The past three years have been good to professional service firms. In fact, in the 2006 study I conducted with Larry Bodine, "Increasing Marketing Effectiveness at Professional Firms," 75% of the respondents said their firms grew in the last three years. And nearly 40% said they grew dramatically.
It would be nice to sit back and enjoy the ride of a boom period. But periods of dramatic growth aren't just good for the bottom line. They're a good opportunity for firms to evaluate their marketing strategies and build competencies that will be highly desirable if the economy tanks again.
Unfortunately, strong economic times can tempt a firm to neglect self-evaluation. The firms that understand the nuances that make them successful can use that information to carry their success through the ups and downs of the marketplace.
Knowing Your Top Strategies Doesn't Mean They're the Right Strategies
It's safe to say that virtually every professional service firm has a list of top marketing strategies. Every year they appear on the strategic plan, they drive activities throughout the firm, and their progress is discussed at the highest levels.
But are the top strategies that firms identify really the ones that they should be pursuing? How do they know for sure? Perhaps they're prioritizing activities simply because they think they worked in the past. Or because they know that competitors are doing them (yes, the lemming principle is alive and well in professional services!).
There's only one way to know for sure whether your firm is directing its marketing efforts wisely. And that is to measure.
In our study, we asked respondents to list and then answer questions about their top initiatives. It was less important to know the measures they listed. Our true aim was to see whetherr respondents could credibly say why their top initiatives were so highly regarded.
What we learned was disconcerting, although not terribly surprising. Although most respondents have no trouble listing their top initiatives, their perceptions of their effectiveness are highly anecdotal. Time and again, when we asked, "How do you know this initiative is so highly effective?" they said, in effect, "We just think so." Yikes! Is this a way to run a successful business?
What's more, only 10% of respondents have a separate budget line for evaluating the effectiveness of their marketing programs. Here's the real kicker: Those who do have a formal measurement budget are a whopping 240% more likely to say they are extremely effective against competitors than those firms that don't have a formal measurement budget! This means there's a significant connection between formal measurement and competing extremely effectively in the marketplace. Now we can prove that anecdotes and intuition are simply not enough.
Those who formally commit money and resources to measure can indeed teach us something about how to say authoritatively, "These are in fact the initiatives that give us the best results."
Which Marketing Strategies Should Your Firm Pursue? Or Discontinue?
Many of our respondents told us that getting a measurement program started seems daunting. It needn't be. Firms need to choose quantitative and qualitative methods of measurement that are reasonable and repeatable.
Our study showed that three types of client-focused metrics tend to work well when used in combination. (These three metrics were first mentioned in our March 2006 Marketplace Master issue.) These metrics are objective and obvious, clearly identified with clients, and featured very tangible outcomes:
- Growing client revenue: "Did you grow revenue with your client or not?"
- Moving the phases of a sale through a pipeline: "Did you close the sale or not?"
- Listening to the client: "Did you listen to your client or not?"
Effective Marketing Strategies Require Effective Measurement
Study respondents gave us some real-life examples of how they are measuring their top marketing initiatives. The following examples make it clear that not all measurement techniques are equally effective. But, with the following examples, we can begin to see that a firm can compete with the right marketing strategies if it uses the most effective measurement techniques.
I've grouped their entries in two categories: whether they were used by respondents who self-identified as "extremely effective competitors" and those that self-identified as "less effective competitors." I've included my commentary in italics.
Initiative: Arranging business development appointments with clients and prospects
Measurements used by "extremely effective" respondents:
- Track telemarketing call metrics such as lead flow, call volume, connection rate, conversion rate, meeting cancellation rate, and project success. This measurement and the next two use well-defined metrics in combination with well-communicated expectations.
- Consolidate business development executives' monthly performance statistics (meetings, proposals, sales, etc.) for comparative analysis. Rate prospects using formulas to predict their long-term worth to the firm.
- Track number of engagements as a percentage of appointments. This is easily documented and time-delimited.
Measurements used by "less effective" respondents:
- Enter lead information in our database, but don't follow through. Good start, but no follow-through.
- Rely on anecdotal evidence to evaluate success. This is too vague.
- Measure only our ability to get an initial meeting. No further follow-up. This bar is set too low.
Initiative: Differentiation, Positioning and Branding
Measurements used by "extremely effective" respondents:
- After meeting with clients or prospects, attorneys report back on how well they received our new tag line and firm philosophy. This shows a repeated use of an internally accepted and well-known measurement process.
- Perform client perception surveys at front- and back-end of branding campaigns. This is well time-delimited.
- Conduct perception monitoring among target audiences to measure how mature we are in demonstrating each dimension of the positioning strategies we've put into place. This is a savvy use of models that are validated with clients.
- After differentiating and branding the firm for environmental law, we measured revenue, workload, and new hires. This measurement is tangible and simple.
Measurements used by "less effective" respondents:
- Determining whether clients "accept" the firm or not. This is too vague.
- Use no formal tool, but say "that worked" or "that didn't work" after an interview. There are no agreed-upon measurement parameters.
Initiative: Targeting and Segmentation
Measurements used by "extremely effective" respondents:
- Use a six-month segmentation process to compare revenue from year to year. This method and the next are quantifiable and well time-delimited.
- Use CRM to look at billing records and top revenue-generating clients to establish a historical profile, which will be placed in the context of the local, regional, and national marketplace.
- Determine the penetration rate of target segmentation, i.e. the number of customers obtained from a defined target. This method and the next two are tangible and simple.
- Analyze direct mail response rates.
- Track the revenues for each niche and the types of activities that help increase those revenues.
Measurements used by "less effective" respondents:
- Focus on the number of opportunities to present the firm to prospects. These and the next two examples are what I call "thinking you're measuring when you really aren't."
- Create sector working groups to share information.
- "Knowing" a firm's clients, and targeting them.
Do You Really Know Your Top Marketing Initiatives? Get Serious!
Most marketing initiatives "work," depending on what's happening with the economy, your business cycle, and the forces at work in your own marketplace. But don't fool yourself with an unsubstantiated listing of your firm's top marketing initiatives. Knowing which initiatives are factually the best comes only after they are effectively measured.
The sooner firms get serious about measurement, and allocate resources to evaluate their progress with effective assessment tools and techniques, the more likely that they will make real gains against their competitors. And increase the longevity of their enterprises.
