With a global pandemic, a contentious U.S. election, and waves of social issues/changes dominating the media and peoples’ attention, it’s not a wonder that the buying cycle for technology and software firms was both unpredictable and unprecedented. Many firms benefitted greatly during this time–while other firms did not meet goals and expectations and are planning to rebound this year. Which firm is yours?
The Hinge Research Institute’s newly published 2021 High Growth Study: Technology and Software Edition looks at and helps both types of firms. It also examines firm size based on revenue and number of full-time employees. Technology and Software firms from around the world were sampled—so chances are, your firm is represented.
About the Study
The study showcases industry trends within the larger context of other professional service industries including: Accounting and Financial Services; Architecture, Engineering, and Construction; Consulting; GovCon; and Legal. It then dives deeper into comparing the Technology and Software “high growth” firms (those having a compound annual growth rate of 20% or greater over a three-year assessment period) with average and no growth peers. There was good representation across most firm sizes. The firm size of Technology and Software (T&S) firms that participated in the study are broken out by 2020 revenue as shown in Figure 1.
Figure 1: T&S Firm Size Based on 2020 Revenue
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More than 120 T&S firms participated in the study with a combined revenue of $175 billion and more than 400,000 employees. While, as shown in Figure 2, the Technology and Software industry as a whole is leading all other professional services industries in terms of overall revenue growth—there is still plenty of room for improvement.
Figure 2: Median Growth Rate by Industry
What Key Challenges are T&S Firms Facing in These Unprecedented Times?
For the high growth Technology and Services firms, not surprisingly, unpredictability in the marketplace was the top challenge—followed by changes in how buyers buy their services. In fact, changes in how buyers buy services—marks an increase of 46% from last year’s study. (See Figure 3.) Interestingly, increased competition from new firms and increased competition from larger competitors, which topped the list of business challenges last year, fall to fifth and fourth place in this year’s study. The need for new skills, which ranked high on other industry business challenge lists this year, actually dropped from third place in 2019 to sixth place in 2020. These are challenges that are here now and for the next few years.
Figure 3: Anticipated Business Challenges Over the Next 3-5 Years
In this article, I will highlight some of the study findings that show what Technology and Software high growth firms are doing differently in light of today’s unpredictability and uncertainty.
Insight #1: High Growth Technology and Software Firms Conduct More Research
As shown in Figure 4, high growth Technology & Software firms conduct research significantly more than no growth firms.
Figure 4: T&S Firms That Conduct Research On Their Target Audience
But, more importantly, Figure 5 shows that high growth firms are more likely conduct or leverage research on a quarterly basis. With this regular cadence of research, high growth T&S firms are in better positions than other firms when it comes to adapting to changes in buyer behavior and identifying why and where unpredictability occurs in the marketplace.
Insight #2: T&S Firms Spend More on Marketing Budgets to Ensure Growth
Until recently, high growth Technology and Software firms’ marketing budgets were comparable to slow or no growth firms. But today, high growth T&S firms are investing significantly more in marketing—more than 22% of firm revenue and twice as much as no growth firms. This budget increase allows T&S to leverage more digital marketing to accommodate changes in buyer behavior and invest more in technology. With these dramatically larger budgets, one can partly see how and why some Technology and Software firms grow faster and more than most others. (See Figure 6.)
Figure 6: T&S Marketing Budget (% of Firm Revenue)
Insight #3: High Growth T&S Firms Tend to Use Marketing Techniques More Intensely
As Figure 7 shows, high growth T&S firms and no growth firms employ email marketing campaigns at about the same rate (63.9% vs. 64.3%).
Where behaviors dramatically change is in the next two techniques on the list. High growth T&S firms use digital ads more than six times as often as no growth firms (44.4% vs 7.1%).
The gap grows even larger with the next technique: promoting thought leadership on social media. High growth firms use this marketing technique 22 times as much as no growth firms (44.4% vs. 2.1%).
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As you can see, there are certain marketing techniques that high growth firms use intensely that no growth firms barely use. Another example is the live product and service demonstration. Take note. These techniques are getting high growth T&S firms the visibility and engagement that no growth firms never see or experience.
Figure 7: Top Marketing Techniques Currently Used by T&S Firms
Insight 4: High Growth T&S Firms Orchestrate All the Marketing Parts More Effectively
Now let’s take a look at the top 10 most impactful marketing techniques used by high growth T&S firms. (See Figure 8.) At first glance, both high growth firms and no growth firms appear to use a lot of the same techniques (with the notable except of public relations/earned media). So how is it that high growth T&S firms reap more benefit from these techniques?
They orchestrate all the parts more effectively.
The right marketing mix, grounded in the right research, combined with the right positioning make for a powerful force in the marketplace.
Figure 8: Top Marketing Techniques for T&S Firms Based on Impact
Insight 5: High Growth T&S Firms Leverage Technology and Benefit from Digital Leads
The 2021 High Growth Study: Technology and Software Edition clearly shows that high growth Technology and Software firms are two to three times more mature with general business, core business, and marketing & sales automation. This maturity pays off as their technology automatically adapts and optimizes to changing business needs. The strategy is built around the technology—leading to better effectiveness and efficiency throughout high growth T&S firms. (How does your firm compare with automation maturity?)
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Greater levels of technology optimization are reached—to the point where nearly 50% of leads come from digital sources as shown in Figure 9.
Figure 9: Proportion of Leads from Digital Sources
These are just some of the findings and insights from the 2021 High Growth Study: Technology and Software Edition. The study goes into the impact of COVID-19 on Technology and Software firms, the role of mergers and acquisitions, and where high growth T&S firms are focused for the next year.
The Bottom Line
Even in these times of uncertainty, high growth Technology and Software firms are adapting to changing buyer behaviors, identifying and leveraging sales opportunities, and leveraging digital marketing and technology to generate more leads. These high growth firms realize—and invest in—the principle that the firms that pivot first, and have the best information, will undoubtedly grow and have the best competitive advantage.
The data is in. What can you learn from these high performers? Where do you need to make changes with your marketing and business development? How far can you take your firm with these findings and insights? Now is the best time to learn from the firms that are leading the way in your industry.
Additional Resources
Join the High Growth technology and software firms who use research to guide their marketing and business development efforts by purchasing this full research study here.
