by Kelly J. Waffle, Managing Director of the Hinge Research Institute
Let’s face it, the last 12 months have been a challenge. Many consulting firms are facing an uncertain future. Hinge Research Institute’s High Growth Study 2021: Consulting Edition, noted that unpredictability in the marketplace, changes in how buyers are buying services, and increased competition from new firms and competitors top the list of serious growth challenges.
Many of these challenges are having strong negative impacts on consulting firm growth, and they are not expected to go away soon. According to our annual high growth study of professional services firms, now in its sixth year, the consulting industry is lagging behind almost all other professional services industries in terms of overall revenue growth.
The Secrets to Consulting Growth in Turbulent Times
Research Provides a Roadmap
Our latest research shows that the consulting industry is in last place when it comes to profitability. Consulting has the highest percentage of low-profit firms amongst all professional services industries surveyed.
How should your firm adapt to the previously mentioned business challenges? What marketing and business development strategies should you be leveraging in the future? Why are high-growth consulting firms (firms with an annual growth rate of 20% or higher compounded over three years) growing faster than your firm? Stop guessing and rely on the research to give you trends, analysis, and answers.
In the High Growth Study 2021: Consulting Services Edition 379 consulting firms participated with combined revenue of $20 billion and more than 60,000 employees. This study represents every size of a consulting firm.
The research also tracks trends and behaviors based on the growth profiles of consulting firms: No Growth, Average Growth, and High Growth. It’s important to understand how these firms responded differently.
The Correlation Between Growth & Profitability
In addition to growing at a rate of 20% or higher, our research shows that more than 45% of high growth consulting firms are highly profitable (25% or more). More than 79% of high growth firms reported profitability of 11% or higher. For the most part, you can see a correlation between high growth and average to high profitability. In contrast, 75% of no growth consulting firms saw low to average profitability. Many of the behaviors and trends identified in this research may account for the higher profit percentages.
Increase Your Marketing Budget
Until recently, high growth consulting firms had marketing budgets comparable to slower-growing firms. In our most recent High Growth Study, we saw a dramatic increase of nearly 50% in marketing investment from high growth firms than their no-growth peers.
Want to learn what else high growth consulting firms do differently? Then be sure to check out our on-demand webinar called, The Secrets to Consulting Growth in Turbulent Times. Find out how high growth consulting firms spent their time and resources and what other adaptations they made to generate more profit throughout the last 12 months.
About the Author
As Managing Director of the Hinge Research Institute, Kelly helps B2B and professional services clients leverage research content and insights to drive visibility, credibility, leads, and prospect engagement.
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