The results from the 2018 High Growth Study are out, and there’s a great deal for professional services firms to learn. Now in its third year, the study involved over 1,000 firms with a combined annual revenue of more than $176 billion and marketing budgets totalling more than $20 billion. They have more than one million full-time employees.
The firms represent a broad cross-section of industries, including accounting, architecture, construction, consulting, engineering, financial services and technology. Micro firms with less than $1 million in annual revenue were represented, as were large firms with $50 million or more in annual revenue—and everything in between.
Through the survey, top executives at these firms revealed a great deal about the current state of professional services. Are revenues growing or slowing? What are the most pernicious threats? Perhaps most importantly, the study explains why some firms in every industry are growing much more dramatically than their peers, and what they are doing differently to bring about that growth. Here are some of the highlights from the study.
Slowing Growth, With Bright Spots
The growth in median annual revenue across all industries in the study fell by 9 percent, from 10.2 percent in 2016 to to 9.1 percent in 2017. While most industries saw growth slow—only legal services saw a year-over-year increase—there were major differences in performance between industries.
For example, technology companies led the list with an 11.4-percent increase in 2017, even as the industry itself saw a 20-percent drop from the previous year. Accounting and financial services firms were at the bottom of the list, posting a 6.1-percent increase in median revenue, which is a 22-percent decrease over the previous year. It was also the only industry that failed to post at least an 8-percent increase in 2017.
One major bright spot: Companies across all industries that derived the majority of their revenue through government contracting. These firms grew by 13.3 percent, a whopping 87-percent year-over-year increase.
Meet the High-Growth Firms
There is a group of companies in each industry that is having a very different experience when it comes to revenue growth. These elite companies—we call them the high-growth firms—are those making more than $1 million in annual revenues and have seen revenue grow by 20 percent or more annually for the three years. Across all industries covered by the study, one in three (34.2 percent) fall into this high-growth category.
By studying how these companies think and act differently, we can determine what drives their increased revenue. The 2018 High Growth study contains many of those answers.
For example, let’s look at threats to the industry. As a group, when asked about threats, professional services firms named competition from new firms and larger companies, downward price pressure, a shortage of top talent and unpredictability on the marketplace as some of their top challenges. High-growth firms were also concerned about these things, but they were also far more likely to name automation and artificial intelligence as a threat, as well as the challenges of managing a remote workforce.
When it comes to creating a strategy to face those threats, high-growth firms were far more likely to narrow their focus and specialize, to “productize” their services, to outsource non-core functions and to train on business development and other skills. Overall, high-growth firms are more likely to be specialized. They are more likely to enjoy a skills advantage in key areas of business development.
And here’s a big one: they were almost three times more likely to conduct frequent research on their target markets. That research develops insights that lead to competitive advantages.
Effective Marketing Techniques
For the first time in 10 years, high-growth firms outspent their no-growth peers in marketing budget. In some cases, the differences were pronounced. One in five high-growth firms are investing 20 percent or more of their annual revenue in the marketing budget.
What can be learned about how these high-growth firms go to market? The 2018 High Growth Study dove deeply into which techniques firms use, how much effort they put into each and what they perceived as most effective. Across industries, firms in the high-growth category listed as most impactful techniques that put them in direct contact with prospects and allowed them to use a consultative approach.
For example, high-growth firms listed the top five most impactful marketing techniques as networking at targeted conferences, trade shows and events; providing assessments or consultations; providing demos, either in person or through digital channels; using a proposal took kit; and speaking at the aforementioned conferences. Providing downloadable, gated content, publishing written blog posts, video blogging and nurturing prospects through phone calls also made the top 10.
By studying what works across industries—and what works well in each specific industry—and by focusing in on the behavior of firms that are growing by double digits, professional services companies can gain many insights that can help shape marketing, sales and revenue strategies. Hinge makes the Executive Summary of the 2021 High Growth Study available free. Download it today and enjoy!
How Hinge Can Help
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