Over the last year, consulting firms have fought to stay afloat in the turbulence created by a global pandemic, an election cycle and waves of social change. Understandably, not all firms thrived in this climate. Some firms did see major wins, however, while others were forced to play defense and tend to their wounds. Consulting firms of all stripes are re-examining their businesses in an effort to adapt to today’s unexpected challenges.
The Hinge Research Institute’s newly released 2021 High Growth Study: Consulting Services Edition describes these challenges and how firms have responded to them. The report looks first at overall industry trends within the larger context of the general professional services industry. It then compares the fastest growing consulting firms (those having a compound annual growth rate of 20% or greater over a three-year assessment period) with their slower, no growth peers.
379 consulting firms participated with a combined revenue of $20 billion and more than 60,000 employees.
Unfortunately, the consulting industry as a whole is lagging all other professional services industries in terms of overall revenue growth.
Purchase the 2021 High Growth Study: Consulting Edition
The High Growth Study explores how firms are adapting to an unpredictable market and how they are handling marketing and business development. High Growth firms are defined as having a compound annual growth rate of 20% or greater over a three-year period. High Growth consulting firms come in all sizes, but growth seems to favor the smaller boutique firms.
It’s important to understand what these firms are doing differently. Read on to uncover some high-level insights.
Key Findings
Unpredictability in the marketplace overtakes the need for new skills as the top anticipated business challenge.
In last year’s study, consulting firms ranked the need for new skills as their top business challenge for the next 3-5 years. This year, unpredictability in the marketplace tops the charts. While this shift is likely due to the pandemic, it may reflect a longer-term change in the way firms approach the market, too.
Research on target audiences is a priority of 2020. More consulting firms are conducting research—and they are doing it more frequently.
Our data shows that consulting firms are doing more research than ever before—a strategy used by many high-growth firms to keep abreast of the evolving marketplace. And they are doing research more frequently than before (see chart below).
Marketing budgets jump as consulting firms learn to pivot in unpredictable market conditions.
It should be noted that in addition to conducting frequent research, consulting firms are also allocating more dollars than ever before to their marketing budgets. On average, about 43% more!
Why?
For the past few years there has been an emphasis on leveraging digital techniques. But we believe the pandemic has forced many firms to go all in on digital—a transformation that requires new infrastructure and new skills. At least some of that investment is reflected in the industry’s marketing budgets.
COVID-19 + Impacts on Profitability
According to the study consulting firms are solidly in last place when it comes to profitability. Most firms either had a really good year or were severely impacted by COVID-19. In this new virtual world, Consulting firms had to figure out how to meaningfully pivot from in-person events to hosting virtual ones. High Growth consulting firms also showed an increase in the number of webinars they were hosting or participating in because meaningful interaction with their audiences remains a top priority, COVID or not.
In addition, we’re seeing that over a quarter of firms are planning to go fully remote. Remote work is not a foreign concept to this group of professionals, though—many of them were fully remote even pre-pandemic.
So why the change now?
It could be because firms are looking to reduce overhead, and the pandemic showed them how it could be done. With this shift, we could potentially see more productivity and a bigger emphasis on work–life balance.
Purchase the 2021 High Growth Study: Consulting Edition
About one in four consulting firms achieved High Growth status.
High Growth consulting firms come in all sizes, but growth seems to favor the small players. This may be due in part to buyers’ preference for the more personal service of a smaller firm.
The Bottom Line
We live in uncertain times and today’s firms are facing unprecedented pressures and decisions. The firms that pivot first—and have the best information—will undoubtedly gain a competitive advantage.
And there are no better examples to learn from than the High Growth cohort. Their emphasis on digital marketing techniques, conducting frequent research and automation are driving their success. The data is in. Now is the perfect time to learn from the firms that are leading the way.
Additional Resources
Want to see the full results of the 2021 High Growth Study: Consulting Edition? Purchase the full report here.
