s critical to approach business development with your client’s point of view in mind. This means developing a deep understanding of the industries you serve and the daily business challenges they face. It also means getting away from a scattershot approach and focusing on specific clients, markets, and prospects.
Effective execution. All marketing must be approached with the goal of driving revenue, not just name recognition. The first, crucial step in getting this right involves clear financial reporting and identifying key clients that are already producing high margins and have potential to grow. Once these have been identified, take the time to establish programs that nurture and expand these relationships to other practice areas at the firm.
Enhanced business development and management. Making sure the revenue engine is running smoothly means that firm management must let rainmakers chase business, and let business development professionals support them. At the same time, close attention must be paid to cost containment and dedicating resources to efforts that can yield results as well as to streamlining service delivery. And perhaps most challenging, compensation must be aligned with behavior that supports the firm’s articulated strategy.
The firms that ultimately survive this disruption and emerge as great performers will be those with leaders who respond and act with focused effort—an effort that pushes boundaries just beyond what the firm thinks possible.
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Doug Johnson has 25 years of experience developing and executing strategic growth plans within a wide range of professional service firms. Reach him at firstname.lastname@example.org or at 303-995-1131.