High Growth Strategies for Your Professional Services Firm: 2
This issue is the second of a three-part series of articles on high growth professional services firms, based on findings in our research study The High Growth Professional Services Firm: How Some Firms Are Able to Grow in Any Market. In the first article we looked at some of the characteristics of high performing firms. Now we turn our attention to some of the ways high growth firms gain an advantage over average growth firms.
We've already learned that high growth firms are able to outperform their average growth peers while spending less on marketing. So how are they investing differently than typical firms? We found some important clues in our research.
A Focus on Strategy
Whether or not firms should specialize has long been a subject of debate among professional services marketers and owners. In an attempt to get a definitive answer, we asked our research participants whether they were specialists. Nearly half of the high growth firms in our study described themselves as very specialized (contrast this against roughly a quarter of the average growth firms).
We didn't stop there. We wanted to find out what strategies they used to expand their business. As you can see in the table below, high growth firms are more likely to narrowly target customers and offer specialized services. Average growth firms, on the other hand, tend to mine their existing client base and expand their range of services.
Preferred Strategies
High growth firms were also much more likely (almost 3 to 1) to have a strong differentiator. Among those firms with a strong differentiator, the high growth group tended to talk about their differences in more specific terms. We believe that when prospective clients can understand and appreciate a firm's differentiation, they are more likely to remember and engage that firm.
Preferred Differentiators
High growth firms were also three times more likely to be able to provide a very detailed description of their best customers. Firms that have a deep understanding of their customers are better equipped to appeal to the the right prospects. That means less wasted time, energy and money.
What Fuels Great Strategy?
If the most successful firms are spending less on marketing but generating more revenue, they must be running a more fuel-efficient marketing machine. So far, we've found that high growth firms tend to specialize, narrowly target clients and differentiate themselves. But how do they make the right decisions? How do they avoid taking the wrong road?
Knowledge informs strategy, and successful firms do the due diligence to know where opportunity lies. Most high growth firms research their clients on a regular basis. More than customer satisfaction surveys, these firms' research is designed to learn what clients need and want — and how these factors are changing. The firms then use this information to provide more appropriate and timely services. It allows them to take a more proactive role in their clients' lives than more passive firms.
In addition, our study revealed that more frequent research correlated with higher growth and profits. These findings were striking.
Research Results
High growth firms succeed in part because they use their resources more wisely. By attacking the market surgically — going after the just the right prospects using the right tools, they achieve much better than average results. Next month, we'll discuss which marketing tactics high growth firms emphasize, and we'll wrap up with some specific recommendations for your practice.
If you would like a more in-depth guide to the issues discussed in this series of articles, be sure to download and read our new book, Spiraling Up: How to Create a High Growth, High Value Professional Services Firm. It's free!